La. Admin. Code tit. 16 § II-311

Current through Register Vol. 50, No. 11, November 20, 2024

Section II-311 - Implementation Guidelines and Processing Restrictions and Procedures

A. Implementation Guidelines. All projects must be feasible and viable. The project must satisfy the following implementation guidelines.

1. HOME funds will be allocated only to fill the gap between other sources of funds available to the project and the required uses of funds in the project. Conventional financing or equity must equal at least 15 percent of total development cost for each phase of a project.

2. Neither appraised value nor total development cost plus points and fees paid by or on behalf of the eligible borrower under the HOME/MRB Program may exceed the maximum permissible acquisition cost for single-family units for the area within which the unit is located.

3. Maximum HOME funds budgeted to develop a unit may not exceed 85 percent of the total development cost per unit during the construction period for any phase of development.

4. All projects must be scattered site or consist of townhouse units.

5. Developer fees shall not exceed 15 percent of the developer fee base. The combined builder profit and builder overhead shall not exceed 8 percent of the builder profit base.

B. Market Study

1. If the total number of units in a project consists of 16 or more units and the project involves any new construction or the conversion of an existing nonresidential building to residential rental use, a detailed market study dated as of a date no earlier than 90 days prior to the application deadline must be submitted by an independent qualified housing consultant evidencing demand for additional homeownership units in the market area.

2. The market study must:

a. specify in detail the sources of demand for new homeownership units by low income households and that such low income households will pay no more than 30 percent of their household income for PITI;

b. contain a confirmation as to the total number of rental units that have received building permits over the 24-month period ending 120 days prior to the application deadline and that the construction and placement in service of such units in the pipeline will not affect the absorption efficiency of the project;

c. document the request for points in the selection criteria for special needs groups, new construction in areas with 95 percent rental occupancy and large families occupying single-family units having four or more bedrooms.

3. In addition to the submission of the market study, the independent qualified housing consultant must execute and submit by the application deadline a certification of demand for new units.

C. Total Development Cost Limitations. No project will be reserved or allocated HOME funds if the total development cost per unit plus points deemed paid by or on behalf of an eligible borrower as specified under the agency's HOME/MRB Program exceed the FHA single-family mortgage limits for single-family units within the area which the unit is located.

D. Dollar per Square Foot Limits. No project will be reserved or allocated HOME funds if the total development cost per square foot exceeds $75.

E. Developer Fees and Builder Profit Limits

1. Developer fees for a project shall not exceed 15 percent of the developer fee base.

2. Builder profit shall not exceed 6 percent of the builder profit fee base and builder overhead shall not exceed 2 percent of the builder profit fee base unless approved by the agency in connection with projects:

a. without an identity of interest between the developer and the builder; and

b. in which the construction contract was awarded on the basis of a competitive solicitation of qualified contractors.

F. Proposed Sale Price Per Units. No unit in project may be sold for more than the maximum sales price reduced by any fees or points deemed paid by or on behalf of an eligible borrower, as specified under the agency's HOME/MRB Program.

G. Appraisals. Appraisals establishing a project's fair market value will be required in connection with all projects financed with HOME funds.

H. Identities of Interest. An identity of interest is construed to exist when:

1. there is any financial interest of the developer in the builder or any financial interest of the builder in the developer;

2. any officer, director or stockholder or partner of the developer is also an officer, director or stockholder or partner of the builder;

3. any officer, director, stockholder or partner of the developer has any financial interest in the developer; or any officer, director, stockholder or partner of the builder has any financial interest in the developer;

4. the developer advances any funds to the builder;

5. the developer supplies and pays, on behalf of the builder, the cost of any architectural services or engineering services other than those of a surveyor, general superintendent, or engineer employed by a developer in connection with its obligations under the construction contract;

6. the developer takes stock or any interest in the builder corporation as consideration of payment;

7. there exists or comes into being any side deals, arrangements, contracts or undertakings entered into or contemplated, thereby altering, amending, or canceling any of the required closing documents, except as approved by the agency;

8. any relationship (e.g., family) existing which would give the builder or developer control or influence over the price of the contract or the price paid to any subcontractor, material supplier or lessor of equipment.

I. Cost Certifications. The agency must review the certification of the certificate of actual cost audited as of the placed-in service date in accordance with Generally Accepted Accounting Principles (GAAP) by an independent certified public accountant.

J. Subsidy Layering Review. Prior to releasing any retainage of HOME funds for a project, a subsidy layering review will be conducted in connection with any project receiving HOME funds.

K. Debarred Developer. No debarred developers may be reserved HOME funds.

La. Admin. Code tit. 16, § II-311

Promulgated by the Department of the Treasury, Housing Finance Agency, LR 23:1533 (November 1997).

AUTHORITY NOTE: Promulgated in accordance with R.S. 40:600.6.