Transformational Housing Loan Fund Term Sheet

(DOH direct to borrower loans)

Up to $71,250,000 funding available

Revised October 24, 2023

Eligible Borrower

• For Profit Developer of Affordable Housing
• Community Partner (Nonprofit organization)
• Local Government
  • Any county, municipality, city, tribal government, special district organized under Title 32, school district, district**, or a housing authority created under Part 2 of
    Article 4 of Title 29.
• Political Subdivision of the State

Eligible Projects

• Housing related infrastructure
• Gap Financing for Housing Development
• Preservation and Restoration (limitations apply)
• Acquisition
• Bridge Loans
• Construction
• Rehabilitation
• Mini-Permanent Debt
• Energy Efficiency and Renewable Energy Updates

Long Term Affordability

• Minimum of 30 years

AMI Limitations

Loan Amount

• Maximum loan amount of $5,000,000 or $100,000 per unit, whichever is less.

Outside Financial Sources

• LOI or term sheet from a financial institution
  • Preferred: A third-party financial institution to be the primary lender on a project; DOH to be a subordinate lender
• Award letters or letters outlining denial from other funding sources
• Additional applicant liquidity or equity may be required

Term

• <10 years or commensurate with senior debt

Interest Rate

• 2%: For-profit developers
• 1%: Non-profit developers, housing authorities, local governments, or political subdivisions of the State

Security

• Deed of Trust

Loan - To - Value (LTV), Loan - to - Cost (LTC)

• Maximum: 95% combined loan to value
• Lessor of Combined LTV and Combined LTC

Debt Coverage Ratio Range

• 1.05 - 1.15, dependent upon other funding sources

Repayment

• Up to 40 year amortization, or
• Interest only may be considered during construction and stabilization

Prepayment

• Encouraged when possible; no penalties

Rate Lock

• 12 months from time of award letter - no fee

Fees Paid by Borrowers

• $500 Application Fee
• 0.50% Origination Fee
• Applicable 3rd party closing and administration fees

Eligible Projects

Projects must do one of the following:

• Develop and integrate housing-related infrastructure to offset construction and predevelopment costs;
• Provide gap financing for housing development
• Increase supply of new affordable for-sale housing stock
• Maintain existing affordable housing through preservation and restoration of affordable housing stock through rehabilitation, retrofitting, renovation, capital improvements, and repair of current affordable housing stock through investments in one or more of the following:
  • Senior housing;
  • Purchase of and remediation of low-quality or condemned properties;
  • Housing units, integrated into nonsegregated housing developments, specifically designed for people living with disabilities;
  • Weatherization and energy improvements to multi-family and single-family residents to maintain and improve the quality of affordable homes and rental units;
  • Purchase and transition of current housing stock into affordable housing, including properties currently in use on a short-term rental basis;
  • Programs or initiatives to ensure that existing housing remains affordable for local workforce or community households;
  • Land acquisition for affordable housing;
  • Property conversion and adaptive reuse;
  • Permanent supportive housing.
• Finance energy improvements
• Create affordable homeownership opportunities.

Priority Areas

DOH may prioritize applications that:

• Increase supply of housing in communities in proportion to the community's housing needs through:
  • A preference for mixed-income projects including AMIs below the listed limitations;
  • Developments in which housing units are restricted at income levels demonstrated by local community needs as specified by the listed AMI limitations.
• Are located in communities that:
  • Face barriers accessing capital from traditional sources;
  • Have suffered significant negative financial or other impacts resulting from the COVID-19 Pandemic; or
  • Are otherwise underserved.
• Align with other state economic development efforts;
• Create permanently affordable home ownership opportunities;
• Ensure the long-term affordability of any development or projects funded by the THLF program;
• Include units restricted for rent to persons with disabilities or that were designed with universal design features;
• Are highly energy efficient or use high-efficiency electric equipment for space and water heating.

Application and Award Process

• Applications due the 1st of each month. Applications should be submitted through Neighborly and follow typical DOH Funding Application guidelines. Contact your Housing Development Specialist for additional information.
• Award and Determination: After DOH staff underwrites applications, staff recommendations will be presented to the State Housing Board (SHB). SHB recommendations will then be presented to the DOLA Executive Director for final approval. A contract between DOH and the applicant can start being drafted at this time.

Reporting Requirements

Awardees will be required to report quarterly to DOH. Reports will include, but are not limited to:

• A description of each awardee’s use of the loan funds.
• Project or program progress (construction, spending, budget, etc.)
• Beneficiary information including but not limited to demographic (e.g., race and ethnicity), geographic, income, program participants and project beneficiaries.
• Other State reporting requirements as required.
• Please be sure to refer to the published and periodically updated Term Sheet and FAQs immediately prior to application as additional requirements and/or waivers may be published.

See THLF FAQ document for additional details and requirements.

See SB 22-159 for additional details and requirements.