Notice of Funding Availability (NOFA) for affordable housing in the incorporated and unincorporated areas of Sonoma County

The Sonoma County Community Development Commission is pleased to announce the issuing of this Notice of Funding Availability (NOFA) for affordable housing in the incorporated and unincorporated areas of Sonoma County.

The Community Development Commission shall make up to $4,228,928 available of Community Development Block Grant – Disaster Recovery (CDBG-DR) funds through the California Department of Housing and Community Development’s (HCD) Disaster Recovery – Multifamily Housing Program (DR-MHP) and will award these funds to one or more projects meeting qualifying criteria as described in this NOFA. Eligible applications will be considered for a portion of the funds, in accordance with the DR-MHP Policies and Procedures. The Policies and Procedures for the DR-MHP program are available on HCD’s website. All applicants are strongly advised to review the following documents provided by the State of California Department of Housing and Community Development as administrative guidelines and regulatory requirements associated with CDBG-DR MHP funding.

The Community Development Commission reserves the right to request that Applicants submit additional information as requested by staff. The Community Development Commission also reserves the right to suspend, amend or modify the provisions of this NOFA, to reject all proposals, to negotiate modifications of proposals, or to award less than the available funding.

In response to the 2017 wildfires, the United States Department of Housing & Urban Development (HUD) allocated CDBG-DR funds to HCD for disbursement statewide to disaster-affected areas. The Sonoma County Community Development Commission was identified as a subrecipient of these funds.

Funding

The form of assistance to Developers shall be a loan. Projects recommended for funding by the Community Development Commission, and approved by HCD to receive a funding award, will be funded to address a financial gap, not to exceed forty percent (40%) of the total Project cost, up to the amount of funding available. Sixty percent (60%) of the Project cost must be covered by other funding sources and recognized in the Sources and Uses Statement and Project Pro Forma as either identified or committed. The maximum per-unit subsidy award shall be consistent with annual HOME limits established by HUD, up to 240% of the HOME subsidy limit if a regional per-unit subsidy increase has been issued to the jurisdiction and are included in the table below. The minimum award amount is
$200,000.

Loan Terms and Conditions

• Projects must target Low- to Moderate-Income households earning eighty percent (80%) of the Area Median Income level established by HUD, or less. Tenants may be families, seniors, veterans, special needs, or homeless (or at-risk), and/or other eligible groups.
• The borrower shall enter into loan documents with the Housing Authority, including but not limited to: (1) Loan Agreement; (2) Promissory Note, secured by (3) Deed of Trust with the Housing Authority’s Deed of Trust Rider, (4) HCD’s DR-MHP Development Agreement Rider,
  (5) Regulatory Agreements, (6) Hazardous Substances Indemnity Agreement, (7) Assignment of Architects’ and Engineers’ Agreements, Plans and Specifications and Consent, (8) Assignment of Construction Contracts & Agreements and Consent, and (9) any other necessary documents.
• The borrower must accept the Community Development Commission’s standard loan terms: three percent (3%) simple interest per annum, principal and interest deferred for the fifty-five (55) year loan term. Interest shall commence with the recordation of the deed of trust. The term of affordability will be fifty-five (55) years from the date of HCD’s approval of the Project Completion Report.
• Projects must have reasonable acquisition, construction and operating costs, as reviewed and determined by staff based on local recent comparable developments.
• Applicants must leverage other financing sources such as, but not limited to, state, federal and other local sources and private equity.
• Applicants must demonstrate readiness.
• Applications recommended for funding to HCD must enter into a Pre-Commitment agreement with the Housing Authority.
• Applicants must have site control demonstrated by fee title ownership, an executed long-term lease or option to execute a long-term lease, signed option or purchase agreement, or equivalent legally enforceable instrument.
• Projects must comply with the requirements of the California Environmental Quality Act (CEQA) and the National Environmental Policy Act (NEPA). Compliance with CEQA and NEPA must be completed prior to finalization of the funding commitment.
• Applicants must comply with all funding source requirements, including but not limited to California prevailing wage requirements and federal Davis Bacon federal labor standards; Section 504 of the Rehabilitation Act of 1973; Americans with Disabilities Act (ADA); Affirmatively Furthering Fair Housing Act; Section 3 of the U.S. Housing Act of 1968, Equal Opportunity and related requirements in 24 CFR Section 982.53, as amended; Architectural Barriers Act of 1968; federal and state requirements related to Minority Business and Women Business Enterprises (M/WBE), Duplication of Benefits, the Uniform Relocation Assistance and Real Property Acquisition Act, prohibition against Eminent Domain, Building Standards (CalGREEN, WUI, Broadband Infrastructure), Article XXXIV, and the National Objective of Demonstrating Benefit to LMI Persons; federal labor standards regulations under 29 CFR Part 5 and other regulations; and state and federal regulations pertaining to remediation of lead, asbestos and other hazards.
• Projects must comply with County Fund for Housing policies; plans and ordinances of the County of Sonoma and applicable city jurisdiction; HCD DR-MHP Policies and Procedures; state and federal regulations; and any other funding source guidelines and regulations.
• Applicants understands that under the California Public Records Act all documents that they submit in response to this NOFA are considered public records and will be made available to the public upon request.

Projects will be subject to the DR-MHP Underwriting Criteria, as carried out by Community Development Commission staff and is available on HCD’s website.

The ability to satisfy these terms and conditions is not a guarantee of project funding.

Affirmative Marketing Plan

Project applications must include an Affirmative Marketing Plan using the Affirmative Fair Housing Marketing Plan Form HUD-935.2A. Affirmative Marketing involves outreach and advertising efforts aimed to engage individuals and groups who might otherwise be unlikely to apply. Affirmative marketing efforts must begin at least ninety (90) days prior to initial renewed occupancy for new construction and substantial rehabilitation projects. In addition to the required demographic analysis, individuals who were impacted by the 2017 disasters (including the 2017 Tubbs fire) and Section 8 Housing Choice Voucher holders have been determined by HCD to be included with those who are least likely to apply. Examples of people impacted by the 2017 disasters include renters that have lost rental units or have been displaced due to the impacts of the 2017 disasters (FEMA disasters DR-4344 and DR-4353).

Instructions for completing the Affirmative Marketing Plan can be found in Section 2.12 of the DR-MHP Policies & Procedures. To reach out to individuals and families that were impacted by the disasters and to Section 8 Housing Choice Voucher holders, the plan shall, to the extent feasible, identify non-profit caseworkers who were on the ground during the disaster, contact area public housing agencies, advertise through TV/Radio/Newspapers/Billboards/211 system. Within the interest list and application, data shall be collected to determine if a prospective applicant was impacted by the disasters or is a Section 8 Housing Choice Voucher holder.

Eligible Use of Funds

Pursuant to 42 USC 5305(a)(4), authorized activities under this statute include the clearance, demolition, removal, Reconstruction, and Rehabilitation of buildings and improvements (including interim assistance, and financing public or private acquisition for reconstruction or rehabilitation, and Reconstruction or Rehabilitation, of privately owned properties). New housing construction is also eligible as established in 83 FR 5844, paragraph B.32 of Section VI. Rehabilitation and reconstruction activities must increase the supply of affordable housing units to be considered.

Eligible costs include:

• Architectural and engineering design;
• Permitting fees;
• Developer fees;
• Mobilization, site prep, and clean up; and
• Construction, Reconstruction or Rehabilitation costs.
Ineligible costs include:
• Pre-application costs and application development costs
• Land and building acquisition costs
• Advances of any type, including construction
• Facility operating or maintenance expenses

Applicant Eligibility

Qualified affordable housing developers/project sponsors (“Applicants”) that meet the NOFA requirements are encouraged to submit proposals. Qualified Developers must have completed at least three multifamily developments, at least one of which includes affordable rental units. Eligible Applicants include for-profit or non-profit corporations, individuals, general or limited partnerships, or limited liability companies. Applicants without the necessary experience must enter into joint venture agreements with experienced developers in order to be considered.

Project Eligibility

HCD Approval of Recommended Projects: Any Projects recommended for funding by the Community Development Commission from DR-MHP funds are subject to final approval by HCD in accordance with the DR-MHP Policies and Procedures.

Eligibility of multifamily housing Projects will be assessed by HCD based on specific eligibility criteria:

• CDBG-DR funds are limited to low to moderate income-housing units. Proposed Projects may have mixed-income units, but CDBG-DR funds must only be applied to the Affordable Units for occupation by Low- to Moderate Income Households.
• The proposed project must tie back to the disaster by increasing the supply of affordable housing units.
• The proposed Project must have a minimum of 8 total units. If the Project is a Scattered Site Project, the Project application must include details on the Developer’s experience managing Scattered Site rentals and must provide a reasonable plan to adequately supervise and maintain the properties.
• The proposed Project must have a minimum of four Affordable Units or 30 percent of units must be Affordable Units, whichever is greater. Pursuant to 24 CFR 570.483(b)(3), if the project is a rehabilitation project or a senior new construction project, the project must include at least 51% of units as LMI- occupied, or a waiver must be requested. All rehabilitation projects must result in the addition of affordable units to the affordable housing stock to be deemed eligible.
• The proposed Project must meet one of the HCD Project types defined in the “2019 Multifamily Housing Program Guidelines” Article 2, Section 7302 (e) (1-5) including, 1) Large Family, 2) Special Needs, 3) Seniors, 4) Supporting Housing, and 5) At High Risk.
• All sources of funding required to complete the Project must be identified, documented as committed and accessible prior to the Department issuing a firm commitment letter and Notice to Proceed.
• The proposed Project must be cost reasonable, which is what a reasonable person would pay in the same or similar circumstances for the same or similar item or service. Cost reasonableness may be documented by comparing costs between vendors or to similar Projects.
• The proposed Project must successfully meet environmental review clearance and receive an Authority to Use Grant Funds (ATUGF) or environmental clearance letter from the Department prior to the Department issuing a firm commitment letter and Notice to Proceed.
• The proposed Project adheres to the Housing Element requirements listed in HSC 50829 and 50830.
• The proposed Project must meet the following affordable rent requirements and tenant income limits through the duration of the affordability period. At a minimum, the following thresholds must be adhered to in all Projects:
  • Maximum Affordable Rents (inclusive of all utility costs) shall not exceed the High HOME rents as designated for the Project area. DR-MHP Assisted Units may only be leased to Households with an annual income that is less than 80% of the Area Median Income.
  • Multifamily developments must meet the following affordability requirement: a minimum affordability period of 55 years for the rehabilitation, reconstruction, or new construction of multifamily rental Projects
  • Sale of a Project during the affordability period is acceptable; however, affordability periods must still be adhered to and included as a deed restriction.
• The proposed Project must be completed and occupied by April 30, 2025.
• Proposed Projects must be located within incorporated or unincorporated areas of Sonoma. This area has been identified as a Most Impacted and Distressed (MID) area impacted by the 2017 wildfires per the Federal Emergency Management Agency’s Disaster Declaration DR-4344.

Priority Criteria

Projects must meet one of the criteria:

• Projects providing a greater ratio of affordable rent units to total units (i.e. a project where 51% or more of the total units are affordable).
• Project accommodating “Deep Affordability” with at least ten percent (10%) of units targeted to households below thirty (30%) of Area Median Income levels established by HUD.
• Projects providing permanent Supportive Housing (PSH) units. The 2019 Multifamily Housing Program Guidelines define supportive housing as a housing type that meets the requirements of Article 2, Section 7302(e) (4).
• Projects that are providing residential units for Elderly Persons.
• Projects providing residential units for people with at least one Disability. Disabled people are among the groups considered as being most vulnerable and at risk of suffering negative effects from natural disasters.
• Projects that are providing residential units for Low-Income Immigrants. Post disaster Low- Income Immigrants face additional barriers to disaster relief based on immigration status, Limited English Proficiency, and fear of compromising future efforts for permanent legal status.

Application Process

How to Apply: Please fill out the attached loan application information (PDF: 507 kB). Submit a completed Community Development Commission Loan Application Form along with applicable attachments, such as the pro forma, total development budget, uses by source, unit mix chart, etc…

Due Date: Applications are due no later than May 28, 2021; at 5:00 pm., Applications will be reviewed on a continuous basis until all funds are committed to eligible projects. Please send one (1) binder including a hard copy and thumb drive of the application and attachments by US Mail* and one (1) Electronic version by Dropbox to Christopher.Raschke@sonoma-county.org. The hard copy must be tabbed, please ensure the electronic files are individually labeled. Applications may also be dropped off by our physical office (address is listed below) Monday through Thursday between the hours of 9:00am – 1:00pm prior to the due date.

Timeline: The targeted meeting for the initial funding recommendations by the Community Development Commission will be scheduled in June 2021. Final funding award approvals for projects will be made by HCD approximately (60) days within submission of applications.

Hard Copy by US Mail to:
Attn: Christopher Raschke
Community Development Commission
1440 Guerneville Road Santa Rosa, CA 95403

Please note: The Community Development Commission has closed most of its public counters until further notice and are open on a limited basis to help curb a resurgence of coronavirus infections occurring in Sonoma County and statewide. Our current public counter hours are as follows: Monday – Thursday 9:00 am – 1:00 pm.

Selection Process and Evaluation Criteria

Project Applications will be reviewed by staff for application completeness, eligibility, long-term Project viability, verification of financial feasibility, and cost reasonableness, Project timeliness and schedule, and Developer capacity. Other factors for evaluation include competitiveness in the State funding programs and secured financial commitments; project readiness; qualifications, capability and expertise of the development team to finance, design, build/rehabilitate and manage affordable housing; affordability levels; number of units; unit mix (number of bedrooms); any information requested in the Loan Application; Community Development Commission policies and preferences; HCD prioritization; and completeness, accuracy, and quality of the proposal/application. County Fund for Housing are the Community Development’s guiding criteria for evaluation of projects. Policies can be found on our website.

Complete Project Applications will be reviewed by Community Development and Sonoma County Department Staff. The Review Committee will provide funding recommendations to the CD Committee and CTAC Committee as well as the Board of Supervisors who will make recommendations for any selected Project Applications to be forwarded to HCD for final approval. Final Project funding award decisions are made by HCD, generally within sixty (60) days of submission. The HCD review process ensures compliance with regulatory requirements and broader recovery goals. For more information about HCD’s Project Application review, please refer to the DR-MHP Policies & Procedures. Once HCD approves a Project Application to receive a funding award, HCD will issue a Notice to Proceed (NTP) to the Community Development Commission, who will in turn, notify the Developer applicant. HCD may also issue Conditional Approvals, which may result in a NTP once the conditional factors identified by HCD have been satisfied.

Appeals

Project Applications not approved by HCD to receive funding may be appealed by the Community Development Commission. In order to request an appeal after HCD rejection, Developer must notify the Community Development Commission in writing within fifteen (15) days from the HCD award announcement date, via mail to the Community Development Commission at:

Community Development Commission
Housing and Neighborhood Investments Unit
1440 Guerneville Avenue
Santa Rosa, CA 95403

The Community Development Commission may request additional information from Developer after the initial request for appeal is received. The Community Development Commission will make a decision to appeal or not to appeal HCD’s funding decision within sixty (60) days of the award announcement date. The Community Development Commission’s decision to appeal or to not appeal shall be final.

Recapture Funds

A Developer may be required to repay all, or a portion of the funds received. The reasons for recapture include, but are not limited to the following:

• A Developer withdraws from the Program prior to completion of the Project and fails to meet a national objective;
• A Developer does not meet the affordability requirements for the term of affordability;
• A Developer is found to have used program funds for an ineligible activity or cost; and/or,
• A Developer does not report the receipt of additional insurance, SBA, FEMA, non-profit assistance and/or any other Duplication of Benefits received after award.

The method of recapturing funds and the timeframe for doing so are determined on an individual Project basis. However, the recapture method and timeframe will be consistent with 2 CFR part 200 or other applicable cost principles. Complete recapture provisions will be included in the agreements between the Community Development Commission and Developer.