RLF General Guidelines
DOH permits housing organizations and local governments operating Revolving Loan Fund (RLF) Programs to retain Program Income and use it as described below.
Eligible Activities
Originally funded activity
Program Income generated by payments from beneficiaries of loans for RLF Program activities must be revolved and re- committed in support of the originally-funded activity (e.g., new loans to beneficiaries for DPA).
Project delivery costs for loan servicing
DOH may approve the use of Program Income to cover Subrecipient loan servicing expenses. DOH will only consider approval of this use of Program Income for a Subrecipient with an active RLF Program contract, and only for the same program activity (e.g., DPA, Rehab). DOH will underwrite submitted loan servicing expenses during the annual application cycle for the program activity. If granted, approval will be included in the Subrecipient’s written agreement with DOLA.
Prior to any draw of Program Income for loan servicing, the Subrecipient shall submit a request--including supporting documentation--to their Asset Manager, who will approve, revise, or deny the draw in writing. Loan servicing draws from Program Income are only permitted for active loans and delinquent active loans for which a Subrecipient submits documentation demonstrating attempts to collect payments. “Active loans” means loans for which regular payments are due (e.g., monthly). A Subrecipient may draw for loan servicing costs for any given loan only once per borrower payment period.
In general, DOH does not permit loan servicing draws from Program Income for deferred or other loans without regular payments. However, DOH may consider allowing draws from Program Income for other types of loans if a Subrecipient can demonstrate reasonable costs associated with servicing those loans. Approval is subject to DOH underwriting.
Agencies with RLF programs funded by multiple sources must draw Program Income from the RLF account for the program that originally funded the loan (e.g., CDBG), or a pro-rata share if the loan was funded by multiple sources.
Other project delivery costs
Rarely, and on a case-by-case basis, DOH may approve draws from Program Income for other project delivery costs. A Subrecipient that seeks this ability must submit a written, justified request to their Housing Development Specialist. Each request will be subject to DOH/DOLA review and formal approval.
Ineligible Activities
Program Income may not be used for any administrative or project delivery expenses other than those described above. DOH will fund eligible administrative and other project delivery costs through active grants.
Timely Disbursement of Available Balance
DOH requires that all Program Income is committed or disbursed for RLF Program Activity loans before additional funding may be awarded. Pursuant to CDBG and HOME requirements, Subrecipients must substantially draw any RLF balance before DOH may disburse additional funds for beneficiary loans.
Reporting
Subrecipients with RLF Programs must report Program Income to DOH on a semi-annual basis, or more frequently as HUD or DOH may require, and on a quarterly basis during the term of active contracts with DOLA. Subrecipients must provide documentation on each RLF account by activity and funding source. CDBG and HOME Program Income may not be co-mingled and must be accounted for separately. Reporting requirements are described in greater detail in the Tracking and Reporting section.
Spending Program Income
DOH requires Subrecipients to spend Program Income on the same activity for which it was originally contracted. If a Subrecipient has an RLF account balance that exceeds what they may reasonably expect to spend in two years, the Subrecipient should work with their DOH Development Specialist on a proposal to re-program funds to another eligible activity. Proposals must be for an eligible housing activity, and in most cases, will require a return of funds to DOH and execution of a new contract with the agency. Subrecipients may initiate this process, or DOH may provide notification if staff identify an RLF Program with excess Program Income. In the latter situations, if a Subrecipient does not work timely and in good faith with DOH on a proposal to spend their excess RLF balance, those funds may be subject to recapture, as described in the Recapture section.