Field Office Training 1 U.S. Department of Housing & Urban Development CFFP Overview Field Office Conference Call March, 2008 Todd Wendorf Office of Capital Improvements

Field Office Training 2 Field Office has a prominent role We have made this a major element of our implementation of the program. Field is our ears and eyes. Reality Check FO provides front line assessment of capacity of PHAs, and needs of their PH Portfolio Difficult to do from D.C. alone CFFP Web Site provides background/forms, etc. fund/ cffp.cfm Role of the Field Office

Field Office Training 3 Prior to Submittal of a CFFP Proposal –The role of the Field Office centers around PHA Plan, LOCCS, and Physical Needs Assessment During the Review of the CFFP Proposal –Field Offices have closest relationship with PHAs –We rely upon Field Offices to provide us feedback on capacity of PHAs and evaluation of the proposed use of the proceeds. –Request FO Counsel to review DOTs and ensure that documentation satisfactorily establishes that DOTs are effective and in first position. Role of the Field Office

Field Office Training 4 After approval of the CFFP Proposal –Receive and Review Quarterly Reports on the use of the CFFP Proceeds –Close – Out – as you would any Capital Fund Grant –Ongoing Annually, on a timely basis, review and approve PHA Plan showing use of CF for debt service Annually, and on a timely basis, execute Capital Fund Amendment to the ACC Role of the Field Office

Field Office Training 5 Physical Need Assessment Requirements Submit as part of PHA Plan Must Cover Entire Portfolio Must span the term of the financing – usually 20 years Must Take Into Account Life Cycle Replacement Costs of All Major Building Systems Survey a statistically valid sampling of units. No less than 10% of the units at each project. CFFP PNA Form – designed to help PHAs meet these requirements Role of the Field Office Pre-Submittal

Field Office Training 6 Physical Needs Assessment Role of the FO in reviewing the PNA Form Is there a PNA form included for all projects in the PHAs inventory including PHA wide nondwelling spaces? Are all areas of the form properly filled out? Was the PNA included in an approved PHA Plan (See Field Office Certification Section) Was there a representative sample of units inspected in accordance with the Modernization Handbook? Do the life cycle replacement periods appear reasonable? Are there life cycle replacement periods for all building systems? Does the PNA contain items that are not eligible under the CFP? Luxury items such as Jacuzzis. Role of the Field Office Pre-Submittal

Field Office Training 7 PHA Plan and CFFP PHA must include CFFP in their PHA Plan Must budget for d/s payments on regular annual statement under BLI 9000 and also in the 5 year action plan Must include a separate annual statement detailing the budgeted use of CFFP proceeds Prior to CFFP submittal, must have approved PHA Plan with CFFP requirements –Field Office can specify in PHA Plan approval letter that undertaking financing requires written approval of DAS of OPHI. PHA approves PHA plan with debt service included Role of the Field Office Pre-Submittal

Field Office Training 8 LOCCS Primer – Automatic Payments Most CFFP transactions setup with Direct LOCCS Payments for Debt Service (HQ OCI sets up) Role of the Field Office –Open Grants – funds budgeted for BLI 9000 debt service payments in Annual Statement should be spread by the field into BLI 9000 upon approval of the PHA Plan. The Field Office will not need to spread any funds for future debt service payments. –Future Grants - will be targeted for debt service payments when funds become available. Debt service payments will be automatically spread in either BLI 9001 or 9002 just like BLI 0110 Initial Budget, 1410 Administration, and 1408 Management Improvements. Role of the Field Office Pre-Submittal

Field Office Training 9 Field Office Confirmations Received Proposal PHA Capacity LOCCS Obligation/Expenditure Compliance Support Proposal Approved PHA Plan includes use of proceeds, use of CFP for debt service, and PNA TDC FO completes analysis and confirms that each project upon which the proceeds are to be used is within TDC limits. Role of the Field Office - Proposal Review

Field Office Training 10 Declaration Of Trust (DOT) Confirmations DOTs effective and in first position for each property proceeds will be used upon PHA Counsel Certifies and submits DOTs FO Counsel confirms that documentation satisfactorily demonstrates that an effective DOT is recorded in first position at each property. This can be long lead term item. FO Director plays a prominent role in getting this work prioritized by the FO Counsel. Request to FO counsel should take place within 3 business days of notification to FO. Review by FO Counsel should be complete within one month Role of the Field Office - Proposal Review

Field Office Training 11 Participation in Panel PHA will have to live with impact of financing Field Office will have to live with PHA It is important to OPHI that the Field Office is as familiar with the details of the transaction as possible, and has a meaningful opportunity to surface issues or ask questions OCI holds Panels, similar to a loan committee, where the details of the Proposal are reviewed. FO Directors and appropriate staff are invited and encouraged to participate in Panels. Role of the Field Office - Proposal Review

Field Office Training 12 Quarterly P&Es CFFP Proceeds do not appear in LOCCS As part of our Approval, we require PHA’s to submit P&Es both: Annually as part of PHA Plan Quarterly to FO PIH Role of the Field Office Ensure that PHA is submitting P&E on a quarterly basis Monitor Rate of Obligation and Expenditure Bond/Loan documents and CFF Amendment to the ACC carry a provision that requires prepayment prior to a violation of the obligation and expenditure limits (see attached CFF Amendment to the ACC) Role of the Field Office - Post Approval

Field Office Training 13 Changes to CFFP Proposal Post Approval There are two levels of approval a PHA would need to obtain from the FO, depending upon the nature of the change PHA Plan – up to certain limits, budget modifications are approved in the same manner a change in the use of Capital Funds would be handled, through an approval of the PHA Plan Past Threshold, Additional Written Approval from the FO is required A change in the type of activity (e.g., development verses modernization) being financed. A change in the public housing project upon which the proceeds are being used. A reduction of 20% or more in the number of public housing units the proceeds will be used upon. An increase of 20% or more in the cost of non-dwelling space. OCI will play consultative role Role of the Field Office - Post Approval

Field Office Training 14 Removal From Inventory Capital Funds are dependant upon the existence of public housing units Capital Fund Financing – as its name implies – is dependant upon the continued receipt of Capital Funds by a PHA As part of their financing documents – PHAs generally covenant against undertaking activities that would reduce the amount of Capital Funds they receive. Reductions in inventory would harm the investors and the PHA Reduced Debt Coverage Ratio Reduced amount of Capital Funds to maintain remaining portfolio If PHAs Remove Units from Inventory – generally they would be required to prepay a portion of the financing first – so as to maintain the existing Debt Coverage Ratio. Role of the Field Office - Post Approval