NSP Spring Cleaning. Documenting Compliance For Closeout. May 29, 2018

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U.S. Department of Housing and Urban Development NSP Spring Cleaning Documenting Compliance For Closeout May 29, 2018 Community Planning and Development

Today s Presenters - John Laswick, HUD - Njeri Santana-Carter, HUD - Lawrence Reyes, HUD - Marilee Hansen, HUD - Jennifer Alpha, TDA - Sandy Patel, TDA U.S. Department of Housing and Urban Development Community Planning and Development 2

AGENDA Monitoring Common Findings Documentation Why it s important File Management/Example of Documentation Needed to Support NSP Activities Record Retention DRGR Clean up and Introduction to Report U.S. Department of Housing and Urban Development Community Planning and Development 3

What Is Monitoring & Why Is It Important Monitoring is the systematic process of collecting, analyzing, and using information to track a grantee s progress toward reaching its program objectives. Monitoring helps HUD field staff to: Stay fully informed concerning participant compliance with program requirements. Be aware of the extent to which technical assistance is needed. Detect fraud, waste, and mismanagement or situations with potential for such abuse. U.S. Department of Housing and Urban Development Community Planning and Development 4

The Role of Monitoring Monitoring focuses on critical functions and/or areas of concern: Program Management Financial Management Sub-grantee management Record-keeping Reporting U.S. Department of Housing and Urban Development Community Planning and Development 5

Types of Monitoring There are different levels, types, and areas of monitoring. They include: Limited or in-depth Remote or on-site Program/technical area-specific Grant-specific Project-specific U.S. Department of Housing and Urban Development Community Planning and Development 6

Common Findings Activities Don t Meeting National Objective Inadequate Documentation to Support Disbursements Inadequate Policies and Procedure Improper Affordability Restrictions Ineligible Costs Inadequate Oversight of Subrecipients and/or Developers U.S. Department of Housing and Urban Development Community Planning and Development 7

Documentation Why It s Important Records must be maintained and available for review upon request (24 CFR 570.506). They must be: Complete; Accurate; and Orderly Good documentation is necessary to close the grant This Phoo by Unknown Author is licensed under CC BY-NC-SA U.S. Department of Housing and Urban Development Community Planning and Development 8

Impacts for NOT Documenting Employees must redirect their time and energy from program delivery to locate and/or produce the requested documentation. If documentation can not be produced the grantee may have to reimburse its program using non-federal funds.

Causes of Not Documenting Grantees and subrecipients lack an understanding on what documents are required to be maintained. No written policies and/or procedures on documentation and file management Lack of quality review before files are sent to storage and/or when transaction has been completed No clarification of the level of detail needed to satisfy grantors or auditors

File Organization Templates Checklists developed for each kind of file to be retained for NSP The checklists cover the life-cycle of a typical NSP housing project Checklist can be modified by the grantee to fit their program Source: NSP File Management System Template

General Project Files Acquisition Files Pre-Construction Files Construction Files Homebuyer & Renter Disposition Files Major Files Grantee s NSP Program Files Demolition Land Bank

How to Adequately Document to Prevent Monitoring Finding U.S. Department of Housing and Urban Development Community Planning and Development 13

General Project Files (Example) 1. Developer/Subrecipient Applications 2. Applicable NSP Agreements - developer 3. Applicable NSP Agreements - subrecipient 4. NSP Action Plan & Amendments 5. NSP Target Area Documentation 6. Tier I Environmental review record/clearance (RROF/FONSI) 8. Proof of citizen comments (ads, etc.) 9. HUD Grant agreement 11. Financials records (ledgers, etc.) 12. National Objective documentation 13. HUD monitoring reports and responses 14. Housing rehabilitation standards 15. NSP policies and procedures 16. Developer fee/activity delivery agreement 17. Section 3 procedures, reports, and documentation 19. Monitoring plan and risk analysis 20. Subrecipient monitoring visits & reports 21. For each rental project, new renter info provided annually and checked for income eligibility. 22. For each homeownership project, annual occupancy certification homestead records search, mailed occupancy certification, site visit U.S. Department of Housing and Urban Development Community Planning and Development 14

Acquisition File (Example) 1. Proof that property is in NSP target area 2. Site specific environmental review checklist 3. Evidence that property is abandoned or foreclosed (copy of deed, delinquency letter or other document) 4. If foreclosed, seller certification RE: tenant protections, if applicable 5. If vacant, signed & dated inspection report indicating vacancy status 6. Purchase Agreement Addendum/contingencies (subject to 1% discount if foreclosed, Environmental Review, seller certification, financing) 7. Appraisal (NSP compliant), 60 days from closing 8. Proof of 1% discount from original appraisal final within 60 days of final offer (update if needed) 9. HUD 1 settlement statement (executed copy) 10. Recorded mortgage & note in grantee or subgrantee's favor 11. Copy of Hazard & Property liability insurance 12. Inspection report, if rehabilitation 13. Work write up and specifications 14. Preliminary total development budget 15. Long term monitoring plan 16. Title insurance U.S. Department of Housing and Urban Development Community Planning and Development 15

Construction File (Example) 1. Draw Request approval/disapproval with required corrections 2. Inspection Report with approval/disapproval with required corrections 3. Change Order & justification with approval/disapproval prior to work being done 4. Cost reasonableness review of change orders 5. Copy of permits & onsite notices 6. Asbestos & lead clearance forms 7. Payment tracking form 8. Final walk through inspection & punch list 9. Proof of punch list completion 10. Certificate of Occupancy 11. Proof of Final payment of 12 retainage. Construction budget 13 reconciliation. Cost eligibility review 15. After photos U.S. Department of Housing and Urban Development Community Planning and Development 16

Homeownership/Rental File (Example) 1. Homebuyer application 2. Documentation of homeownership counseling (8 hours minimum at HUD approved agency) 3. Accepted sales contract lesser of TDC & appraisal 4. Maximum sales price calculation form 5. Copy of first mortgage lender appraisal 6. Income documentation for buyer and signed income certification form 7. Income eligibility, certification by grantee staff & date determined 8. For buyer subsidy calculation - recapture or resale approach form 9. Credit report 10. Good faith estimate 11. First mortgage approval/loan commitment letter 12. Review of mortgage terms and action taken 13. Executed NSP homebuyer mortgage 14. HUD 1 settlement statement (proof of review & executed copy) 15. Program income calculation, repayment and reporting, as applicable 16. Copy of executed restrictive covenant with affordability period Rental 1. Tenant Application 2. Income documentation for renter and signed income certification form 3. If Section 8 proof of certificate and family paying 30% of income U.S. Department of Housing and Urban Development Community Planning and Development 17

Land Banking/Demolition File (Example) Land Banking 1. Closing Docs (including HUD-1, Purchase and Sales Agreement, and Appraisal 2. Land Bank Procedures Manual including Dispoisiton Policy 3. Property Inventory and Land Bank Maintence Agreement 4. Memorandum of Understanding Between NSP Grantee and Land Bank Authority Demolition 1. Proof that Property is in NSP target area 2. Site Specific Environmental Review checklist 3. Blight Certification Letter 4. Total Cost Estimate for Demo Per Parcel 5. Before and/or After photos 6. Acquisition Documentation (if apporiate) 7. Approved HUD Demo Waiver If More Than 10% of NSP funds Was Used U.S. Department of Housing and Urban Development Community Planning and Development 18

Records Retention - CDBG Records are to be retained for 5 years from the date of submission of the grantee s CAPER in which the specific activity is reported for the last time, unless there is litigation, claims, audit, negotiation, or other actions involving the records, which has started before expiration of the 4-year period. In such cases, the records must be retained until completion of the action and resolution of all issues which arise from it or the end of the regular 4-year period, whichever is longer. U.S. Department of Housing and Urban Development Community Planning and Development 19

Records Retention - HOME Rental housing records: General records 5 years after the close of the program Tenant income, rents, and inspection reports most recent 5 years and until 5 years after the end of the affordability period Homeownership records: 5 years after project completion Resale/recaptures 5 years after the end of the affordability period TBRA: 5 years after the assistance ends Agreements loan, development, regulatory, etc. 5 years after the end of the affordability period U.S. Department of Housing and Urban Development Community Planning and Development 20

Record Retention - NSP 01 02 03 Records retention requirements vary (24 CFR 570.506, 42 USC 12707 a(4) and in Community Development Block Grant Guide to National Objectives) It is recommended that all records be retained for 5 years after closeout For real estate transactions records must be retained until the end of the affordability period U.S. Department of Housing and Urban Development Community Planning and Development 21

DRGR Cleanup Reports Purpose: Assist grantees and CPD Representatives in reviewing Action Plans and Quarterly Performance Reports Identify elements in DRGR that directly relate to reporting priorities NSP reporting priorities: Meeting National Objectives Accurate & complete financial reporting Precise locations for all NSP treated properties U.S. Department of Housing and Urban Development Community Planning and Development 22

DRGR Cleanup Reports (Con t) Identifies errors that only pertain to the identified reporting priorities Other sections could be improved but they are nice to haves and not required Provides for consistent reporting Allows grantees and CPD Representatives to work together resolving reporting issues Pinpoints required data errors U.S. Department of Housing and Urban Development Community Planning and Development 23

DRGR Cleanup Reports (Con t) Two reports Financial Performance 10 rules for each report which identify specific data points that must in the report and where to correctly report it Down load from DRGR/Micro Strategy in Excel Hide columns not needed Any cell that is red, identifies an error to be corrected before the report can be approved U.S. Department of Housing and Urban Development Community Planning and Development 24

DRGR Cleanup Reports (Con t) If all activities funded with grant funds (line of credit) are: Marked complete in the Action Plan and completion dates are reported in the QPR National objectives have been met Addresses and affordability periods documented in DRGR Green measures documented for NSP2 and 3 No red boxes in either report QPR can be considered final U.S. Department of Housing and Urban Development Community Planning and Development 25

DRGR Cleanup Reports (Con t) Each report has a matrix which identifies: Criteria Criteria Level (Action Plan or QPR) Condition (what is in DRGR) Grantee action needed HUD action needed U.S. Department of Housing and Urban Development Community Planning and Development 26

DRGR Cleanup Reports - Performance U.S. Department of Housing and Urban Development Community Planning and Development 27

DRGR Cleanup Report - Performance U.S. Department of Housing and Urban Development Community Planning and Development 28

DRGR Cleanup Report - Performance U.S. Department of Housing and Urban Development Community Planning and Development 29

DRGR Cleanup Report - Financial U.S. Department of Housing and Urban Development Community Planning and Development 30

DRGR Cleanup Report - Financial U.S. Department of Housing and Urban Development Community Planning and Development 31

DRGR Cleanup Report - Financial U.S. Department of Housing and Urban Development Community Planning and Development 32

Resources NSP File Management System Template https://www.hudexchange.info/resource/3842/nsp-file-managementsystem-template/ OIG-CPD Integrity Bulletins: Life-cycle of a grant; Implementing five key internal controls https://www.hudexchange.info/resource/5065/hudintegrity-bulletins/ Long Term Rental Oversight https://www.hudexchange.info/course- content/nsp-webinar-series-long-term-rental-oversight/nsp-webinar- Long-Term-Rental-Oversight-Part-I-Presentation.pdf NSP Sample Land Bank Maintenance Agreement https://www.hudexchange.info/resources/documents/samplelbmaintenan cecontracts.doc U.S. Department of Housing and Urban Development Community Planning and Development 33

Resources (cont.) Sample Memorandum of Understanding Between NSP Grantees and Lank Bank Authority https://www.hudexchange.info/resources/documents/landbankmou.doc HUD Exchange https://www.hudexchange.info/ CPD Monitoring Handbook https://www.hud.gov/program_offices/administration/hudclips/handbooks/ cpd/6509.2 DRGR Cleanup Report Guidance to be uploaded to HUD Exchange (look for List Serve announcement soon) DRGR Cleanup Reports to be unloaded to HUD Exchange (look for List Serve announcement soon) U.S. Department of Housing and Urban Development Community Planning and Development 34

QUESTIONS? U.S. Department of Housing and Urban Development Community Planning and Development 35

Please complete our survey at the end of the webinar! U.S. Department of Housing and Urban Development Community Planning and Development 36