REQUEST FOR PROPOSALS (RFP)

Transcription

1 EASTERN LOS ANGELES REGIONAL CENTER ANNOUNCEMENT OF COMMUNITY PLACEMENT PLAN (CPP) START-UP AWARD AFFORDABLE HOUSING FISCAL YEAR NPO Housing Project 3 NPO Housing Project 4 REQUEST FOR PROPOSALS (RFP) Page 1 of 83

2 EASTERN LOS ANGELES REGIONAL CENTER COMMUNITY PLACEMENT PLAN (CPP) START-UP AWARD FISCAL YEAR REQUEST FOR PROPOSALS AFFORDABLE HOUSING SUMMARY OF PROJECT The development of affordable and accessible homes is necessary to meet the goal of the California Department of Developmental Services (DDS) to expand opportunities for individuals with developmental disabilities (consumers) to reside in the least restrictive community settings and to at the same time advance the objective of the Olmstead v. LC Supreme Court decision of deinstitutionalization issued in The Eastern Los Angeles Regional Center (ELARC) in collaboration with DDS seeks proposals for acquisition of two single family homes for longterm lease to a licensed residential services provider to be selected and vendored by ELARC with Start-up Funds. Applicants must submit a proposal to develop permanent housing through the Buy It Once model where an NPO purchases residential property that will be used exclusively by regional center consumers in perpetuity. To ensure that homes developed using Start Up funds are always available for use by consumers, real estate deed restrictions or restrictive covenants which place specific limitations on the use of the property must be applied to the property by the NPO or developer. From this RFP two single family homes will be acquired. Both are to be licensed as Adult Residential Facilities (ARF); however one will be vendored as an Enhanced Behavioral Supports Home under a pilot program until January 1, 2020 and one will be vendored as Specialized Residential Facility (Habilitation). Interested parties are invited to submit a proposal in accordance with the specifications contained in this Request for Proposal (RFP) to acquire and manage either one or two single family home properties for long-term lease to vendors providing residential services to adults with developmental disabilities. ELARC reserves the right to award projects together, separately, or not award funding, despite the proposal indicating willingness to acquire both properties. Start-up monies are awarded with the intent of defraying the cost to develop a new service. Therefore, commitments in the form of hard (dollar) and/or soft (in-kind) contributions are necessary for each applicant receiving an award. (Additional funding may be available for renovations required to meet licensing standards for non-ambulatory residents, if not available from other sources.) Funding must demonstrate a leverage ratio of a minimum of three dollars in leveraged funds to each one dollar in CPP start-up funds. Selection will be based on the proposal which best meet the desired elements. Project #3: Enhanced Behavioral Supports Home for Adults - housing acquisition Start-up funding up to $300,000 for property acquisition leveraged by 3 to 1. Enhanced behavioral supports home (EBSH) means a facility certified by the Department of Developmental Services (Department) and licensed by the Department of Social Services (DSS) as an ARF that provides 24-hour nonmedical care to regional center consumers who require intensive services and supports due to challenging behaviors that cannot be managed in a community setting without the availability of enhanced behavioral services and supports, and 1 Page 2 of 83

3 who are at risk of institutionalization or out-of-state placement, or are transitioning to the community from a developmental center, other state-operated residential facility, institution for mental disease, or out-of-state placement. Enhanced behavioral services and supports means additional staffing supervision, facility characteristics, or other services and supports to address a consumer s challenging behaviors, which are beyond what is typically available in other community facilities licensed as an ARF. Regulations for enhanced behavioral services and supports have not yet been made available. DDS shall establish by regulation a rate methodology for enhanced behavioral supports homes that includes a fixed facility component for residential services. Final selection for this RFP will be subject to compliance with DDS regulations as yet to be promulgated. Project #4: Specialized Residential Facility for Adults (SRF 4 bed) - housing acquisition Start-up funding up to $200,000 for property acquisition leveraged by 3 to 1. A regional center shall classify a vendor as a DSS Licensed-Specialized Residential Facility provider if the vendor operates a residential care facility licensed by the Department of Social Services (DSS) for individuals with developmental disabilities who require 24 hour care and supervision and whose needs cannot be appropriately met within the array of other community living options available. Primary services provided by a DSS Licensed-Specialized Residential Facility may include personal care and supervision services, homemaker, chore, attendant care, companion services, medication oversight (to the extent permitted under State law) and therapeutic social and recreational programming, provided in a home-like environment. Incidental services provided by a DSS Licensed-Specialized Residential Facility may include home health care, physical therapy, occupational therapy, speech therapy, medication administration, intermittent skilled nursing services, and/or transportation, as specified in the IPP. This vendor type provides 24 hour on-site response staff to meet scheduled or unpredictable needs in a way that promotes maximum dignity and independence, and the provision of supervision and direct care support to ensure the consumers health, safety and well-being. Other individuals or agencies may also furnish care directly, or under arrangement with the DSS Licensed-Specialized Residential Facility, but the care provided by these other entities must supplement the care provided by the DSS Licensed-Specialized Residential Facility and does not supplant it. Regional Center monitoring of the DSS Licensed-Specialized Residential Facility shall be in accordance with the applicable state laws and licensing regulations, including Title 17, and the regional center admission agreement. Payment for services in a DSS Licensed-Specialized Residential Facility must be made pursuant to Title 17, Section (a), after the regional center obtains approval from the Department for payment of the prevailing rate or, pursuant to Welfare & Institutions Code, Section 4648 (a)(4), the regional center may contract for the provision of services and supports for a period of up to three years, subject to the availability of funds. PURPOSE & SCOPE Awardee will need to acquire one or two single family home properties to be purchased and owned by a non-profit housing organization (NPO) and restricted for the use as housing for regional center consumers (i.e., individuals with developmental disabilities) in perpetuity as per 2 Page 3 of 83

4 the housing guidelines (See EXHIBIT A). Property will be required to be renovated to meet the standards to be licensed by the Department of Social Services of the State of California as an ARF. Renovation money through Community Placement Plan will be made available for each home based upon the renovations needed to comply with Department of Public Social Services Community Care Licensing Requirements. Start up funding is intended to partially defray the cost of the start-up of a new service. Any necessary renovation of the property must be supervised by and is the responsibility of the aforementioned NPO, regardless of funding source. The property will be leased to a residential service provider who will provide care and supervision to the residents. The selected residential service provider as well as regional center staff will be available to the NPO for development team meetings and technical assistance regarding licensing requirements. Property ownership and management will be separate and distinct from the provision of services and supports. The NPO(s) will be required to acquire one or two single family homes, depending on selection, for adults with developmental disabilities who choose to live in a community care licensed facility. Each property must be located within the ELARC catchment area as indicated in the attached EXHIBIT B. Additional specifications for the prospective property are provided below: Property features: Private bedroom for each resident (no more than 4 residents) A den or second common area preferred Ample parking (off-street, preferred) for staff and visitors Neighborhood features: Nearby shopping and recreation activities, Public transportation, Quiet street, preferred Not allowable property features: Ancillary improvements, e.g., pools, barns, or other structures, except garage APPLICANT ELIGIBILITY The NPOs primary mission must be to acquire and manage affordable homes for the needs of individuals with special needs. For the purposes of these projects, the preferred NPO corporate structure is an IRS 501(c)(3) corporation that will own the property with an Organizational Clearance Certificate for the project from the California Board of Equalization. Only applicants who possess all qualifications as specified in the RFP and have acquired, constructed, renovated or rehabilitated property for the use of special needs populations for a minimum of three years will be considered. Proposals will be considered from affordable housing providers who provide development team members with documented experience to meet this minimum standard. Applicants who are incorporated as a non-profit housing organization must demonstrate their ability to acquire one or two single family homes for lease to a residential service provider(s). The goal for the NPO is to provide long term affordable housing to individuals with developmental disabilities. NPOs must submit the resumes of the development team, a summary of past projects, a narrative of proposed property ownership from acquisition to conversion to 3 Page 4 of 83

5 permanent financing; NPO organizational and financial documentation; an implementation and financing plan; and sample reporting format. The selected applicant will be required to provide a performance bond for all money advanced. The cost of the bond will be an acceptable start-up cost. If you are proposing an alternate to the performance bond, specify the performance assurances that you will be providing the regional center. Selected applicants are subject to funding source review and approval. APPLICANT INELIGIBILITY The following agencies or individuals are not eligible for housing development: a. The State of California, its officers, or its employees; b. A regional center, its employees, and their immediate family members; c. The area board members, its employees or their immediate family members; d. Any NPO with a conflict of interest in either board members or employee; e. Any applicant determined to be an excluded individual or entity as defined in Section (b) (1). PRELIMINARY ORIENTATION A mandatory orientation to this RFP and an opportunity to have questions answered will be held from 10:30 a.m. to 11:30 a.m., Tuesday, January 6, 2015, at Eastern Los Angeles Regional Center, Boardroom 1000 S. Fremont Ave., Alhambra, CA (626) Attendance at the orientation is required in order for the proposal to be accepted unless special arrangements are made and documented in writing prior to the orientation. Should you have any questions prior to the orientation, please contact Doris Weis at (626) SUBMISSION OF PROPOSAL Notice of Intent to Respond to Request for Proposal (EXHIBIT C) is due by 11:30 a.m. Thursday, January 8, The Notice of Intent form here enclosed as Exhibit C must be used and all questions and requests for information must be provided, including signature and date. Form DS1891 applicant/vendor disclosure statement must accompany Notice of Intent to Respond to Request for Proposals. Response to the Request for Proposals must be received by ELARC, no later than 2:00 p.m., Thursday, February 5, There will be no exception to this deadline unless approved in writing by regional center based on either a violent act of nature or arson, vandalism and/or theft of records and/or property by individuals other than the applicant. All interested applicants must submit an original and five copies of each proposal to 4 Page 5 of 83

6 the attention of Doris Weis, Community Services Specialist (Project Coordinator). By mail at: By delivery to: Eastern Los Angeles Regional Center Eastern Los Angeles Regional Center Doris Weis, Community Services Specialist Doris Weis, Community Services Specialist P.O. Box South Fremont Av, Building A-2 Alhambra, CA Alhambra, CA All inquiries regarding this proposal and technical assistance requests should be directed to Doris Weis at (626) Technical assistance is limited to information on the requirements for preparation of proposals. Applicants are expected to prepare their proposals themselves or retain someone to provide such assistance. TIMELINE Request for proposals announced... December 15, 2014 RFP available online... December 17, 2014 Orientation....10:30 a.m. January 6, 2014 Notice of Intent to Respond to Request for Proposals due... 11:30 a.m. January 8, 2014 Deadline for receipt of proposals... no later than 2:00 p.m. February 5, 2015 Evaluation & Selection of Proposals... on or before February 19, 2015 Interviews, if necessary... on or before February 26, 2015 ELARC Board of Directors Decision... on or before March 10, 2015 Notice of Selection... on or before March 17, 2015 Review of DDS regulations for EBSH and discussion of project details... before April 15, 2015 Contract negotiations complete... on or before April 15, 2015 Projects to start operation... the latter of CA budget finalized or conditional approval by DDS Monthly Reports due by the 15 th of each month... effective July 15, 2015 Property acquired... within 60 days of DDS approval Strict adherence to the above deadlines will be followed. PROPOSAL REVIEW AND SELECTION PROCESS Each proposal will undergo a preliminary screening. Late or incomplete applications will not be accepted for review and rating. Incomplete application means an application that does not include all information requested in this RFP. Proposals submitted after 2:00 p.m. on February 5, 2015 will not be accepted for consideration. No proposal will be returned. The Review & Selection Committee will be seated by ELARC. This Committee will review, score, rank and prioritize the proposals. Applicant s proposals may be rejected for inconsistency with state and federal guidelines, failure to follow instructions, incomplete documents, failure to submit required documents, and late submission. 5 Page 6 of 83

7 Acceptable proposals will be scored in the following areas: NPO organizational and financial documentation; Narrative proposal; Implementation plan; Project Budget. In addition to evaluation on merit of the proposal, applicants will be evaluated and selected based on previous performance (including the timely completion of projects, a history of cooperative work with the regional center or other funders, and track record consistent with established timelines for development). Preference will be given to plans and developments demonstrating leveraging of funds from grants, gifts and other like sources rather than, or in addition to, funds from long-term financing. All applicants are urged to design and develop their proposal to fully address each of the scoring criteria. The need for interviews with the highest ranking applicants will be determined by the regional center. The recommendation of the Review & Selection Committee shall be approved by the ELARC Executive Director and/or the ELARC board of directors, and is not subject to appeal. All applicants will receive notification of ELARC s decision regarding their proposal. The RFP does not commit ELARC to select any proposal and award any contract. Further note that applicant must continue to qualify with upcoming regulations in order to retain the grant award for the EBSH. CONTRACT TERMS The applicant selected for the CPP grant award will enter into an agreement (contract) with the ELARC. Among other provisions, the contract will be in compliance with the Guidelines for Purchasing and Developing Permanent Housing through the Regional Center Community Placement Plan for FY Requests and Amendments (Housing Guidelines AKA EXHIBIT A). The selected NPO shall submit invoices to ELARC for review. Within thirty (30) days of receipt of the invoice, the ELARC Project Coordinator shall determine, in collaboration with ELARC Fiscal Monitor, whose discretion shall be reasonably exercised, whether or not the services performed by the selected NPO are in accordance with the terms of the Agreement and Federal, State and local laws and regulations and whether or not the selected NPO is otherwise entitled to payment. The selected NPO shall be bound by the determination of the ELARC Project Coordinator of approval or disapproval of any invoice in accordance with the terms of the agreement. A copy of the executed long-term lease to the residential service provider must be provided to the ELARC project coordinator prior to reimbursement of final claim of the start-up funds. In addition, the final claim will not be reimbursed until the final reconciliation is received. CONTENT OF PROPOSAL The proposal must be typed on standard white paper and include a table of contents and page numbering. Use the following outline. For items that request conditional information, provide a 6 Page 7 of 83

8 statement whether or not it applies to the applicant in order to ensure that it has been addressed. I. APPLICANT INFORMATION (NPO Organizational, Development Team, Financial Documentation) a. The contact information (name, address, address and telephone number) of the proposed NPO applicant and whether applying as a non-profit corporation, a limited partnership, or a limited liability corporation. b. State the name of the author of the proposal. List any parties who participated in writing all or part of the proposal. Any proposal written for an applicant by a consultant or professional grant writer will demonstrate a commitment by the writer to provide ongoing technical assistance during the project implementation phase. c. Describe or provide materials that clarify the NPO s mission and development and management experience of the NPO, any developer retained by the NPO and other development team members. A roster of development team members is required. d. At a minimum the proposal should include names of partners, staff or consultants, if known, who will be involved in the implementation of the project if awarded; resumes; a summary of past projects; and a narrative of proposed property ownership from acquisition to conversion to permanent financing. e. List of references and/or letters of reference relevant to experience and other qualifications required to complete this or similar projects. Applicants should be aware that ELARC will contact reference and other sources to corroborate any of the information provided in the proposal. f. Specify any past history of activities which have had a serious negative impact upon development projects, tenants or residents including, but not limited to: financial losses (e.g., foreclosure), or serious investigation or citation under the California Administrative Code, the Penal Code or Regulations of the State of California, or the laws of other states, or the Federal Government. Any information withheld or omitted March result in disqualification of the proposal or termination of the contract. If there is no history as described in this paragraph, state so. g. Organizational Documentation i. Internal Revenue Service approval of 501(c)(3) status. ii. A current, within 120 days, Certificate of Status of Good Standing with the California Secretary of State must be received by the RC before executing a CPP contract with the selected NPO. Contracts must be executed prior to June 1, iii. Articles of Incorporation demonstrating that the organization s mission includes the development and management of housing for RC consumers. iv. By-laws of the NPO. v. A list of current officers and Board of Directors. vi. A corporate resolution authorizing the execution of documents by the designated signatory of the NPO must be received by the RC before executing a CPP contract with the selected NPO. 7 Page 8 of 83

9 vii. A summary of the history of development of housing for individuals who have a developmental disability or special needs. viii. An executed Conflict of Interest Statement. [see Appendix J in Exhibit A] h. Financial Documentation - ELARC will evaluate financial statements in order to determine the applicant's financial ability to cover start up costs and stability to meet the long term commitment to hold and manage the property. i. If your agency has not already provided, provide three (3) years of audited financial statements with the most recent audit an unqualified audit opinion completed by a Certified Public Accountant using accepted accounting practices. ii. For all agencies, provide current year-to-date financial statements and latest annual report for the NPO. II. Implementation Plan a. A narrative proposal of the project that includes the proposed property ownership structure. b. The plan must specify a process that ensures compliance with all state and local building requirements, including without limitation the regional center s receipt of verification that each project has received all applicable, required permits prior to the start of any demolition, construction, or renovation/rehabilitation. c. Include a description of whether you will be providing a performance or surety bond for all money advanced and the completion of the project. The cost of the bond will be an acceptable start-up cost. If you are proposing an alternate to the performance bond, specify the performance assurances that you will be providing the regional center. d. Include a schedule for development, i.e., a sequence of activities necessary to complete the project. This step-by-step action plan which includes measurable, time-limited activities toward the achievement of specific project tasks and achievement of the proposed outcome. The project objectives should be realistically achievable within the time frame. Timeline of project activities has to reflect a date for the properties to be acquired and leased to a service provider within 180 days of contract execution by all parties. The activities should cover each major step of the project and should include but not be limited to: i. Upon selection by the regional center the timeframe for providing a corporation resolution that authorizes the signatory to sign on behalf of, and obligate the NPO. ii. Provision of funding commitment letters iii. Provision of evidence of property site control iv. Loan closing and Property Acquisition v. Provision of evidence of property purchase, including an executed, recorded deed of trust and regulatory agreement vi. Provision of evidence of application to the County Tax Assessor vii. Provision of final sources and uses (budget) viii. Certificate of Occupancy (Notice of completion, if rehabilitation) ix. Executed, long-term lease agreement between NPO and service provider x. Executed, property management agreement 8 Page 9 of 83

10 xi. Evidence of property insurance e. Activities which may occur within days of contract execution by all parties i. Property tax exemption, if not provided sooner ii. Reconciled sources and uses of funds (budget) III. Proposed Sources and Uses (Project Budget) Allowable costs include pre-development costs, (i.e., escrow; due diligence costs; environmental impact report, if indicated; survey and soil analysis), acquisition costs (funds to option, purchase, or acquire property); development costs (architectural and engineering; permits and fees; appraisal cost; developer, legal, accounting, consultant, and project management fees, if necessary). a. Specify the start-up budget amount you propose to be awarded not to exceed $300,000 for acquisition of Project #3 and $200, for acquisition of Project #4 property. Additionally, specify the total start-up budget amount required which must show a three to one leveraging of awarded funds with hard (dollar) and/or soft (in-kind) commitments i.e., the CPP funds do not exceed 25 percent of the total cost of the project. b. A budget narrative describing how each budget line item was calculated is required to sufficiently define all terms and areas of the budget except the item for property modification. c. Include sources for leveraged funds, e.g., federal, state and county housing programs, private parties, banks and foundations. Priority will be given to plans and developments that demonstrate leveraging of funds from grants, gifts and other like sources rather than leveraging of funds from loans. d. Evidence of leveraged funds may include letters of commitment or memoranda of understanding from leveraged fund source(s) that identify a specific financial commitment to the proposed project (including contact name and phone number for each source). e. Outlines the terms of the loan and/or debt service (mortgage). If long term funding is a mortgage loan, include proposed loan terms. Mortgage loans must not exceed a 15-year term without prior funder approval. If you are asking for an exception to the 15-year term, please include a proposed alternative. f. General Expenses or developer fee should address specific minor expenses that cannot be classified in any other line item. g. Includes a fifteen (15) year pro forma budget that demonstrates the project s financial feasibility along with anticipated rent roll (lease payment) as follows: i. Anticipates income from all sources to be used to fund and operate the project to completion. ii. Accounts for required replacement or maintenance reserve funds. iii. Estimates total amount of debt service (e.g., mortgage payment), property taxes, property insurance, and property management expenses (if applicable). iv. Details the process and management of application for property tax exemption and payment of property taxes. v. Demonstrates ongoing pro forma of costs and lease terms that support financial sustainability. 9 Page 10 of 83

11 ATTACHMENTS EXHIBIT A. Guidelines for Purchasing and Developing Permanent Housing through the Regional Center Community Placement Plan for FY Requests and Amendments (Housing Guidelines) EXHIBIT B. Cities & Zip Codes for ELARC EXHIBIT C. Notice of Intent to Respond to RFP EXHIBIT D. Proposal Cover Sheet 10 Page 11 of 83

12 EXHIBIT A. Guidelines For FY Requests and Amendments January 2014 Page 12 of 83

13 Table of Contents Department of Developmental Services Community Placement Plan Housing Guidelines FY I. Introduction... 1 II. Authority. 2 III. Regional Center Requirements 3 IV. CPP Housing Proposal Contents. 4 A. Proposal Overview. 4 B. Budget Section 5 C. NPO Documents. 7 V. Housing Requirements A. Restrictive Covenants... 8 B. The DDS Deed of Trust 9 C. The DDS Profit Participation Agreement or Promissory Note. 10 D. Order of Filing. 10 E. Performance Bond. 11 F. Property Safety Standard. 11 G. Insurance Requirements 11 H. Requirement Regarding Lender Notices 11 I. Property Tax Exemption Requirement 12 J. Debt Service Pay Off. 12 VI. Allowable Costs 12 A. Acquisition 12 B. Renovation of NPO Owned Property.. 14 C. Ineligible Costs VII. Proposed Schedule of Development/Implementation Plan VIII. Project Status and Reporting A. Documentation 16 B. Reporting. 16 C. Performance Measurement.. 16 D. Reconciliation of Funds. 17 IX. Review of Proposal. 17 A. Initial Determination 17 B. Housing Proposal Review. 18 X. Housing Approval Process A. Conditional Approval.. 19 B. Acquisition Approval 19 Appendixes A CPP Restrictive Covenant B DDS Profit Participation Agreement C DDS Promissory Note D DDS Deed of Trust E Request for Notice (DDS form) F Request for Notice (Regional Center form) G Agreement to Provide Notice and Cure Rights H Required Proposal and Project Documents I Ownership Entity Documentation J NPO Conflict of Interest Statement K CPP Proposal Checklist Page 13 of 83

14 Department of Developmental Services Guidelines for Purchasing and Developing Permanent Housing NOTE: The Effective Date of these Housing Guidelines is July 1, These Housing Guidelines apply to all Housing Proposals submitted by a Regional Center to the Department after the Effective Date; and where an NPO will be the fee owner of a property purchased in part with CPP funds. I. Introduction The Department of Developmental Services (Department or DDS) Community Placement Plan (CPP) Housing Guidelines (Housing Guidelines) were created to achieve the development of safe, affordable and sustainable housing for individuals with a developmental disability. To protect the State of California s (State) interest and investment, the Department has modeled the housing program after the Department of Housing and Community Development s program requirements. Pursuant to these Housing Guidelines, a regional center (RC) may submit a Housing Proposal to the Department requesting approval to use CPP start-up funding (CPP funds) for the acquisition (purchase) of housing and the modification of the housing to meet the unique housing needs of individuals with a developmental disability. The RC s CPP Housing Proposal(s) must: Be consistent with the RC s authority to conduct resource development as described in Welfare and Institutions Code (WIC) Section and be submitted and approved through the CPP process. Be consistent with the Department issued FY CPP Guidelines (CPP Guidelines) released on December 23, 2013, and these Housing Guidelines. Demonstrate a contractual agreement between the RC and a nonprofit ownership-entity organization (NPO) that will own the property through an Agreement or Contract that includes, but is not limited to, the following: the tasks to be accomplished, who is responsible for those tasks, and an accountability by each entity for the timely development of the project. Demonstrate a separation of property ownership from the delivery of services and supports within the home (i.e., the NPO cannot be both the property owner and the service provider). Contain sufficient detail for the Department to determine the intended use of the requested funds. 1 P age Page 14 of 83

15 Demonstrate the restrictive use of the property, in perpetuity 1, for individuals with developmental disabilities eligible for California regional center services (RC consumers). Demonstrate compliance with State fiscal oversight, accountability and asset requirements. The Department may, by means it deems appropriate, determine the accuracy of the proposal, and may contact any entity named in the proposal, including funding sources, contractors, and other agencies for the purpose of clarifying the information provided in the proposal. The approval of RC proposals is contingent on the RC s current and future compliance with the Housing Guidelines and the RC s ability to promptly and directly provide the Department, as needed or as requested, current, complete and accurate information as specified in these Housing Guidelines. Further, by submitting a CPP Housing Proposal and accepting CPP funds, the RC agrees to submit to all reviews conducted by the Department, including examination and review of books, records, documents and files, in whatever form they exist, of the named NPO and its affiliate organizations, and to interviews with its principals, agents, and employees. II. Authority Development of permanent housing must adhere to resource development provisions pursuant to WIC Section , in which the development of community resources are allowed within a RC s approved CPP. CPP funding requests must adhere to the submission and approval process outlined in the FY CPP Guidelines, these Housing Guidelines, and all provisions contained in the RC contract with the Department. Approval and funding priority will be aligned with the priorities and goals in the CPP Guidelines. The Department supports collaborative proposals between two or more RCs to develop specialized resources to meet the statewide needs of individuals who have challenging service needs. Proposals for the development of community residential resources shall be for: Individuals residing in developmental centers (DC), mental health facilities ineligible for FFP, or out-of-state placements; Residential homes that offer specialized services for individuals with challenging service needs, e.g., Adult Residential Facilities for Persons with Special Health Care Needs; Delayed egress and secured perimeter homes that maximize community living options and serve as an appropriate alternative to referring individuals who have challenging service needs for admission to Fairview Developmental Center (FDC) due to an acute crisis, mental health facilities ineligible for FFP, and for out-of-state services; and 1 For purposes of these Housing Guidelines, in perpetuity is interchangeable with for 99 years. 2 P age Page 15 of 83

16 Projects approved to utilize CPP funds earmarked for strategic development to meet the residential needs of individuals who have challenging service needs, as outlined in the FY CPP Guidelines. III. Regional Center Requirements The Department uses CPP funds in collaboration with RCs to develop permanent housing through the Buy It Once model where NPOs purchase residential property that will be used exclusively by RC consumers in perpetuity. To ensure that homes purchased using CPP funds are always available for use by RC consumers, RCs and NPOs are required to fully comply with each of the requirements in these Housing Guidelines including, but not limited to, the following: The recordation of a restrictive covenant against the developed property as outlined in Section V(A) of these Housing Guidelines. [see also Appendix A] The DDS Profit Participation Agreement (see also Appendix B) or Promissory Note (see also Appendix C), acceptable to the Department, is completed and fully executed, as outlined in Section V(C) of these Housing Guidelines. The recordation of a Deed of Trust in favor of the Department as outlined in Section V(B) of these Housing Guidelines. [see also Appendix D] If the NPO is obtaining a secured loan, the recordation of Requests for Notice as outlined in Section V(H) of these Housing Guidelines (referenced under Section 2924b, Civil Code). [see also Appendixes E and F] If the NPO is obtaining a secured loan, the NPO s secured lender s execution of an Agreement to Provide Notice and Cure Rights, as outlined in Section V(H) of these Housing Guidelines. [see also Appendix G] Details of the provisions to be included in the agreement/contract between the NPO and RC and in the agreement/lease between the NPO and the RC service provider regarding the adjustment of the lease rate and the service provider reimbursement/service rate upon reduction or elimination of the debt service. [see also Section V(J) of these Housing Guidelines] Details of the provisions to be included in the lease between the NPO and the RC service provider. This includes, but is not limited to, the terms for funding short and long term maintenance and a replacement reserve for the replacement of capital improvements. Changes to the required documents and any future encumbrances against the property are not allowed without the prior written consent of the Department. Proper adherence to these requirements will ensure that the property will be properly maintained, in perpetuity, for use by RC consumers. 3 P age Page 16 of 83

17 IV. CPP Housing Proposal Contents A. Proposal Overview The proposal 2 shall include a detailed description that: i. Demonstrates that the NPO s 3 mission includes the development and management of safe, accessible, affordable and sustainable housing to meet the needs of RC consumers with challenging service needs, as specified in their Individual Program Plans. ii. iii. iv. Identifies the type of housing to be developed. The type of housing may include, but is not limited to, Adult Residential Facility, Residential Care Facility for the Elderly, Specialized Residential Facility, Adult Residential Facility for Persons with Special Health Care Needs, Family Home Agency, or units within a multifamily housing development 4 (five or more units in a condominium, apartment, or single story structure). Identifies the applicable NPO that will acquire ownership of the property. In instances where the Developer is different than the NPO, the Department may request additional information including, but not limited to, information that demonstrates the Developer s experience, financial strength and development ability. All documents required in Section IV(C) of these Housing Guidelines must be included in the proposal, or upon selection and approval by the Department of the NPO, prior to the acquisition of real property. If the RC has not selected an NPO at the time the proposal is submitted to the Department, the RC may describe the process that will be used to select an NPO or the pending Request for Proposal process. For further details, see Section IV(C)(v) of these Housing Guidelines. Demonstrates that the proposed property responds to the needs of RC consumers who are moving from developmental centers into the community, a mental health facility ineligible for FFP, out-of-state, and/or for RC consumers at risk of admission to FDC due to an acute crisis, a mental health facility ineligible for FFP, and/or out-of-state services consistent with the provisions of AB 1472 (Chapter 25, Statutes of 2012). v. Describes the neighborhood of the proposed property, the impact of the project on the surrounding community, and local resources for support and services, including day program and vocational services that are available for consumers residing in the proposed development. 2 Proposals and accompanying documents, once received by the Department, are subject to disclosure pursuant to the Public Records Act (California Government Code Section 6250 et seq.). 3 If an RC proposes to use a Limited Partnership or Limited Liability Company as the property owner, the RC should contact the Department to discuss requirements and request approval prior to proposal submission. 4 If an RC is interested in developing multifamily projects, the RC should contact their CPP Liaison for guidance. 4 P age Page 17 of 83

18 vi. vii. viii. ix. Describes the capacity of the NPO to expedite new development, any specialty services the home will provide, whether the proposal is for new construction or renovation, and parking considerations. Provides detailed financial information and audited financial statements of the NPO that demonstrate the ability and capacity of the NPO to secure long-term financing (e.g., letters of commitment, lending history, etc.) to fund the required percentage of costs associated with the acquisition, development and management of the housing. For additional requirements regarding audited financial statements of the NPO, refer to Section IV(C)(iii). Describes the RC and NPO s long-term plan for the NPO to maintain the property, which may include having a plan for maintenance and establishing a replacement reserve account. If such an account is to be used, the RC should include this in the projected fifteen (15) year pro forma operations budget. Demonstrates that property ownership and management will be separate and distinct from the provision of services and supports (i.e., the NPO cannot be both the property owner and the service provider). x. Describes a schedule for development (implementation plan), including project milestones. [see Appendix H] xi. Demonstrates how the NPO shall comply with all state and local building requirements, including the RC s verification that all projects have, or shall receive, all required permits prior to the start of any demolition, construction, or renovation. (This can be demonstrated through appropriate language in the agreement between the NPO and the RC adequate to the satisfaction of the Department.) B. Budget Section The proposal shall include a detailed budget that: i. Describes how the RC and the NPO will maintain accounting, financial, and other records related to the use of CPP funding. ii. Unless waived by the Department, demonstrates, a leverage ratio of a minimum of three dollars in leveraged funds to each one dollar in CPP start-up funds. For multifamily projects, the leverage ratio applies to, either the units to be occupied by RC consumers, or to the entire project. iii. Includes sources of funds. a) Priority will be given to plans and developments demonstrating leveraging of funds from grants, gifts and other like sources rather than, or in addition to, funds from long-term financing. 5 P age Page 18 of 83

19 b) Entities providing project funds may include, but are not limited to, federal, state and county housing programs, private parties, banks and foundations. c) Evidence of project funds may include letters of commitment or memoranda of understanding from leveraged fund source(s) that identify a specific financial commitment to the proposed project (including contact name and phone number for each source). iv. Outlines the terms of the loan(s) and/or debt service (mortgage). a) If long-term funding is a mortgage loan, includes proposed loan terms. b) Mortgage loans shall not exceed a 15-year term without Department approval. v. Includes a detailed Sources and Uses of Funds for the project. If the Sources and Uses of Funds are not available, the budget must describe the funds targeted for acquisition, administrative cost of the NPO (to include developer fees), pre-development cost, renovation and transition estimate. Sources and Uses will need to be updated at the following times: a) Upon the acquisition of the property (during escrow period); b) Upon approval of the renovation bid/budget; c) Upon any material project changes; d) At reconciliation of CPP funds upon completion of each project; and, e) At any time requested by the Department. vi. vii. Includes the projected cost for acquiring and/or renovating the property and the methodology for establishing the proposed developer fee(s) from all sources. The developer fee methodology must clearly describe the basis for calculating the fee(s) (e.g., flat fee, percentage of CPP funds, percentage of total project costs, etc.) or if it is separately calculated for acquisition, renovation or rehabilitation of new construction. The Department may request discussion with the RC regarding the methodology and administrative cost prior to approving the CPP proposal and/or the acquisition of a property. Addresses the proposed use of any excess CPP funds toward the completion of the proposed project or excess funds deposited into a replacement reserve account, and ensures that permanent financing and CPP funds are not utilized for the same cost/expense. Examples of excess CPP funds include funds that may be generated from funds (acquisition or renovation) that were not used for the project, permanent financing, closing costs, reimbursements to the developer, NPO, or RC for acquisition, pre-development or construction costs, or reimbursement due to tax exempt status. The purpose(s) for which excess funds of five thousand dollars ($5,000), or greater, will be used requires Department approval. Upon reconciliation of all funds, any unused balance of CPP funds must be returned to the Department within 120 days of the reconciliation of funds. 6 P age Page 19 of 83

20 viii. ix. Includes contract provisions between the RC and NPO that will require the NPO to return CPP funding to the RC and the Department for properties that will not be completed, projects that do not conform to the purpose of these Housing Guidelines, and/or projects that have unspent funds. a) Projects where CPP funds are used for renovation require a contract between the RC and the NPO and/or the service provider. The contract shall include a detailed plan and description for recoupment of CPP funds to the Department in the event that, for any reason whatsoever, the real property ceases to be used as housing for RC consumers; provided, however, a temporary cessation of use of the housing by RC consumers due to casualty or temporary condemnation not effected by the NPO shall not require the NPO to repay CPP funds. Includes a fifteen (15) year pro forma budget that demonstrates the project s financial feasibility along with anticipated rent roll (lease payment) as follows: a) Anticipates income from all sources to be used to fund and operate the project to completion. b) Accounts for required replacement or maintenance reserve funds. c) Estimates total amount of debt service (e.g., mortgage payment), property taxes, property insurance, and property management expenses (if applicable). d) Details the process and management of application for property tax exemption and payment of property taxes as required by the city, county or local municipality. e) Demonstrates ongoing pro forma of costs and lease terms that support financial sustainability. C. NPO Documents For NPOs, the RC shall submit with the proposal: i. A description of the development and management experience of the NPO, any person, agency, business, and/or organization retained by the NPO and other development team members (e.g., developer, architect, accountant, consultants, etc.). The proposal should include resumes, a description of the financial ability to complete the project, a summary of past projects, and a narrative of proposed property ownership from acquisition to conversion to permanent financing. ii. Required documents include, but are not limited to, the following: a) Internal Revenue Service approval of 501(c)(3) status. b) A current, within 120 days of proposal submission, Certificate of Status of Good Standing with the California Secretary of State. c) Articles of Incorporation demonstrating that the organization s mission includes the development and management of housing for RC consumers. d) By-laws of the NPO. 7 P age Page 20 of 83

21 e) A list of current officers and Board of Directors. f) A corporate resolution authorizing the execution of documents by the designated signatory of the NPO. g) A summary of the history of development of housing for individuals with a developmental disability or special needs. h) All required NPO documentation listed in Appendix I. i) An executed Conflict of Interest Statement. [see Appendix J] iii. Three (3) years of audited financial statements with the most recent audit being an unqualified audit opinion completed by a Certified Public Accountant using generally accepted accounting and auditing standards. The following is required for NPOs that have operated for less than three (3) years: a) For NPOs that have operated for at least one (1) year but less than two (2) years, the audit for the year of operation. b) For NPOs that have operated for two (2) years but less than three (3) years, audits for both years of operation with the most recent audit being an unqualified audit. To ensure the current fiscal viability of the NPO, the Department will consider qualified audits, based on the nature of the qualification, as long as the qualified audits are not for the most recent full year of operation. iv. Current year to date financial statements of the NPO. v. If an NPO has not been selected prior to the submission of the Housing Proposal, please outline the process for NPO selection. Upon selection of the NPO, the RC shall submit to the Department the above listed documents. The Department will not issue a final approval until the RC is in current contract with an NPO. There shall be no property acquisitions until final approval of the NPO by the Department. V. Housing Requirements A. Restrictive Covenants An approved project (property) shall have a recorded restrictive covenant entered into between the RC and NPO (owner of the property) and be filed/recorded on the property on the day the NPO becomes the fee owner of the property (close of escrow), subsequent to the recordation of a private or federal governmental agency lender s Deed of Trust (if any). The purpose of the restrictive covenant is to restrict the use of the property as housing for RC consumers in perpetuity. Accordingly, the restrictive covenants shall include a restriction on the use of the property as housing for RC consumers in perpetuity, from the date of the close of escrow on which the NPO becomes the fee owner of the property. Failure to file/record a Department approved restrictive covenant on current and prospective properties acquired with CPP funds shall impact future RC CPP project and fund approvals and/or recoupment of funds with respect to such RC and the 8 P age Page 21 of 83

22 applicable NPO. If (i) the RC has provided acquisition funding to an NPO under any prior fiscal year DDS Housing Guidelines, (ii) the NPO has used any portion of such funding to purchase one or more properties, and (iii) as of July 1, 2014, any of those properties are not encumbered by a restrictive covenant, or are encumbered by restrictive covenants that contain terms inconsistent with the terms of such prior fiscal year Housing Guidelines, then (iv) the RC must cause each of such properties to be encumbered by the form of restrictive covenant attached to these FY Housing Guidelines prior to the Department s approval of such RC s FY CPP Housing Proposal. The enclosed Restrictive Covenant (Appendix A) as approved by the Department should be utilized. RCs may submit a request for approval of an alternative document; however, it must contain content that is substantially similar to Appendix A. The alternative restrictive covenant proposed by any RC must be consistent with these Housing Guidelines that include, but are not limited to, the following: Default Notice: A requirement that the RC and the Department receive written notification from the NPO within five (5) days upon any default by the NPO under its loan with its lender. Consent Notification: A requirement that no real property encumbrance, sale, pledge, assignment, hypothecation, or conveyance of the property, or any of its interest therein, including the benefit of use of the property for RC consumers, occur without the prior written consent of the Department. Agreement to Provide Notice of Cure Rights: A requirement that the RC must ensure the NPO obtains an executed Agreement to Provide Notice and Cure Rights from the lender by not later than the close of escrow (in a form substantially similar to Appendix G). In the event of a breach or violation of the provisions of the restrictive covenant, the Department may give written notice to the NPO. If the breach or violation is not cured to the satisfaction of the Department within the time period specified in the notice, which shall not be less than twenty (20) days, the Department may declare a default and may seek legal and equitable remedies. B. The DDS Deed of Trust An approved project (property) shall have a Deed of Trust in favor of the Department (the DDS Deed of Trust ) signed by the NPO (as owner of the property) and filed for record concurrently with the Restrictive Covenant on the day the NPO becomes the fee owner of the property (e.g., on the close of escrow). If an NPO obtains a secured loan from a private or federal governmental agency lender to finance a portion of the purchase price, then the DDS Deed of Trust may be filed subsequent to the recording of such lender s deed of trust. The enclosed sample DDS Deed of Trust (Appendix D) is approved by the Department for use by RCs. An RC may submit a request for approval of an alternative format; however, it must contain content substantially similar to Appendix D. 9 P age Page 22 of 83