(1)
Loan Types: Eligible
Projects may receive HIF loans in three areas: acquisition loans,
construction/rehabilitation loans, and permanent loans. All loans will be structured
as Deferred Payment Loans (DPL). Developers shall complete the application process
in accordance with the appropriate HIF Program Guidelines.
(2)
Loan Terms: All loans
under the HIF program shall be made upon the following terms and such other terms as
are included in the HIF Program Guidelines and/or DHCD's loan documents:
(a)
Loan Proceeds: the
proceeds of the loan shall be used solely for the development of the Eligible
Project approved by DHCD.
(b)
Loan Amount.
1. the
amount of a HIF I loan shall be set by DHCD according to the HIF Program Guidelines;
the amount of a HIF II loan shall not exceed 30% of the Total Development Cost of
the Project; the amount of a HIF III loan shall not exceed 50% of the Total
Development Cost of the Project; and the amount of a HIF IV, or HIF V loan shall not
exceed 50% of the Total Development Cost of the Project (except that a HIF IVor HIF
V loan for a shelter for survivors of domestic abuse may not exceed the lesser of
80% of the Total Development Cost or $2.5 million); 760 CMR 23.04(2)(b)1. shall not
apply to M.G.L. c. 121E loans.
2. DHCD
may establish a maximum percentage of the Total Development Cost and dollar limits
(per unit or per Eligible Project, or both) in the HIF Program Guidelines, to which
the loan would also be subject.
(c)
Loan Period.
1. the original term of a HIF I loan shall be up
to 40 years. At the maturity date, the term may be extended at the discretion of
DHCD with the consent of the owner if the Project continues to meet the HIF
requirements.
2. the original term of a
HIF II, HIF III, HIF IV, HIF V, or M.G.L. c. 121E loan shall be up to 30 years. At
the maturity date, the term may be extended for additional periods of up to ten
years each at the discretion of DHCD, with the consent of the owner, if the Project
continues to meet the HIF affordability requirements, as applicable, and the
requirements for an extension under the applicable HIF Legislation, the HIF Program
Guidelines, and the loan documents for such loan have been
satisfied.
(d)
Interest Rate. interest rates for the loans shall be fixed
at rates determined by DHCD, in consultation with the Office of the Treasurer of the
Commonwealth.
(e)
Loan
Payments. because all HIF loans are structured as DPLs, principal and
interest payments will be deferred for the loan period unless any of the following
occurs:
1. Projects funded under HIF I have Gross
Cash Receipts for a fiscal year exceeding Gross Cash Expenditures by 115%;
or
2. Projects funded under HIF II, HIF
III, HIF IV, or HIF V have Gross Cash Receipts for a fiscal year exceeding Gross
Cash Expenditures by 105%; or
3.
Projects funded under any of the HIF Legislation default on the terms of the loan;
760 CMR 23.04(2)(e) shall not apply to M.G.L. c. 121E loans.
Within 45 days after the end of each Project's fiscal year, the
owner shall supply DHCD or the Financial Intermediary with the necessary financial
statements needed to determine the amount of payment necessary for the period; all
amounts paid pursuant to 760 CMR 23.04(2)(e) will be applied first to the payment of
interest and then to principal.
(f)
Land Use Restriction.
the Developer/owner of the Project shall execute and record at the appropriate
Registry of Deeds or Registry District of the Land Court, or both, a Land Use
Restriction. The Land Use Restriction shall only be released:
1. upon payment in full of all amounts due under
the HIF loan (provided, however, that no prepayment shall be allowed under the loan
prior to the maturity date as defined in the promissory note for such loan;
or
2. upon foreclosure of the subject
Project by the holder of a bonafide first-priority mortgage; or,
with DHCD's consent, a bonafide mortgage that was senior to the
lien of the HIF mortgage loan at the time of loan closing, or to which the HIF
mortgage loan has been duly subordinated.
(g)
Mortgage Lien. the
loan shall be secured by a mortgage lien against the Project, which may be junior
only to such senior mortgage liens as are permitted by DHCD.
(h)
Refinancing. A HIF
loan may be refinanced during the term of the loan only with the prior written
approval of DHCD.
(3)
Refinancing Existing HIF Loan with Subsequent HIF Loan. HIF
II loans may be made to refinance HIF I Projects in existence before January 14,
1994 and which meet additional eligibility criteria in the HIF II Guidelines. HIF
III loans may be made to refinance HIF I Projects or HIF II Projects in existence
before promulgation of the HIF III regulations and which meet additional eligibility
criteria in the appropriate HIF Program Guidelines. HIF IV or HIF V loans may be
made to refinance HIF I or HIF II Projects in existence prior to July 31, 2002 and
which meet additional eligibility criteria in the appropriate HIF Program
Guidelines.
(4) In addition to Deferred
Payment Loans, Eligible Projects under M.G.L. c. 121E may also receive assistance in
the form of capital grants, subsidies, or mortgage insurance guarantees and other
credit enhancements, in the minimum amount required for a Financially Feasible
Project. Developers shall complete the application process for such assistance in
accordance with the appropriate HIF Program Guidelines. 760 CMR 23.04(2)(a), (b),
(f), and (h) shall apply to all such assistance. DHCD may provide assistance in the
form of a capital grant, subsidy, or mortgage insurance guarantee or other credit
enhancement where it finds that such form of assistance is reasonable necessary to
meet the requirements of other financing sources for the Project.
(5)
Purchase Option and First Refusal
Option. As a condition of each HIF IV or HIF V loan, or loan or other
assistance provided under M.G.L. c. 121E, DHCD shall be granted a purchase option
and a first refusal option to purchase the Project, in accordance with the following
terms:
(a)
Purchase
Option. Upon the expiration of the term of the affordability
restrictions imposed in the Land Use Restriction for a Project, DHCD shall have an
option to purchase the Project from the Developer/owner at a price equal to the
then-current appraised value of the Project less the total outstanding balance of
all principal, interest and any other charges payable under the HIF IV or HIF V loan
or, in the case of M.G.L. c. 121E, less any remaining obligations of the
Developer/owner under any other form of HIF financial assistance. The appraised
value of the Project shall be determined in the manner described in the HIF IV or
HIF V Legislation or M.G.L. c. 121E, as applicable, and in accordance with the HIF
Program Guidelines and DHCD policies, as applicable. DHCD may exercise the Purchase
Option by sending notice to the Developer/owner of its intention to exercise the
Purchase Option by certified mail and recording/filing a copy of such notice in the
Registry of Deeds or Registry District of the Land Court within 120 days after the
expiration of the term of the affordability restrictions imposed by the Land Use
Restriction. If DHCD fails to exercise the Purchase Option by such option exercise
deadline, DHCD shall automatically be deemed to have waived the Purchase Option, and
such Purchase Option shall automatically terminate.
(b)
First Refusal Option.
If at any time the Developer/owner of a Project wishes to sell, transfer or
otherwise dispose of (transfer) the Project, or any part thereof, prior to DHCD's
exercise of the Purchase Option, and receives a bonafide
third-party offer for the same, the Developer/owner shall send a notice to DHCD by
regular and certified mail, return receipt requested, setting forth the
Developer/owner's intention to transfer all or part of the Project and the terms of
any bonafide offer by a third party to purchase the Project (or the
applicable portion(s) thereof). DHCD shall have the right to purchase the Project
(or the portion(s) thereof to which such offer relates) at the same price and on the
same terms as those contained in such offer. DHCD may exercise the First Refusal
Option by sending notice to the Developer/owner of its intention to exercise the
First Refusal Option by certified mail and recording/filing a copy of such notice in
the Registry of Deeds or Registry District of the Land Court within 120 days after
its receipt of the Developer/owner's notice. If DHCD fails to exercise the First
Refusal Option by such option exercise deadline, DHCD shall automatically be deemed
to have waived the First Refusal Option, and such First Refusal Option shall
automatically terminate (but only with respect to the portion(s) of the Property to
which the third-party offer relates); however, if the sale contemplated in the
third-party offer is not effected on the same terms and conditions as those
contained in the offer, as described in the Developer/owner's notice, within six
months after DHCD's receipt of the Developer/owner's notice, or if any of the
material terms of such third-party offer shall be revised, DHCD's First Refusal
Option shall be revived. If a Developer/owner's notice relates to a proposed
transfer of only a portion of the Project, the First Refusal Option shall remain in
effect with respect to all remaining portions of the Project.
(c)
DHCD may Assign the Purchase
Option or the First Refusal Option to a Qualified Developer. A
Qualified Developer is a developer who:
1. is a
Non-profit Corporation or is a Local Housing Authority ;
2. has completed an application with respect to
its proposed purchase of the Project, in the format specified by DHCD (the "Purchase
Application") (DHCD will issue a "Notice of Project Availability" that will include
instructions for completing a Purchase Application for this purpose);
3. has been selected to purchase the Project based
on DHCD's review and underwriting of the Purchase Application;
4. agrees that upon purchasing the Project, it
will execute a Land Use Restriction providing for the Project to remain an Eligible
Project for a term of at least 40 years; and
5. provides any additional due diligence materials
not part of the Purchase Application that may be required by
DHCD
(d) If DHCD exercises the
Purchase Option, DHCD or its assignee shall have 120 days after the expiration of
the option exercise deadline specified in 760 CMR 23.04(4)(a) (and not less than 240
days after the expiration of the term of the affordability restrictions imposed by
the Land Use Restriction) to purchase the Project. If DHCD exercises the First
Refusal Option, DHCD or its assignee shall have 120 days after the expiration of the
option exercise deadline specified in 760 CMR 23.04(4)(b) (and not less than 240
days after the DHCD's receipt of the Developer/owner's notice) to purchase the
Project. Promptly upon request by DHCD or its assignee, the owner will provide DHCD
or its assignee with such due diligence material and such opportunity to inspect the
Project as would be reasonably required by a third-party purchaser. The date for the
acquisition closing under the Purchase Option or the First Refusal Option, as
applicable, may be extended by agreement of the parties and the agreed-upon
extension shall be recorded/filed in the Registry of Deeds or Registry District of
the Land Court. DHCD or its assignee may extend the date for the acquisition closing
to a reasonable date, if it determines that additional time is needed due to delays
in closing preparations caused by the Developer/owner. After delivering notice of
its intent to exercise the Purchase Option or First Refusal Option, DHCD may at any
time terminate its exercise of the Purchase Option or the Right of First Refusal, in
its discretion, without incurring any damages or other liability, if it determines
it is not in the best interests of DHCD to effect the purchase (but such termination
right shall apply to DHCD only, and not to any assignee).
(e) DHCD or its assignee may purchase or otherwise
acquire the Project only for the purposes of preserving or providing affordable
housing, which shall include a requirement that the Project remain affordable for a
term of at least 40 years.
(6)
Application Process.
Application procedures for HIF loans and, as applicable other assistance, are
specified in the appropriate HIF Program Guidelines. DHCD reserves the right to hold
competitive funding rounds for HIF loans and, as applicable, other
assistance.
