UNIFIED FUNDING 2017 QUESTIONS AND ANSWERS

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1 UNIFIED FUNDING 2017 QUESTIONS AND ANSWERS Project Financing: Q1: Are HDC bond financed projects eligible for other sources besides HWF if they are not applied for in conjunction with HWF? Is HWF the sole funding program available to HDC bond financed projects through the RFP? A: Except for HWF, Unified Funding resources are not available for 4% LIHC/tax exempt bond financed projects. Q2: Can an HCR state-designated boost in eligible basis be utilized for tax-exempt bond financed projects receiving 4% LIHC financing? A: No, pursuant to Section 42 of the Internal Revenue Code, the stated designated basis boost is not available for 4% LIHC credit projects. It should also be noted that 4% LIHC awards/allocations are not available under this RFP, even for projects requesting Homes for Working Families financing in which NYC HPD will serve as the 4% LIHC allocation agency for NYC HDC-financed bond projects. Developer Fee: Q1: For the minimum developer fee deferral requirement, this requirement is imposed at construction financing closing as opposed to at 8609? If the required amount is deferred at construction financing closing with excess cash flow above $35 pu/pm, the deferred amount can later be reduced if there are cost savings? A: Yes, this requirement is imposed at the time of construction financing closing. No, the minimum deferred amount may not be reduced if there are cost savings, or, if additional resources are brought into the project. Any deferred fee above the minimum, which a developer choses to defer, may be paid down with cost savings or additional resources.

2 Early Award: Q1: What should an applicant submitting an Early Award project provide to meet the title report submission requirement, if the land is currently owned by a municipality? A: Provide a title report for the current owner. Q2: ESSHI applications were due in July and they required a minimum of 30% of units targeted to ESSHI eligible populations. The Unified Funding RFP requires ESSHI Early Award applications to have a minimum of 50% of the units targeted to ESSHI eligible populations. Will HCR reduce the percentage to 30% for Early Award applicants? A: No. Early Award applicants applying under the ESSHI Early Award State Housing Goal must propose at least 50% of the project s total units are targeted to an ESSHI eligible population. Housing Opportunity: Q1: For Housing Opportunity projects, is the requirement to have at least 2 bedrooms on average? A: Yes. For example, a project could consist of 10 one-bedroom units, 30 twobedroom units, 20 three-bedroom units which would average 2.16 bedrooms and meet the Housing Opportunity standard. Q2: Where can we find the list of schools for the Housing Opportunity projects? A: The Agency has identified census tracts with poverty rates of less than 10% that have been linked to High and Moderate Proficiency School Districts based on the New York State Math and English Language Arts test scores for grades 3 through 8 in the school year. The list of census tracts can be found in the UF 2017 Reference Materials: Reference-Materials.pdf Architecture & Engineering: Q1: Are there changes in the maximum unit sizes this year? A: No.

3 Q2: In the Enterprise Green Communities criteria, the following language was added to the RFP this year: with addenda adapted by NYS. What is the addenda and can that be distributed now? A: The addenda referenced above are part of both the State and New York City Energy Codes. Therefore, this provision in the RFP should read with addenda adapted by NYS or NYC. Q3: Is it possible to get a waiver for the 25% common area limit for supportive housing projects requiring more space for program space, wheelchair clearance, etc.? A: Residential shared common space must be less than 25% of the total residential space. Projects with the residential common space exceeding the above limits are subject to the waiver process detailed in the Design Handbook. Waiver requests for increases above the maximum allowable percentage of shared common space shall show proof of sufficient funding for development of the excess space. In addition, the waiver must document that the project operations can support the excess common space within an acceptable rent and building operation plan. Q4: Will HCR waive the construction cost threshold requirements for Passive House projects? A: No. All UF 2017 projects will be evaluated under the Cost Consideration process detailed in Section VI of the UF 2017 RFP. Q5: Will cost threshold requirements be waived for high energy performance costs? A: No. All UF 2017 projects will be evaluated under the Cost Consideration process detailed in Section VI of the UF 2017 RFP. Underwriting: Q1: Should NYSERDA funds be shown in the development budget if there is no commitment for the funds available at the time of application submission? A: Yes, it should be shown as a source of funds. A letter from the developer committing to defer developer fee to cover the NYSERDA funds, in the event they are not available, should be provided.

4 Q2: Is there an operating budget boilerplate or sample that can be used as a reference? A: An excel version of the operating proforma is available on our website. This is a required exhibit for TA submission requests. See Section VII of the UF 2017 RFP for more information. Q3: Does the 1/3 maximum deferred LIHC developer fee and maximum $35 pu/pm cash flow allowance requirements conflict? A: They could potentially; however, it is unlikely given that we are only requiring cash flow above the $35 pu/pm to be contributed. If the cumulative fifteen-year cash flow over the $35 pu/pm limit resulted in a required developer fee deferral of more than 1/3 of the budgeted developer fee, HCR will allow this. MPP: Q1: If the acquisition cost is de minim is, is there an appraisal requirement? A: In the interest of minimizing project costs, an appraisal will not be required if the property is being transferred voluntarily. Q2: The CPM indicates that a market study is required when there are 15 or more units, or if LIHC is involved. In this case, there are 12 units and no LIHC. Further, this is already in the HCR portfolio and the issue with this property has been one of ownership and maintenance, not of community demand. Is there a market study requirement? A: There is no comprehensive market study required in non-lihc projects with less than 15 units. Q3: Can the requirement for a Phase I ESA be waived? A local SEQR is not required for the work being contemplated. The MPP funding is intended to stabilize the structure, not change the footprint or occupancy sizes in any way. A: A Phase I ESA is required for MPP funds. Q4: For a project with existing HCR debt, which will remain in the project and be subordinate to the new MPP money, upon acquisition, will the accrued interest be transferred to the new owner? A: Yes, accrued interest on HCR debt cannot be forgiven.

5 Q5: Can PBV s be requested with MPP financing? A: Yes. Q6: Are outstanding interest and penalties that have accrued over the years eligible costs for the MPP Program? A: Yes, however, applicants should bear in mind that 90% of project costs must be directly related to physical improvements. Q7: Can MPP funds be used for construction financing? A: Yes. MIHP: Q1: Under the MIHP priorities, one priority is that at least 25% of the units are affordable above 90% AMI up to 130% AMI. For a project in a QCT or transitional neighborhood with the 20% marketing band, does a unit with rent at 84% AMI and affordability up to 104% AMI meet that requirement, or does the rent need to be above 90% AMI? A: Yes, these units meet that requirement if they are targeted to households over 90% AMI. Q2: Can MIHP be used with SLIHC? A: Yes, however, in areas with market conditions that can support conventional financing or when MIHP is combined with other available financing sources, lower per unit MIHP subsidies will be expected. Applications will be carefully reviewed to ensure that MIHP units are not over-subsidized. Q3: Can a project proposing MIHP financing propose to include Project Based Vouchers (PBV) from NYC HPD? A: Yes, however, the PBV s may only be used to subsidize PBV eligible units serving households below 30% or 50% AMI. Q4: How does HCR determine if a neighborhood is a transitional neighborhood? A: Applicants should schedule a TA session well in advance of the application deadline to discuss whether the project is located in a transitional neighborhood. They should bring census tract data and any other relevant data to the TA session

6 to demonstrate to HCR why they believe that the neighborhood qualifies as transitional. An agency determination will be made quickly to allow applicants to make any necessary changes to the project. CIF: Q1: Under CIF eligible uses, the RFP says Financing is only available for sitespecific multi-family rental housing that will have first mortgages financed by taxexempt or taxable bonds issued by HFA, or as a stand-alone resource for projects without LIHC or bonds. Is this only referencing rehab projects and not the nonresidential (retail/community facility) projects? A: The above statement applies only to residential rehabilitation projects. Q2: Under CIF Regulatory Agreement requirements, it says a provision will be made requiring HCR approval of proposed non-residential uses of CIF-financed spaces. If a developer signs a master lease guaranteeing the rents, is that enough for HCR to approve a non-residential use? A: The provision of a master lease will not result in HCR s approval of a nonresidential use. HCR is interested in non-residential uses that are supportive of tenants and the surrounding neighborhoods. Q3: Can CIF be combined with HWF? A: No. SHOP: Q1: Can you apply for SHOP with 4% credits? A: Not through the Unified Funding process. SHOP is available for use with 4% credits through the HFA Open Window RFP. The HFA Open Window RFP can be found at: Q2: If OPWDD commits to service and rental subsidy, as well as 50% of the TDC of the OPWDD supported units, which are 30% of the project s dwelling units, could the applicant request SHOP subsidy of up to $60,000 per non-supportive housing unit (up to 60% AMI)?

7 A: Yes, the non-supportive unit would be eligible for up to $110,000 in NYC, Westchester County and Long Island/$60,000 rest of state in SHOP funds. Q3: For OPWDD supportive housing units utilizing SHOP funds, assuming a total development cost of $240,000 per dwelling unit with an OPWDD capital subsidy per unit of $120,00, could SHOP cover $85,000 of the remaining $120,000 per unit development costs? A: Yes. However, as per the RFP SHOP term sheet, Projects securing resources from HHAP, HPD or other agencies for supportive housing units are not expected to request the maximum per supportive unit awards under this program. The maximum per supportive unit awards are expected for projects unable to secure leveraged resources and/or for projects where prevailing wages are required. HWF: Q1: Are there any other programs besides HWF that can be used with 4% LIHC? A: Except for HWF, Unified Funding resources are not available for 4% LIHC/tax exempt bond financed projects. Q2: For HWF, does the per unit cap apply to all units or only those below 60% AMI? A: HWF may only fund units affordable at or below 60% AMI; the per unit cap applies to the 60% AMI units proposed. Special Needs: Q1: For special needs/supportive units, does there have to be an award of government services and operating funds? For example, if a non-profit works with people who are homeless and recently released from incarceration but who are working and can pay their own rent and the non-profit has funding to provide services, is that eligible? A: The project described above is eligible under the RFP for funding in the general application pool. To be considered for the LIHC supportive housing set-aside, the project must meet the QAP definition of supportive housing including a funding plan in place or the identification of a plan for funding of appropriate services, the provision for an ongoing rental subsidy or other form of subsidy which will be available to ensure that rents paid by the targeted population remain affordable

8 and a firm commitment for capital financing, which may include long term debt service financing, from a governmental agency serving the proposed target population and/or have a commitment of service and operating funding from a governmental agency serving the proposed target population. Q2: Can you combine ESSHI, NY/NY III and/or OMH commitments to achieve the 50% capital and operating subsidy requirement for Early Award Supportive Housing Goals? A: Yes, however, all agencies involved in the project must acknowledge the other populations being proposed in the project and agree to the population and unit mix being proposed. Technical Assistance: Q1: How soon can you request Technical Assistance? A: Technical Assistance may be requested as soon as possible and in accordance with Section VII. of the UF 2017 RFP. General: Q1: When are regular round decisions anticipated to be made? A: Regular round awards are anticipated in April Q2: Should developers submit applications for both 4% and 9% credits? A: Developers cannot use both 4% and 9% credit in the same project. However, HCR encourages all prospective applicants to consider whether 4% credits offers a viable alternative for financing. Applicants considering whether to proceed as a 4% or 9% project should contact the appropriate Development Director identified in the Section VII of the UF 2017 RFP. Q3: Will an application fail cost effectiveness scoring if Davis Bacon wages are required? A: Not necessarily. The cost effectiveness scoring criterion awards points to proposed projects based on a comparison of costs to other projects proposed in the same cost region.

9 Q4: How is project readiness assessed? A: Per the NYS 9% LIHC Qualified Allocation Plan, project readiness is scored on the extent the application demonstrates the likelihood of a construction closing in the shortest possible timeframe based upon an assessment of the status of financing commitments and whether the project is supported by the implementation of significant measures including but not limited to infrastructure improvements, real property tax relief and rezoning. Q5: Will NYC certified M/WBE s be recognized by the State in the scoring of applications? A: Only if the firm certified as a NYC M/WBE is also certified as a NYS certified M/WBE. Q6: How is cost effectiveness threshold determined? A: Per Section VI. of the UF 2017 RFP, in scoring Cost Effectiveness and identifying High Cost Projects, HCR will use three cost measures: Total Residential Project Cost per Gross Square Foot of Residential Space, including common areas (Square Footage used for this calculation is all space within residential units plus all space within residential common areas up to, but not exceeding the HCR design standards limit of 25% of the total, or 35% if a waiver to exceed that 25% limit has been requested and granted prior to application); Total Residential Project Cost per Bedroom; and, Total Residential Project Cost per Residential Unit. For scoring purposes, HCR will award points to projects with costs at or below the median for all projects submitted during the round within the same cost region. Q7: Are there any special requirements for a project that seeks to place age requirements on some or all units? A: Developers seeking HCR funding for a housing development that intends to restrict tenancy based on age shall provide HCR with proof it has obtained an exemption from the New York State Division of Human Rights ( DHR ) in accordance with N.Y. Exec. Law 296-2a(e). Verification that DHR has granted this waiver may be a condition precedent to the construction loan closing. Examples

10 of projects that must comply with this requirement include, but are not limited to senior developments for individuals who are 62 and older or who are 55 and older, units for frail elderly populations, and developments subject to New York City zoning rules for affordable independent residences for seniors ( AIRS ).