Market Analysis Policy 1-1

Policy Statement

All development proposals will be evaluated in regards to the market needs for the type of housing at the proposed site.

Policy

NHD will utilize third party market studies and other data resources available in consideration of the following:

• demographic and household data for the neighborhood and metropolitan area
• Existing rental or homeowner housing supply
• Vacancy rates and related demand for rental or homeownership housing
• Construction and rehabilitation activity in the surrounding area
• Other investment public and private investment in the area (economic opportunities)
• Appropriateness of subject property location, unit sizes and configurations
• Analysis of  opinion of market feasibility

Prior to the commitment of funds, Data and analysis must support the reasonable assumption that the property can be fully occupied within six (6) months of completion. 

Pre-Construction Loans 1-2

Policy Statement

DND may provide preconstruction loans to assist non- and for-profit developers with up-front development costs on eligible housing projects. Developers are required to seek preconstruction funding from other financing sources (i.e., CEDAC, LISC, etc.) prior to requesting a pre-construction loan from DND.

Policy

Type: Early Release preconstruction loans may be made to move a proposed housing development to a critical juncture such as receipt of building permits, construction loan closing, or acquisition. Early Release preconstruction loans will be funded through early releases of existing DND fund awards or commitments.

Amount: The amount of each request should be limited to the minimum amount necessary to assist the proposed housing development to achieve certain development benchmarks, for example design development for bidding, construction drawing for permits, funding applications for construction and permanent loans, etc.

Match: For-profit developers will be required to match the preconstruction funds received from DND. All professionals whose services are included in the preconstruction budget will be expected to defer a portion, or all, of their fees.

Term: The term of preconstruction loans will be for the shortest period of time. The term shall not exceed the earlier of the construction loan closing date for the project or the date of any sale, assignment, conveyance, or other transfer of the property under consideration.

Interest Rate: The interest rate for preconstruction loans will be 0%.

Repayment Terms: Payments during the term of the loan will be deferred. Preconstruction loans will either be due and payable in full at construction loan closing or incorporated in DND’s overall project subsidy. If incorporated into DND’s overall project subsidy, preconstruction loan security documents should be discharged at construction loan closing.

Collateral: Loans will be evidenced by a Promissory Note, Business Credit Agreement, and, if the developer owns the site, a Mortgage.

Uses: Preconstruction budgets may include, but are not limited to, costs related to consultant fees; site assessments, environmental, architectural, and engineering reports; preparation of plans and specifications. DND shall NOT approve any Pre-construction Budgets that include costs related to the acquisition, direct construction; organizational development fees, unless the housing proposal has received the removal of grant conditions from HUD and all other funding commitments, with associated terms and conditions, have been fully executed by all parties.

Design Review 2-1

Policy Statement

DND will review the plans of proposed affordable housing developments to be built on DND land or that may seek DND funding assistance to ensure proposed developments comply with DND Residential Design Standards and meet the need for quality affordable housing in Boston’s neighborhoods.

Policy

DND review will proceed throughout the design and development of each housing development proposal during the three basic phases: Schematic Design, Design Development, and Construction Document Phases. Developers are strongly encouragedto consult with DND at the early stages of a project’s conception. The design review will strive to find the best balance between quality design and materials, cost and energy efficiency, to ensure a quality, durable and efficient product is produced with the minimum amount of public funding or assistance necessary. The review shall be coordinated with the BRA, Article 80, and community review process and provide the developer and project architect with timely comments and clear direction regarding the design and specifications for the proposed development. DND shall provide the developer with comments and documentation regarding approval at appropriate points throughout the design and development of the project, within 2 weeks of submission of a complete set of required documents:

Review Phases

Schematic Design Phase: DND shall review the site plan, building massing, exterior treatments, and general floor and unit layouts. Done in conjunction with the zoning and permitting processes for the proposed development, DND shall work to coordinate its’ review and comments with the BRA, Article 80 review and community review process.

Schematic Design Review – DND shall provide the developer with a Design Review and Approval Form for “Schematic Design” outlining DND’s comments, concerns and any required changes that will be expected to be incorporated into the proposed development at the next submission stage.

Submission Requirements:

• 2 full size schematic design sets plus 1 digital (CD) copy including: Site Plan with building footprint, schematic drawings of building massing, exterior finishes, street scape illustrating scale of building, interior layouts and unit configurations.
• 1 set plus one digital (CD) copy of outline specifications.

Design Development Phase: DND will review progress drawings as the project architect develops the design of the proposed building and coordinates and incorporates structural, mechanical, electrical, plumping, and fire protection requirements into their the plans.

Design Development Review - DND shall review the DD set to ensure that any comments or requirements provided during the Schematic Design Review are properly incorporated in the projects designs across disciplines, and ensure that the development continues to comply with DND Residential Design Standards, Article 80 requirements and meets the City’s goals for LEED Silver Certifiable standard or better. DND shall provide the developer with an updated Design Review Form for “Design Development” at the conclusion of the Design Development Review.

Submission Requirements:

• 1 full size and 1 half-size dd set plus digital (CD) copy: incorporate any design comments and requirements from the SD review and include initial Structural, Mechanical, Electrical & Plumbing Plans (MEP), Fire Protection Plans, materials and construction details
• 1 paper set of Project specifications plus digital set (CD): including project scope
• LEED Silver sustainability elements are to be defined with the submission.
• Cost estimate

Construction Document Development Phase: DND will continue to review the project plans throughout the construction document development phase. There are three key submission points:

Construction Document Review and Conditional Approval - DND will review the Bid Set and Project Specifications to ensure that all comments and required changes from earlier reviews have been fully integrated into the project’s bid set and to ensure compliance with DND’s Bid Policy and local and federal requirements that may impact the projects pricing. DND will issue a Design Review Form for “Bidding and Construction Document Review” prior to the issuance of the invitation to bid. (See DND Bidding Policy)

Submission Requirements:

• 1 half-size complete and fully coordinated Construction Document set plus 1 digital (CD) set, including Structural, Mechanical, Electrical & Plumbing Plans (MEP), Fire Protection Plan, material and construction details, integrations & coordination of MEP and LEED Silver sustainability elements.
• 1 set plus 1 digital (CD) copy of the full specifications and project scope of work
• Cost estimate
• All bidding information, including instructions to bidders, the draft invitation to bid letter, bid form, form of contract, contractor selection criteria and the list of potential contractors to be invited to bid.

Construction Bidding And Pricing Review – DND will review the bids obtained from the various contractors along with the developer’s recommended contractor selection to ensure that the selection followed the established selection criteria and that the lowest qualified price has been achieved and that sufficient explanation has been provided regarding any significant discrepancies between bidders and or trades. DND will also ensure that the selected contractor is not currently listed on the HUD debarred list.

Submission Requirements: Side-by side comparison of each complete bid received, bidder qualifications, explanation of substantial price differentials. Copies of bid proposals may be requested by Design staff if needed. (See Bidding Policy and attachments for further detail.)

Design & Construction Approval – DND will complete a final review of the project Design & Construction Documents including the construction contract, any addendum, unit costs, add-alternative list, VE items, Betterments, etc. The DC set shall have resolved any outstanding comments from the CD review. DND will issue an executed Design Review & Approval Form to be signed by the project architect and the developer prior to the Project closing.

• Submission Requirements: A complete set of construction drawings and Cost Controls: The developer must provide alternates in the bid document to evaluate the cost of foreseeable scope of work that may be reduced or increased after bidding takes place. The development team is to provide the SA with a list of cost control items. These items are to appear as alternates in the bid documents. (See Design and Construction Approval Submission Checklist for a complete list of documents required for submission.)

Change Orders 2-2

Policy

Change Orders are the formal process for handling proposed changes to the scope due to unforeseen conditions after the construction contract has been executed and the project has started construction. Change Orders shall be minimized and used appropriately and provide information on the proposed changes, the impact of the changes to the contractor’s sum and the adjustment, if any, to the time needed to complete the contract work. All Change Order must be submitted as Requests (COR) in writing prior to any work being done or it will be rejected. All Change Orders are subject to approval by DND, based on justification of need and overall construction costs. If at any time the cumulative effect of change orders or the Project cost overruns causes the construction contingency to fall below 50% of its original amount, the City shall have the right to suspend further advances of the City’s loan proceeds until the Developer has demonstrated to the City’s satisfaction additional sources of funds sufficient to guaranty completion of the Project.

Change Order Types - DND will consider for approval only the CO types listed below:

• Non Design-related Change Order: These change orders include unforeseen conditions, code-related issues, field conditions and building inspector changes.
• Design-related Change Order: These change orders include additions or subtractions of the scope of work and/or unincorporated elements that affect the appearance, layout, functionality, dimensions, and/or quality of the project.
• Emergency Field Condition Change Orders: These change orders include any condition that causes an emergency situation where safety or other immediate losses may occur. Advanced approval is not required, although DND must be notified immediately, with a written submission to follow.
• Donation/Contribution Change Orders: These change orders include changes resulting from the donation of materials or labor. All donations and contributions must be processed as a change order. Any savings realized will be added to the hard cost contingency.
• Betterments: Owner requested changes in the scope of work during construction that are upgrades in equipment and materials beyond the base scope of work within the contract. For Betterments to be considered, the project must draw upon or pledge in writing available Developer Fee, or committed outside funding sources. If there are project cost savings, the project can use “developer” portion of savings for Betterment payment or reimbursement.
• Credits: Modifications in the scope of work during construction, which reduces the cost of the scope or creates savings in the contract budget. Credits must be submitted as COR immediately once they have been identified and discussed with the CS. Delay in the submission of a credit COR may result in the delay in approval of other pending CORs.

Change Order Submission

Change Order Requests (CORs) must be prepared and signed by the contractor and include the following:

Proposed changes to the contractor’s scope of work;

• Dollar amount of adjustment, if any, to the contractor’s sum;
• The adjustment, if any, in time needed to perform the proposed work and complete the contract;
• Subcontractor Invoices must be attached to all COR’s;
• Any COR that exceed $10,000 must be accompanied by a written explanation, prepared by the project architect regarding the exact reasons for the COR; and
• No work shall commence prior to approval of the COR.

As CORs are approved, they may be packaged together and processed as one Change Order. Each Change Order package should be prepared by the Project Architect or Project Developer. The package must include the AIA Standard Document G701, the approved Change Order Request(s) and associated back up. The Change Order package must be signed by the Developer (or Developer’s representative), Project Architect, General Contractor and DND Construction Specialist and Development Officer, and state their agreement upon all of the following:

• Changes to the Work
• The amount of the adjustment, if any, in the Contract Sum; and
• The extent of the adjustment, if any, in the Contract Time

Bidding 3

Policy Statement

Projects must be competitively bid in order to achieve the lowest reasonable construction cost and to provide increased fair access to the economic opportunities created through the project.

Policy

Projects that receive City funding only (no land1*): Developers must solicit and receive bids from at least 3 General Contractors. Solicitation of Bids should to be based on construction documents and specifications, which are nearly complete (typically 95%) in order to achieve the most accurate pricing of the project.

The solicitation of bid documents must include clear criteria for the selection of the general contractor. The criteria includes the contractor’s financial qualifications, experience with projects of a similar type and scope, performance on past and current projects, compliance with state and local requirements as appropriate, such as Boston Residency & Jobs Policy, Davis-Bacon Wage Rate compliance, and project construction costs. DND must review and approve all solicitation of bid documents prior to their issuance to General Contractors.

The Developer is not required to select the contractor with the lowest bid, but must demonstrate in writing that there is sufficient justification if a contactor with a higher price is selected. It is expected that the lowest price from the qualified bidders will be used to negotiate with the selected general contractor and in determining the final amount of the construction. The final contract amount is subject to DND approval.

If the developer does not receive bids from 3 qualified contractors, DND reserves the right to require that the project be re-bid.

Under certain circumstances and upon submission of a written request, DND may consider an alternative to the above Policy regarding solicitation of Bids from General Contractors.

Project Developers that are also licensed general contractors and intend to perform the duties of a general contractor (“Developer/Contractor”) for the project are required to follow the process listed below in order to establish the final contract price.

• The Developer/Contractor must agree to solicit 3 or more competitive prices for all of the sub-trades and submit the pricing information received to DND. Also, the Developer/Contractor must agree to comply with all local requirements such as Boston Residency & Jobs Policy, Davis-Bacon Wage rates, if applicable, and any other requirement of local and federal funding sources and work cooperatively with DND to ensure the lowest reasonable costs for the development. DND reserves the right to request an independent cost estimate prior to the final commitment of funding.

The RFP of Sites (land or buildings) for the Development of Affordable Housing: If the majority of the project is being developed on City Owned land being provided under a Request for Proposal subject to Mass General Law 30B, then that open and competitive process is deemed to meet the above bidding requirements, as long as the applicant holds to the contract amount submitted in the response to the RFP. During the development process, changes in the pricing may occur due to changes in the scope of work, however, it is expected that the selected developer would work cooperatively with DND to achieve the lowest reasonable construction cost and to provide increased fair access to the economic opportunities. Therefore, DND reserves the right to request that the project solicit competitive bids for General Contractor or sub-contractors or obtain an independent cost estimate prior to the final designation.

The RFP for NSP funding for residential REO developments: Proposals submitted under the open Neighborhood Stabilization Program RFP will be carefully evaluated for financial feasibility. DND will conduct site visits for each property included in an application and review and approve the proposed Scope of Work, upon which the hard cost estimate shall be based. For proposals with proposed hard costs in excess of $50,000, DND requires the developer to obtain prices from 3 independent contractors to ensure the costs reasonableness of hard costs.

A project which include only a small percentage of land obtained from the City under a separate 30B process, shall be required to follow the DND bid policy.

Construction Costs 4-1

Policy Statement

Project developers must ensure that all efforts are made to ensure that construction costs are minimized and appropriate for the proposed type of construction.

Policy

Project developers must ensure that all efforts are made to ensure that construction costs are minimized and appropriate for the proposed type of construction.

Policy Statement

Projects must adhere to the following guidelines to help ensure that construction costs are minimized and appropriately budgeted:

1. The design must be efficient and appropriate for the proposed housing use and unit sizes should be consistent with the goal of providing affordable housing, as well as relevant city and state design guidelines. Proposals that exceed minimum requirements, such as minimum unit size, amenities, etc., must justify these exceedances and how they are reasonable in terms of the overall cost of the project.
2. Costs must be estimated at each stage of project development as indicated in Design Review Policy.
3. Costs must fall within an acceptable range that is defined by the costs of similar recent projects. DND will use recent and historical cost data in making this determination.
   Cost profiles will be provided for common project types:
   • Homeownership: 1) 1-4 family new construction; 2) 1-4 family rehab; 3) large- or scattered-site new construction; and 4) adaptive reuse.
   • Rental: 1) SRO; 2) assisted living; 3) small unit rehab; 4) small unit new construction; 5) large unit rehab; and 6) large unit new construction.
   • Projects that do not fall within the above typology will be compared against a set of like projects.
4. Environmental and site costs: see Environmental and Site Cost Policy.
5. Construction cost contingency: see Contingency Policy.
6. Competitive bidding is required of all projects: see Bidding Policy.

General Development Costs 4-2

Policy Statement

General Development Costs (soft costs) shall be consistent with the costs of projects of similar scope, magnitude, and complexity.

Policy

1. All general development costs, shown on One Stop lines 159 - 185, must fall within an acceptable range that is defined by the costs of similar recent projects. DND will use recent and historical cost data in making this determination.

Cost profiles will be provided for common project types:

• Homeownership: 1) 1-4 family new construction; 2) 1-4 family rehab; 3) large- or scattered-site new construction; and 4) adaptive reuse.
• Rental: 1) SRO; 2) assisted living; 3) small unit rehab; 4) small unit new construction; 5) large unit rehab; and 6) large unit new construction.
• Projects that do not fall within the above typology will be compared against a set of like projects.

Contingencies and Cost Savings 4-3

Policy Statement

Development projects are expected to have an adequate contingency to cover unforeseen costs.

Policy

CONTINGENCY AND ALLOWANCE AMOUNTS:
Hard Cost Contingency: For New Construction Projects the contingency shall be equal to 5% of construction contract amount. For Rehabilitation Projects, the contingency shall be equal to 10% of the construction contract amount.

Allowances: For new construction projects, separate allowances for unforeseen environmental and site work, handicapped accessibility and/or window guards, should be carried outside of the construction contract and be in addition to the above contingencies.

Soft Cost Contingency: For both New Construction and Rehabilitation Projects, the contingency shall be equal to 2.5% of the total soft cost budget.

COST SAVINGS:
Allowances: If the allowances are not needed for intended purposes, the budget will be reduced by the total amount of the unused allowance and the public subsidy provided to the project will be reduced by the same amount.

Cost Savings & Unused Contingency:
At the end of a project (and following the completion of all change orders and approval by DND of the costs), the final actual total cost of the development (Final TDC) will be compared to the initial approved budget from the Closing. If there are any costs savings (except for unused allowances), 50% of the savings may be drawn down by the developer as additional fee. The balance of the cost savings will be used to reduce the principal amount of the Subsidy loan.

Acquisition Costs 4-4

Acquisitions Costs Policy for New Real Estate Purchases and for Preservation of Currently Owned Properties

Policy Statement

Acquisition costs reflected in a development budget may not exceed the fair market “as is” value of the property.

Establishment of Value and timing of appraisals:

For any property acquisition, the following applies:

• The sales price of the acquired property must be supported by an “as is” appraisal.
• Appraisals must be obtained from an unrelated third party appraiser.
• An appraisal of the property must be submitted at the time of application, and if the acquisition transaction has not closed may need to be updated at the time of the actual acquisition or before DND commits funding.
• The acquisition line item in the final development budget shall always reflect the lesser of the actual sales price or the as-is appraised value at the time of acquisition.

Where there is an identity-of-interest ⁱⁱ between the parties, the acquisition is considered to be a “Non-Arm’s Length Transaction.” For these types of transactions, the acquisition cost may include the following:

The principal balance of the existing debt on the property, including pre-payment penalties, fees, and unpaid accrued interest as documented in the annual audited financial statements;
Current balance of sponsor-paid capital improvements or capital contributions as documented in the annual audited financial statements;
Unpaid principal balance of any remaining deferred developer fee payments (due from the original development) as reflected in both the annual audited financial statements and a developer fee note;

If the “as-is” appraised value of the property exceeds the total of the above three items and there are sources, such as private debt or private equity to cover the full appraised value , then DND shall require proceeds be applied to pay down any existing City or State subordinate debt or reduce the amount of any new public subsidy being requested of either DND or the State.

i An “As is” Appraisal is the estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.
ii Identity-of-Interest is defined as any relationship (generally based on family ties or financial interests) between the seller and purchaser (prospective owner), which would reasonably give rise to a presumption that the parties to the transaction may operate in collusion in establishing the purchase price of the property.

Developer Selection 5-1

Policy Statement

Developers and their team members must have the capacity to carry out their proposed projects and be in good standing with regard to the management of existing real estate, payment of city taxes, water and sewer charges, and debt obligations.

Policy

In reviewing a development team the following standards shall be used:

Good Standing

Applicants must be in good standing with the Department of Neighborhood Development. In addition to Tax History and Water and Sewer reviews of an applicant's property owned within the City of Boston, DND shall review the status of such properties to determine if any of them are abandoned, vacant or otherwise underutilized. In the event that DND determines that such conditions exist on another property owned by the applicant within the City of Boston, an inquiry shall be made to the applicant as to the reason for such status and the plans of the applicant to remedy such conditions. If the applicant is unwilling, unable or does not provide DND with a timely, satisfactory plan to address such issues, DND shall declare the proposal non-qualifying. Bidders for City-owned land or buildings will be screened by the Boston Fair Housing Commission. Applicants must not have any unresolved housing discrimination complaints or convictions for violating fair housing laws. DND shall also review the status of all outstanding loans the applicant has with DND. If any of these loans are in default, DND will assess the reason for the default and the applicant's plan to remedy this condition. If the applicant does not provide DND with a timely, satisfactory plan to address the loan default, DND shall declare the proposal non-qualifying.

Creditworthiness

The City of Boston reserves the right to deny funding to any applicant principal or partner whom it determines is not creditworthy and not bankable. In general, an applicant will be considered not creditworthy if (1) debt obligations are not current and/or (2) public filings (e.g. liens, judgments) are outstanding.

Development Team

The Applicant/Development Team must be able to demonstrate the technical and financial ability to complete the project. Prior successful development experience is required. The record of the developer and members of the development team will be considered individually and collectively. DND and neighborhood partners may require tours of previous projects involving team members. The members of the development team must be in good standing on current DND projects. The development team must include an architect, an environmental engineer, a surveyor, and an attorney. The services of a professional estimator must be used to develop cost estimates. Emphasis will be given to experience with previous projects of similar scale and complexity. For supportive housing proposals, the experience of the service provider will also be considered. The applicant must be able to demonstrate an ability to complete the development tasks/benchmarks and begin construction according to the established development timeline.

Local Participation

Additional consideration shall be given to qualified development teams that include local businesses or residents or that provide local employment or conting in excess of the minimum City requirements.

If the applicant is a current or past recipient of DND housing assistance, there must be no significant project or construction delay, or outstanding regulatory compliance issues with regard to the assisted project. Individual development team members may be prohibited from participating in city-funded projects if they demonstrated significant performance deficiencies on previous city-funded projects; for example, if their performance contributed to significant delays, cost overruns, construction defects, etc.

Working Capital

The applicant must be able to demonstrate sufficient working capital to cover all identified pre-development costs.

Developer Fee 5-2

Policy (effective November 2, 2009)

Projects that involve the creation or preservation of affordable housing may include a Developer Fee and Overhead as an eligible cost to the project. The maximum amount of this Fee and Overhead allocation is reflected in a DND approved development budget at the time of initial award of subsidy funds. The amount of the Fee and Overhead that may be drawn from capital resources or paid from the projects operations shall be subject to DND’s formula.

Maximum Fee and Overhead Formula:

The maximum fee and overhead allowed is determined by deducting the following from the approved development budget: acquisition, fee, overhead, and capitalized reserves. From this “Basis”, a maximum fee, overhead and development consultant fee calculation is applied by utilizing the following formula:

15% of Basis up to $3,000,000 or less, plus
12.5% of any Basis between $3,000,001 and $5,000,000, plus
10% of any Basis over $5,000,000, plus
5% of Acquisition cost

The sum of the developer fee, overhead and development consultant line items in the approved development budget may never exceed the maximum allowable fee and overhead as determined at the time of the initial award of funds. While the approved development budget may change in the course of pre-development planning, design and permitting, the maximum fee and overhead will adhere to this maximum allowance regardless of future changes to the budget including subsequent sources provided to the project by other lenders.

Payable Fee and Overhead

Generally, Fifty Percent (50%) of the total allowed fee and overhead will be allocated to Developer Fee and Fifty Percent (50%) will be allocated to Overhead (including development consultant). DND may consider variations of the distribution between Fee, OH and Consultants on a case by case basis. For all project types, up to 50% of Overhead may be released at construction loan closing with the balance paid out proportionately during the course of construction. Any Developer that may be drawn from capital resources may be drawn as follows: for rental projects, up to 50% of the Developer Fee may be drawn at construction completion with the balance released at the time of permanent loan closing; for homeownership development projects, the Developer Fee shall be paid upon the sale of all units. Release of any fee and overhead for any project is subject to the approval of all lenders, the Loan Hold Back Policy, the individual project Loan Documents, and submission of all requisite completion and compliance reports.

Deferred Fee and Overhead

Projects that involve the re-capitalization, refinancing or restructuring of existing debt must contribute the entire Developer Fee back to the project as a source. Overhead may be drawn over the course of the project’s refinancing and rehabilitation activity as outlined above.

For any project that involves the deferment of a portion of approved Developer Fee, DND shall defer all cash flow payments until such deferred fee is paid in full.

Fee at Risk 5-3

Policy Statement

This policy is created to ensure that developers assume risk for their developments.

Policy

The Fee, as determined by the Fee and Overhead Formula, is at-risk from the date of DND's commitment throughout the project developments. Subsequent increases in development costs or decreases in other funding sources will be covered through a reduction in the amount of the Payable Fee.

After construction loan closing, increases in hard costs and or/soft costs will be covered first from their respective contingencies, then from the developer fee.

Developer Capacity 5-4

Policy Statement:

For housing development projects, DND will evaluate the developer’s capacity and experience with similar developments.

Policy:

DND will review the following:

• Reputation in the community as a developer
• Organizational and Staff History of prior development of affordable housing
• Experience with similar types of projects in terms of size and scope
• Experience with the type of construction
• Experience utilizing multiple subsidy sources

Construction Retainage 6-1

Policy Statement

DND will require retainage be withheld from construction requisitions on all projects.

Policy

Retainage Amounts:
Retainage, in the amount of ten percent (10%) of the value of construction costs incurred for the project, shall be withheld from each requisition.

Ten percent (10%) may be reduced to five percent (5%) retainage of the value of each requisition for construction costs subsequent to project construction reaching fifty percent (50%) completion.

Retainage Payment

Retainage shall be released upon receipt by DND of the following:

• Architects Certificate of Completion.
• A Certificate of Substantial Completion issued by DND (shall not be issued until all Punch List Items have been completed)
• A reconciliation of Homeowners Home Inspection Report by DND, Developer, Contractor and Homebuyer.
• Final Lien Waivers from the project contractor and other laborers, sub-contractors and material providers.
• Certificate of Occupancy by the Inspectional Services Department.
• Certification by employees and/or agents of DND and other Lenders that the construction work, including completed punchlist items, is acceptable and consistent with the approved construction budget, plans and specifications.

If completion of certain construction items must be delayed for an extended period (i.e. landscaping/planting awaiting Spring, exterior painting pending appropriate weather/temperature), Seasonal Items, Two Hundred Percent (200%) of the value of these DND-approved, monetized items shall be retained until such items have been completed to the satisfaction of DND.

Loan Hold-back 6-2

Policy Statement

DND, at a minimum, shall withhold 5% of the total DND loan amount until the project's completion.

Policy

DND will hold back the disbursement of at least 5% of the DND Loan (the "Holdback") until the project is 100% complete, as detailed in the loan documents and evidenced by receipt of the following documentation:

• Certificate of Completion, issued by DND Construction Specialist
• HOME Completion Report with income information for each HOME assisted Unit, Direct Benefits Statement, Cost Certification and/or other items as required in the Loan Documents.

Subsidy - Rental and Cooperative 7-1

Policy Statement

DND will provide loans to developers of affordable rental projects to assist with costs that are in excess of construction, permanent, and/or other subsidy financing and equity resources. The amount of funds invested in a rental or cooperative housing project will always reflect the minimum amount of public subsidy necessary to achieve the maximum public benefit.

Policy

The amount of each request should be limited to the least amount of public funds necessary to make the project feasible, should be restricted to eligible costs directly related to the housing development project, and must comply with cost and underwriting standards currently accepted as industry standards by all other lenders involved in the project.

Amount: The amount of funding will be limited to the gap between the amount of debt supportable by the anticipated net operating income from the operations of the project plus any other anticipated capital or equity contributions and the approved total development cost of the project. Generally, per unit commitments will not exceed $50,000 per unit.

Term: The term of the assistance will be for a minimum period of thirty (30) years.

Interest Rate: The interest rate charged will depend upon the needs of the project given the terms of the other funding sources and the ability of the project to support DND debt.

Repayment Terms: The conditions for payment will always be based on the needs of the particular funding request.

• Payments of principal and/or interest during the construction and rent-up period will be deferred to minimize development costs.
• DND will require one of the three following payment options during the operational phase of the project:
• fixed monthly payments;
• cash flow payments, with a minimum payment of 50% of all cash flow payable to public subordinate debt, such as DND and DHCD, after deducting normal and customary operating expenses and senior debt service payments¹; or
• fully deferred payment of principal and interest until loan maturity. In all cases, all outstanding principal and interest will be due and payable at loan maturity.

1 If the permanent resources for the project include a deferment of all or some portion of the allowable developer fee, DND will forgo its portion of the 50% cash flow payments until such deferred developer fee has been paid in full.

Homeownership Subsidy 7-2

Policy Statement

DND will provide loans to developers of affordable homeownership projects to assist with costs that are in excess of construction and/or subsidy financing and equity resources.

Policy

Eligible homeownership developments involve the new construction or rehabilitation of a property that will ultimately be owned and occupied by a household as their primary residence. This also includes 1 - 4 family properties where the owner will occupy one unit with the balance of the units offered for rent by that owner. The amount of each request should be limited to the least amount of public funds necessary to make the project feasible, should be restricted to eligible costs directly related to the housing development project, and must comply with cost and underwriting standards currently accepted as industry standards by all other lenders involved in the project.

Amount: The amount of funds will be limited to the gap between the anticipated sales proceeds and the approved total development costs. Generally, per unit commitments will not exceed $50,000. In addition, 100% of any excess sales proceeds that might result from cost savings during construction or from a higher then anticipated sales price due to changes in the market must be returned to DND to reduce the amount of the publicly funded capital contribution. For projects that include market rate unrestricted units, the amount of any excess sales proceeds may be split, with 50% paid to the Developer as additional fee and 50% paid to the subsidy providers, DND & the State, to reduce the amount of capital subsidy provided to the project.

Term: The term of this assistance will be the lesser of the date of the construction loan closing to the date the property is sold to the selected homebuyer or two (2) years.

Interest Rate: The interest rate charged will depend upon the needs of the project given the terms of the other funding sources and the projects ability to achieve the anticipated public benefit. To minimize the gap between anticipated sales proceeds and total development costs, an interest rate of zero percent (0%) is a generally accepted practice.

Repayment Terms: The conditions for payment will always be based on the needs of the particular funding request. Payments of principal and/or interest during the construction period will be deferred to minimize development costs. Since the total development cost usually exceeds the value or the approved sales price of the property, the borrower is released from any financial obligation at the point of sale to the eligible buyer (assuming all of the conditions detailed in the loan documents have been met).

Long-Term Affordability 7-3

Policy Statement

All NHD-assisted rental or cooperative housing projects and Homeownership Development projects must provide for long-term affordability.

Policy

In order to preserve the City's stock of publicly assisted affordable housing, all homeownership, rental or cooperative projects that receive assistance (funding and/or property) from the Department of Neighborhood Development shall remain affordable for a set period of time, as detailed below. The level of affordability (i.e. the number of units affordable to households at a specified income level) shall be documented in the Affordable Housing Covenant and shall be maintained throughout the affordability term.

Homeownership Development Projects:

The affordability and income restrictions for any project developed as an ownership opportunity, whether through rehabilitation or new construction shall have an affordability term of 30 years with a 20 year extension at the City's option. In addition, the affordability and income restriction of any rental opportunities associated with the owner-occupied property shall also be maintained for same period of time.

Rental and Cooperative Housing Development Projects:

The affordability and income restriction for rental or cooperative housing development projects shall have an affordability term "In Perpetuity".

For any projects assisted with HOME funds, the HOME regulations and required monitoring shall pertain to the minimum number of years required by the HOME regulations as established by HUD at the time of initial funding. However, the income restrictions and affordability mix established by the Affordable Housing Covenant shall be maintained and monitored for the entire affordability term.

Site Control 8

Policy Statement

DND requires project sponsors to demonstrate site control for all land and buildings included in a project.

Policy

Project sponsors, at the time of application for financing, must demonstrate full site control through a fully executed instrument such as an option agreement or a purchase and sale agreement, or with a deed. Agreements must include a sales price and an expiration date, which must provide for sufficient time to secure all proposed sources of financing.

Applicants for pre-development financing shall, at a minimum, provide a letter from the seller. Such letter shall clearly indicate that the owner is engaging in negotiations with the proposed buyer.

For projects involving city-owned property DND may, at its discretion, consider the receipt of a proposal in response to a land or building disposition RFP sufficient evidence of site control for submission of an application for funding. However, Tentative Developer Designation status must be obtained from DND before an award of funds will be issued.

Applicants are also required to review DND’s Acquisition Policy.

Subordination 9

Policy Statement

The City of Boston is not legally required to agree to subordinate its mortgage to any new financing proposals. However, upon written request, the City may consider the subordination of its mortgage(s) for refinancing proposals that will not seriously impact the affordability of the property or security of the public investment. Reverse Mortgages are not eligible for Subordination.

Policy

Single Family Properties (1-4 family, owner occupied)
For those City mortgages without subordination clauses, the policy to review Applications for Subordination is based on the following criteria:

Receipt of a completed Application for Subordination

1. The total mortgage debt, including the City's mortgage (known as Loan To Value or LTV) does not exceed 85% of the appraised value of the property.
2. Lenders must show a reasonable belief that the borrower has the ability to repay the new loan. The ability to pay back the loan is defined as: the borrower's scheduled monthly payments, including principal, interest, taxes, insurance and assessments, combined with the scheduled payments for all other debt, does not exceed 50% of the borrower's monthly gross income (known as the Debt to Income ratio or DTI).
3. Lenders may not include financing of excessive points and fees.
4. It is the general policy of the City of Boston to not subordinate our loans or liens for the purposes of Cash Out unless there are extenuating circumstances. For example emergency home repairs, medical expenses or other unexpected expenses. If your Application for Subordination includes a Cash Out mortgage the processing time for your application falls under exception processing and may take up to 21 business days to complete.
5. Loan must be a Fixed Rate Mortgage (FRM); Adjustable Rate Mortgages (ARM) are not eligible for Subordination.
6. The borrower has not requested more than one (1) subordination from us in a two (2) year timeframe.  

Investor Owned, Large Residential Real Estate Loan Subordination and Restructure policy
No cash proceeds restructures, primarily rate reductions

For requests that simply reduce the interest rate and does not negatively affect the potential cash flow to DND the following procedure is in effect.

1. The borrower and all related entities shall be current on their loans, taxes and financial reporting prior to considering the request.
2. DND may require that the units be inspected to ensure compliance with HQS or physical standards as may be required in the loan documents, any expenses incurred shall be the responsibility of the owner.
3. DND may allow reasonable increases to reserves made from increased cash flow resulting from interest rate reductions.
4. The borrower shall pay all costs of the subordination, including a full review and modification of existing DND documentation by DND's outside attorney. An estimate of the cost shall be provided when the request is submitted. A deposit against this estimate may be required with the balance due at closing.

Restructures that generate cash to the project
For requests that refinance the first mortgage or other debt senior to DND and involve an increase in the amount of debt that is senior to DND the following procedure is in effect:

1. All proceeds from the transaction must be used to make capital improvements to the subject asset.
2. The borrower and all related entities shall be current on their loans, taxes and financial reporting prior to considering the request.
3. DND may require that the units be inspected to ensure compliance with HQS or physical standards as may be required in the loan documents, any expenses incurred shall be the responsibility of the owner.
4. The borrower shall pay all costs of the transaction, including a full review and modification of existing DND documentation by DND's outside attorney. An estimate of the cost shall be provided when the request is submitted to DND. A deposit against this estimate may be required with the balance due at closing.
5. A full review of the effect of the proposal will be done in conjunction with the housing division.
6. An attempt will be made to generate additional years of affordability for the project.
7. DND may require that the repayment terms on its loan be modified or that cash flow definitions be modified.
8. Loan to value after the refinance (for the first mortgage) should not exceed 85% 

Community Process and Property Disposition Notification 10 

I. PURPOSE 

These community participation policies & procedures are designed to 1) ensure that community residents and local leaders are fully informed about the sale of any real estate sold by the Department of Neighborhood Development, 2) create a uniform and timely structure for this process so that developers and residents alike have a clear understanding of how the process works, enabling both to more effectively plan for, and participate in the project development process, and 3) promote equal opportunity and fair housing in the disposition of residential sites. 

II. PRINCIPLES

These policies and procedures are based on the following principles: 
A Community's Right to Know: Residents have a right to know what is proposed for a site before any decisions are made. They must also be given the opportunity to provide input about any proposed development to the City prior to any final decisions being made. From this principle, the City has an affirmative obligation to ensure that community notification is complete and timely. 

Proportionality: The level of community participation must be proportionate to the impacts of the proposed development. Small scale property sales (such as a side yard) demand a different and lesser level of community input than do large sites that demand more extensive processes. 

Balancing Uniformity & Flexibility: Policies must be uniformly applied across the city and for all types of properties being sold. The City must also, however, build some flexibility into the procedures to appropriately respond to the very unique issues that will often be involved in each property. Additionally, the Director of DND may respond to unique circumstances or an urgent public priority by approving an alternate notification process provided that such process meets the intent of the policies defined in this document. 

DND Responsibilities & Authority: The Department of Neighborhood Development (DND) has the ultimate legal responsibility to ensure that all property disposition is done in conformance with all applicable Federal, State and Local governing laws, including ensuring that the City affirmatively furthers fair housing in the administration of its housing and community development programs. DND also has the public trust responsibility to ensure that all property disposition is conducted with the goal of providing the greatest public benefits to all of the City's residents and that it is done in a timely and cost-effective manner. DND is therefore obligated to retain the final authority to make decisions about all property disposition in order to faithfully execute these legal and public trust responsibilities. 

III. PROCEDURES

LEVEL 1: NON-DEVELOPMENT SITES

This category of properties includes small-scale sites where there is no development beyond physical rehab of existing space for existing uses. This applies programmatically to:

1. any residential abutter lots that are determined to be undevelopable for any other purpose,
2. the Residential Development Program and 1-4 Family Housing Program (rehab of vacant 1-4 family buildings for homeownership) and
3. individual sites that meet the test of physical rehab only for existing uses. Exemption: transfers of properties between Departments of the City of Boston are exempted provided that no changes in the use/occupancy of the property will result from the transfer.

6-STEP PROCESS

1. NOTIFICATION: Notification about the proposed property sale, including timelines and procedures for applying for the property and/or receiving additional notifications about the disposition of the property will be sent to: abutters within 100' radius, neighborhood-based groups representing the area in which the property is located, local elected officials, individuals who have formally expressed interest in the property at the Clearinghouse, and community leaders. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
2. COMMUNITY COMMENT PERIOD: A minimum 30-day 1 period after the completion of the Notification Process and before the property is advertised during which time notified individuals and/or organizations can provide input.
3. COMMUNITY INPUT PUBLIC MEETING: If, during the Community Comment Period, there are questions and/or concerns raised, DND will consult and/or meet with those individuals or groups to address those concerns. If, at the end of the Community Comment Period, the City determines that there are remaining unresolved community concerns, a Community Input Public Meeting will be held to address those issues no more than 45 days after the conclusion of the Comment Period.
4. ADVERTISEMENT: Taking into account input received during the Comment Period and Community Input Meeting (if applicable), DND will prepare a Request for Proposals that will be clearly advertised in a daily paper, the Central Register and at least one local community paper. All parties that have expressed an interest in the property either by filing an Expression of Interest through the Clearinghouse or by responding in writing to the notification letter will also be sent a copy of the advertisement. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center and its homebuyer education agencies (residential sites only).
5. BUYER SELECTION: Based solely on the criteria defined in the Request for Proposals, DND will select a buyer for the property.
6. FINAL PUBLIC NOTICE: Prior to a final designation vote by the Public Facilities Commission, a notice of the planned sale will be published in the City Record and will be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).

LEVEL 2: MINOR DEVELOPMENT SITES 

This category of properties includes small-scale development sites where some limited community impacts are anticipated. This applies to new construction of a single 1-4 family house, non-residential or residentially developable abutter lots, rehabilitation of 1-4 family residential buildings involving any changes in use and/or occupancy, small-scale non-residential rehabilitation. Where DND is required to transfer a property to another department of the City of Boston for disposition or a municipal purpose, the receiving department will be responsible for defining its own community notification processes. 

7-STEP PROCESS

1. NOTIFICATION: Notification about the proposed property sale, including timelines and procedures for applying for the property and/or receiving additional notifications about the disposition of the property will be sent to: abutters within 300' radius, neighborhood-based groups representing the area in which the property is located, local elected officials, individuals who have formally expressed interest in the property at the Clearinghouse, and community leaders. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
2. COMMUNITY COMMENT PERIOD: A minimum 30-day2 period after the completion of the Notification Process and before the property is advertised during which time notified individuals and/or organizations can provide input.
3. COMMUNITY INPUT PUBLIC MEETING: If, during the Community Comment Period, there are questions and/or concerns raised, DND will consult and/or meet with those individuals or groups to address those concerns. If, at the end of the Community Comment Period, the City determines that there are remaining unresolved community concerns, a Community Input Public Meeting will be held to address those issues no more than 45 days after the conclusion of the Comment Period.
4. ADVERTISEMENT: Taking into account input received during the Comment Period and Community Input Meeting (if applicable), DND will prepare a Request for Proposals that will be clearly advertised in a daily paper, the Central Register and at least one local community paper. The advertisement will be sent to a citywide list of developers and all parties that have expressed an interest in the property either by filing an Expression of Interest through the Clearinghouse or by responding in writing to the notification letter. The advertisement will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
5. BUYER SELECTION: Based solely on the criteria defined in the Request for Proposals, DND will select a buyer for the property.
6. COMMUNITY REVIEW PUBLIC MEETING: Where the recommended buyer is proposing development on the site beyond physical rehab of existing space for existing uses, and prior to any final action on the site by the Public Facilities Commission, a Community Review Public Meeting will be held where the proposed buyer will present their plan to the community.
7. FINAL PUBLIC NOTICE: Prior to a final designation vote by the Public Facilities Commission, a notice of the planned sale will be published in the City Record and will be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).

LEVEL 3: SIGNIFICANT DEVELOPMENT SITES:

This category of properties includes larger scale sites with more significant potential community benefits and impacts. Examples: multifamily new construction (more than a single 1-4 family house), multifamily residential rehab (5 or more units), small scale (1-4 units) residential rehab where there are significant changes in use or occupancy, special needs housing creation, commercial or industrial new construction, rehab of commercial or industrial space that will result in a significant change in use or occupancy. Where DND is required to transfer a property to another department of the City of Boston for disposition or a municipal purpose, the receiving department will be responsible for defining its own community notification processes. 

9-STEP PROCESS:

1. NOTIFICATION: Notification about the proposed property sale, including timelines and planned schedule for public meeting(s), timelines and procedures for applying for the property, and procedures for receiving additional notifications about the disposition of the property will be sent to: abutters within 300' radius3 , neighborhood-based groups representing the area in which the property is located, local elected officials, individuals who have formally expressed interest in the property at the Clearinghouse, and community leaders. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
2. COMMUNITY INPUT PUBLIC MEETINGS: Within 90 days of the completion of the notification process, two public meetings will be held to introduce the proposed development concept and solicit input from the community about issues that the City should address in preparing the development guidelines and selection criteria for the property. The second public meeting may be canceled if the majority of participants at the first public meeting determine that a second public meeting is not necessary.
3. REQUEST FOR PROPOSALS: DND will prepare a Request For Proposals (RFP) for the property that will take into account three primary factors: 1) the various development guidelines and selection criteria that were proposed in the public meetings, 2) overall benefit to the City and all its residents, and 3) the legal and regulatory constraints that governs the City's property disposition authority. DND will provide a draft version of the RFP to community representatives upon request.
4. ADVERTISEMENT: The Request for Proposals will be advertised in a citywide daily paper, the Central Register and at least one local community paper. The advertisement will be sent to a citywide list of developers and all parties that have expressed an interest in the property either by filing an Expression of Interest through the Clearinghouse or by responding in writing to the notification letter. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
5. PROPOSAL REVIEW: DND will review those proposals received that conform to the submission requirements defined in the RFP and will rank the proposals based solely on the criteria defined in the RFP.
6. COMMUNITY REVIEW PUBLIC MEETING(S): The highest ranked developer(s) will make a presentation to community residents to explain their proposed development and respond to questions or concerns from the public. Where necessary, DND may require additional public meeting(s) to ensure that community concerns are appropriately addressed.
7. DEVELOPER SELECTION: DND will make a final developer selection decision based on the criteria defined in the RFP taking into account the input received in the Community Review Meeting(s).
8. FINAL PUBLIC NOTICE: Prior to a final designation vote by the Public Facilities Commission, a notice of the planned sale will be published in the City Record. This information will also be available on the City of Boston/DND Website, the Clearinghouse and at the Home Center (residential sites only).
9. DEVELOPMENT MANAGEMENT: During the development process, DND will ensure that neighborhood organizations are informed regularly about progress and/or issues related to the development.

NOTES: 

1. This period may be reduced to no less than 15 days where it can be documented that the local neighborhood association has already reviewed and commented on the proposed property disposition or is able to review and comment on the proposed property disposition in less than 30 days 
2. This period may be reduced to no less than 15 days where it can be documented that the local neighborhood association has already reviewed and commented on the proposed property disposition or is able to review and comment on the proposed property disposition in less than 30 days. 
3. Where DND determines that potential direct development impacts are significant, a radius of greater than 300' may be chosen.

Housing Policy --- Section 11a

Policy Statement

DND requires rental housing developments with ten (10) units or greater to include a minimum set-aside of 10% of the housing units for homeless families and/or individuals (the "Set-aside Units").

Policy

(Language to be included in Loan Agreement and Affordable Housing Restriction)

No fewer than ten percent (10%) of the total housing units in a project shall be rented to "Homeless Households" (as defined herein) with an income no greater than thirty percent (30%) of the median income for the BMSA. “Homeless Household” shall mean:

1) Literally Homeless: Individual or family who lacks a fixed, regular, and adequate nighttime residence, meaning;

(i) Has a primary residence that is a public or private place not meant for human habitation;

(ii) Is living in a publicly or privately operated shelter designed to provide temporary living arrangements (including congregate shelters, transitional housing, and hotels and motels paid for by charitable organizations or by federal, state and local government programs); or

(iii) Is exiting an institution where (s)he has resided for 90 days or less and who resided in an emergency shelter or place not meant for human habitation immediately before entering that institution

2) Fleeing/Attempting to Flee DV: Any individual or family who:

(i) Is fleeing, or is attempting to flee, domestic violence;

(ii) Has no other residence; and

(iii) Lacks the resources or support networks to obtain other permanent housing

All vacant units must be listed with Homestart, Inc. a Boston-based housing organization. Property owners shall accept applications only from HomeStart, or DND’s approved designee. Tenant screening criteria for Set-Aside Units shall include references from the Household’s case worker, service provider, current employer, or other such party with information that could mitigate any negative aspects associated with homelessness and/or the Household’s past housing history.

Initial rents shall not exceed thirty percent (30%) of the median income for a Household earning 30% of the Area Median Income adjusted for family size, regardless of the household’s receipt of assistance from the Section 8 Rental Assistance Program. When any of the Homeless Set- Aside Units become vacant, that unit shall be rented to another Homeless Household, maintaining the number of Set-aside Units in the project.

For developments that receive project-based Section 8 subsidies: a) if the Section 8 contract covers 90% or fewer of the units, the 10% set-aside for homeless households shall consist entirely of units not receiving Section 8 subsidies; b) if the contract covers greater than 90% of the units, the Set-Aside for homeless households shall consist of all unsubsidized units in the project, as well as, some Section 8 subsidized units.

Project-based MRVP’s: Projects may utilize Project-based MRVP’s administered by Metropolitan Boston Housing Partnership (MBHP)/Department of Community Housing and Development (DHCD) to satisfy the Homeless Set-Aside requirement as long as DND participates in the development of and approves the tenant selection plan and referral process for Homeless Set-Aside units. All other requirements regarding notification and reporting are applicable to the Homeless Set-Aside units utilizing Project-based MRVP’s including; written verification of the Household’s homeless status must be provided to HomeStart prior to fourteen (14) days of their taking occupancy of the Set-Aside Unit. HomeStart also has authority to request verification of continued tenancy.

If the Borrower does not receive a referral from Homestart or the City’s designee within thirty (30) days of notice of the vacancy, then the Borrower may identify a Homeless Household that meets the above definition of Literally Homeless. The Borrower must verify and provide written documentation of the Household’s homeless status to HomeStart prior to fourteen (14) days of their taking occupancy of the Set-Aside Unit. This unit shall continue to be considered part of the Homeless Household Set-Aside with initial rents set and subsequent vacancies filled, in compliance with this policy.

Please review DND Homeless Set-Aside Procedures for additional information on leasing up of units.

Homeless Housing Set-Aside Procedures 11b

Policy Statement

DND requires rental housing developments with ten (10) units or greater to include a minimum set-aside of ten percent (10%) of the rental housing units for homeless families and/or individuals with an income no greater than thirty percent (30%) of the median income for the BMSA (the "Set-Aside Units").

Eligible Participants

“Homeless Household” shall mean:

1. Literally Homeless: Individual or family who lacks a fixed, regular, and adequate nighttime residence that is a public or private place not meant for human habitation;

(i) Has a primary residence that is a public or private place not meant for human habitation;

(ii) Is living in a publicly or privately operated shelter designed to provide temporary living arrangements (including congregate shelters, transitional housing, and hotels and motels paid for by charitable organizations or by federal, state and local government programs); or

(iii) Is exiting an institution where (s)he has resided for 90 days or less and who resided in an emergency shelter or place not meant for human habitation immediately before entering that institution

2. Fleeing/Attempting to Flee DV: Any individual or family who:

(i) Is fleeing, or is attempting to flee, domestic violence;

(ii) Has no other residence; and

(iii) Lacks the resources or support networks to obtain other permanent housing Outreach, Screening & Selection

Clearinghouse: DND has contracted with HomeStart, Inc., a Boston-based housing organization, to serve as a Clearinghouse for the Set-Aside Units. As such, HomeStart maintains written verification of Household’s homeless status, monitors leasing activity and provides information and outreach to potential applicants and referral sources for the Set-Aside Units. HomeStart also has capacity to provide limited stabilization services to Homeless Households that they refer for up to one year after placement.

DND Homeless Set-Aside Units: DND mandates that Borrower’s must fill vacant Set-Aside Units solely with applicants referred by HomeStart, or DND’s designee of choice. HomeStart or the designee will refer eligible tenants with the appropriate level of services. In order to ensure that accurate data is maintained on the Set-Aside program, the Borrower must notify HomeStart when a vacancy is anticipated or has occurred, and prior to occupancy of the Set-Aside Unit. 

Project-based MRVP’s: Projects may utilize Project-based MRVP’s administered by Metropolitan Boston Housing Partnership (MBHP)/Department of Community Housing and Development (DHCD) to satisfy the Homeless Set-Aside requirement as long as DND participates in the development of and approves the tenant selection plan and referral process for Homeless Set-Aside units. All other requirements regarding notification and reporting are applicable to the Homeless Set-Aside units utilizing Project-based MRVP’s including; written verification of the Household’s homeless status must be provided to HomeStart prior to fourteen (14) days of their taking occupancy of the Set-Aside Unit. HomeStart also has authority to request verification of continued tenancy.

Tenant Selection: The Borrower shall adopt tenant screening and selection criteria that recognizes the unique circumstances of Homeless Households and appropriately mitigates negatives aspects associated with homelessness and/or the Household’s past housing history. Borrower’s should reduce barriers and implement leniency for Homeless Households with poor credit and housing histories. In addition, Borrower’s should take into consideration those with Criminal Offender Record Information (CORI) as it relates to housing. In reviewing the application, the Borrower or his designee shall consider references from the Household’s service provider, current employer, or other such party with information pertinent to assessing the Households ability to maintain a successful tenancy.

Leasing the Set-Aside Units

Vacancy Timeliness: If the Borrower does not receive a referral from Homestart or the City’s designee within thirty (30) days of notice of the vacancy, then the Borrower may identify a Homeless Household that meets the above definition of Literally Homeless. The Borrower must verify and provide written documentation of the Household’s homeless status to HomeStart prior to fourteen (14) days of their taking occupancy of the Set-Aside Unit. This unit shall continue to be considered part of the Homeless Household Set-Aside with initial rents set and subsequent vacancies filled, in compliance with this policy.

Kick-off Meeting: It is expected that soon after loan closing and prior to Set-Aside occupancy that the owner, or its designee, attends a meeting with HomeStart and DND for a meeting to discuss Set-Aside procedures and policies and to ensure compliance with the referral process, vacancy tracking and reporting. 

New Construction or Rehab with Current Vacancies: With regard to new construction rental housing developments, or those that are rehabilitation projects which contain existing vacancies, the Borrower must first fill the Set-Aside Units until the obligation has been satisfied.

Fully-Occupied Projects: When a project is fully occupied and there is an existing waiting list, the Borrower has the option to fill every other vacant unit with applicants from the waiting list. However, all Set-Aside Units must be filled within three (3) years. 

Turnover: Should any Homeless Set-Aside Unit become vacant, then that unit shall continue to be considered part of the Homeless Household Set-Aside with initial rents set and subsequent vacancies filled by eligible households in compliance with this policy.

Rent Guideline: Initial rents for the Homeless Set-Aside Units shall not exceed thirty percent (30%) of the income for a Household earning thirty percent (30%) of the Area Median Income adjusted for family size.

Other Issues

Number and Type of Set-Aside Units: Projects including ten (10) or greater rental housing units must include a minimum set-aside of ten percent (10%) of the rental housing units for homeless families and/or individuals. Normal standards of rounding shall apply; i.e., if the project has fourteen (14) rental units, it must include one (1) Set-Aside Unit and if it has sixteen (16) units, it must include two (2) Set-Aside Units. The distribution by bedroom size of the Set-Aside Units must be proportional to the overall configuration of the project, unless otherwise approved by DND.

Relocation 12

Policy Statement

DND will ensure that projects receiving federal funds adhere to the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA).

Policy

URA is used to protect residential and non-residential tenants and property owners from being displaced involuntarily as a direct result of federally assisted acquisition, rehabilitation or demolition projects. Sponsors submitting proposals in response to Request for Proposals where temporary relocation is anticipated are required to submit the following information at the time of application submission: 1) Project Information Form, 2) Master Tenant List, 3) General Information Notice, and 4) an Estimated Relocation Budget. Projects that anticipate any permanent displacement must provide additional information. In addition, mixed-use projects must provide information on all tenants - both residential and non-residential.

Additional information and guidance can be found in DND's Tenant Relocation Policies and Procedures for Applicants and Recipients of CDBG and HOME Funds from the Neighborhood Housing Development Division (Effective 11/99).

Policy Statement:  

To better ensure that the condominium fee structure is fair and equitable for all owners, DND or NHT-supported Mixed Income or Affordable Condominium Developments must use a calculation of the beneficial interests allotted to units that is  based upon the” fair value” of the units, rather than square footage.

Affordable Condominium Development Housing Restriction

Affordable Housing Restrictions for developments that include affordable condominium units shall include language requiring that the “beneficial interests” (which are in turn used to determine the allocation of condominium fees and special assessments) be allocated in accordance with the requirements of the Massachusetts Condominium Act, Massachusetts General Laws Chapter 183A, which stipulates that the percentage interest for each unit be determined by the “fair value” of the unit as of the date of the master deed.

The Developer shall also agree to provide such back-up documentation as DND may reasonably require in order to complete its determination of compliance with this policy.

Fair Value

DND defines “Fair Value” as the calculation of the projected sales price of the units (also known as the “Strict Value Method”). A developer may propose an alternative method of setting the Affordable Unit proportional share provided that the calculation comes out equal to or less than that realized by the Strict Value Method. 

Approval of Assessments

The Condominium Documents must require that at least a two-thirds (66.6%) majority approve any action that may lead to a special assessment of the Condominium Association members.

Affirmative Fair Housing 13

Policy Statement

DND shall require that Sponsor's of assisted projects comply with the Affirmative Fair Housing Marketing requirements of the Boston Fair Housing Commission ("Commission"). These requirements are designed to ensure equal access by all residents of Boston regardless of race, color, religious creed, marital status, familial status, military status, handicap, national origin, sex, age, ancestry, sexual preference, and source of income.

Policy

All DND-assisted projects must comply with Affirmative Fair Housing Marketing requirements. Sponsors of projects with less than five (5) units comply with fair housing objectives by listing units available for sale or rent with Metrolist and by signing a Non-Discrimination Statement. Sponsors of DND-assisted projects with five (5) or more new or vacant units must submit an Affirmative Fair Housing Marketing Plan ("Plan") to the Commission with thirty (30) days of receiving a final designation or firm funding commitment. The Plan describes all the steps the Sponsor will take to guarantee fair and open housing access.

Commission staff review the Plan submitted by the Sponsor and work with the Sponsor to incorporate any amendments, if necessary. The Plan must be approved a) before a loan closing of DND funds or conveyance of DND land occurs and b) prior to advertising, application taking, or tenant-buyer selection. Following approval, Commission staff monitors Plan compliance.

In addition, the Commission will screen developers within fifteen (15) days of opening Request for Proposal responses to determine if there are any outstanding Equal Opportunity/Fair Housing complaints against each individual and entity on file at the Commission, U.S. Department of Housing and Urban Development, or the Massachusetts Commission Against Discrimination. DND staff will submit information to the Commission so it may complete the screening process.

Special needs housing projects with five (5) or more new or vacant units are also subject to the Commission's Affirmative Fair Marketing program. Special needs projects of less than five (5) units comply with fair housing objectives by listing units available for rent with Metrolist and by signing a Non-Discrimination Statement. Mainstream multi-family projects containing a special needs sub-component should submit a separate special needs Plan if the tenant selection process differs from that of the non-special needs units.

Additional information on Commission requirements can be obtained from its Affirmative Fair Housing Marketing and Tenant Selection Manual.

13-1 Fair Chance Tenant Selection 

The goal of this policy is to stabilize neighborhoods and minimize displacement by providing preference for existing neighborhood residents for up to 50% of the units in projects located in non-segregated geographies with high rates of displacement or households at high risk of displacement. The pilot preference will only be for initial rent up. 

Project Eligibility

52 Montebello Road is eligible for this pilot preference because:
The area meets a diversity threshold where there is no one racial or ethnic group that makes up more than 60% of the population. 

It is within an area where more than 30% of households are severely rent burdened, paying more than 50% of their household income on rent.

Because there are fewer than 20 units in the 52 Montebello Road development, applicants living within a 1/4 mile buffer of the development may be eligible for the preference. A map and a list of addresses located within the 1/4 mile buffer may be accessed online or in person at 1544 Columbus Avenue, Roxbury, MA 02119 during the application distribution hours.

Household Eligibility

Households living within 1/4 mile are eligible if they meet at least one of the following criteria¹:

• Rent-Burdened: Household income at or below 30% of Area Median Income (AMI) paying more than 30% of income for rent or household income over 30% and at or below 60% AMI paying more than 50% of income for rent. This includes voucher holders paying more than 30% of income for rent (tenant paying amount of rent over Fair Market Rent (FMR)). 
  • Supporting documents for this preference include copies of current lease and current tax documents
• Elderly (62+ years old) with income at or below 60% AMI
  • Supporting documents for this preference include a government issued identity card and current tax documents. 
• Renter household with income at or below 60% AMI with school age children in a Boston Public Schools. 
  • Supporting documents for this preference include a school enrollment certificate or other proof as well.

Implementing the Diversity Preservation Preference

• The application for entry into the lottery must be amended to include an option for applicants to apply for the Diversity Preservation Preference Pilot.
• The Boston Fair Housing Commission (BFHC) has drafted a Lottery Application Checklist for households to reference while completing applications: Included in the checklist is a description of the Diversity Preservation Preference Pilot.
• DND has included as part of this amendment copies of a map and the list of addresses located within the target area - 1/4 mile radius of 52 Montebello Road. Developers and their marketing agents must make a copy available to applicants during the application period to help them determine if they should apply for the preference. The listing and the map are also available online.
• The BFHC has provided an updated Compliance III Applications Returned log in which developers and agents must identify households who have selected the Diversity Preservation Preference and the applicant’s eligibility based on supplying supporting documentation.
• For households who may qualify for more than one of the eligibility requirements, it should be clarified that they need only supply the supporting documents for one, so whichever is most convenient for them is recommended (e.g. if eligible for both 1 and 2 under Household Eligibility, there’s no benefit to providing all of the documents for both preferences. If it is easier to organize a copy of a government issued identification card and current tax documents, there’s no need to also provide copies of current lease. 
• To qualify for the preference, households are required to submit the necessary supporting documents along with the application. 
• Developers and their agents should review the scope of this preference carefully and be prepared to guide households on eligibility and supporting documents. Should the front-line staff working on the marketing and application process have any questions, they should contact the Affirmative Marketing Specialist at 617/635.2500 for guidance. Households should not be steered to DND or the BFHC.

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¹ Meeting more than one of the criteria does not afford applicants higher preference.