SINGLE FAMILY SPARC ROUND 8 (FY 10) Sponsoring Partnerships and Revitalizing Communities June 2009
Single Family SPARC The Single Family SPARC (Sponsoring Partnership and Revitalizing Communities) program encourages partnerships among local governments, redevelopment and housing authorities, non-profit housing organizations and for profit developers to promote affordable homeownership opportunities for first-time home buyers in the Commonwealth. SPARC funding is intended to assist housing advocates in addressing critical housing needs faced in their communities. SPARC Allocations VHDA will set-aside an allocation of SPARC funds for Round 8. Local governments, redevelopment and housing authorities, non-profit housing organizations and for profit developers may submit proposals for Single Family SPARC Funds. Eligible proposals selected by VHDA for funding which significantly leverage VHDA resources and complement VHDA s efforts in reaching its strategic goals will be awarded an allocation of funds whose interest rate is approximately ½ % below the VHDA 1 st time homebuyer rate at the time of loan reservation. Other eligible proposals selected by VHDA for funding will receive a set-aside of FHA Plus resources. SPARC resources require large subsidies and are intended to serve 1 st time homebuyers who, due to their limited income and/or resources, would not otherwise qualify for a VHDA mortgage. Therefore, in no instance should SPARC funds be reserved for a borrower(s) who could qualify to purchase a home utilizing VHDA s standard 1 st time homebuyer loan programs. Proposals for SPARC Round 8 must be received by VHDA by close of business (5:00 P.M.) on, August 14, 2009. Proposal sponsors should submit one electronic copy of the application/proposal to sparcapplications@vhda.com. Any exhibits or supporting documentation may be mailed to VHDA 601 South Belvidere, Richmond, VA Attn: Toni Ostrowski. Please be sure to include three (3) copies of exhibits/supporting documents. A VHDA review team will rank each proposal and make recommendations for funding. It is anticipated that VHDA will announce the proposals selected for SPARC funding by October 1, 2009. Round 8 allocations will be available for reservation through June 30, 2010. Eligible Homeownership Projects In order to be eligible for an allocation of SPARC funds, the project proposal must meet the following requirements: Provide single-family detached, attached and/or condominium units. Any new condominium development must be FHA approved. Other condo developments must meet the applicable agency guidelines (FNMA, FHLMC, VA). VHDA will limit the concentration of its financing to no more than 25% of the total units. Project proposals must request sufficient funds to finance a minimum of 5 individual units. Units may be stick-built, modular, panelized or manufactured. If manufactured housing, the units must be permanently attached to the real estate and considered real property, as well as, meeting VHDA property guidelines. 2
Unless otherwise approved by VHDA, all deed restrictions must completely terminate at foreclosure. Locality restrictions must allow for any purchase prior to foreclosure to include the payoff of the VHDA first and second mortgage(s) (if applicable). The project proposal may provide units in a subdivision or on scattered sites. The proposal must expand or preserve the stock of quality affordable housing units. Minimum Design and Construction Requirements Homes financed by VHDA should be constructed in a manner compatible with VHDA s mission of providing quality, affordable housing. In addition, homes should be designed to be compatible with the surrounding neighborhood by reflecting the architectural style of adjacent properties. New Construction: Plans and specifications are to comply with the latest applicable issue of (USBC) Virginia Uniform Statewide Building Code, (IBC) International Building code, other referenced codes, requirements of localities, and prevailing design and construction practices. Rehabilitation: All additions, adaptive reuse, and rehabilitation work/trades requiring building permits are to be built as new construction to comply with (USBC) Virginia Uniform Statewide Building Code and (IBC) International Building Code. Allocations of Permanent Home Purchase Mortgage Monies VHDA will provide the allocations of permanent mortgage funds to eligible applicants under the following terms and conditions: Eligible Use of Funds Interest Rate Loan Term / Amortization Period Loan Security Mortgage Insurance Underwriting Allocations will be used to fund permanent home purchase mortgages to qualified first-time homebuyers. Funds will be disbursed directly to the closing agent at the time the loan is closed. The interest rate will be determined at the time of reservation of funds. The rate will be ½% below the standard VHDA 1 st time homebuyer rate. The interest rate for FHA Plus loans will be the prevailing rate at the time of reservation. 30 years First deed of trust All mortgages with LTV s of over 80% must be government insured. VHDA mortgage insurance requirements for FHA, VA, RD, will be applicable. VHDA will underwrite mortgages using the program standards of all VHDA s mortgage revenue bond program (1 st time homebuyer program). 3
Ineligible Loan Programs Sales Price Limitations Income Limits Pricing options are not available-the lender must offer only standard pricing (1+1). Second Deed of Trust programs must meet VHDA s Secondary Financing Certification requirements. The sales prices of homes cannot exceed the limits set under VHDA s 1 st time homebuyer program regardless of the location of the property (e.g. federally targeted areas). Visit VHDA s website @ www.vhda.com for current sales price limits. The gross income of households applying for SPARC funds may not exceed the limits set under VHDA s 1 st time homebuyer program. VHDA 1 st time homebuyer income limits apply regardless of the location of the property (e.g. federally targeted areas). Visit VHDA s website @ www.vhda.com for current income limits. Homeownership Education All borrowers are required to attend a VHDA Homeownership Education course or to successfully complete VHDA s web based educational course. Applicant Qualifications Proposals for SPARC allocations may be submitted by local governments, housing authorities, non-profit housing organizations and for profit developers/sponsors. Proposal Review and Approval Process The Single Family SPARC proposal review process consists of two stages: 1) Eligibility review, and 2) Competitive review. All proposals for funding will undergo an eligibility review. If an application meets the standards for eligibility, the proposal will advance to the competitive review stage. Standards for eligibility include: Each proposal must be (1) complete; (2) legible; and (3) received by VHDA no later than close of business on Friday, August 14, 2009. Proposal sponsors should electronically submit one electronic copy of the proposal and exhibits to sparcapplications@vhda.com. Organizations that do not have the capability of electronically submitting their proposal/exhibits may mail the proposal to VHDA. Three copies of the proposal and exhibits/supporting documents must also be received by VHDA by close of business Friday, August 14 th. Proposals may be submitted any time prior to the August 14 th deadline. For competitive review, please refer to the below chart for submission order, required documentation and the maximum points associated with each section. Proposals must be at a stage where it is reasonable to expect loan reservations/loan closings to take place by June 30, 2010. Please carefully review the Proposal Readiness section of this document. 4
POINTS TAB DOCUMENTATION Mandatory I. Application Transmittal (Form summarizes allocation requested and provides contact information) 80-90 points (max total) II. Narrative Summary A. Need for SPARC Funds Financing B. Documentation of a Strategy Mandatory III. Summary of Typical Home Purchase Transaction 20 points (max. total) IV. Proposal Readiness 10 points (max. total) V. Bonus Point Categories Need for SPARC Funds Financing (Maximum 20 points) SPARC funding requested by the proposal sponsor must be necessary for project feasibility, and should be generally unavailable from private lenders or through VHDA s regular Single Family bond programs. The proposal sponsor should clearly specify the need for the SPARC funding in order to address the proposed project. This demonstration of need must include documentation of demographic and economic information as well as local studies and articles indicating the need for such financing to address local affordable homeownership needs. 5
Housing Strategy (Maximum 60-70 points) Proposals should contain strategies that assist VHDA in achieving its goals. For consideration under the competitive review process, all proposals must clearly specify one of the following areas of concentration and provide strategies that will address the area of concentration. Area of concentration Expand Affordable Housing Opportunities Address Housing Needs of Minorities and Diverse Cultures Support Community Revitalization Efforts Increase Housing Opportunities for Seniors and People with Disabilities Strategies (Examples) A proposal involving the development of new singlefamily homes, the rehabilitation of existing homes, or the purchase of existing homes (or a combination of these three approaches) which targets low- to moderateincome 1 st time homebuyers. A proposal involving the development of new singlefamily homes, the rehabilitation of existing homes, or the purchase of existing homes (or a combination of these three approaches) which incorporates marketing homeownership opportunities to minority 1 st time homebuyers. A proposal involving the development of new singlefamily homes or the rehabilitation of existing homes (or a combination of these two approaches) in an area formally designated for revitalization by the locality. A proposal involving the development of new singlefamily homes, the rehabilitation of existing homes, or the accessibility modification of existing homes (or a combination of these three approaches) utilizing the principles of universal design. All proposals will be evaluated based on the following criteria specified under each area of concentration. Points will be assigned based on the extent to which the proposal addresses the specified criteria. Interest rates associated with each allocation may be limited by factors such as: income level of borrower, location of property etc. 6
Expand Affordable Housing Opportunities Income 20 points (High) Targets borrowers at 80% of the area median income or less (adjusted for household size) 15 points (Moderate) Targets borrowers at VHDA s maximum income limits Home Inspection 10 points To be awarded these points the sponsor must agree to cover the expenses of a home inspection. The home inspection report must also be provided to the home buyer. A Virginia certified home inspection is performed by a home inspector that is certified through: 1)ASHI (American Society of Home Inspectors), 2) NACHI (National Association of Certified Home Inspectors), 3) the Virginia Board for Asbestos, Lead, and Home Inspectors or 4) other equivalent certifications acceptable to VHDA. Leverage 30 points (High) Provides one or more of the following: 1) down payment assistance of not less than 10% of the sales price through soft second programs; 2) VHDA approved financing subsidy programs; 3) gifts of equity and/ or land. Documentation of leverage must be submitted with proposal. 15 points (Moderate) Provides resources that increase housing affordability. For example: 1) resources for the payment of borrower s closing costs: 2) waives connection fees. Documentation of leverage must be submitted with proposal. 7
Address the Housing Needs of Minorities and Diverse Cultures Marketing/Outreach 20 points (High) Submits a detailed marketing outreach plan that proactively markets VHDA homeownership programs to minority population. Home Inspection 10 points To be awarded these points the sponsor must agree to cover the expenses of a home inspection. The home inspection report must also be provided to the home buyer. A Virginia certified home inspection is performed by a home inspector that is certified through: 1)ASHI (American Society of Home Inspectors), 2) NACHI (National Association of Certified Home Inspectors), 3) the Virginia Board for Asbestos, Lead, and Home Inspectors or 4) other equivalent certifications acceptable to VHDA. Leverage 30 points (High) Provides one or more of the following: 1) down payment assistance of not less than 10% of the sales price through soft second programs; 2) VHDA approved financing subsidy programs; 3) gifts of equity and/ or land. Documentation of leverage must be submitted with proposal. 15 points (Moderate) Provides resources that increase housing affordability. For example: 1) resources for the payment of borrower s closing costs: 2) waives connection fees. Documentation of leverage must be submitted with proposal. 8
Support Community Revitalization Efforts Such proposals will demonstrate how SPARC funding will support local efforts of increasing/maintaining neighborhood homeownership; develop downtown housing; de-concentrate poverty (through mixedincome development) or provide affordable homeownership opportunities whereby any of which are linked to economic and neighborhood revitalization investments. Property 30 points (priority) Existing or rehabilitated housing where NSP resources will be combined with other resources and strategies to stabilize at risk or destabilized neighborhoods. 20 points (High) Significant rehabilitation and/or new construction of quality affordable housing in an area formally designated by the local governing body under at least one of the following categories: 1. Areas designated under Title 36 of the Code of Virginia in accordance with one of the following a) Section 36.51; b) Section 36-49.1 c) Section 36-52.3 or d) Section 36-55.30.2. 2. A Neighborhood Revitalization Strategy Area (NRSA) designated in a locally adopted, HUD-approved plan as part of a jurisdiction s CDBG program and contained in the local Consolidated Plan for Housing and Community Development or addendum. 3. Areas identified as State Enterprise Zones by the Virginia Department of Housing and Community Development. 15 points (Moderate) Utilization of existing housing stock in a locally designated revitalization area involving little or no property rehabilitation or new construction. Home Inspection 10 points To be awarded these points the sponsor must agree to cover the expenses of a home inspection. The home inspection report must also be provided to the home buyer. A Virginia certified home inspection is performed by a home inspector that is certified through: 1)ASHI (American Society of Home Inspectors), 2) NACHI (National Association of Certified Home Inspectors), 3) the Virginia Board for Asbestos, Lead, and Home Inspectors or 4) other equivalent certifications acceptable to VHDA. 9
Support Community Revitalization Efforts - continued Leverage 30 points (High) Provides one or more of the following: 1) down payment assistance of not less than 10% of the sales price through soft second programs; 2) VHDA approved financing subsidy programs; 3) gifts of equity and/or land. Documentation of leverage must be submitted with proposal. 15 points (Moderate) Provides resources that increase housing affordability. For example: 1) resources for the payment of borrower s closing costs: 2) waives connection fees. Documentation of leverage must be submitted with proposal. 10
Increase Housing Opportunities for Seniors and People with Disabilities Property 20 points (High) Properties comply with ANSI 117. Builders/Architects have attended a universal design course sponsored by VHDA. 15 points (moderate) Incorporates concepts of Easy Living or Universal Design principles to include at a minimum 1) zero step entrance; 2) accessible bathroom facility and 3) accessible common meeting space. Builders/Architects have attended a universal design course sponsored by VHDA. Home Inspection 10 points A Virginia certified home inspection is performed by a home inspector that is certified through: 1)ASHI (American Society of Home Inspectors), 2) NACHI (National Association of Certified Home Inspectors), 3) the Virginia Board for Asbestos, Lead, and Home Inspectors or 4) other equivalent certifications acceptable to VHDA. The real estate contract must be contingent on the receipt of a satisfactory inspection. The SPARC sponsor must agree to cover the expense of the inspection. A copy of the home inspection must be submitted to VHDA in the underwriting package. Leverage 30 points (High) Provides one or more of the following: 1) down payment assistance of not less than 10% of the sales price through soft second programs; 2) VHDA approved financing subsidy programs; 3) gifts of equity and/ or land. Documentation of leverage must be submitted with proposal. 15 points (Moderate) Provides resources that increase housing affordability (e.g. 1) resources for the payment of borrower s closing costs: 2) waives connection fees). Documentation of leverage must be submitted with proposal. 11
Proposal Readiness (Maximum 20 points) Preference will be given to those proposals that are ready to go forward. Applicants must score a minimum of 10 points to be considered for an allocation of funds. Plans and Specs 5 points New Construction: the applicant must provide copies of plans and specifications and artist renderings. If these items are not available at application, the applicant may provide photographs of previous new construction developments for which they were the developer. Photographs must be accompanied by the development address. (Note: photos will not be returned) 5 points Time Line Rehabilitation: the applicant must provide external and interior photographs of previous rehabilitated properties for which they were the developer. Photographs must be accompanied by the address of the subject property. (Note: photos will not be returned) NSP: the applicant must provide evidence of a commitment for NSP resources from the Department of Housing and Community Development. Localities not eligible for an allocation of NSP funds through the DHCD must submit a statement from the local chief executive officer certifying that the SPARC proposal is consistent with the approved NSP plan. A development time line that demonstrates the ability of the applicant to utilize SPARC funds (reservation of funds by qualified buyers) by June 30, 2010. 2 points Evidence of Zoning Approval 2 points Site Control Evidence of current zoning allowing proposed project or documentation of local zoning approval (2 points). Evidence that application for zoning approval has been submitted for consideration but not yet actually considered by the locality (1 point). No evidence of approval or application for application (0 points). In revitalization areas, proposals should document that the developer/sponsor has site control of at least 50% of the building sites with a plan to obtain site control on the remaining parcels within 6 months. For all other applicants, evidence of site control of all parcels will be necessary to receive the full two points. 12
Proposal Readiness - continued 2 points Assurance of Utility Services Such assurances may include letters from local utilities indicating that sites have access to water/sewer, electricity, etc. For rural projects without water and sewer systems, proposals should include documentation that the project sites are suitable for wells and septic systems. 4 points Utilization of past SPARC allocations VHDA will examine the performance of sponsoring entities which received SPARC allocations under previous rounds. Performance issues reviewed by VHDA will include timeliness in utilizing previous allocations as well as any past performance information contained in the proposal. VHDA will award no points under this category for those proposals from sponsors who have not previously received SPARC allocations or did not effectively utilized Single Family SPARC allocations. Bonus Points Categories (Maximum 10 points) 5 points Green Building Builder provides one of the following: 5 points Universal Design 1) Verification of Energy Star certification of homes. Homes must be rated 5 star by a certified HERS rater (requires a blower door test and duct pressurization test plus a certified software rating). 2) Verification that homes are EarthCraft certified. 3) Homes are certified under the Enterprise Foundation Green Communities green builder program. The builder/architect demonstrates attendance at a VHDA sponsored universal design training session and incorporated UD elements into the home plans or homes will be Easy Living certified. VHDA reserves the right to withhold funding, regardless of scoring, to any organization or individual where VHDA has determined that 1) previous SPARC allocations were not administered in an equitable manner, 2) there was misrepresentation by the Sponsor in a previous SPARC application or 3) VHDA determines the proposed property is not compatible with VHDA s mission of providing quality, affordable housing. VHDA reserves the right to alter programmatic parameters following sufficient notice to SPARC sponsors. 13