Legal Issues Eligible Applicant Who can be a sponsor of a Section 202 and 811 project ? 5 PRONG TEST Who can be a sponsor of a Section 202 and 811 project ? 5 PRONG TEST

Legal Issues Eligible Applicant 1) 202: must have 501(c)(3) or 501(c)(4), 811: must be 501(c)(3) 2) No part of the net earnings can inure to the benefit of any member, founder, contributor or individual 3)Must not be controlled by, or under the direction of, persons or firms seeking to derive profit or gain there- from 4) Must have a governing board 5) Must be approved by HUD as to administrative and financial responsibility 1) 202: must have 501(c)(3) or 501(c)(4), 811: must be 501(c)(3) 2) No part of the net earnings can inure to the benefit of any member, founder, contributor or individual 3)Must not be controlled by, or under the direction of, persons or firms seeking to derive profit or gain there- from 4) Must have a governing board 5) Must be approved by HUD as to administrative and financial responsibility

Legal Issues Sponsor Cannot be a public body or instrumentality of a public body. If associated with public body, 202 applicants need attorney’s opinion. 202 Sponsor can be a consumer cooperative. Cannot be an Indian Housing Authority, tribe, instrumentality or agency of a tribe or IHA. Sponsor Cannot be a public body or instrumentality of a public body. If associated with public body, 202 applicants need attorney’s opinion. 202 Sponsor can be a consumer cooperative. Cannot be an Indian Housing Authority, tribe, instrumentality or agency of a tribe or IHA.

Legal Issues Attorney’s Opinion Must state that under state or tribal law entity is not an instrumentality, and Meets the definition of “private nonprofit organization” under Part 891, and Has Articles of Incoproration which provide no more than minority control by public body or tribe, and Is not receiving a majority of its operational funding from public body or tribe Must state that under state or tribal law entity is not an instrumentality, and Meets the definition of “private nonprofit organization” under Part 891, and Has Articles of Incoproration which provide no more than minority control by public body or tribe, and Is not receiving a majority of its operational funding from public body or tribe 4

Legal Issues Exhibit 2: What is Legal Review looking for? Whether sponsor has the legal authority to sponsor the project, to assist the owner and to apply for the capital advance. Whether there are inconsistencies between sponsor’s legal documents and HUD’s statutory, regulatory and NOFA requirements. Exhibit 2: What is Legal Review looking for? Whether sponsor has the legal authority to sponsor the project, to assist the owner and to apply for the capital advance. Whether there are inconsistencies between sponsor’s legal documents and HUD’s statutory, regulatory and NOFA requirements.

Legal Issues Site Control 202 vs : Insufficient evidence of site control. Rejection. 811: Insufficient evidence of site control. Category B. Site Control 202 vs : Insufficient evidence of site control. Rejection. 811: Insufficient evidence of site control. Category B.

Types of Site Control 1. Deed or long-term leasehold  Title or leasehold interest must commence prior to the application deadline date 2. Contract of sale  Cannot require closing earlier than 12 month following application deadline date 1. Deed or long-term leasehold  Title or leasehold interest must commence prior to the application deadline date 2. Contract of sale  Cannot require closing earlier than 12 month following application deadline date

Legal Issues 3.Option to purchase or for a long- term leasehold  M ust state a firm price  Be in effect for a minimum of six months and must be renewable for a minimum of an additional six-month term Refer to NOFA for additional details 3.Option to purchase or for a long- term leasehold  M ust state a firm price  Be in effect for a minimum of six months and must be renewable for a minimum of an additional six-month term Refer to NOFA for additional details

Legal Issues 4.Site covered by a HUD mortgage. Must show requested release of site. 5.Sites acquired from a public body have special requirements. See NOFA. 4.Site covered by a HUD mortgage. Must show requested release of site. 5.Sites acquired from a public body have special requirements. See NOFA.

Legal Issues Title to the site  Must provide current title report or policy, provide all referenced docs.  Legal opinions acceptable. See NOFA for specific requirements  Mortgage liens that will be satisfied by initial closing are not considered limitations. See NOFA for specific requirements Title to the site  Must provide current title report or policy, provide all referenced docs.  Legal opinions acceptable. See NOFA for specific requirements  Mortgage liens that will be satisfied by initial closing are not considered limitations. See NOFA for specific requirements

Prohibited Relationships Conflict of Interest: Officers/directors of Sponsor and Owner cannot have any financial interest in any contract with the Owner. Conflict of Interest: Officers/directors of Sponsor and Owner cannot have any financial interest in any contract with the Owner.

Permissible Relationships Identity of interest: In the simplest terms, describes when one person can’t wear two hats. “An identity of interest between the Sponsor or Owner and any development team member or between development team members is prohibited until two years after final closing.” Some exceptions. Identity of interest: In the simplest terms, describes when one person can’t wear two hats. “An identity of interest between the Sponsor or Owner and any development team member or between development team members is prohibited until two years after final closing.” Some exceptions.

FY2010 Section 202 Evidence of Need Sponsor’s evidence of need should include: Estimate of demand (see EMAD handout) Market conditions in existing supply (Pub. Hsg., RHS, LIHTC, Sec. 8, & 202) Assisted housing under construction Sponsor’s evidence of need should include: Estimate of demand (see EMAD handout) Market conditions in existing supply (Pub. Hsg., RHS, LIHTC, Sec. 8, & 202) Assisted housing under construction

FY2010 Section 202 Evidence of Possible Lack of Demand Projected long-term decline in age-cohorts for target population Slow absorption in newer units Persistently high vacancies Widespread use of Age Waivers Evidence of new projects filling at the expense of existing ones Projected long-term decline in age-cohorts for target population Slow absorption in newer units Persistently high vacancies Widespread use of Age Waivers Evidence of new projects filling at the expense of existing ones

FY2010 Section 202 Special Tabulations of Households for 1990 and 2000 at: abs.html Special Tabulations of Households for 1990 and 2000 at: abs.html

FHEO Legal Overview Legal Requirements Incorporated into 202/811 NOFAs The fair housing/nondiscrimination requirements found in the 202/811 FY 2010 NOFA rating factors: – Providing meaningful access to persons with limited English Proficiency (LEP); – Affirmatively further Fair Housing through Marketing (AFHM); and – Site and Neighborhoods Standards (SNS) The fair housing/nondiscrimination requirements found in the 202/811 FY 2010 NOFA rating factors: – Providing meaningful access to persons with limited English Proficiency (LEP); – Affirmatively further Fair Housing through Marketing (AFHM); and – Site and Neighborhoods Standards (SNS)

FHEO Legal Overview Limited English Proficiency (LEP) LEP persons: persons for whom English is not their primary language; limited ability to read, write, speak, or understand English.

FHEO Legal Overview LEP Cont’d Recipients of federal financial assistance, including recipients of 202/811 funds, must take reasonable steps to ensure meaningful access to their programs and activities by LEP persons. Both the 202 and 811 FY 2010 NOFAs incorporate LEP requirements within the rating factors (section 3.b). Recipients of federal financial assistance, including recipients of 202/811 funds, must take reasonable steps to ensure meaningful access to their programs and activities by LEP persons. Both the 202 and 811 FY 2010 NOFAs incorporate LEP requirements within the rating factors (section 3.b).

Legal Overview LEP Cont’d Applicants should consult HUD’s Final LEP Guidance when determining how to prepare their narrative responses to earn this point. LEP Guidance available at: offices/fair_housing_equal_opp/promotingfh/lep Applicants should consult HUD’s Final LEP Guidance when determining how to prepare their narrative responses to earn this point. LEP Guidance available at: offices/fair_housing_equal_opp/promotingfh/lep

Affirmatively further Fair Housing Implementing a range of standards, policies, and procedures that not only refrain from discriminating, but also actively promote integration and fair housing choice.

Legal Overview AFHM Cont’d Goal: to target such marketing so as to “achieve a condition in which individuals of similar income levels in the same market housing area have a like range of housing choices available to them regardless of race, color, religion, sex, handicap, familial status or national origin.” 24 CFR

AFHM Cont’d Compare demographic data of the project and the housing market area and, based on the results, developing a marketing plan that will reach those applicants that are least likely to apply.

Affirmative Fair Housing Marketing Describe past strategies to reach persons that are least likely to apply for the housing, and address planned improvements. Methods may include various media outlets, informational brochures, working with community leaders, LEP services, and other new and innovative approaches. Describe past strategies to reach persons that are least likely to apply for the housing, and address planned improvements. Methods may include various media outlets, informational brochures, working with community leaders, LEP services, and other new and innovative approaches.

Site and Neighborhood Standards SNS: 202 and 811 recipients must select a site that will promote greater choice of housing opportunities for minority elderly (202) and minority persons with disabilities (811). The concept is related to AFFH. 202 and 811 NOFAs incorporate SNS within rating factors (section 3.b). SNS: 202 and 811 recipients must select a site that will promote greater choice of housing opportunities for minority elderly (202) and minority persons with disabilities (811). The concept is related to AFFH. 202 and 811 NOFAs incorporate SNS within rating factors (section 3.b).

Civil Rights Threshold Review Applicants must not have outstanding unresolved civil rights matters.

Affirmatively Furthering Fair Housing The applicant should demonstrate how the proposed project will address one or more impediments identified in the applicable local community’s Analysis of Impediments to Fair Housing Choice.

Site and Neighborhood Standards Choose a site location that provides desirable housing to residents and promotes greater choice of housing opportunities for minority elderly/disabled persons/families. HUD will assess whether the site meets the site and neighborhood standards at 24 CFR (b) and (c) by examining relevant data in the application or in the local HUD Office. Choose a site location that provides desirable housing to residents and promotes greater choice of housing opportunities for minority elderly/disabled persons/families. HUD will assess whether the site meets the site and neighborhood standards at 24 CFR (b) and (c) by examining relevant data in the application or in the local HUD Office.

Target Involvement of Program Population Inclusion of the target population (elderly and persons with disabilities, including minorities) in the development and implementation of the project.

29 Questions