What is the funding process for TCAP and Exchange construction draws?
Construction draws under TCAP and Exchange program will be funded on a pro rata basis with draws from first mortgage construction lenders. This ratio will be established for each TCAP and Exchange project prior to closing.
Owners will be required to submit a draw request for each draw in a form required by AHFA. In addition to standard construction draw requirements, owners will be required to provide all information with respect to each draw that is necessary for AHFA to comply with TCAP and Exchange programs’ reporting requirements. AHFA’s obligation to fund each draw will be conditioned upon the first mortgage construction lender’s prior approval and simultaneous, pro rata funding.
AHFA’s obligation to fund each draw will be conditioned upon its receipt of TCAP funds from HUD and Exchange funds from the Treasury. AHFA is required to expend TCAP funds within three days after it receives the funds from HUD and expend Exchange funds within 24 hours after it receives the funds from Treasury. AHFA will not request funds from HUD or Treasury for any construction draw until all conditions for the draw have been satisfied and completed.
What if my first mortgage permanent lender is different than my first mortgage construction lender?
Draws during construction will work as described above. Conversion of TCAP or Exchange funds from construction phase to permanent phase will be conditioned, in addition to other standard requirements, upon confirmation that the first mortgage permanent loan has closed and that the first mortgage construction loan has been repaid in full.
What if my first mortgage construction lender is to be repaid in full from TCAP or Exchange fund proceeds upon project completion?
Draws during construction will work as described above. When the project has been completed and all requirements for the final draw under the TCAP or Exchange funds have been met, assuming no default exists, AHFA will fund a final draw from TCAP or Exchange funds to repay the first mortgage construction loan in full.
How will TCAP or Exchange funding coordinate with equity funding?
Each construction draw under TCAP or Exchange funds will be conditioned upon the owner’s receipt of all equity payments scheduled to be made prior to the proposed draw.
What are AHFA’s requirements concerning payment and performance bonds?
AHFA must be shown as a dual obligee under all payment and performance bonds for construction projects. In lieu of payment and performance bonds, AHFA will accept, but only to the extent approved and accepted by the first mortgage construction lender, (a) a letter of credit from a satisfactory bank in an amount equal to the general contract amount, or (b) a combination of (1) payment and performance bonds from all major subcontractors, and (2) a payment and performance bond or satisfactory letter of credit for the general contractor, which provide aggregate protection equal to the general contract amount. AHFA must be identified as a beneficiary of each letter of credit and a dual obligee under all payment and performance bonds, in each case on a subordinate basis to the first mortgage construction lender. AHFA’s TCAP or Exchange commitment will be voided if owners do not provide one of the foregoing forms of assurance of contractor performance.