§ 11003. Application Selection Criteria.

(a) General. All applicants requesting Farmworker Housing Assistance Program Credit shall be eligible to apply under this Section for a reservation and allocation of Credit.

(1) Application review period. The Committee may require up to forty-five (45) days to review an application and an additional fifteen (15) days from the closing date of the application filing period to consider the application for a reservation of Credit.

(2) Application evaluation. Applications shall be evaluated to determine if complete, by meeting all threshold requirements; if economically feasible, by demonstrating the financial capacity to complete the project; and, the adequate financial capacity, resources and sufficient expertise to successfully develop, own and maintain the proposed project for the term of the compliance period.

(3) The applicant shall apply to the Committee for certification of Credit prior to incurring project costs.

(b) Selection Criteria. Applications shall be evaluated and scored based upon cost efficiency as described below. Applications shall compete with other applications and shall be funded based upon the availability of Credit, and the cost efficiency score. Family housing projects as defined in Section 11001 will be given first priority in the allocation of Credit with secondary preference given to all other projects. Applications receiving a Credit reservation will be those with the lowest cost per square foot as described below. The criteria are:

Primary Criteria -Cost Efficiency. The score consists of the following factors: Total Estimated Project Cost and Total Residential Square Footage. Score shall be determined by dividing the Total Project Cost by the Total Residential Square Footage to obtain the Cost per square foot. The resulting calculation shall be carried out to the third decimal point (i.e., $89.756 per square foot).

(2) Tie-breakers. In the event that two or more applications receive the same score under the Primary Criteria, tie-breaker criteria shall be applied to establish the order of selection priority. The following tie-breakers shall be employed:

(A) First Tiebreaker -Financial Readiness. Points are based upon total project costs compared to the total financing formally committed at the time of application. Financing for this purpose includes loans, grants, investor and owner equity. Score shall be determined by dividing the Total Committed Financing by the Total Project Costs. The resulting calculation shall be carried out to the fourth decimal point (i.e., .4899). Projects shall be ranked with the highest percentage of Total Committed Financing first and so forth in that order.

(B) Second Tiebreaker -Equity Contribution. Points are based upon equity contribution related to the Credit. Score shall be determined by dividing the equity contribution related to the Credit by the amount of the Credit. The resulting calculation shall be carried out to the fourth decimal point (i.e., .7255). Projects shall be ranked with the highest percentage of Equity Contribution first and so forth in that order.

(c) Thresholds. The following thresholds shall be met to the Committee's satisfaction by presentation of conclusive, documented evidence:

(1) Site control. Applicants shall provide evidence that the subject property is, and will remain, within the control of the applicant from the time of application submission.

(2) Local approvals. Applicants shall provide evidence that at the time of application filing all land use and zoning approvals necessary to develop the proposed project have been obtained. The Committee may require in support of the evidence, a Committee provided form letter from an appropriate local government planning official of the applicable local jurisdiction certifying that all approvals are in place.

(3) Economic Feasibility. Applicants shall demonstrate, on a Committee approved format, a financing plan demonstrating the proposed project's economic feasibility as a qualified farmworker housing project. The information provided shall demonstrate that the proposed financing, including tax Credit, is sufficient to complete the project, adequate to operate the project for the term of the compliance period and the proposed ownership has the financial capacity to ensure the completion and operation of the project for the term of the compliance period. The feasibility analysis shall also utilize the underwriting criteria specified in Section 11004.

(A) Enforceable financing commitment. Applicants shall provide evidence of enforceable financing commitments for a minimum fifty percent (50%) of the construction financing or fifty percent (50%) of the permanent financing for the proposed project's estimated total construction or total permanent financing requirements. The commitments shall be in writing and from a lender other than a mortgage broker, the applicant, or an identity of interest of the applicant. Permanent financing must have a term of at least 15 years. If a variable or adjustable interest rate permanent loan is proposed, the applicant shall demonstrate feasibility at the maximum prescribed interest ceiling rate for the same period.

(B) Deferred-payment financing, grants and subsidies. Applicants shall provide evidence that all deferred-payment financing, grants and subsidies are “committed” at the time of application.

(1) Evidence provided shall signify the form of the commitment, the loan, grant or subsidy amount, the length of the commitment, and express authorization from an official expressly authorized to act on the commitment of funds.

(2) If applicable, substantiating evidence of the value of local fee waivers or land write downs may be required.

(C) Bank or Financial institutions requesting credit shall provide the following:

(1) Request for an allocation of Credit.

(2) An enforceable financing commitment of funds for the subject project detailing the terms and conditions of the loan commitment.

(a) Any financing commitment with a term of less than 15 years from the application filing deadline or loans funded prior to January 1, 1997 are excluded and ineligible.

(b) Applications shall be made prior to funding of the loan.

(3) The stated market rate of interest for loans being offered to similar projects as of the closing date of the application filing period.

(4) The stated rate of interest charged the subject project including the estimated amount, term and usage.

(5) The amount of credit requested.

(a) The credit requested shall be based upon the interest earned on that portion of the principal amount of the loan which was used to fund Eligible Costs that were actually paid or incurred.

(b) The credit shall apply only to interest income earned in accordance with (a) above and shall not include any loan fees or charges by the bank or financial institution.

(6) Amortization schedules showing the projected interest earned on the Eligible Costs at both the market rate and the below market rate shown in the commitment.

(D) Credit can only be applied for during an application cycle. If the bank or financial institution is not requesting Credit for the loan being provided to a proposed project, the applicant shall provide a waiver from all lenders at the time of application.

(1) All lenders listed in the application, if not requesting Credit, shall execute and acknowledge that no Credit is being requested and that Credit will not be requested subsequent to any qualified expenditure made by the owner of the proposed project.

(4) Sponsor characteristics. Applicants shall provide evidence that project participants possess sufficient expertise and financial capacity to develop, own, operate and sustain the proposed project for the compliance period. The Committee shall determine if any of the evidence provided shall disqualify any or all of the participants or the applicant. The following minimum documentation is required:

(A) Current year-to-date financial statement(s) and the prior three fiscal/calendar year financial statements and IRS tax returns for the general partner(s), principal owner(s), and developer(s);

(5) Minimum construction standards. Applicants shall provide a statement certifying their intent to meet all building and compliance requirements as more fully described in Health and Safety Code Section 18900, (for single or multi-family housing), the Health and Safety Code 19960 (for factory-built housing), Health and Safety Code 18000 (for mobile homes), or Health and Safety Code 17000, (for employee housing), as applicable. Additionally, the statement of certification shall itemize the minimum specifications of those codes to be incorporated into the project design.

(A) If local building codes are more restrictive then those regulations shall prevail.

(B) The applicant shall provide a certification from the appropriate local agency, from a certified architect, or from the appropriate state agency that the proposed housing meets the minimum standards as specified in the appropriate codes.

HISTORY

1. New section filed 9-29-98; operative 9-29-98 pursuant to Government Code section 11343.4(d) (Register 98, No. 40).

Note

Note: Authority cited: Section 50199.56, Health and Safety Code. Reference: Sections 50199.52, 50199.53 and 50199.55, Health and Safety Code; and Sections 17053.14(e), (f), (h) and (i), 23608.2(b), (e), (f) and (h) and 23608.3(b), (e), (f) and (h), Revenue and Taxation Code.