In order to request HUD approval, PHAs must submit a minimum of one hard copy and three electronic copies on CD of the complete CFFP Proposal to:
Office of Public Housing Investments
451 7th Street SW
Washington, DC 20410
Attention: Dominique Blom
Deputy Assistant Secretary
One hard copy of a complete CFFP Proposal and one electronic copy on CD should also be sent to the appropriate Field Office Director of Public and Indian Housing. The Cover Letter should evidence that a complete Proposal was sent to the Field Office.
Per 24 CFR 905.57, HUD has streamlined its CFFP Proposal requirements. The focus of this streamlining effort has been to design the program to rely more heavily on existing HUD systems, such as PHAS, to minimize redundancies between the CFFP and other HUD programs, such as mixed finance, RHF, etc., and provide regulatory relief to smaller housing authorities. Towards these ends we have implemented the following streamlining measures.
PHAs that borrow less than $2 million cumulatively and are designated as Standard Performers; PHAs that borrow less than $20 million cumulatively and are designated as High Performers; PHAs that propose to use CFFP Proceeds as part of a mixed finance transaction, are no longer required to submit the below noted items as part of their CFFP Proposal:
- Fairness Opinion
- Management Assessment
- Assurances in regard to construction management and financial controls
- If HUD determines that interest or other costs do not appear to meet industry norms, or other aspects of the proposal present atypical risks, HUD retains discretion to require assessments, opinions or controls, or return the proposal.
PHA undertaking Mixed Finance Modernization transactions, PHAs borrowing less than $2 million, PHAs sizing their borrowing only based on Projected RHF are not required to:
- Statement demonstrating that the PHA has considered leveraging non-public housing funds, and state why the proposed financing is appropriate in light of alternative sources available.
The following items have also been streamlined:
- Physical Needs Assessments are no longer required of PHAs that use CFFP proceeds as part of a Mixed Finance Proposal, and for PHAs that size their financing based upon only projected RHF.
- PHAs that size their CFFP based only on RHF, and those that propose to utilize the CFFP as part of a mixed finance modernization transaction are not required to:
- Submit a CFFP Budget as part of the CFFP Proposal
- Submit quarterly reports to the Field Office
- DOTs are not required to be submitted for any mixed finance projects.
The PHA must submit the below financing schedules in the manner and format prescribed by HUD:
The following submissions are also required:
The PHA must submit a complete set of the legal documents that the PHA will execute in connection with the CFFP transaction. The legal documents are to be submitted to HUD only after they have been negotiated and agreed upon by the parties to the transaction. HUD will not review preliminary documents that are still under negotiation.
The PHA will submit modernization DOTs for all of their Non-Mixed Finance public housing projects and a certification from their counsel that these represent all of their public housing properties, and that in each instance the DOTs are recorded in first position and will be effective for the term of the financing. If the PHA Counsel is unwilling to offer such a certification, the PHA may submit a title report, along with a certification from the PHA that the DOTs and the title report cover all properties in their public housing portfolio. As noted in the streamlining section of this page, DOTs are not required to be submitted for mixed finance projects.
- A cover letter:
The letter should include a statement demonstrating that the PHA has considered leveraging non-public housing funds, and state why the proposed financing is appropriate in light of alternative sources available. For streamlined PHAs, construction management, leveraging statement and financial controls is not required. The cover letter must be signed by the PHA Executive Director (or Chief Executive Officer, if applicable) and should transmit and request HUD?s approval of the CFFP Proposal. It should briefly describing the proposed financing and use of proceeds, the percentage of capital funds being dedicated to debt service, and the percent of the PHA?s public housing units benefiting from the financing. The letter should indicate any impact of the financing on the public housing portfolio, highlight any significant financial elements or legal provisions, and provide an overview of construction management and financial controls.
- Term sheet, table of contents, and contact information
The PHA must submit (a) a table of contents, (b) the HUD-prescribed Term Sheet (MS-Word), and (c) contact information for all of the key participating parties.
- Financing schedules:
- A debt service schedule. Please find HUD form debt service schedules by clicking on the below links.
- A sources and uses schedule (MS-Excel, 20 KB)
- A portfolio schedule (including projections for RHF as appropriate). The portfolio schedule should be used by the Authority to project any future adjustments in its capital funding due to activities such as demolition, disposition, conversion, merging units, casualty, condemnation, asset management, PIC data issues, etc. The CFP should also be adjusted to reflect items that would limit available CFP, such as Voluntary Compliance Agreements, other administrative or judicial actions, or contractual commitments to mixed finance projects (e.g. Regulatory and Operating Agreements). The Authority shall project a stabilized number of units (Stabilized Base Unit Count) to be reached in no more than five years after all planned or anticipated activities have been completed that would reduce future Capital Fund grants.
HUD generates per unit funding schedules and other Capital Fund Reports that can be used to complete the portfolio schedule. These schedules can be found at 2008 Capital Fund Reports page.
- Other required submissions:
- Capital Fund Financing budget detailing the use of the CFFP loan proceeds. Proceeds may be used only for the modernization or development of public housing and related costs including the modernization or development of non-dwelling space. Financing proceeds may not be used for administration or central office cost center costs (except for mixed-finance projects), management improvements, or upon non-viable projects, such as those subject to required conversion. Financing proceeds may be used to reimburse predevelopment costs, but only to the extent they were incurred in conformance with applicable regulatory requirements. Sample Capital Fund Financing budget (MS-Excel, 97 KB) The Capital Fund Financing budget utilizes the Annual Statement form. HUD will accept an Annual Statement submitted in accordance with 4(b)(1) in satisfaction of the requirement for a Capital Fund Financing budget in this section 4(a). Qualified PHAs that are not required to submit Annual Statements as part of their PHA Plan must still submit a Capital Fund Financing budget as part of their CFFP Proposal, however Annual Statements and Five-Year Action Plans showing the use of Capital Funds for the payment of debt service will not be required of Qualified PHAs.
- A copy of the following PHA Plan information: 1) an Annual Statement showing the use of the CFFP proceeds; and 2) an Annual Statement and Five-Year Action Plan (Capital Fund Program tables) showing the use of Capital Fund Program (CFP) grant amounts and/or Replacement Housing Factor (RHF) grant amounts for debt service payments. Where a PHA is requesting that HUD establish automatic payment of debt service from LOCCS to the lender or trustee, the PHA should use BLI 9000 to show debt service payments in their annual plan and Five Year Action Plan. The budgets in LOCCS for open grants which will be used to make debt service payments need to be revised to reflect the estimated debt service payment amounts on the BLI 9000. Where a PHA will be making direct payments of debt service, BLI 1501 should be used.
The cover letter should include a statement confirming that the above items have been incorporated into an approved plan. However, to the extent a Qualified PHA is not required to submit Annual Statements or Five-Year Action Plans as part of their PHA Plan, these items are not required to be submitted as part of a CFFP Proposal.
- The cover letter should include a statement confirming that the above items have been incorporated into an approved plan. However, to the extent a Qualified PHA is not required to submit Annual Statements or Five-Year Action Plans as part of their PHA Plan, these items are not required to be submitted as part of a CFFP Proposal.
- An independent, third party management assessment (MS-Word, 69 KB)
- An independent third party fairness opinion (MS-Word, 27 KB)
- A physical needs assessment (MS-Excel 2.7MB) covering the Authority's entire public housing portfolio, for the term of the financing, taking into consideration the life cycle replacement costs of all major building systems
- Financing documents:
- Declaration of Trust requirements:
- Board Resolution, Counsel’s Opinion, and Depository Agreement:
- The PHA must submit evidence of a PHA Board resolution that authorizes the PHA to undertake the loan up to a specified amount; provide all security interests required by the loan; and repay the loan with capital funds as required by the financing documents. The Board resolution must also provide authorization for the Executive Director or other executive staff to negotiate and enter into all legal documents required as part of the transaction.
- The PHA must submit PHA counsel’s opinion, which opines that the PHA has the authority to enter into the transaction, and that the transaction complies with the requirements of the 1937 Act, as amended, federal regulations, and the ACC, as amended. Sample Opinion of Counsel (MS-Word, 72 KB)
- The PHA must submit a depository agreement that covers all of the CFFP funds. Sample Depository Agreement
Pooled CFFP Transactions
While most Capital Fund Financing Program transactions involve a single PHA, an alternate model also exists. This model involves groups, or Pools, of PHAs within the same state, entering into agreements to jointly pursue CFFP financing. The CFFP Pool model is transferable and relevant to any CFFP transaction for PHAs and can provide benefits in the form of shared costs, expertise and the inherent support of a grouped approach.
The primary reason PHAs have chosen to engage in a Pool approach is because it enables PHAs to reduce transaction costs and make larger, complex transactions feasible for smaller PHAs or smaller projects. In these situations, Bonds may be issued through the state Housing Finance Agency (HFA), a lead PHA, an affiliate or a procured financial professional. In many cases, the Pool is able to set up an internal team comprised of HFA and/or PHA staff and procured legal and financial professionals who can help drive the process through approval. For these reasons and more, Pools are a viable alternative to a single CFFP transaction. There are advantages and disadvantages to seeking CFFP funds through a pooled transaction. Please feel free to contact the CFFP staff to discuss.
For Pooled transactions please provide:
- Master list of participating PHAs;
- Pool Mailing List - Sample (MS-Excel, 42 KB)
- Pool Spreadsheet (MS-Excel, 24 KB)
- Master Sources and Uses statement and Master Effective Cost of Financing;
- Narrative statement on the structure of the Pool.
If you have any questions regarding the CFFP application requirements please contact a member of the CFFP team.