Q&A on DOH Affordable Housing Development Scoring

This applies to rental and homeownership development for affordable housing units. This does not apply to CHDO operating, down payment assistance, or homeowner assistance programs.

Starting on December 2, 2024 and for affordable housing development rounds thereafter.

DOH wants to be transparent in how we are making decisions about our limited funding sources, and to be clear about the State’s priorities. These scoring criteria give us a tool to assess projects in a competitive application process. In developing these criteria, DOH looked at scoring criteria used by other funders, including CHFA, to build alignment between our processes.

DOH does not anticipate being able to fund all applicants in a round. Applications not selected for funding will not automatically roll over into future rounds, and should instead re-apply if funding is still needed.

• Yes, applicants can re-apply. Unless there are changes to the project features, scores aren’t likely to change cycle to cycle, but the mix of projects applying may positively or negatively impact their relative competitiveness.
• DOH encourages you to work with your development specialist if you plan to re-apply.

DOH will revisit the criteria annually to ensure they are providing value to our review process and are aligned with statewide priorities. However, we recognize that projects are developed over several years, and we are committed to
providing as much consistency as possible.

It doesn’t. CHFA will evaluate projects submitted to it for funding separately. However, DOH has taken CHFA’s QAP into account when developing our scoring criteria to provide as much consistency as possible.

DOH will continue to explore ways to improve alignment with CHFA. In the meantime, applicants should apply to DOH after award of tax credits, consistent with current practice.

This is part of a comprehensive review, that will also include review of application documents to determine if a project:

• Meets threshold requirements for the funding source, such as:
  • Project readiness
  • Funding availability & requirements of those funding sources
• Demonstrates financial feasibility
• Is aligned with State & DOH priorities

The scoring will inform our recommendation, along with other factors.

DOH recognizes that there are needs throughout the state and aims to support communities across Colorado. In reviewing our applications, we will ensure that we are meeting our statutory obligation to fund a minimum of $5M per year in rural projects, and may invest beyond this depending on the unique mix of applications received in a given year and their relative competitiveness.

The criteria will have different weights.

There will not be a minimum threshold score. All projects that have applied for a given round of funding will be scored and compared against one another, in addition to being evaluated on the merits of their other application materials, as
noted above.

• Yes, DOH will be using this scoring criteria for all housing development projects. All projects that have applied for a given round of funding will be scored and compared against one another.
• Applicants that apply in a funding round that has restrictions on its eligible project types (e.g. Proposition 123-funded homeownership funds) will only be compared against other eligible projects. However, projects that apply in a broader round would be compared against all projects that apply in that round.

Scoring will occur while the project is being underwritten.

Applicants can request their score from their housing development specialist to understand how to make their application more competitive.

Scores are one component of a comprehensive review of applications that determines our funding recommendations, and do not solely determine whether an applicant is funded. Therefore, DOH recommends that applicants who aren’t
recommended for funding work with their development specialist to determine how to strengthen their application if they choose to re-apply.

DOH will continue to make recommendations to the State Housing Board in a publicly available packet. These recommendations are based on scoring and other elements of comprehensive application review. As of now, we don’t
anticipate that applicant scores will be published.

• You are encouraged to work with your development specialist on all aspects of your project and application to receive technical assistance. However, working with a development specialist is never a guarantee of funding, as project awards
  will always depend on the number and competitiveness of projects submitted in a
  given round.
• In an effort to be fair and just to all applicants, DOH will not provide feedback
  after a complete application has been submitted, and before a funding decision
  has been made.

A full Neighborly Application and all attachments, as detailed in the Application Instructions and Due Diligence Checklists.

Scoring will happen concurrently with the underwriting process - no more than 45 days from when DOH receives a complete application.

• Generally speaking, DOH assesses for feasibility, readiness, management capacity, market demand, leverage and cost containment. Some of these assessments will be scored using the primary factors, and some of these will not be scored, but will be assessed for level of risk, consistent with current practices.
• DOH underwriting policies are outlined in the Application Instructions.

DOH will provide applicants with an opportunity to speak directly to each scoring criteria in their application. We don’t expect this will create additional administrative burden for applicants during scoring and underwriting. However,
additional documents may be required after award (e.g. evidence of energy efficiency certification achieved).

Project readiness will not be scored, but it may be considered as part of comprehensive application review.

• Will a developer’s compliance record be shared/transparent to applicants, so they can work to resolve any outstanding issues?
  • Yes. Applicants are encouraged to contact their Housing Development Specialist
    and/or Asset Manager to discuss their compliance record.
• Is this related to the rental/property management company or the development team?
  • DOH will consider the experience of all project partners, including the development team and property management partners.
• What materials will you be reviewing?
  • Currently, DOH collects development team company bios and assesses each partner’s compliance record. We envision providing applicants with an opportunity to speak directly to this scoring factor in their application.
• Can newer teams or developers enter the affordable housing development process?
  • DOH encourages new development teams to partner with a more experienced partner with a more established track record.

• How is this different from the current process?
  • This is currently assessed by DOH, and will now be included in the scoring process.
• Why did DOLA set the benchmarks it did?
  • The 10% benchmark for rental projects is aligned with what we are currently seeing in gap funding applications. Historically, DOH has been closer to 5% of the funding stack. For homeownership projects, this benchmark was modified to reflect recent policy changes to increase the per-unit maximum. Similarly, for rural rental (non-LIHTC) projects, this benchmark was set to align with higher per-unit allowances for rural areas, and in response to feedback from interested parties to ensure these projects can remain competitive.
• What types of funding or investments qualify as leveraged funds? Will donations count?
  • All non-DOH sources will qualify, including fee waivers and land donations supported by, for example, an appraisal.
• Will scoring be impacted if grant funds from sources other than DOLA exceed 10% of total development costs?
  • No. DOH encourages applicants to pursue as many sources as makes sense for the project.

• How often will DOH update the cost reasonableness data?
  • This analysis includes an evaluation of CHFA data, in addition to 31 separate data points including geographic location, activity type, and various costs by unit as well as by square foot. Staff evaluates how both sources and uses change over time across all cost containment categories.
  • Historically, this analysis has been completed every two years. However, there have been two analyses in the past two years. Staff will explore opportunities to update this on a more frequent basis.
• Is this considering region-specific cost reasonableness (i.e. those in lower AMI areas with higher construction cost), and are there more details for what is considered reasonable?
  • No. This analysis assesses regional variation in costs, but the cost reasonableness ranges are not differentiated by location. The benchmarks are published in the Development Application Instructions. In the future, DOH may consider different cost reasonableness ranges that speak to the specific market conditions in different market types across the state.

• How can we ensure rural projects aren't penalized due to limited infrastructure for high-level electrification?
  • Energy certifications are one of several criteria, and not the only way for projects to demonstrate ways in which they are incorporating innovative and value-added features.
• Will this apply to projects of all sizes?
  • Yes, all projects are eligible to receive points for energy certifications.
• What resources are available to help finance energy efficiency efforts?
  • DOH encourages developers to explore availability of new federal and state tax credits and grants that may offset some or all of the costs related to improved energy standards. For examples of available resources, please visit CHFA’s Multifamily Electrification Hub.

• Can this become a bonus when the project is considering more than the minimum requirements for funding?
  • Yes, DOH will award additional points when the project exceeds the benchmark.

• What are “no-negotiation contracts”? Will DOH provide contract templates at the time of application?
  • Bonus points will be provided if the applicant agrees to accept DOH’s standard/uniform templates as a contract without negotiations, in order to execute in 90 days or less.
  • “Negotiations” include, without limitation, revisions to standard State language in the main Grant or Loan Agreement document, waivers of insurance requirements, revisions to a subordination agreement, and modifications to affordability requirements, such as reporting or unit mix. “Negotiations” do not include corrections to typographical and factual errors such as with names,
    numbers, and locations, key personnel changes, or budget and milestone timeline updates.
• How is DOH defining sustainable development?
  • This is consistent with DLG’s definition of this term as used during the IHOI competitive grant program, that projects are located in pre-existing neighborhood or commercial districts, where no new infrastructure is required to be built to support the project (aside from impact fees). Efficient land use practices are being incorporated into the project (e.g., adaptive reuse, compact building
    design, contributing to walkable neighborhoods).
• How can rural areas and areas without public transportation be considered for bonus points in the transit category? Would DOLA consider alternatives like awarding points for infrastructure improvements or transportation solutions like shuttle service in rural areas?
  • Projects not located on the transit map will be given an opportunity to speak to thoughtful transit or service connections within the community, and this will be considered for this category. In the future, the Department aims to use an expanded definition that will include neighborhood centers identified as part of the HB 24-1313 process.
• Would land trusts qualify as a tenant equity vehicle/wealth building for the bonus category?
  • The intent of this category is to encourage wealth-building for rental tenants to eventually be able to move into homeownership. As a result, land trusts would not receive bonus points.
• Will DOH staff have the flexibility to consider other types of innovative project delivery, other than the two types indicated in the criteria?
  • Yes, DOH understands that modular construction and 3D printing are a small sampling of what may be considered “innovative”.
• Can bonus points be earned in this criteria (Community Planning Alignment) if an applicant can demonstrate the plan is aligned with a community development plan, even if that plan was NOT part of a DOLA grant?
  • No. DOH’s goal in providing bonus points for projects in alignment with a community plan funded by a previous DOLA grant is to continue to incentivize the work undertaken in conjunction with DOLA