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HOUSING AND COMMUNITY SERVICES DEPARTMENT
DIVISION 140
COMMUNITY DEVELOPMENT INCENTIVE PROJECT FUND
813-140-0000
Purpose and Objectives
OAR chapter 813, division 140, is promulgated to accomplish the purpose of ORS 458.705 through 458.740, specifically 458.720 through 458.740, which implement the Community Development Incentive Project Fund. The Community Development Incentive Project Fund holds the proceeds of lottery bonds issued to make grants or loans to Oregon municipalities, businesses and individuals; provides credit enhancements to commercial banks and private lenders in order to encourage real estate development that promotes downtown and community center areas; provides affordable housing and other infill developments; or funds projects that promote business opportunities in Oregon's distressed areas and rural communities.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02
813-140-0010
Definitions
All terms used in OAR chapter 813, division 140, unless otherwise specifically defined herein have the meanings given in ORS 458.705 through 458.740. As used in OAR chapter 813, division 140, unless the context indicates otherwise:
(1) "Board" means the Community Development Incentive Advisory Board established pursuant to ORS 458.710.
(2) “Economic Revitalization Team” means the program of agency cooperation by the Governor’s Office to coordinate and streamline state policies, programs and procedures and provide coordinated state agency assistance to local governments. These agencies are: Economic and Community Development Department, Department of Environmental Quality, Oregon Housing and Community Services Department, Department of Land Conservation and Development, and Oregon Department of Transportation, Department of State Lands, the Department of Agriculture and the Department of Business and Consumer Services. “Regional Economic Revitalization Team” means a regional team comprised of one regional employee with each of the agencies listed above.
(3) "Fund" or "Incentive Fund" means the Community Development Incentive Project Fund.
(4) "Gap Financing" means financing provided by the Fund when other state or private financing sources are inadequate or unavailable to finance a development project.
(5) "Housing Preservation Community Incentive Fund" means a program that provides grants and/or loans to preserve affordable housing developments financed presently or previously by OHCS that have Section 8 project-based rental assistance contracts which have been renewed or will be renewed.
(6) “Program Overview” means a publication available from the Department setting forth general guidelines and information about the program and application process.
(7) "Rural Community" and "Rural Service Center," means an unincorporated community which consists of permanent residential dwellings, and commercial, industrial or (in the case of a Rural Community) public uses to the community, the surrounding rural area, or to persons traveling through the area.
(8) “Six Budget Principals” means those principles stated in Governor Kulongoski’s budget document presented in 2004 for the 2005/2007 Legislative Session to grow Oregon’s economy and ensure that all Oregon communities — large and small, urban and rural, survive. Those principals are:
(a) Provide our children and adults with the educational opportunities they need to succeed today and in the future;
(b) Take care of our most vulnerable citizens;
(c) Create family-wage jobs for Oregonians;
(d) Maintain the high quality of life we enjoy in Oregon;
(e) Ensure that our citizens are safe in their homes and in their communities, and
(f) Provide for a safe, efficient and accountable state government.
(9) "Small Community Incentive Fund" means a program that provides loans and grants of $80,000 or less for development projects, meet the criteria of the Incentive Fund program.
(10) "Urban Unincorporated Community," means an unincorporated community which has at least 150 permanent residential dwelling units, contains a mixture of land uses, and includes areas served by a community sewer system and water system.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 11-2002(Temp), f. & cert. ef. 9-5-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06; OHCS 15-2007(Temp), f. & cert. ef. 12-18-07 thru 6-14-08; OHCS 6-2008, f. & cert. ef. 6-23-08
813-140-0020
Fund Purposes
(1) The primary purpose of the Fund is to provide Gap Financing to help local communities or to use as an incentive to obtain additional funding commitments from other sources.
(2) The Fund is not intended to provide financing to replace other financing from private or public sources that could be available within 12 months of the date of the award to fund a proposed development project. Rather it is intended to be a flexible resource that promotes worthy projects by bridging funding gaps which prevent a project either from moving forward or from moving forward in a manner which achieves one or more of the Six Budget Principals.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0030
Fund Administration
(1) The Board will develop program guidelines, including specific project criteria and financing mechanisms which can be found in the Program Overview and application materials.
(2) The Department will administer the Fund in accordance with ORS 458.735. The Department's Administration of the Fund is not subject to State Housing Council policy, rules or standards.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 11-2002(Temp), f. & cert. ef. 9-5-02 thru 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0040
Eligible Uses of the Fund
(1) The Oregon Housing and Community Services Department may make grants and loans for the purpose of financing capitalized project costs (including but not limited to project management or consultant fees that are related to project development) but not for the purpose of financing planning or technical assistance or other administrative or operating costs. It is the policy of Oregon Housing and Community Services Department that, in general, payment from the Fund for hours worked by anyone employed by, and paid through the payroll of the applicant or recipient of the funds is not an eligible cost. Work will be performed by an independent contractor and hours worked or job cost billed will be presented by invoice. Any exception to this policy will be pre-approved in writing by the Director of Oregon Housing and Community Services Department. The requested exception will show that the use of employees provides a clear benefit to the project. Each request will include the applicant's cost allocation methodology and payroll procedures to ensure they have sufficient tools in place to appropriately track employee time. Each request for payment from the Fund for hours worked by employees will include a statement that hours billed are correct and appropriate, and will be documented with time-keeping data. In no circumstance will the Fund pay for staff time associated with the entity's operations.
(2) The Department may make a grant instead of a loan for a project which otherwise complies with the requirements of this OAR chapter 813, division 140 where repayment of the amount disbursed by the Fund for the project is inappropriate or the recipient would have insufficient capacity to repay the amount disbursed based on cash flow projections or documentation submitted with the application.
(3) The costs and expenses of the Department necessary for the administration of the Fund and the grants and loans made from the Fund. These costs and expenses may include the amounts necessary for the administration of the Fund through the Small Community Incentive Fund or the servicing of loans and grants made by the Fund, pursuant to a contract with the Department.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 11-2002(Temp), f. & cert. ef. 9-5-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0050
Eligible Applicants and Eligible Projects
(1) Eligible applicants include local governments and nonprofit and for-profit organizations.
(2) To be eligible for funding, a proposed project must meet the following criteria:
(a) The project must be located within the urban growth boundary of an incorporated city in this state, or in an Urban Unincorporated Community, Rural Community, or Rural Service Center that is served by a community sewer system and/or water system.
(b) The project must achieve at least one of the following three main purposes found in ORS 458.725:
(A) Promoting affordable housing near jobs or transit, developments near jobs and transportation;
(B) Revitalizing downtowns and community centers; and
(C) Rebuilding rural and distressed economies.
(c) The project must demonstrate financial feasibility and soundness based on cash flow projections or documentation submitted with the application.
(d) The project must promote achievement of at least one of the Governor’s “Six Budget Principles.”
(e) The project must comply with local comprehensive plans and land use ordinances or other regional or local plans.
(f) The project sponsor must demonstrate capacity (including capacity provided by outside consultants or developers) to fully implement the project as documented in application materials.
(g) The project must be locally supported and serve to further the community's goals related to livability and growth.
(h) The for-profit developer that is or will be the owner of the project must demonstrate investment or equity in the project.
(3) Eligible projects include, but are not limited to, a development project that has joint public and private sponsorship and/or ownership.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06; OHCS 15-2007(Temp), f. & cert. ef. 12-18-07 thru 6-14-08; OHCS 6-2008, f. & cert. ef. 6-23-08
813-140-0060
Funding Preferences
Among proposed projects that meet the requirements of OAR 813-140-0050, preference will be given to projects that meet one or more of the following categories:
(1) Are designed in a manner that maximizes long-term sustainability through use of recycled materials, attention to energy efficiency, and long term economic viability of the project;
(2) Further the economic vitality of the local community;
(3) Address a specific unmet need for affordable housing;
(4) Leverage, to the maximum extent, public and private funding sources (including tax incentives), as demonstrated by local and/or private commitment and investment;
(5) Are designed in a manner to be consistent with or complementary to the character of the surrounding community or neighborhood; and/or
(6) Demonstrate ability to expend Incentive Fund resources within 12 months after award. In the event there are insufficient moneys in the Incentive Fund to meet all otherwise qualified pending applications, the department may provide loans in part or for all of the amount requested based on the number of the categories listed above that a proposed project falls within.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0080
Rating Criteria
In addition to evaluation of a proposed project's compliance with the requirements of OAR 813-140-0050 and taking into consideration the preferences set forth in 813-140-0060, the evaluation of a proposed project may include, but is not limited to, consideration of the following:
(1) Any conditional or firm funding commitments or efforts to work with other funders to leverage all available resources;
(2) The readiness of the project to proceed once financing has been committed by the Department;
(3) In comparison with other proposed projects, the greatest impact on communities;
(4) Demonstration of realistic financial assumptions, including the need for a loan guarantee or grant funds, and the ability to repay loans;
(5) The strength of the development team as it relates to the scope of the project;
(6) Community support for the project as demonstrated by funding or fee waivers, resolution of support, or participation of community groups; and
(7) Appropriateness and uniqueness of the design of the project in relation to fulfilling the goals of the project and matching the context of the community.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0090
Lending Criteria
(1) The Department's lending criteria allows the Fund to create quality development patterns, produce a sound loan portfolio and create a sustainable loan fund.
(2) The Department shall permit the assumption of an appropriate level of risk, maintain a reserve for losses, and provide for the periodic monitoring of reserve adequacy as follows:
(a) An applicant for a loan shall demonstrate an ability to repay the debt through forma and other documentation submitted with the application. When applicable, the Department may offer a combination of grants and loans as well as a combination of loan products and terms, as it, in its sole discretion, deems appropriate to ensure repayment.
(b) A loan may be for an income-producing project or for a project in an urban renewal district with available tax increment financing.
(c) A loan may be subordinate to other loans both in terms of payment and lien securing repayment.
(3) The Department may make the following types of loans:
(a) Predevelopment loans for projects that are in the early stage. The purpose of these loans is to finance eligible predevelopment expenses such as architectural, engineering, environmental studies, purchase of options or other eligible expenses as determined by the department. A predevelopment loan shall have maximum term of 12 months and shall be 100% secured by collateral acceptable to the Department. The borrower shall pay a loan fee of 1% of the principal amount of the loan for the regular, or “large” Community Incentive Fund. There is no fee for Small Community Incentive Fund pre-development loan borrowers.
(b) Short-term loans having terms not to exceed 5 years. These loans shall accrue interest at the rate of 1% per annum for the “large’ program and 3% for the Small Community Incentive Fund program. Both shall require minimum annual interest payments.
(c) The “large” Community Incentive Fund can offer long-term loans having terms exceeding 5 years, but not exceeding 15 years. These loans shall accrue interest at a rate of 3% per annum and shall require minimum annual interest payments. The Small Community Incentive Fund does not offer long-term loans.
(d) For existing owners remaining in the program, the Housing Preservation Community Incentive Fund can offer 2 percent interest loans with a maximum term of 20 years. Other loans will be at an interest rate and term determined by the Department through project underwriting to best meet the financial viability of the project.
(4) A borrower shall execute such agreements, instruments and other documents that are required by the Department and that are in form and substance satisfactory to the Department. These documents may contain terms and provisions regarding required insurance coverage, loss reserve and periodic reporting requirement, financial ratios, escrow payments, late charges, defaults, priority of liens, and such other matters as the Department deems prudent or appropriate.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06; OHCS 15-2007(Temp), f. & cert. ef. 12-18-07 thru 6-14-08; OHCS 6-2008, f. & cert. ef. 6-23-08
813-140-0095
Application Process for Housing Preservation Community Incentive Fund
(1) All housing projects financed by OHCS with HUD Section 8 rental assistance contracts which have been renewed or will be renewed are eligible to apply.
(2) Applicants must obtain application materials directly from the Department.
(3) Applicants must submit their applications to the Department contact person listed on application materials.
(4) The Department will analyze the application and determine the appropriate mix of funding sources including tax credits, credit equity, grants and/or loans.
(5) The applications that, in the judgment of the Department, meet program requirements (see Program Overview and application materials), will be summarized for submission to the Advisory Board for their review and recommendation.
(6) Projects will be selected for financing, which in the judgment of the Board (as evidenced by its recommendations to the Director) and the Director achieve the requirements of the Housing Preservation Incentive Fund based on the criteria outlined in application materials and Program Overview.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 15-2007(Temp), f. & cert. ef. 12-18-07 thru 6-14-08
813-140-0096
Application Process for Funding from
Housing Preservation Community Incentive Fund
(1) All housing projects financed
by OHCS with HUD Section 8 rental assistance contracts that have been renewed or
will be renewed are eligible to apply for funding from the Community Development
Incentive Project Fund.
(2) An applicant for funding
from the fund shall submit an application for funding to the Department on the form
provided by the Department.
(3) If the Department determines
that funding is needed for financing developments because other state or private
financing sources are inadequate or unavailable, unless the Department determines
that financing is needed for the purpose of preserving affordable housing, the Department
shall submit a funding application under section (2) of this rule to the Community
Development Incentive Advisory Board for its review and recommendation.
(4) An application for funding
that has been reviewed by the board under section (3) of this rule is subject to
the Department’s approval or disapproval after the Director has reviewed the
Board’s recommendation. The Department’s determination under this section
is subject to its evaluation of the application on the basis of applicable statutory
criteria.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705
- 458.740
Hist.: OHCS 6-2008, f. &
cert. ef. 6-23-08; OHCS 2-2010, f. & cert. ef. 1-7-10; OHCS 10-2011(Temp), f.
& cert. ef. 10-17-11 thru 4-12-12; OHCS 4-2012, f. & cert. ef. 4-11-12
813-140-0100
Award
(1) The Director shall announce the applicants receiving Fund awards. An applicant who receives a Fund award will be issued a reservation and conditional award.
(2) Except upon the written approval of the Department, no moneys will be disbursed from the Fund until all conditions of the reservation and conditional award (including submission of the required documents) have been met to the satisfaction of the Department.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02
813-140-0105
Application Process for Large Community Incentive Fund
(1) The application process for obtaining a grant or loan from the Fund may involve, but is not limited to, a competitive review process, a first come-first reviewed process, or such expedited process as is necessary or appropriate to further the goals of the Fund.
(2) An applicant must contact the appropriate Department Regional Advisor to the Director to discuss its proposal (See Program Overview). The Regional Advisor to the Director will provide technical assistance; input on the viability of the project; and will work with the applicant to analyze and project the financial needs to determine the appropriate mix of grants and/or loans.
(3) An applicant must submit its application in a manner satisfactory to the Department. The Regional Economic Revitalization Team which may choose to consult with other regional partnerships in areas where partnerships exist, and Oregon Economic and Community Development Department financial reviewers may review the applicants. This review may include a pre-screening for fatal application flaws that on the face of the application do not meet the requirements of these rules as well as an in-depth review.
(4) The applications that, in the judgment of the Regional Economic Revitalization Team, best meet Fund thresholds and preferences (see Program Overview and application materials), will be submitted to the Department along with comments from the reviewers in the Regional Economic Revitalization Team. The number of applications submitted to the Department may be limited at the discretion of the Director.
(5) The Department will forward a description of the projects, along with comments from the Regional Economic Revitalization Team, to the Board for their consideration. At the same time, a committee of representatives from the Regional Economic Revitalization Teams, in conjunction with the Department's senior management, will develop a funding proposal. A finalized funding proposal will be presented to the Director and the Board for their review and recommendations.
(6) Projects will be selected for financing which, in the judgment of the Board (as evidenced by its recommendations to the Director) and the Director best achieve the purposes of the Incentive Fund based on the criteria outlined in OAR chapter 813, division 140.
Stat. Auth: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 7-2002(Temp), f. & cert. ef. 5-30-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; Renumbered from 813-140-0070, OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06
813-140-0110
Small Community Incentive Fund
(1) The Small Community Incentive Fund may provide loans and grants to eligible projects which require a financial incentive or gap financing. The maximum amount of financing that may be provided by the Small Community Incentive Fund for a project, whether in the form of a grant or loan or a combination of both, is $80,000.
(2) In order to be eligible for financing by the Small Community Incentive Fund, a project must meet the parameters described in the previous sections of the rule with the following exceptions:
(a) The project must be located within the urban growth boundary of an incorporated Oregon city, or in an Urban Unincorporated Community, Rural Community, or Rural Service Center that is served by a community sewer system and/or a community water system.
(b) The project must achieve at least one of the three objectives of ORS 458.725(1) through (3).
(3) The Department may make the following types of loans:
(a) Predevelopment loans which shall be fully secured with collateral acceptable to the Department and shall:
(A) Not accrue interest and have a term not to exceed 6 months, or
(B) Accrue interest at the rate of 1% per annum and have a term of more than 6 months but not to exceed 12 months.
(b) Short-term 1-5 year loans which shall accrue interest at the rate of 3% per annum, have a term not to exceed five years, and require a minimum annual payment of interest.
(4) The Regional Economic Revitalization Team will determine at the local level the process for evaluating applications, including use of a first-come, first-served or competitive process (see Overview). The Regional Economic Revitalization Team for the region in which a project is located and other experts as appropriate will review the funding requests for projects in its region. The Regional Economic Revitalization Team will determine if other Economic Revitalization Team agency resources are available to fund a project and if so, will direct the applicant to the appropriate agency. The Regional Economic Revitalization Team will, in evaluating the project, consider factors such as how well a project meets the Fund's threshold criteria, the Fund's preferences, and the financial feasibility of the project. Projects selected by the Regional Economic Revitalization Team will be forwarded to the Department, along with the Regional Economic Revitalization Team's comments and recommended conditions of award. The forwarded projects will be submitted to the Board. The Board will provide comments to the OHCS director before funding approval is made. The Director, or his designee, shall make all final funding determinations and announce conditional awards.
Stat. Auth.: ORS 458.705 - 458.740
Stats. Implemented: ORS 458.705 - 458.740
Hist.: OHCS 11-2002(Temp), f. & cert. ef. 9-5-02 thru 11-25-02; OHCS 16-2002, f. & cert. ef. 11-25-02; OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
813-140-0120
Waiver
The Department may waive or modify any requirements of OAR 813, division 140, unless such waiver or modification would violate applicable federal or state statutes or regulations.
Stat. Auth.: ORS 90.800 - 90.840, 90.630, 183, 446, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.579 - 456.581
Hist.: OHCS 5-2006(Temp), f. & cert. ef. 3-29-06 thru 9-24-06; OHCS 17-2006, f. & cert. ef. 9-15-06
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