Request for Proposals Wake County Affordable Housing Development Program for Tax Credit Developments

2015 Request for Proposals Wake County Affordable Housing Development Program for Tax Credit Developments 1) STATEMENT OF PURPOSE AND PROGRAM SUMMARY Wake County s Department of Housing and Community Revitalization announces the availability of funds under the Affordable Housing Development Program to support the development of affordable housing through use of Low Income Housing Tax Credits (LIHTC). The County seeks qualified developers to submit proposals for the rehabilitation or new construction of multifamily rental projects (including single room occupancy, or SROs) that contain units affordable to families, individuals, and the elderly earning annual incomes at or below 40% of the area median income for 9% LIHTC projects, and incomes at or below 50% of the area median income for 4% LIHTC projects. Funds are available through the Wake County Capital Improvements Plan (CIP), Home Investment Partnership Program (HOME), and the Housing Opportunities for Persons with AIDS (HOPWA) program. County funding is contingent upon the approval of the proposed development by the Wake County Board of Commissioners. Funds are available to for-profit and non-profit developers, or sponsors of rental housing, in the form of loans for permanent financing. Construction loans for site acquisition and/or to cover the financing gap for site improvements and rehabilitation costs will also be considered if specifically requested at the time of application. Wake County has approximately $3,000,000 of funding available in 2018. Developments located within Wake County, including the city limits of Raleigh, are eligible for County funding. Applicants to the Wake County Affordable Housing Development Program are required to submit a copy of the LIHTC application submitted to the North Carolina Housing Finance Agency (NCHFA), in addition to other items listed in the enclosed application checklist. The Wake County Department of Housing and Community Revitalization will give preference to proposals with the following program characteristics: 9% LIHTC projects: should offer a portion of total units to individuals or households earning at or below 40% of the area median income (AMI) i.e. less than $32,080 for a family of four (refer to Attachment 1 for area median incomes in the Raleigh-Cary MSA), or; Wake County Affordable Housing Development Program RFP - 1

4% LIHTC projects: should offer a portion of total units to individuals or households earning at or below 50% AMI i.e. less than $40,100 for a family of four (refer to Attachment 1 for area median incomes for the Raleigh-Cary MSA.). All awards are contingent upon approval by the Wake County Board of Commissioners and funding selection by the North Carolina Housing Finance Agency. In order to distribute affordable housing throughout all of Wake County, the County will prioritize funding commitments to developments within municipalities that contain less than the countywide average percentage of subsidized housing (4.2% of total units). These municipalities are: Apex Cary Holly Springs Rolesville Morrisville Any questions regarding Wake County funds should be addressed to Kelly Baraldi at 919-856- 6318 or Kelly.Baraldi@wakegov.com. 2) APPLICATION DEADLINE AND SCHEDULE January 15 to February 9: Staff are available for questions and technical assistance with applications. Please contact Kelly Baraldi at 856-6318 for County assistance. February 9: Deadline for receipt of 9% LIHTC applications by Wake County. All 9% applications must be received in the Housing & Community Revitalization office by 4:00pm February 9. 4% LIHTC applications will be accepted on a rolling basis. February 9 to March 23: Staff evaluations of applications (incomplete applications will not be considered). March 23: Site scores become available from the NCHFA for tax credit project applicants. May 9: Funding recommendations taken to the Wake County Board of Commissioners. August: Notification of Tax Credit Awards from NCHFA and Wake County. NOTE: Dates subject to revision. 3) ELIGIBLE PROJECTS All projects must meet the following minimum requirements to be considered for funding: a) Include the construction of new units or the rehabilitation of existing units, including the conversion of existing units to single room occupancy (SRO) or efficiency units. b) The property must meet minimum Wake County property standards and all applicable building codes upon completion of construction or rehabilitation. Higher scores will be given to projects that commit to meeting Energy Star requirements or better (third party verification is required upon completion of construction/rehabilitation). Wake County Affordable Housing Development Program RFP - 2

c) Project must contain at least five (5) assisted rental units. A more detailed description of what constitutes an assisted rental unit can be found in section 7. 2(f) of this RFP. Applicants must submit a detailed proposal outlining how supportive services will be provided to residents requiring assistance (see application checklist). d) All projects requesting funding must be located within Wake County; preference will be given to projects located in the five priority municipalities highlighted above: Apex, Cary, Holly Springs, Rolesville, and Morrisville. e) Existing properties should be vacant, presently occupied by low-income families that meet program income requirements, or if resident relocation is required, projects must incorporate relocation expenses in the project application development budget. (NOTE: Tenants cannot be asked to relocate in anticipation of applying for County funds.) f) Applicants must have secured site control at the time of application. Staff will review applications that are in the re-zoning process; however, staff will not recommend an applicant for Board of Commissioner approval if the site is not properly zoned for its intended or proposed use. Zoning must be in place by 9:00 am on May 2, 2018. g) NCHFA QAP Neighborhood Characteristics requirements will also be considered in evaluation of each project site. h) If the applicant requests HOPWA funding, project must adhere to eligibility requirements as outlined under the Federal HOPWA program, targeting housing units for low-income persons, and their families, that are medically diagnosed with HIV/AIDS. 4) RENT AND INCOME RESTRICTIONS All units are subject to the following income and rent restrictions for 30 years (the extended use period for any low-income housing tax credit project) or so long as Wake County s loan is outstanding, whichever is greater: a) All income restrictions as required in NCHFA s Low Income Housing Tax Credit Qualified Allocation Plan (QAP) targeting households at or below 60% of area median income (AMI). b) 9% LIHTC projects: should offer a portion of project units to individuals or households earning at or below 40% of the area median income (AMI) i.e. less than $32,080 for a family of four, or; c) 4% LIHTC projects: should offer a portion of total units to individuals or households earning at or below 50% AMI i.e. less than $40,100 for a family of four. d) If the project is HOME-funded, at least 20% of the units must be set-aside for households at or below 50% of the area median income (refer to Attachment 1 for maximum HOME program rents). If HOME funds are combined with federal Low-Income Housing Tax Credits, additional requirements may apply per the NCHFA application. e) Every unit is subject to maximum rent limits designed to help make rent affordable to low-income households. If the project is HOME-funded, rents must be no more than the HOME Program rent limits (less tenant-paid utilities) OR the market rent of comparable housing, whichever is less. Refer to Attachment 1 for maximum HOME program rents. f) Annual monitoring of tenant income certification and rent paid for units will be required. Wake County Affordable Housing Development Program RFP - 3

5) WAKE COUNTY LOAN TERMS The terms of the County funds will be negotiated consistent with the following guidelines: a) Permanent financing (construction financing must be requested in the application and will be considered on a case-by-case basis) b) Maximum total loan to value: 95% of appraised value c) Interest Rate: 0%-2%, depending on project need d) Term: 20-30 Years, or so long as affordability is maintained e) Repayment: Annual f) Lien: First or subordinate with conditions g) Right of First Refusal 6) APPLICANT FINANCIAL PROJECTIONS The County will review each project s development budget for accuracy and reasonableness according to the following underwriting assumptions: Confirm general requirements, builders profit and overhead, consulting fees, contingency, architect s fees, and developer s fees are within the limits as listed in the NCHFA QAP. Operating reserve is at least six (6) months of total project expenses and annual loan payments. Legal fees, which are the responsibility of the developer or sponsor, are included in the development budget. The County will also review each project s operating pro forma cash flows for accuracy and reasonableness according to the following underwriting guidelines**. All underwriting criteria must be consistent with guidelines set out in the 2018 NCHFA QAP. Proposed rents do not exceed the maximum allowed by the funding program(s) Annual reserve for replacement deposits are at least $250 per unit for new construction and $350 per unit for rehabilitation Total annual project expenses on a per unit basis are set at a minimum of $3,600 for new construction and $3,800 for rehabilitation projects Residential rental income escalating at 2% Other income escalating at 2% per year Vacancy allowance is set at a constant 7% per year Operating expenses escalating at 3% per year Real estate taxes escalating at 3% per year Replacement reserves escalating at 4% per year Debt coverage ratio is at least 1.15 for twenty (20) years ** Reasonableness of pro forma assumptions will be a significant factor in determining funding. Any project/applicant that receives a County funding commitment, and returns to Wake County Affordable Housing Development Program RFP - 4

the County requesting payment modifications or an increase loan amount will be required to reapply during the next funding cycle. 7) EVALUATION CRITERIA Wake County will evaluate project applications based on the following criteria, organized into two broad categories: 1) Project Viability, and 2) Wake County Policy Goals. The relative importance of the evaluation criteria seeks to track the evaluation criteria of the NCHFA QAP as well as Wake County affordable housing priorities. Below are key criteria in Wake County s selection of a project applicant for award: 1) Project Viability a) Financial Feasibility: Probability of project successfully closing; b) Development Quality: Quality of the proposed improvements; c) Development & Management Team: Financial strength, experience, and capabilities of the developer; ability of applicant to repay County loan with the minimum repayment terms; capabilities of project property manager; 2) Wake County Policy Goals d) Affordability Targeting: Population served i.e. household AMI targeting and special needs populations; e) Location: Location of project site near public transit, schools, and other community amenities, and not within close proximity to a large existing development of affordable housing; f) Special Needs Units g) Energy Star Application Requirements: In lieu of completing a separate application, Wake County requires applicants submit a copy of the tax credit application submitted to NCHFA, including a 30-year proforma, depending on the loan term requested, consistent with NCHFA QAP requirements. See Wake County s Application Checklist enclosed. Staff members from the Wake County Department of Housing and Community Revitalization, and staff from other municipalities will meet to evaluate all applications, and may consult NCHFA staff in project evaluation. Project Evaluation Criteria and Scoring Criteria Points 1) Project Viability a) Financial Feasibility 30 b) Development Quality 10 c) Development & Management Team 10 2) Wake County Policy Goals d) Affordability Targeting 15 e) Location 15 f) Special Needs Units 15 g) Energy Star 5 TOTAL 100 Wake County Affordable Housing Development Program RFP - 5

1) Project Viability a) Financial Feasibility (30 points) Preference is given to projects that have a high probability of moving forward. This generally means that the developer or sponsor has site control, there is an experienced and qualified development team, there is a reasonable expectation that the project will be approved for an award of federal low-income housing tax credits from the State, and the project is economically feasible. The project funding needs, the reasonableness of project costs, and the relevance of the project to the housing needs of the area to be served will also be considered during the evaluation. The following financial factors will be considered during the evaluation of projects: i) It is anticipated that County funds will be used to leverage funds from other sources, including LIHTC funds, other public sources, private equity, and private financing. Projects that have commitments of other funding at the time of application are preferred. ii) Land and building values will be confirmed by an appraisal provided by applicant. Note that after the project has been completed, the developer must furnish the County with a cost certification. For developments funded with tax-credits, the cost certification must be consistent with the requirements of NCHFA for its federal LIHTC allocations. Funds available from Wake County are generally used to fund the gap between development costs and available private financing and equity contributions. Unless the proposal states otherwise, the County assumes that the drawdown of its funds will take place after completion and lease-up of the units as a source of permanent financing. Construction loans will also be considered if specifically requested at the time of application. Note on financing terms outlined in Section 5 above: Minimum terms on County loans require a 0-2% interest rate, an amortizing term of no more than 30 years, and annual payments. Note that County loans will be secured by a promissory note and deed of trust. Once funds are committed, developers requiring any changes in payment terms, interest rates, loan amounts, etc. will be required to submit a new proposal during the next funding cycle. b) Development Quality (10 points) Projects will be evaluated and rated based upon the quality of the project design, material selection and site considerations. Staff will inspect the project and associated community and will thoroughly evaluate the plans and specifications. The criteria for evaluating development quality include: i) The building design and use are compatible with the surrounding environment and existing neighborhood. ii) The overall building design is attractive and well thought out, and is characterized as possessing architectural appeal. Wake County Affordable Housing Development Program RFP - 6

iii) Material selections are of good quality, designed for normal maintenance and can be expected to perform well over the long-term. iv) The site is suitable for the proposed development without additional major geotechnical, environmental or utility infrastructure expenditures. v) Subsidized units located within a larger development should be of comparable size and quality to the market rate units. c) Development and Management Team (10 points) Consideration will be given to the capacity and experience of the development and management team, including: Applicant should demonstrate prior successful experience and development capabilities with comparable size and type projects. Evaluation of the creditworthiness and financial management of the developer or sponsor to ensure acceptable financial capacity to carry the project forward. The financial capability of the developer to contribute equity and successfully obtain construction and permanent financing will be evaluated. Developers with prior experience with the County will be evaluated on those experiences in addition to history of loan repayment. The property manager s experience will be evaluated, and a review of local and state projects will be performed. Preference will be given to management plans that offer continuous on-site management. Plans to address the supportive service needs of tenants will be evaluated. Developers who have not previously received funds from the Wake County Affordable Housing Development Program should submit letters of reference from up to 3 public lenders from which they have received funding in the past, confirming that the developer is in good standing and all projects are well-maintained and constructed in a timely manner. 2) Wake County Policy Goals d) Affordability Targeting (15 points) Wake County Department of Housing and Community Revitalization will give preference to proposals with the following program characteristics: For 9% LIHTC projects: should offer a portion of total units to individuals or households earning at or below 40% of the area median income (AMI) i.e. less than $32,080 for a family of four (refer to Attachment 1 for area median incomes in the Raleigh-Cary MSA), or; For 4% LIHTC projects: should offer a portion of total units to individuals or households earning at or below 50% AMI i.e. less than $40,100 for a family of four (Refer to Attachment 1 for area median incomes for the Raleigh-Cary MSA.) Wake County Affordable Housing Development Program RFP - 7

Projects with the highest relative number of total units serving individuals or households at the lower AMI targets above will receive the full allocation of points for this criterion. Projects may tie. All other projects will receive points relative to the top point recipient, based on the relative number of affordable units provided. e) Location (15 points) Projects located within Wake County will be evaluated according to the Wake County Distribution of Affordable Housing Policy (Attachment 2), focusing on the following factors: Proximity to existing or planned public transportation corridors; Proximity to developed or planned schools; Proximity to special needs resident services; The number of affordable housing developments within close proximity to each project, and the populations they serve; Proximity to amenities include grocery stores, pharmacies, shopping, services, community facilities, and healthcare. f) Special Needs Units (15 points) Projects that propose units to be set aside for families or persons with special needs are preferred. Special needs housing includes, but is not limited to, housing for: Formerly homeless; Mentally, developmentally, and physically disabled persons; Persons with HIV/AIDS; Transitional housing, supportive housing, and Low Barrier Housing access; Single Room Occupancy (SRO) housing will be given priority. Supportive Services Plan reflective of population must be provided as part of the application. g) Energy Star Standards (5 points) Projects are encouraged to commit to meeting Energy Star standards or higher. Projects that commit to meeting Energy Star standards will be required to submit third party documentation proving that these standards are met upon completion of the rehabilitation or construction. Wake County Affordable Housing Development Program RFP - 8

APPLICATION SUBMISSION CHECKLIST A copy of the application form submitted to NCHFA for funding will be required as part of the County application. To be considered complete, the proposal must also include the following supporting documents. This sheet should be used as a coversheet for your proposal with all attachments in the order as listed below. Non-refundable application fee of $100 made payable to Wake County HCR Cover letter briefly describing the proposed project, population to be served and the specific amounts requested from Wake County Copy of NCHFA application and 30-year proforma Signed, notarized affidavit of no conflict of interest or a statement of disclosure of conflict of interest (see Attachment 3) Location map clearly indicating the project site Site plan for project site (survey, plat or tax map) Evidence of site control (deed, contract of sale, option to purchase or other evidence acceptable to the County) Evidence of appropriate zoning for proposed project Outline plans and specifications, including at a minimum: elevations, floor plans and a site plan Resume or other qualifications of the developer or sponsor, including a list of previous projects with current vacancy rates Audited financial statements of the developer or sponsor for the past 2 years, including its tax identification number Letters of support from other agencies and funding sources with whom you intend to collaborate Description of supportive services offered to tenants, including provider of services, history of providing services to the proposed population, and annual budget for the supportive service delivery Short narrative describing how Energy Star will be used and any other sustainable practices that will be implemented and how that will be ensured Appraisal (required for all acquisitions) Phase I environmental assessment, if available Crime report for the property and a ½ mile radius for the previous year Wake County Affordable Housing Development Program RFP - 9

To be considered for funding all applications must be received by 4:00 p.m. on February 9, 2018. Original applications and two (2) hard copies with all attachments and one (1) electronic copy should be forwarded to the following person and address: Ms. Kelly Baraldi, Administrative Services Coordinator Wake County Housing & Community Revitalization 336 Fayetteville St., 4 th Floor Room 417 PO Box 550 Raleigh, NC 27602 919-856-5689 8) EVALUATION OF PROPOSALS Applications will be reviewed for completeness and eligibility. All eligible proposals will be ranked according to the criteria stated in this Request for Proposals. Any application scoring less than 75 out of the 100 eligible points will not be recommended for funding approval. Also note that all sources of financing must be identified before a commitment letter will be issued. All sources of financing must be secured before closing. Commitments will be valid for 18 months from the date of approval. ** Should any project that the County commits funding return to the County with requests for additional funds, payment changes, changes in terms of funding commitment, units produced or any other substantial change to the original commitment, the developer will be required to resubmit an application in the next Request for Proposals for the changes to be considered. 9) APPLICATION FEE Applicants must submit a $100 non-refundable application fee in the form of a check made payable to the Wake County HCR. 10) RIGHT TO REJECT PROPOSALS Wake County reserves the right to reject any and all proposals received as a result of the Request for Proposals or to negotiate on the terms of the funds so as to best serve the interests of Wake County. Wake County Affordable Housing Development Program RFP - 10

ATTACHMENT #1 INCOME LIMITS WORKSHEET 4/14/2017 80,200 Wake County Income Limits Family size adj 0.7 0.8 0.9 1.08 1.16 1.24 1.32 Family size 1 2 3 4 5 6 7 8 Median 100% 56,140 64,160 72,180 80,200 86,616 93,032 99,448 105,864 est. Low 80% 44,950 51,350 57,750 64,150 69,300 74,450 79,550 84,700 HUD 60% 33,720 38,520 43,320 48,120 52,020 55,860 59,700 63,540 est. Very Low 50% 28,100 32,100 36,100 40,100 43,350 46,550 49,750 52,950 HUD 40% 22,480 25,680 28,880 32,080 34,680 37,240 39,800 42,360 est. 30% 16,850 19,250 21,650 24,600 28,780 32,960 37,140 41,320 HUD Low 80% equals the US median family income level, adjusted for family size Very low 50% starts with 50% of the median 4 -person family income and then is adjusted for family size 60% equals the 50 limit x 1.2 40% equals the 50% limit x.8 30% equals the 50% limit x.6 HUD rounds to nearest $50 and usually publishes limits for 80,50,& 30%. Fair Market Rents: Effective: 1/1/2017 0 Bedroom 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom $695 $861 $993 $1,294 $1,592

Distribution of Affordable Housing Housing Units Affordable to families earning less than 60% of area median Income within each municipality* 2016 Update Municipality Total Units Total Government Subsidized Units % Government Subsidized Units Additional units needed for municipality to achieve: 2% Subsidized Units 3% Subsidized Units 4% Subsidized Units 5% Subsidized Units Apex 16,623 298 1.8% 34 201 367 533 Cary 60,880 740 1.2% 478 1,086 1,695 2,304 Fuquay-Varina 9,609 555 5.8% Garner 11,377 637 5.6% Holly Springs 10,779 309 2.9% 14 122 230 Knightdale 6,058 427 7.0% Morrisville 9,955 78 0.8% 121 221 320 420 Raleigh 189,383 9,787 5.2% Rolesville 2,299 72 3.1% 20 43 Wake Forest 13,383 694 5.2% Wendell 2,563 337 13.1% Zebulon 2,077 245 11.8% Total 334,986 14,179 4.2% 633 1,522 2,524 3,530 Countywide % Subsidized Units 4.2% *Families earning less than $45,960 Towns below Average: Apex, Cary, Holly Springs, Morrisville, Rolesville

Conflict of Interest Statement I,, Executive Director/Director/President of, certify that no conflict of interest exists between the staff, Officers, Board of Directors, Board Members, immediate family members or immediate interested parties, as it pertains to the following property/project:. Printed Name: Signed: Date: State of County of I,,Notary Public, do certify that personally appeared before me this day and acknowledged the due execution of the foregoing agreement. Witness my hand and Notary Seal, this day of, 20. Notary Public: My Commission expires: (seal)