80-006 Code Vt. R. 80-140-006-X - Grants, Loans and Advances to Assist the Planning, Construction, Rehabilitation, and Operation of Redidential Housing; Mortgage Loans to Housing Sponsors for Single Family Development Rules

CHAPTER ONE SCOPE AND DEFINITIONS

Section 1 Authority

These rules are made and published pursuant to sections 621(5), (12) and (17) and section 624 of the Vermont Housing Finance Agency Act of 1974 as amended, (the "Act").

Section 2 Background and Purpose

By No. 77, § 3, effective June 7, 1989 (the "Amendment") the Vermont General Assembly amended 10 V.S.A. § 621(5) to empower the Agency to provide "such grants, loans, or advances as will assist the planning, construction, rehabilitation, and operation of residential housing primarily for persons of low and moderate income, including but not limited to assistance in community development and organization, advisory services, the formation of cooperative housing corporations, and to encourage community organizations to assist in developing same."

The Agency finds that reductions in the amount of federal financial assistance in the provision of safe and decent housing at costs affordable to persons and families of low and moderate income has created a crisis in the availability of such housing, that incentives for private developers and private lenders to participate in the creation and preservation of such housing have declined, and that the excess of demand for such housing over the supply will increase at an expanding rate in the absence of flexible and timely strategies designed to marshall [marshal] all resources available from time to time, including land, existing structures, public funds, and private funds.

It is the purpose of these Rules to encourage an adequate supply of safe and decent housing at reasonable cost, to interpret, limit, and implement, in part, the provisions of 10 V.S.A. § 621(5), as amended by the Amendment, and to establish criteria for mortgage loans to housing sponsors for Single Family Developments.

Section 3 Definitions

The following words and terms, unless the context clearly indicates a different meaning, shall have the following meaning:

(1) "Advance" means a direct expenditure of funds by the Agency for the purpose of planning, constructing, rehabilitating, or operating Residential Housing primarily for persons and families of low and moderate income;

(2) "Agency" means the Vermont Housing Finance Agency created by the Act;

(3) "Bonds, notes and other obligations" or "bonds, bond anticipation notes or other obligations": means any bonds, notes, debentures, interim certificates or other evidences of financial indebtedness issued by the Agency pursuant to the Act;

(4) "Eligible Borrower" includes a housing sponsor, non-profit entity, or other legal entity qualified to receive a loan for a Single Family Development or a Mixed Use Development under the provisions of these Rules;

(5) "Grant" means a grant of funds which the recipient is not obligated to repay or which the recipient is obligated to repay only in the event of a breach of conditions imposed by the Agency with respect to the use of the funds;

(6) "Land value" means the appraised value of the land as determined by an appraiser approved by the Agency; if purchased less than two years prior to the date of application the purchase price of the land or the appraised value, whichever is lower;

(7) "Limited Profit". A housing sponsor is organized on a limited profit basis if its organizational document, whether directly or by reference to a controlling agreement (which may be a lease, a loan agreement, a Regulatory Agreement, or other agreement between the Agency and the Borrower), imposes significant limitations on rental charges or sale prices, builder's and developer's fees, the right of disposition of the sponsor's property and franchise, or other sources of profit as the Agency may determine on a case by case basis;

(8) "Mixed Use Development" means Residential Housing, a portion of which will be devoted to non-housing facilities, provided that all or a portion of such non-housing facilities are not designed or will not be designed primarily for the benefit of the occupants of the dwelling units;

(9) "Multi-Family Rules" means the Agency's Rules pertaining to Loans to Multi-Family housing sponsors;

(10) "Non-Profit Entity" means a department, division, board, commission, agency or other instrumentality of this State, a political subdivision of this State, an agency of any such political subdivision, an "exempt organization" within the meaning of section 501(c)(2), (3), or (4) of the Internal Revenue Code, a non-profit corporation organized as such under the laws of this State, an entity owned, or whose day-to-day management is controlled, under the terms of a partnership agreement, by any of the foregoing, or a "limited equity cooperative" within the meaning of Chapter 14 of Title 11, Vermont Statutes Annotated;

(11) "Residential housing" means single or multi-family residential dwelling units designed primarily to provide principal dwelling accommodations for persons or families, including the land and improvements thereon and such non-housing facilities or services considered necessary or convenient by the Agency in connection with the residential housing. "Residential housing" includes, but is not limited to, single or multi-family dwellings, congregate homes, residential care homes as defined in 18 V.S.A. § 2002, nursing homes, transitional housing, emergency shelters for the homeless or displaced, mobile homes, single room occupancy dwellings, and group homes for the mentally ill or developmentally disabled. "Residential housing" also means cooperative interests and mobile home parks as defined in 10 V.S.A. Section 6201. Non-housing facilities or services shall be deemed necessary or convenient in connection with the residential housing in any case in which the Agency finds that the particular facilities or services are designed primarily for the benefit of the occupants of the dwelling units or that the acquisition, construction, or rehabilitation of the dwelling units would not be economically practicable except in connection with the economic benefits to be obtained from such facilities or services.

(12) "Single Family Development" means real property acquired or to be acquired for the construction, rehabilitation, or operation of Residential Housing primarily for occupancy by persons and families of low and moderate income, and which consists primarily of individual dwelling structures, condominium apartments, or cooperative interests owned or to be owned by the occupants of the Residential Housing.

Terms used in these Rules and in the Act, and not defined above, shall have the same meaning as they have in the Act, as amended from time to time.

Section 4 Waivers

The provisions of these rules may be waived by the Commissioners upon their determination that the application of such rules, in specific cases, may result in undue hardship, and that such waiver will not result in a violation of the Act.

Section 5 Separability

If any word, phrase, sentence, paragraph, section or part of these rules is finally adjudged by a court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of these rules.

CHAPTER TWO GRANTS

Section 1

No Grant shall be made under the authority of these Rules except to a housing sponsor or a Non-Profit Entity, and upon a finding by the Agency that the Grant will assist the planning, construction, rehabilitation, or operation of Residential Housing primarily for persons and families of low and moderate income.

Section 2

Each Grant shall be made pursuant to a resolution of the Agency, and shall be made subject to such conditions as shall obligate the recipient to its proper use.

Section 3

A Grant may or may not be made subject to the execution of a formal grant agreement by the recipient In any event, the recipient and any sub-recipient, by the acceptance of the Grant or the proceeds thereof, shall be bound by the conditions of the authorizing resolution and the applicable provisions of these Rules.

Section 4

The obligations of the recipient of a Grant may be secured in such manner as the circumstances warrant, or may be unsecured, as the Agency may determine to be appropriate in the a particular case; provided, however, that in the case of a Grant to a housing sponsor which is not also a Non-Profit Entity, the housing sponsor's compliance with the conditions of the Grant shall be secured by a mortgage on the involved real estate.

Section 5

In any case in which the Agency is authorized to make a Grant under these Rules, it may make a loan instead, and such loan may be secured or unsecured to the extent permitted or required by these Rules in the case of a Grant for the same purpose to the same recipient.

CHAPTER THREE ADVANCES

Section 1

The Agency may make Advances with respect to real property owned or controlled by it Such Advances shall be made in anticipation of the sale or lease of such real property or portions thereof to an Eligible Borrower for the purpose of planning, constructing, rehabilitating, and/or operating Residential Housing, provided that the dwelling units in such Residential Housing are intended to be occupied primarily by persons and families of low and moderate income.

Section 2

Advances for planning, architectural and engineering fees, fees for governmental permits, related legal and consulting fees, and other preliminary costs may be made prior to the identification of a particular buyer for the involved real property.

Section 3

No Advances for costs of actual and substantial physical changes to the involved real property shall be made unless the Agency has first identified the proposed buyer and has determined that delay in the commencement of such changes pending completion of the sale or execution of a binding contract of sale would be materially disadvantageous to the Agency and/or would increase the ultimate cost of the Residential Housing.

Section 4

All Advances shall be accounted for at the time of a sale or lease of the involved real property to a housing sponsor or other Eligible Borrower At the closing of such sale or lease, Advances may be deemed made for the benefit of the buyer, and may be accounted for as a portion of the purchase price, rent, loan proceeds, a Grant (in an appropriate case), or any combination thereof If such Advances have been made pursuant to contracts with third parties that remain executory in part as of the time of closing, as a condition of the sale or lease the buyer must agree to assume all obligations of the Agency under such contracts, unless the Agency shall otherwise consent.

CHAPTER FOUR LOANS FOR MIXED USE DEVELOPMENTS

Section 1

The Agency may make loans to Eligible Borrowers to assist the planning, construction, rehabilitation, or operation of Mixed Use Developments in accordance with the terms and conditions of these Rules.

Section 2

All of the land constituting a Mixed Use Development shall be contiguous Parcels of land separated only by a public way, private way, or non-navigable waters shall be deemed to be contiguous In the case of a Mixed Use Development involving more than two legally identifiable parcels of land, each parcel contiguous to a given parcel shall be deemed contiguous to all parcels to which the given parcel is contiguous.

Section 3

A Mixed Use Development may be financed by a single mortgage loan to a housing sponsor or, if the portions of the development containing the non-housing facilities can be separated by lease or subdivision as mortgageable parcels, and such separation is deemed desirable by the Agency, the Agency may make a separate loan to an Eligible Borrower with respect to the non-housing facilities The Eligible Borrower with respect to such non-housing facilities may, but need not be, the housing sponsor Any such separate loan shall be secured by a separate mortgage containing such provisions as the Agency may deem appropriate in the particular case.

Section 4

A Mixed Use Development may be multi-family Residential Housing, a Single Family Development, or any combination thereof.

Section 5

With respect to any mortgage loan made in whole or in part for the specific purpose of financing dwelling units in a Mixed Use Development which constitutes multi-family Residential Housing, the Multi-Family Rules shall apply to the extent the Multi-Family Rules are consistent with these Rules In the event of a conflict between express provisions of these Rules and the Multi-Family Rules, the applicable provision of these Rules shall be controlling.

Section 6

The intent of this chapter is to authorize comprehensive financing by the Agency of Mixed Use Developments; provided that the non-housing facilities which are not designed primarily for the benefit of the occupants of the dwelling units shall constitute all or part of an existing structure or structures to be acquired and rehabilitated Nothing in these Rules shall be construed to authorize the financing by the Agency of new, original construction of non-housing facilities which are not designed primarily for the benefit of the occupants of the dwelling units, nor the financing by the Agency of any non-housing facilities except in connection with the financing of Residential Housing.

Section 7

No loan for a Mixed Use Development shall be made until the Agency has received and reviewed the recommendation of the Executive Director relating to such loan and the Agency has adopted a resolution approving such loan, which resolution shall include the following determinations

(1) The Residential Housing is primarily for occupancy by persons and families of low and moderate income;

(2) The construction or rehabilitation costs incurred or to be incurred by the housing sponsor under agreement are for housing development costs within the meaning of the Act;

(3) There exists, or without the proposed Residential Housing there will exist, a shortage of decent, safe and sanitary housing at rentals or prices which persons and families of low or moderate income are able to afford within the general housing market area to be served by the proposed Residential Housing or there is a shortage of temporary transitional or emergency housing to be served by the proposed Residential Housing and that private enterprise and investment are unable, without assistance, to provide an adequate supply of the Residential Housing and sufficient mortgage financing for occupancy by the persons or families;

(4) The housing sponsor or sponsors undertaking the proposed housing development will maintain or increase the supply of well-planned, well-designed permanent, temporary, transitional or emergency housing for persons or families of low and moderate income and that the sponsors are financially responsible persons or institutions;

(5) More than one half of each of (a) the total floor area and (b) the total development cost of the Mixed Use Development will be allocated to dwelling units for persons and families of low and moderate income; and,

(6) The non-housing facilities to be acquired and/or rehabilitated in connection with the Mixed-Use Development, and which are not designed primarily for the benefit of the occupants of the dwelling units, are necessary in order to render the purchase or lease of the dwelling units economically feasible for persons and families of low and moderate income.

Section 8

Nothing in these rules shall be construed to bar the Agency from financing any Residential Housing merely because part of the building in which the Residential Housing is located, or other buildings on the land on which the Residential Housing is located, is used or will be used for purposes other than Residential Housing.

CHAPTER FIVE MORTGAGE LOANS TO HOUSING SPONSORS FOR SINGLE FAMILY DEVELOPMENTS

Section 1

Pursuant to 0 VSA § 624(a)(1), and these Rules, the Agency may make mortgage loans to housing sponsors for the purpose of financing the acquisition, construction, and/or rehabilitation of Single Family Developments, and, in the case of a housing sponsor which is a limited equity cooperative, for the purpose of financing the long-term operation of the development.

Section 2

No mortgage loan to a housing sponsor of a Single Family Development shall be made until the Agency has received and reviewed the recommendation of the Executive Director relating to such mortgage loan and the Agency has adopted a resolution approving such mortgage loan, which resolution shall include the following determinations

(1) The Residential Housing is primarily for occupancy by persons and families of low and moderate income;

(2) The construction or rehabilitation costs incurred or to be incurred by the housing sponsor under agreement are for housing development costs within the meaning of the Act;

(3) There exists, or without the proposed Residential Housing there will exist, a shortage of decent, safe and sanitary housing at rentals or prices which persons and families of low or moderate income are able to afford within the general housing market area to be served by the proposed Residential Housing or there is a shortage of temporary transitional or emergency housing to be served by the proposed Residential Housing and that private enterprise and investment are unable, without assistance, to provide an adequate supply of the Residential Housing and sufficient mortgage financing for occupancy by the persons or families;

(4) The housing sponsor or sponsors undertaking the proposed housing development will maintain or increase the supply of well-planned, well-designed permanent, temporary, transitional or emergency housing for persons or families of low and moderate income and that the sponsors are financially responsible persons or institutions; and

(5) More than one half of each of (a) the total floor area and (b) the total development cost of the Single Family Development will be allocated to dwelling units for persons and families of low and moderate income.

Section 3

If the Single Family Development is also a Mixed Use Development, such Development must also satisfy the provisions of Chapter Four of these Rules.

Notes

80-006 Code Vt. R. 80-140-006-X

Effective Date: ([In effect. First effective date not available]

Statutory Authority: 10 V.S.A. § 621(5), 621(12), 621(17) and 624