825 R.I. Code R. 825-RICR-30-00-2.3

Current through October 25, 2024

Section 825-RICR-30-00-2.3 - APPLICATION PROCEDURE

A. Generally. As provided herein, an Owner shall submit to the Corporation a Notice of Intent. The Corporation shall calculate and notify the Owner of the estimated Available Proceeds which would be distributable to the Owner and/or the Transferee from the Housing Development in the event of consummation of the proposed transactions identified in the Notice of Intent. If the Owner wishes to proceed with the proposed transactions, the Owner shall submit a Preservation Application to the Corporation (jointly with the Transferee, if any), on forms provided by the Corporation. One-half of the Available Proceeds shall be distributed to the Preservation Trust (as hereinafter defined) to be used to provide and maintain affordable housing for persons and families of low income within the State of Rhode Island. The Owner and/or Transferee, if any, shall receive the balance of the Available Proceeds. The Owner of Transferee shall agree to maintain the Housing Development as housing affordable to persons and families of low-income for a period of forty (40) years beyond any current use restrictions and to certain other restrictions designed to preserve affordable housing.

B. Notice of Intent.

1. Submission of Notice of Intent. The Owner shall submit to the Corporation a completed Notice of Intent together with the Processing Fee specified below, to notify the Corporation of the proposed transactions to which this Part applies. The Notice of Intent shall contain such provisions as the Corporation shall determine from time to time, including, without limitation, a description of the proposed transactions, specifying the Owner's current intention to retain or Transfer the Housing Development.

2. Documentation and Agreements. Simultaneously with the submission of the Notice of Intent (unless otherwise specified herein or agreed to by the Corporation), the Owner shall submit to the Corporation:

a. Certification of Authority. Evidence of corporate or partnership authority of the Owner and the officers or agents acting on Owner's behalf, satisfactory to the Corporation in form and substance and certified to by the appropriate officer or agent to be validly adopted and in full force and effect; and

b. Additional Documents. Such additional documents agreements and certificates as the Corporation may, from time to time, require.

C. Fees and Costs. Upon receipt of the Notice of Intent, the Corporation shall determine the cost of a Capital Needs Assessment and an Appraisal, if required by the Corporation, and notify the Owner of such costs in writing. The owner shall deliver to the Corporation within ten (10) days following the receipt of the cost disclosure, a certified check (or other method of payment acceptable to the Corporation) in the full amount of such costs. If the Owner fails to do so within such time period, the Corporation may disregard the Notice of Intent and retain the Processing Fee. If requested by the Corporation, the Owner shall provide the Corporation with the names and quotes of and assessors qualified to perform the Capital Needs and Appraisals. The Corporation may select any or entity it shall, in its sole discretion, deem whether or not included among those provided by the Owner and shall in no event be limited to selection based on quotes received.

D. Capital Needs Assessment. Following receipt of the required fees and costs, the Corporation shall cause a Capital Needs Assessment of the Housing Development to be completed by a qualified assessor satisfactory to the Corporation and in accordance with its instructions, the cost of which shall be payable by the Owner, but shall be deemed an allowable transaction cost for purposes of calculation of Available Proceeds. The Capital Needs Assessment shall detail the current and future capital improvements and rehabilitation necessary to rehabilitate the Housing Development and maintain it in good repair, as safe and sanitary residential housing, as well as the estimated costs thereof. After reviewing the Capital Needs Assessment, the Corporation shall determine the required capital improvements and rehabilitation and the estimated costs thereof (which costs shall constitute the minimum required initial contributions to the Rehabilitation Reserve Account as to current improvements and rehabilitation, and the Replacement Reserve Account as to future improvements and rehabilitation, both of which accounts are required by this Part.) In no event, shall the Corporation in any way be bound by the determinations made in the Capital Needs Assessment. In making this determination, the Corporation may consider any relevant information, including, without limitation, information submitted by Owners, tenants and governmental agencies.

E. Appraisal. If determined to be necessary by the Corporation and upon receipt of the required fees and costs by the Corporation, the Corporation shall cause an appraisal of the Housing Development to be completed by a qualified appraiser satisfactory to the Corporation. All fees and costs associated with the appraisal shall be paid by the Owner, but shall be deemed an allowable transaction cost in the calculation of Available Proceeds. The appraisal must be satisfactory to the Corporation in all respects and shall be conducted pursuant to its instructions as to form, substance and assumptions.

F. Processing Fee. The Owner shall pay to the Corporation a nonrefundable processing fee (the "Processing Fee") in an amount established by the Corporation from time to time by Program Bulletin, which fee shall in no event exceed Ten Thousand Dollars ($10,000.00). The Processing Fee shall be payable to the Corporation (or such other entity designated by the Corporation) solely from funds of the Owner and not from Housing Development funds in cash or by certified or bank check; provided that the Processing Fee shall be deemed an allowable transaction cost in the calculation of Available Proceeds. Notwithstanding any other provision herein contained, the Corporation may, at its option, agree to waive all or any portion of the Processing Fee. The Processing Fee paid shall be credited against all applicable application processing and loan submission fees to be paid by the Applicant to the Corporation pursuant to any other rules and regulation of the Corporation in connection with the proposed transactions listed in the Preservation Application.

G. Operating Needs Assessment. The Corporation shall assess the current and future operating expenses of the Housing Development. In making this assessment, the Corporation may consider any relevant information including, without limitation, information submitted by the Owner, residents of the Housing Development or any governmental agency. Owners shall provide the Corporation promptly with access to or copies of all records, documents and information requested by it in connection with such assessment.

H. Initial Determination of Available Proceeds.

1. Upon completion of the Capital Needs Assessment, the Appraisal (if any) and the Operating Needs Assessment, the Corporation shall make an initial estimate of Available Proceeds as of the date of determination, based on available information. In the case of proposed Additional Financing or other proposed financing, the Corporation shall estimate the Available Proceeds assuming conventional financing, as well as the issuance of taxable bonds and tax exempt bonds (including 501(c)(3) bonds) to fund such financings. The estimated Available Proceeds shall be calculated as of the date of determination as follows:

a. Total Funds. The Corporation shall estimate the sum of:

(1) the amount of funds in the Operating Account for the Housing Development in excess of that amount deemed necessary by the Corporation to satisfy the Housing Development's day to day operating costs for the balance of the calendar year;

(2) all revenue account balances for the Housing Development (including, without limitation, the balance of the Operating Reserve Fund and the Replacement Reserve Fund, but excluding all funds escrowed for the payment of taxes and insurance on the Housing Development);

(3) Residual Receipt Account balances for the Housing Development;

(4) an estimate of the proceeds of any Additional Financing or other proposed financing, if any, that is supportable under applicable underwriting criteria; and

(5) proceeds of the sale of Tax Credits, if any.

b. Available Proceeds. The following amounts shall be estimated as of the date of determination and shall be subtracted from the Total Funds to determine the estimated Available Proceeds:

(1) balance of all obligations constituting a lien on the Housing Development which are to be satisfied and discharged in connection with the proposed transactions listed in the Notice of Intent and/or Preservation Application;

(2) estimated amount of the initial deposit to the Rehabilitation Reserve Account;

(3) estimated amount of the initial deposit to the Replacement Reserve Account;

(4) estimated amount of the Preservation Operating Reserve Account Requirement (as herein defined);

(5) estimated amounts of all other required reserve account deposits; and

(6) estimated transaction costs to be paid from funds of the Housing Development (which shall be approved by the Corporation on a case by case basis).

2. The initial determination of Available Proceeds is an estimate and in no way binds the Corporation. The Corporation shall provide the Owner with a copy of the initial determination together with copies of the Operating Needs Assessment, the Capital Needs Assessment and the Appraisal (if any) (collectively, the "Assessment Material").

825 R.I. Code R. 825-RICR-30-00-2.3