Asset Management
HOME program regulations require that all new construction projects funded with HOME must meet a 20-year affordability period.
As administrator of the HOME program, AHFA staff monitors the operations of each HOME project to assess and/or identify any risks that may develop during the affordability period and has established specific requirements to ensure the project continues to be viable. AHFA reviews the projects' financial statements, budgets, reserve account balances and capital requirements from the time of the HOME loan closing to the end of the 20-year affordability period.
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The replacement reserve account is established by the borrower(s) at the time of the HOME loan closing and must be maintained for the entire 20-year affordability period. AHFA has established specific requirements for the replacement reserve accounts to safeguard the availability of funds for capital needs as the project will require for maintaining a viable project throughout the 20-year affordability period.
All withdrawals from the replacement reserve account must be approved by AHFA.
Therefore, AHFA has also established specific guidelines for requesting and receiving approval of withdrawing funds from the replacement reserve account. These guidelines are not all inclusive and, therefore, may not address every situation requiring a request to withdraw funds. -
For Housing Credit properties only
According to Section 3 of the Declaration of Land Use Restrictive Covenants, the owner must notify AHFA in writing at least thirty (30) days in advance of any transfer of the entire project or any portion of the project containing low-income units.
The following documentation must be provided to AHFA for approval prior to any transfer of ownership interest:
Request/Consent of Transfer of Limited Partnership Interest (select applicable forms)
$500 change order fee
lender approval
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Section 42(h)(6) of the Internal Revenue Code requires an extended low-income housing commitment of at least 15 years in addition to the 15-year compliance period. Such requirement is applicable to all properties awarded Housing Credits starting in 1990.
Housing Credit properties that have concluded their 15-year initial compliance period can request a Qualified Contract.
For questions relating to the Qualified Contract process, please contact [email protected].
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During the term of the Loan, Borrower must maintain a written capital maintenance plan (CMP) for the Project. At a minimum, the CMP must include the following components:
Annual Physical Needs Summary: This summary shall provide an estimate of the repairs, replacements, and significant deferred and other maintenance items that will need to be addressed within 12 months.
Long-Term Physical Needs Summary: This summary shall provide an estimate of the repairs and replacement items beyond the first year that are required to maintain the development’s physical integrity over the term of the Loan, such as major structural systems and interior components that will need to be replaced during this period. Prior to the Loan closing, Borrower shall present to AHFA for review and approval a sample version of the capital maintenance tracking system that it will use over the term of the Loan.
Analysis of Reserves for Replacement: This analysis will provide an estimate of the initial and monthly deposit to the Replacement Reserve Account needed to fund the development’s long-term physical needs during the term of the Loan, accounting for inflation, the existing Replacement Reserve balance, and the Expected Useful Life (EUL) of major building systems. This analysis should include the cost of twelve-month physical needs, but not any work items that would be treated as an operating expense.
*Please note that the Capital Maintenance Plan should be submitted in a size no larger than a legal-sized page. Please do not submit this document in any size larger than legal.
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The following is addressing the loan maturity of projects allocated funds under AHFA's HOME Program. Borrowers should notify AHFA at least twelve (12) months prior to the maturity date of the HOME loan to indicate borrower's a) intent to repay the loan in full, or b) intent to restructure the loan. If the borrower is unable to provide payment in full, the borrower will be required to apply for an extension of the HOME Loan by completing the AHFA application for extension. The borrower should submit an application for extension at least six (6) months prior to the maturity date of the HOME Loan. The borrower will be required to review the AHFA HOME Loan Restructuring Policy for additional instructions and complete the AHFA application for an extension (links provided below).
Options:
A) Intent to repay the loan in full
Borrowers may pay the HOME loan in full (principal and all accrued interest) prior to or at maturity. If the HOME loan is paid off prior to maturity, the applicable HOME rent and income restrictions will remain until the end of the required affordability period.
Borrower may request. in accordance with AHFA's Qualified Contract Policies and Procedures, to remove the Housing Credit extended-use restrictions and convert the project to market rate.
B) Intent to restructure the loan
Borrowers paying thirty percent (30%) or more of the HOME loan (principal and all accrued interest) will be allowed to extend the remaining balance for fifteen (15) years.
Borrowers that do not elect to make a payment of thirty percent (30%) or more of the HOME loan (principal and all accrued interest) at maturity and will be required to request an extension of the loan for a maximum of five (5) years.
Borrowers that do not pay the HOME loan in full (principal and all accrued Interest) or do not apply for an extension will be considered delinquent, and AHFA will pursue foreclosure on the property. The borrower will be permanently barred from participating in all programs administered by AHFA. If AHFA is forced to foreclose on the property, AHFA will make every effort to not displace the current tenants.
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According to Section 3 of the Declaration of Land Use Restrictive Covenants, the owner must notify AHFA in writing at least thirty (30) days in advance of any transfer of the entire project or any portion of the project containing low-income units.
The following documentation must be provided to AHFA for approval prior to any transfer of ownership interest: -
Section 42 of the IRS Code allows homeownership opportunities for residents of low-income housing rental developments by allowing the owners to sell to residents following the completion of the initial compliance period. To be eligible for Homeownership Conversion, a project must consist of single-family, duplexes, or townhomes. If owners elect Homeownership Conversion at the time of application, the following forms will need to be reviewed.
These forms are generic in nature and not deal specific.