Veterans Housing and Homelessness Prevention

Program

Funding Round 2

California Department of Housing and Community Development 1

Program Overview

• Created by Chapter 727, Statutes of 2013 (AB 639, Pérez). Proposition 41, the Veterans Housing and Homeless Prevention Bond Act of 2014, approved by California voters on June 3, 2014.

• Partnership between HCD, CalHFA, & CalVet to provide $600 million in Proposition 41 general obligation bonds to fund affordable multifamily rental, supportive and transitional housing.

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Program Goals

• Award annually up to $75 million in funding for the development and preservation of affordable housing and related facilities for veterans and their families to maintain housing stability.

• Develop and implement programs that focus on at-risk for homelessness or experiencing temporary or chronic homelessness.

• Ensure 50% of the funding serves ELI veterans and 60% of the units reach ELI households and shall be supportive housing.

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Geographic Distribution

Objective sets minimum funding levels for designated regions based on point-in-time count (2013) and ELI households paying more than 50% of income for housing as follows:

•Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Santa Cruz, Sonoma Counties – 14% ~ $10.5 M

•Los Angeles County – 31% ~ 23.5 M

•Orange, Riverside or San Bernardino Counties – 8% ~ $6 M

•San Diego County – 7% ~ $5.2 M

•Other Counties – 16% ~ $12 M

Funds remaining after satisfying geographic distribution objectives will be awarded w/out regard

to project location.

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Round 1 Focus

• Impacting veteran homelessness in California, especially among most vulnerable (chronic+).

• Serving Extremely Low Income veterans (30% AMI).

• Encouraging supportive housing, but leaving the door open to transitional and general affordable projects and units as well.

• Ensure provision of appropriate and effective services, encourage rental / operating subsidies.

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Round 1 Results

• 32 Applications Requesting $125 Million.

• 17 Awards: $63 Million, 1221 Total Units, 566 VHHP units, 348 VHHP supportive housing, 169 for chronic homeless.

• 12 projects have supportive housing, 1 transitional housing, 4 general affordable.

• 8 w/ external rental/operating subsidies, 4 capitalized operating subsidies.

• 8 of 17 awards in LA County, 4 in Inland Empire/ Orange County.

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Round 2

Focus same as Round 1: ELI, supportive housing, chronic homeless.

Minor Guideline and Application revisions.

Guidelines Revised: October 13, 2015

NOFA Issued: October 13, 2015

Applications Due: Monday, December 14, 2015.

Awards: February 2016.

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Guideline Changes

• Added a definition for Case Manager.

• Clarified that case management is an eligible operating expense, along with resident services coordination

• Simplified scoring system, funding decisions will be based on raw scores

• Required minimum point scores in Readiness to Proceed and Supportive Services Plan categories

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Guideline ChangesContinued

• Revised the Supportive Service Plan requirements to specify how points are allocated between sub-categories.

• Revised the Leverage of Rental or Operating Subsidies category to allow projects w/out contracts to garner points if they deliver the same rents.

• Clarified the requirements of supportive service case management staffing and credentials of these staff.

• Added a section for Vulnerable Populations Best Practices focused on building design and resident safety.

Housing Types &

Occupancy Requirements

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Housing Types

• Affordable Rental Housing Without Supportive Housing or Transitional Housing;

• Supportive Housing; and

• Transitional Housing

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Occupancy Restrictions

• All VHHP Assisted Units - must be restricted to households including one or more Veterans with incomes that do not exceed 60% AMI.

• All Projects must contain at least 45% of VHHP Assisted Units restricted to Veterans with incomes at 30% AMI or less.

• All SH and TH VHHP Assisted Units – must be restricted to households that include veterans who are Homeless, Homeless with a Disability or Chronically Homeless.

• All Projects – occupancy requirements apply for the full term of the Program loan.

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Occupancy Restricitions

• Any occupancy restrictions based on conditions of separation from military service are subject to HCD approval:a) Projects may only restrict occupancy to Veterans who separated from military service under certain conditions OR who qualify for VA health care when required by a public agency funding.

b) A minimum of 10% of VHHP Assisted Units must be prioritized for occupancy by Veterans who are ineligible for VA health care and/or HUD-VASH.

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Fair Housing Compliance for Age or Gender Restrictions

Include a project-specific legal opinion with supporting materials on how it satisfies fair housing laws.

•Same Sex Segregated Projects: follow instructions in the VHHP NOFA Section R.

•Senior Projects: provide evidence that units are lawfully restricted to senior households in compliance with state and federal fair housing laws.

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Tenant SelectionSections 102(c) and 113

For SH and TH – tenants shall be selected using the local coordinated access system.

For All Other Projects – projects shall comply with UMR Section 8305 and VHHP Guidelines.

•Application Item A12 – Tenant Selection Practices Compliance Certification must be completed for all projects.

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Housing First PracticesSection 112

Projects shall follow the Housing First practices that are documented in the application, property management plan and supportive services plan.

•Application Item A14 – Housing Compliance Certification form must be completed for all SH and TH Projects.

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Disabled Veterans Business Enterprises

Section 109

Entities certified by the CA Department of General Services as Disabled Veterans Business Enterprises (DVBE) shall receive an amount at least equal to 5% of total construction costs for work performed or supplies provided to each project.

•Application Item A15 – DVBE Utilization Plan must be completed.

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Veterans Hiring Plan Requirements

Section 109

Sponsors shall make good faith efforts to hire veterans for development, construction, and related jobs associated with the project.

•Application Item A15 – Veterans Hiring Plan must be completed.

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NEW!

Applications will be now be ranked by the Total Score Achieved rather than against one another based upon the percentage of maximum points received.

Application Ranking

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NEW!

Overall Application:

• 100 Points for Projects w/ SH• 80 Points for Projects w/ TH• 65 Points for All Other ProjectsSupportive Services Plan:

• 10 Points for Projects w/ SH or TH• 7 Points for All Other ProjectsReadiness to Proceed:

• 5 Points for All Project Types

Minimum Point Scores

Development Team Experience

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Development Team ExperienceFor SH or TH Projects – 18 Points Maximum

For Other Projects – 15 Points Maximum

•Developer Exp – 5 points Max (1 point per project)•Sponsor Ownership or Operations Exp – 5 Points Max (2 points per project)•Property Management Exp – 5 Points Max (1/2 Point for each Development)•For SH or TH Only – Lead Service Provider Exp – 18 Points Max

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Development Team ExperienceDeveloper Experience – 5 Points

Points will be awarded based upon the number of rental housing developments or transitional housing completed by the Sponsor over the past 10 years.Projects must contain at least 10 units, unless the VHHP project is less than 15 units.

Projects must be subject to an agreement with a public agency restricting rent and occupancy.

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Development Team ExperienceSponsor Ownership or Operations – 5 Points

Points will be awarded for the Sponsor ownership or operations experience of rental housing developments or transitional housing.Points will be awarded for developments in operation for at least 2 years.

Projects must contain at least 10 units unless the VHHP project contains less than 15.

FOR SH and TH – projects must have been in operation for at least 2 years with units restricted to the Homeless and that include substantial services.

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Development Team ExperienceProperty Management Experience – 5 Points

Applications will be scored as follows:

•Points will be awarded for developments in operation for at least 2 years.

•Projects must contain at least 10 units unless the VHHP Project contains less than 15 units.

FOR SH and TH – to garner points developments must restrict occupancy to the Homeless and include substantial supportive services.

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Development Team ExperienceLead Service Provider – 18 Points

The LSP is the entity that has the overall responsibility for the provision of the supportive services and implementation of the Supportive Services Plan.

Points will be awarded for experience in the last 10 years providing comprehensive case management to homeless populations in SH or TH and for demonstrated expertise working with homeless veterans.

Experience must be documented by contracts which must be attached to Item C.

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Development Team ExperienceLead Service Provider – 18 Points

For SH or TH Only – Lead Service Provider Experience is scored based upon the following:

•Met the 2 yr Threshold Experience in permanent supportive housing not transitional housing

•Years of Experience in PSH or TH

•Number of Projects or Contracts in PSH or TH

•Years of Experience Serving Homeless Veterans in PSH or TH

•Documented success meeting outcome measures for housing stability under a government contract for 2 yrs.

For experience to count executed contracts must be attached to Application Item C2 – Attachment 4

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Supportive Services Plan Requirements

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Supportive Services PlanFor SH and TH – 20 Points Maximum

Categories that will be considered in determining the score for SH and TH:

•Quality and Quantity of Services Provided – 12 Points Maximum

•Resident Involvement – 2 Points Maximum

•Adequacy of the Services Budget and Reliability of Services Funding – 6 Points Maximum

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Supportive Services PlanQuality & Quantity of Services – 12 Pts

• Services provided are veteran centric and appropriate for the target population

• Staff experience, credentials, and job duties include appropriate requirements in veteran cultural competency

• Service delivery model, tailored to veterans

• Accessibility of VA and other services

• Adherence to Housing First Practices

• Physical building space

• Linkages w/ local systems for ending homelessness and serving veterans 30

Supportive Services PlanResident Involvement – 2 Pts

Points will be awarded based upon the quality of:•Strategies to engage residents in building community and operations

•Strategies to engage residents in services planning and operations

•Tenant Satisfaction Surveys, to inform and improve services, building operations, and property management

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Supportive Services PlanAdequacy of Services Budget – 6 Pts

Points will be awarded based upon:•Adequacy of budgeted amounts and the consistency of the amounts w/ other sections of the plan

•Completeness, accuracy and clarity of the budget document

•Extent to which the major services funding sources have been accessed in the past

•Track record of the Sponsor and providers in filling gaps in services funding

•Percentage of the total services budget that is committed at the time of application

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Resident Services Coordination Plan

Requirements

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Resident Services Coordination Plan

For Other Projects – 10 Points Maximum

Categories that will be considered in determining the score for Other Projects:

Quality and Quantity of Services Provided

Resident Involvement

Adequacy of the Services Budget and Reliability of Services Funding

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Resident Services Coordination Plan

Quality and Quanitity of Services – 4 Points Maximum

• Services are veteran centric and appropriate for the target population

• Staff experience, credentials, and job duties include appropriate requirements in veteran cultural competency

• Linkages w/ local systems for ending homelessness and serving veterans

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Resident Services Coordination Plan

Resident Involvement – 4 Points Maximum

Points will be awarded based upon the quality of:•Strategies to engage residents in building community and operations

•Strategies to engage residents in services planning and operations

•Tenant Satisfaction Surveys, to inform and improve services, building operations, and property management

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Resident Services Coordination Plan

Adequacy of Services Budget – 4 Points Maximum

Points will be awarded based upon:

•Adequacy of budgeted amounts and the consistency of the amounts w/ other sections of the plan

•Completeness, accuracy and clarity of the budget document

•Percentage of the total services budget that is committed at the time of application

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Base and Operating Reserve

Off-set Tranches

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Base Tranche

Purpose: A post-construction, permanent loan that covers development budget gaps, excluding reserves that cover scheduled long-term operating deficits or supportive services

o Initial base amounts are set at:$65,000 for 9% credit projects$80,000 for projects that do not use Tax

Credits

o Maximum Loan for both tranches is $10 million

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Operating Reserve Offset Tranche

Purpose: Covers development budget gaps which result from utilizing funds other than VHHP funds to capitalize a long-term operating reserve

Amount shall not exceed $140,000 per VHHP Assisted SH Unit; and the Amount Available from Other Sources Only available for VHHP Assisted SH Units for Chronically

Homeless Veterans or those who are Homeless with a Disability

Only available if Project Contains an Operating Reserve Does not fund deficits in Supportive Services Funding Sized for 17 – 20 years with rents limited to 30% of actual

household income.

If other rental subsidies are obtained or the need for the capitalized operating reserve changes – unexpended funds are subject to recapture by HCD

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Operating Reserve Off Set Tranche Calculation

The calculation methodology is similar to that used for the MHSA COSR.

•Project income from tenant rents (set at 30% of actual income) on the assumption that rents will be affordable to tenants of existing projects targeting homeless populations. The projected rents will likely be lower than the restricted rents. Consistent with MHSA no tenant income will be projected for the first year of operations.

•Allocate operating expenses, sponsor fees, and other costs to units receiving the subsidy.

•Project rental income and eligible costs over a 17 to 20 year period, sizing the OROT to cover the projected deficit, up to $140,000 per unit cap in Section 103(g).

Underwriting

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Underwriting

Underwriting Assumptions and Criteria are Consistent with UMR’s with the following VHHP-specific exceptions.

• Loans with Balloon payments are prohibited UNLESS the Sponsor demonstrates that the Project will generate sufficient operating income, and income obtained through refinancing, to be able to pay the balloon payment when due OR loan with the balloon payment is recorded junior to VHHP Regulatory Agreement.

• If the VHHP loan does not exceed $1.5 million or 15% of TDC, HCD may modify the Underwriting Standards in Section 106 to conform to requirements of other funding sources.

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UnderwritingContinued

Transition Reserve Requirements: For projects with project-based rental assistance

the transition reserve shall be sized to prevent rent increases for 1 year following the loss of the rental assistance instead of 2 years.

For projects with non-renewable project-based rental assistance or operating subsidies the transition reserve shall be sized to prevent rent increases for 2 years following the loss of the rental subsidy.

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Fee LimitsDeveloper Fee

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For 9% and 4% Projects:•Developer Fee is calculated using the 9% Tax Credit program rules for both 9% and 4% VHHP projects. Complete Application Item B7 – Developer Fee Worksheet. Amounts and calculations will be verified against the Sponsor’s final approved TCAC project application.

For All Other Projects:•Net Developer Fee shall not exceed the amount allowed in UMR Section 8312.

Fee LimitsAsset Management and Similar Fees

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Asset Management, partnership management and similar fees paid to the Sponsor on a priority basis are subject to the following limits:

•Shall not exceed a combined level of $20,000 for 2015 (fees paid to investor partners does not count towards this limit).

•This limit shall be increased at a rate of 2% per year.

•If there is insufficient cash flow in a given year, the unpaid portion may accrue without interest and be paid in subsequent years.

•HCD may modify the fee limits in Section 107 to conform to the requirements of other funding sources, if the VHHP loan does not exceed the lessor of $1.5M or 15% of TDC.

Use of Operating Cash Flow

Use of Operating Cash Flow is subject to the UMR requirements, with the following VHHP exception: Supportive services coordination costs may be paid as a project operating expense and shall NOT exceed the following amounts:•$4,000 per unit per year for SH units restricted to veterans who are Chronically Homeless

•$3,000 per unit per year for SH units restricted to veterans with a Disability Experiencing Homelessness

•$1,300 per unit per year for units restricted to ELI Households, but NOT TO veterans who are Chronically Homeless or Veterans with a Disability Experiencing Homelessness

•$750 per unit for Other UnitsThese amounts may be increased with a 2% escalator in

subsequent years

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Contact Information

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