Current through Register Vol. 50, No. 9, September 20, 2024
A. Implementation
Guidelines. All projects must be feasible and viable. The project must satisfy
the following implementation guidelines.
1.
HOME funds will be allocated only to fill the gap between other sources of
funds available to the project and the required uses of funds in the project.
Conventional financing or equity must equal at least 15 percent of total
development cost for each phase of a project.
2. Neither appraised value nor total
development cost plus points and fees paid by or on behalf of the eligible
borrower under the HOME/MRB Program may exceed the maximum permissible
acquisition cost for single-family units for the area within which the unit is
located.
3. Maximum HOME funds
budgeted to develop a unit may not exceed 85 percent of the total development
cost per unit during the construction period for any phase of
development.
4. All projects must
be scattered site or consist of townhouse units.
5. Developer fees shall not exceed 15 percent
of the developer fee base. The combined builder profit and builder overhead
shall not exceed 8 percent of the builder profit base.
B. Market Study
1. If the total number of units in a project
consists of 16 or more units and the project involves any new construction or
the conversion of an existing nonresidential building to residential rental
use, a detailed market study dated as of a date no earlier than 90 days prior
to the application deadline must be submitted by an independent qualified
housing consultant evidencing demand for additional homeownership units in the
market area.
2. The market study
must:
a. specify in detail the sources of
demand for new homeownership units by low income households and that such low
income households will pay no more than 30 percent of their household income
for PITI;
b. contain a confirmation
as to the total number of rental units that have received building permits over
the 24-month period ending 120 days prior to the application deadline and that
the construction and placement in service of such units in the pipeline will
not affect the absorption efficiency of the project;
c. document the request for points in the
selection criteria for special needs groups, new construction in areas with 95
percent rental occupancy and large families occupying single-family units
having four or more bedrooms.
3. In addition to the submission of the
market study, the independent qualified housing consultant must execute and
submit by the application deadline a certification of demand for new
units.
C. Total
Development Cost Limitations. No project will be reserved or allocated HOME
funds if the total development cost per unit plus points deemed paid by or on
behalf of an eligible borrower as specified under the agency's HOME/MRB Program
exceed the FHA single-family mortgage limits for single-family units within the
area which the unit is located.
D.
Dollar per Square Foot Limits. No project will be reserved or allocated HOME
funds if the total development cost per square foot exceeds $75.
E. Developer Fees and Builder Profit Limits
1. Developer fees for a project shall not
exceed 15 percent of the developer fee base.
2. Builder profit shall not exceed 6 percent
of the builder profit fee base and builder overhead shall not exceed 2 percent
of the builder profit fee base unless approved by the agency in connection with
projects:
a. without an identity of interest
between the developer and the builder; and
b. in which the construction contract was
awarded on the basis of a competitive solicitation of qualified
contractors.
F. Proposed Sale Price Per Units. No unit in
project may be sold for more than the maximum sales price reduced by any fees
or points deemed paid by or on behalf of an eligible borrower, as specified
under the agency's HOME/MRB Program.
G. Appraisals. Appraisals establishing a
project's fair market value will be required in connection with all projects
financed with HOME funds.
H.
Identities of Interest. An identity of interest is construed to exist when:
1. there is any financial interest of the
developer in the builder or any financial interest of the builder in the
developer;
2. any officer, director
or stockholder or partner of the developer is also an officer, director or
stockholder or partner of the builder;
3. any officer, director, stockholder or
partner of the developer has any financial interest in the developer; or any
officer, director, stockholder or partner of the builder has any financial
interest in the developer;
4. the
developer advances any funds to the builder;
5. the developer supplies and pays, on behalf
of the builder, the cost of any architectural services or engineering services
other than those of a surveyor, general superintendent, or engineer employed by
a developer in connection with its obligations under the construction
contract;
6. the developer takes
stock or any interest in the builder corporation as consideration of
payment;
7. there exists or comes
into being any side deals, arrangements, contracts or undertakings entered into
or contemplated, thereby altering, amending, or canceling any of the required
closing documents, except as approved by the agency;
8. any relationship (e.g., family) existing
which would give the builder or developer control or influence over the price
of the contract or the price paid to any subcontractor, material supplier or
lessor of equipment.
I.
Cost Certifications. The agency must review the certification of the
certificate of actual cost audited as of the placed-in service date in
accordance with Generally Accepted Accounting Principles (GAAP) by an
independent certified public accountant.
J. Subsidy Layering Review. Prior to
releasing any retainage of HOME funds for a project, a subsidy layering review
will be conducted in connection with any project receiving HOME
funds.
K. Debarred Developer. No
debarred developers may be reserved HOME funds.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
40:600.6.
