Skip to main content

[Home] > [Small Rental Property Owners] >   Frequent Questions

Frequent Questions

Last updated 11.13.2009 (New Program Devlopments)

General Program Information

Application Process

Round 1 Award Process

Round 2 Award Process

Next Steps

New Program Developments

 

General Program Information

What is The Road Home Small Rental Property program?
The Small Rental Property program provides incentives to owners of small scale rental properties to help restore their damaged units and offer them at affordable rents to income eligible tenants. Small rental properties are those with one to four  rental units, which include single family, duplex, triplex, and fourplex buildings. Before the disaster, a large portion of moderate-income working families resided in single-family homes and small rental properties. Often, these were owned and operated by Louisiana property owners. The repair of these rental properties, in conjunction with the other Road Home programs, will ensure that families are given the opportunity to return to Louisiana.

What agency is in control of this program’s funding?
The US Department of Housing and Urban Development (HUD) provided Community Development Block Grant (CDBG) funding to the State of Louisiana’s Office of Community Development (OCD), the State agency in charge of The Road Home program. The Small Rental Property program (Rental program) is run with the assistance of a team of private companies that specialize in housing and community development. The Governor of Louisiana, the Louisiana legislature and The Louisiana Recovery Authority (LRA) have worked together with the Office of Community Development (OCD) since July of 2006 to design the Rental program.

What does ‘small rental properties’ mean?
Small rental properties are those with one to four rental units, which include single family, duplex, triplex, and fourplex rental buildings on one tax parcel. The term “units” refers to residential dwelling units that provide complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.

How are awards calculated?
Applicants will receive the lesser of the following two amounts: The amount selected by the property owner corresponding to the affordable rents they choose for their units or 100 percent of the total cost to repair or reconstruct their storm-damaged property. Refer to the Choosing Your Awards (PDF/1MB) on the Resources and Downloads page.

What is a forgivable loan?
Incentives are made in the form of a no interest, no payment, forgivable loan requiring property owners to maintain affordable rent levels for up to 10 years. The Rental program requires property owners to offer lower rents and in exchange gradually forgives the entire amount of the loan. The award is disbursed when the units are repaired and income eligible tenants are identified, providing an incentive to property owners to keep rents affordable to workforce families, while allowing owners the flexibility to leave the program before the entire loan is forgiven. Refer to Award Levels (PDF/1MB) on the Resources & Downloads page.

Do I have to repay the money I receive from the Small Rental Property program?
Forgiveness of the awards occurs in staged intervals from the time the first eligible tenant occupies the unit. Awards for property owners who agree to maintain rents that are affordable to families at the 80 percent of Area Median Income (AMI) tier are forgiven in the amount of $10,000 at the end of the third year from the time of the first eligible tenant occupies the unit. At the end of year five, any remaining balance up to an additional $5,000 will be forgiven. The outstanding balance of the loan, if any, will then be forgiven in five equal, annual installments. Award levels for property owners serving tenants at the 65 or 50 percent of AMI tiers are significantly higher than the 80 percent of AMI tier. These loans are more than 50 percent forgiven at the end of the fifth year from the time the first eligible tenant occupies the unit, depending on the size of the loan. The balance of the award is then forgiven in five equal, annual installments.

Will you deduct insurance payments, FEMA assistance or SBA loans from the award?
Only owner occupants of three and four unit properties who receive compensation for their home are required to deduct these other benefits. The Small Rental Property program is an incentive program which does not require all other rental property owners to deduct any insurance payments, FEMA assistance or SBA funds from their award.

What properties are eligible?
Single-family, duplex, triplex and fourplex rental buildings located on a single tax parcel that suffered damages of $5,200 or greater from either Hurricane Katrina or Rita and that are located in the 13 designated parishes are eligible for rental funds. Town homes and condominiums are also eligible to apply to The Road Home Small Rental Property program if they meet all general eligibility requirements and specific conditions for condominiums. View Eligibility section on our Web site to learn more.

Am I eligible if I already applied to The Road Home Homeowner Assistance Program?
Homeowners who also own separate rental property are eligible to apply to both programs. Owner occupants of duplex properties, those in which the owner resides in one unit and makes the other available for rent, are eligible to apply to either the Homeowner Assistance program or the Small Rental Property program but may only accept an award in one program or the other.

Property owners who lived in one unit of a three- or four-unit property with their tenants are not eligible for the Homeowners program but are eligible for the Rental program and are urged to apply. These owner occupants are eligible for a grant for the unit they reside in as well as incentive awards for units they agree to rent at affordable rates. They will be provided personal application assistance and may be eligible for additional funding.

However, property owners who received a grant award from the Homeowner Assistance program may now apply for a rental award for other structures on the same tax parcel. The other structures must contain affordable rental units and must meet all other Small Rental Property program requirements.

  • Example: If a property included a single family dwelling where the owner lived and a separate duplex on a single tax parcel, and the applicant received an award from the Homeowner Assistance program for their single family home, this new policy makes them eligible for a Rental Program award on the duplex (if it meets all other Small Rental Property program eligibility requirements).

  • Note: Units that share a roof are not included in this policy and are not eligible to receive Small Rental Property program assistance in addition to a Homeowner Assistance program award .

Did I have to own the property at the time of the storm?
No. In Round 2, investors who purchased or acquired ownership of residential rental property after the storms are eligible to apply. However, these owners will receive a lower preference for funding than owners who owned their property before the hurricanes.


Am I eligible if construction has already started on repairs?
Yes, you are still eligible for the program and may use the cost of the completed work to determine the total cost to repair.

Application Process

How do I apply for the Small Rental Property program?
Visit our How-to-Apply page to learn about future rounds.

What happens after an application is submitted? 
Once the round is closed and all applications are received, the Rental program verifies basic eligibility information, eliminates any late or incomplete applications then scores and ranks all the eligible applications. The Rental program issues Conditional Award letters to those applications with the highest scores. Applicants who rank below the cut-off point may be able to apply to a later round. Refer to the Funding Process page.

What should I do if I disagree with a decision made by the Small Rental Property program?
First, speak to a Small Rental Property call agent (call The Road Home at 1.888.762.3252 and ask to be put through to a Rental program expert.)  If they are unable to resolve your issue to your satisfaction and you believe that the program has reached its decision in error, you have the right to appeal.

Appeals must be filed in writing within 30 days of receiving the Rental program’s determination.  Appeals may be submitted to:

       The Office of Community Development
       Small Rental Property Program
       Attn: The Appeals Office
       P.O. Box 4729
       Baton Rouge, LA  70821

The Appeals Office will research all information related to an application only as it relates to current policies governing The Road Home award decisions. The Road Home Appeals Office will not change policies or laws set forth by the State of Louisiana or the federal government.

Download The Road Home Appeals Guide (PDF/275k) to learn more.  

Round 1 Award Process

I am thinking about changing the rent tiers of my rental units. What am I allowed to do?
If you are a Round 1 award recipient, you may adjust the affordable rent tiers you selected on your application up until you sign and return your Commitment letter. You may also change from a market rate unit to an affordable unit or the reverse before returning your letter. Note that changes in rent tiers may change your award amount. If you received a bonus for mixed-income units you could lose it, and if you did not, you may not receive one after the initial application. Round 2 award recipients may not make changes to their rent tiers.

Round 2 Award Process

What is a Commitment letter? When do I get it?
A Commitment letter reserves the forgiveable loan that you will be awarded once your units are repaired and you have identified tenants whose income meets the affordability levels you chose for your units. To receive a Commitment letter, you must have returned all of your Conditional Award documents. The Rental program will then verify that a number of requirements concerning you and your property have been met. This can take several months depending on the specific requirements (these include verifying your ownership of the property, determining its proximity to amenities, passing a required Federal environmental review, determining if a Homeowner award has already been made to your property, etc.) and whether your particular situation is complex or straightforward. Once these requirements are met, the Rental program issues your Commitment letter.

How soon can I go to closing?
After your Commitment letter is issued, you have nine months to finish your repairs and identify income eligible tenants for your affordable units. If the nine month period is too short, you can request a time extension after the nine months has elapsed. All construction needed to repair your units and comply with the building code must be finished before any award funds are disbursed. This means that you may need to secure lender financing to repair your units. (View more information on the Funding page.) Your Commitment letter should assist you in securing a loan. However, it is your responsibility to obtain construction financing and oversee the completion of any repairs.

When you complete your repairs, you should request a Certificate of Occupancy (or equivalent certification) from your Parish. Once you have it, notify the Rental program and one of our evaluators will call you to arrange a time to inspect your property. If your property was built prior to 1978 and has not already been certified to be free of lead-based paint, the Rental program will have a Lead Risk Assessment conducted on the affordable units and any common areas that are shared by those units.  This is done at the Rental program’s expense. (Refer to the Lead-Based Paint questions and answers below. For more information download Lead Risk Assessments (PDF/40k) flyer.)

Once the property is found to be free of lead hazards, a Road Home Final Inspection will be scheduled. This is how the Rental program ensures that your units meet all requirements and contains the features that you said on your application would be there. At this point you should be only weeks away from receiving your award.

When you pass your final Rental program inspection, you should look for income eligible tenants to rent your affordable units. The Road Home is partnering with the Louisiana Department of Health and Hospitals to help identify affordable rental properties in Louisiana, including units that are accessible for people with disabilities. The Rental program will list your rental property(ies) at www.LAHousingSearch.org, a site that enables prospective tenants and displaced residents nationwide to view available affordable units.

Once you have identified possible tenants, you will need to collect information from them to document that their annual household income matches the rent requirements of your units. Download the Guide to Tenant Selection and Requirements and 2007 Area Median Income (AMI) Limits from our website’s Resources and Downloads page. Consult with Rental program staff if you have any questions.

When you have passed the final Rental program inspection and provided the required tenant income documentation and lease showing the rental amount to the Rental program, a Loan Committee composed of State officials will verify the incentive loan package for final disbursement. You will be scheduled for closing and the award will be transferred to your bank account.

What is my status?
To learn your individual status, call The Road Home at 1.888.762.3252, press the Rental program prompt #1, and ask to be put through to a Rental program expert.

What are the income eligibility limits for tenants renting my affordable units?
The allowable income for your tenants depends on the affordability level you chose for your units, the size of your units, and the parish your property is located in. Refer to the 2007 Area Median Income (AMI) Limits from our website’s Resources and Downloads page.

How am I supposed to get a loan to finance my repairs?
A group of lenders are participating in the Small Rental Property program to provide both construction and permanent financing to applicants who receive a Conditional Award and progress to the Commitment letter stage. (View more information on the Funding page.) These lenders are experienced in providing construction and permanent lending services and have expressed interest in assisting Small Rental Property program award recipients to complete their repairs.

  • A construction loan is a short-term loan specifically designed to pay for construction or substantial repair of buildings or homes. These loans usually provide periodic disbursements to the property owner as the building progresses.

While the Participating Lenders are interested in working with you to restore your rental property, they will adhere to their normal lending standards when reviewing loan applications. The lender alone decides whether to retain, service or sell each permanent loan without participation by The Road Home program.

If your preferred lender is not on the participating lender list, you should contact them right away to let them know you are interested in having them work with The Road Home.

Why don’t you just send me a check?
The purpose of The Road Home Small Rental Property program is to ensure that affordable rental units that were damaged or destroyed by the storms become available once again to the working families of the hardest hit parishes in Louisiana. The only way to guarantee that the money set aside for this purpose actually produces quality affordable rental housing for our citizens is to award the money to small property owners once the repairs are completed and eligible tenants are identified.

Next Steps

My property was built prior to 1978 and now the Rental program is requiring me to have a Lead Risk Assessment (also known as Lead Based Paint Risk Assessment) conducted. What should I do?
We advise you to spend a few hours preparing your property to increase the likelihood that you will pass the Risk Assessment. The key steps involve making sure that no painted surfaces are chipping or flaking, that any construction debris is removed from the site, and that you have thoroughly wet-cleaned all surfaces and vacuumed with a High Efficiency or other high-quality vacuum cleaner. For more information download Lead Risk Assessments (PDF/40k) flyer.

What must I do to address lead paint hazards if they are identified?
Your risk assessment inspection report will contain site specific recommendations.  In general, lead hazard reduction will require:

  • Stabilizing all painted surfaces with a primer and top coat
  • Growing grass or ground cover on all bare soil
  • Cleaning and sealing all horizontal surfaces

For more information, download Lead Risk Assessments (PDF/40k) flyer.

Where can I get help figuring out how much financing I need to make my repairs and preparing a loan application?
The Small Rental Property program has a team of Financial Advisors that can help you with these types of questions. To make an appointment to speak to a Financial Advisor, either request such assistance from your Road Home Lending Team contact, or call The Road Home at 1.888.ROAD.2.LA (1.888.762.3252), press 1 to reach a Rental program expert, and request assistance from a Financial Advisor.


New Program Developments

I have a unit that is completely repaired and that I would like to rent, but I haven’t received my final inspection or my incentive award yet. Does the Rental program allow me to lease it?
The Rental program can now, on a case-by-case basis, authorize property owners whose incentive loan awards are in process to rent vacant, fully repaired units to certified income eligible tenants before closing. The owner must request Rental program authorization. To request authorization, call The Road Home at 1.888.ROAD.2.LA (1.888.762.3252) and press the Rental Program prompt #1 to speak with a Rental program expert.

If I already received an award from the Homeowner Assistance program, but I have separate rental units on my property, am I eligible to apply to Small Rental Property program for those rental units?
Property owners who received an award from the Homeowner Assistance program for their home are eligible to apply for a rental award for separate structures on the same tax parcel. The other structures must contain affordable rental units and must meet all other Small Rental Property program requirements. Units that share a roof with the owner’s home are not eligible for Rental program assistance. (Refer to the General Program Information section above for more information on eligibility.)

Can a property owned by a non-profit organization that applied for assistance in the set-aside undergo a change in ownership after application and remain eligible for the Rental program?
Yes. Previously, a property was not permitted to undergo a change of ownership and keep the benefit of a Rental program award unless the ownership changed after closing. However, nonprofits participating in the set aside may now undergo a change in ownership prior to closing and still remain eligible. The new ownership entity must be an IRS registered 501(c)(3) nonprofit organization registered to do business in the State of Louisiana.

What is the penalty for a property owner who permanently displaces their tenants?
If an owner evicts a tenant in a manner that qualifies the tenant for permanent displacement benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA), the Small Rental Property program will deduct the permanent relocation costs from the owner’s award while allowing the owner to continue in the Rental program.

Small Rental Property Program - Initiative Option


CONSTRUCTION

1. How are the contractors and applicants going to decide on quality of materials?

• The RFP specified the type and quality of materials that must be used by all Small Rental Property Program (SRPP) contractors. SRPP inspectors and construction managers will ensure that these materials lists are followed.

2. If a contractor discovers that additional funds will be needed to complete the property, after construction has begun, will the owner be able to request additional funds from the program?

• The program may consider additional funding, on a case by case basis, if the total additional funding does not exceed 25% of the construction contract and the total resulting award does not exceed the Initiative Option maximum allowable award.

3. Will mold remediation be included in the estimate of repairs?

• Yes, mold remediation may be included in the estimate of repairs.

4. Who carries the Builders Risk insurance?

• The contractor is responsible for builders risk during construction.

5. Is Builders Risk the only type of insurance required?

• SRPP requires the contractor to carry Builders Risk insurance and all insurances required by the State of Louisiana for construction contractors. In addition, the property owner must carry property insurance, flood insurance and all insurances required by the closing documents.

6. Must owners have an active/on-going construction contract in order to have the owner’s existing contractor approved for this Initiative Option?

• Only contractors who are currently under contract, with the owner, to perform the work needed at the units to be assisted through the Initiative Option will be able to apply for approval through the SRPP.

7. How do owners get their contractor approved by the SRPP?

• If an owner is under contract at the time of acknowledgement of participation in the Initiative Option, the SRPP will work with the contractor for possible qualification. The SRPP will request the required information including the name, contract information and a copy of the current contract.

• All contractors must be approved by the SRPP. The SRPP’s construction staff will review and analyze the existing documents including the construction contract and scope of work to determine suitability for the Initiative Option. SRPP construction staff will review the contractor’s bid prices and compare Estimated Cost to Repair (ECR) by each line item to ensure cost consistency. The SRPP staff will review the contractor’s qualifications as listed below to determine suitability for the program.

      i.  Experience – How many years

      ii.  Products – examples to meet SRPP standards

      iii.  Personnel – how qualified for this type work

      iv.  Permits, Registration, Certificates – LA. State Board of Contractors License
      for type of construction

      v.  Proof of Payment & Performance Bonds – Bond for remaining amount of work
      to be performed

      vi.  Capacity to Perform – How many currents projects are in process?

      vii.  Financial Statements – Good standing with the LA. Dept. of Revenue

      viii.  Warranty Policy – What type of warranties do they provide?

      ix.  Insurance – to meet State requirements.

      x.  Quality Control Program – What type of program do they have?

      xi.  Health & Safety Program – What type of program they have?

8. Will the contractors have workman’s compensation insurance?

• SRPP contractors will be required to carry and maintain all insurances required by the State of Louisiana.

9. Once the contractors are chosen, how soon will work begin?

• Construction will begin after closing has occurred and all permits are acquired.

10. What kind of warranties are in place for faulty construction?

• The structure is warranted for 5 years and the workmanship for 1 year.

11. Does the SRPP have enough contractors to complete the total number of properties in the program within a reasonable period of time?

• Contractors were selected as part of a State of Louisiana Request for Proposal. Contractors were required to provide evidence of capacity as part of their RFP submission.

12. Will “access” be part of the construction estimates (ex, driveway, sidewalk)?

• Yes, driveways and sidewalks will be considered as part of the construction estimate.

13. If the property owner has a disagreement with the contractor, who will be the one to settle it?

• The SRPP will actively mediate in such situations


DUPLICATION OF BENEFITS

14. What are DUPLICATION OF BENEFITS?

• Under the Stafford Act persons and businesses may not receive federal funds from two or more sources for the same disaster or emergency. As a result, the SRPP must ensure that deductions are made from an Initiative award equal to other Federal or insurance proceeds. This is called DUPLICATION OF BENEFITS. When these funds are used for certain ALLOWABLE ACTIVITIES the deduction may be reduced.

15. How do the market rate units factor into the award and DUPLICATION OF BENEFITS?

• Market rate units do not factor into the award. All DUPLICATION OF BENEFITS and ALLOWABLE ACTIVITIES for the entire property are calculated on a pro-rated basis based on the square footage of the affordable units versus the entire structure.

16. How is the Hazard Mitigation Grant treated in the DUPLICATION OF BENEFITS?

• SRPP applicants are ineligible for participation in the Hazard Mitigation Grant Program.

17. Should owners report funds received from FEMA?

• Yes, all forms of assistance and insurance proceeds must be disclosed to the SRPP not just FEMA. The SRPP will also verify this information via 3rd party.

18. Do owners have to provide documents showing SBA funds were returned?

• Documentation supporting the return of funding must be provided to the SRPP in order to prevent that funding from being considered a DUPLICATION OF BENEFITS.

19. Will FEMA proceeds reduce the award?

• FEMA or SBA proceeds could reduce the Initiative Option award if the money spent from the FEMA or SBA grant is not spent on ALLOWABLE ACTIVITIES.

20. What if an owner received SBA funds, but returned those funds – How is that factored into DUPLICATION OF BENEFITS?

• Funds that are returned are not counted in the DUPLICATION OF BENEFITS.

21. If an owner has attorney fees in an insurance settlement, will that count as an ALLOWABLE ACTIVITY?

• Legal fees in an insurance settlement will not impact the Initiative Option award.

22. What if an owner received an owner occupied award in the Small Rental Program? How will that be treated?

• The Owner Occupied award is not considered a DUPLICATION OF BENEFITS because the Initiative funding will be based upon the affordable units offered to the SRPP.

23. How will damage from hurricane Gustav affect our DUPLICATION OF BENEFITS and ALLOWABLE ACTIVITIES’s?

• Funding received from hurricanes Gustav and Ike is not considered DUPLICATION OF BENEFITS for the Initiative Option.

24. If an SBA loan covers multiple properties, how will it be prorated?

• The funds will be prorated based on how the SBA allocated the funds.

25. Are small rental properties eligible to participate in the elevation grant program?

• No, small rental program properties are ineligible for participation in the elevation program (HMGP).

26. Historic properties – The state had grants to help with historic properties, will this be counted against owners?

• Yes, according to the US Department of Housing and Urban Development all forms of assistance related to Hurricanes Katrina and Rita must be included in the calculation of DUPLICATION OF BENEFITS for SRPP.



ALLOWABLE ACTIVITIES

27. What are ALLOWABLE ACTIVITIES?

• ALLOWABLE ACTIVITIES are expenditures made by the applicant that are used to repair the small rental property. These are repairs that would have been considered eligible for SRPP funding had the owner not received other assistance. ALLOWABLE ACTIVITIES reduce the DUPLICATION OF BENEFITS.

28. Is loss of rents considered an ALLOWABLE ACTIVITY?

• No. Loss of rents is not considered an ALLOWABLE ACTIVITY.

29. Will an owner be reimbursed for repairs that are already done?

• No, there is no reimbursement for work already completed. Work completed may be considered ALLOWABLE ACTIVITIES and those funds will not be deducted from the Initiative Option award. However, applicants will not be directly reimbursed for money spent on repairs.

30. Do the applicants receive any funds directly?

• No, funding will be paid directly to the contractor through a series of construction draws based upon percentage of completion as verified by the SRPP and property owner.

31. After the small rental property is completed, are the funds still forgivable? Is the Initiative Option award considered a loan or a grant?

• The Initiative Option award is a loan that will be forgiven at various rates as follows:

      i.  Awards for property owners who agree to maintain rents that are affordable to
      families at the 80 percent of AMI tier are forgiven in the amount of $10,000 at the end
      of the third year from the time the first eligible tenant occupies the unit. At the end of
      year five, any remaining balance up to an additional $5,000 will be forgiven. The
      outstanding balance of the loan, if any, will then be forgiven in five equal, annual
      installments.

      ii.  Awards for property owners serving tenants at the 65 or 50 percent of AMI tiers are
      significantly higher than the 80 percent of AMI tier. These loans are more than 50%
      forgiven at the end of the fifth year from the time the first eligible tenant occupies the
      unit, depending on the size of the loan. The balance of the award is then forgiven in five
      equal, annual installments.

32. Will “force-placed” insurance be counted in ALLOWABLE ACTIVITIES?

• Insurance costs are not considered ALLOWABLE ACTIVITIES.

33. Do upkeep and routine maintenance count as ALLOWABLE ACTIVITIES? (Ex: mowing grass, general maintenance.)

• Routine maintenance and upkeep are not considered ALLOWABLE ACTIVITIES.

34. What if the property was gutted – not demolished – will this be considered as an ALLOWABLE ACTIVITY?

• Rehabilitation and reconstruction are both ALLOWABLE ACTIVITIES and demolition costs are considered ALLOWABLE ACTIVITIES. ]Only if it is considered a DUPLICATION OF BENEFITS.

35. What happens if an owner cannot locate all of the receipts for repairs to prove ALLOWABLE ACTIVITIES?

• Property owners who cannot locate all the receipts for repairs should list those items on the ALLOWABLE ACTIVITES worksheet in the “no receipts” column. At closing, these owners will be required to sign an affidavit attesting under penalties of perjury that the listed repairs are true and accurate.

36. What if an owner didn’t receive any funds: FEMA, SBA, etc… will the owner be able to count any of the work already done to the property toward allowable activities?

• No, ALLOWABLE ACTIVITIES are a mechanism to off-set the DUPLICATION OF BENEFITS penalty. If there is no DUPLICATION OF BENEFITS there is no penalty to off-set.

37. What if an owner rented equipment to do some of the repairs at an earlier time; can this be used of offset the DUPLICATION OF BENEFITS penalties?

• Equipment rental is considered an ALLOWABLE ACTIVITY depending on the need for the equipment and if there is DUPLICATION OF BENEFITS to off-set against the ALLOWABLE ACTIVITY.

38. Are taxes and insurance ALLOWABLE ACTIVITIES?

• No. Taxes and insurance are not ALLOWABLE ACTIVITIES

39. Is “sweat equity” considered an ALLOWABLE ACTIVITY?

• No. Sweat equity is work physically completed by the owner on the property. Only repairs completed under contract with a contractor can be considered ALLOWABLE ACTIVITES.

40. Is a special grant for historical property restoration a DUPLICATION OF BENEFITS? Can it be used as an ALLOWABLE ACTIVITIES?

• DUPLICATION OF BENEFITS are funds received as a result of hurricanes Katrina or Rita. If the Historic Grant is received as a result of these storms it is considered a DUPLICATION OF BENEFITS.

41. Is relocation money from SBA considered a DUPLICATION OF BENEFITS or ALLOWABLE ACTIVITY?

• No, SBA funds for relocation are not considered a DUPLICATION OF BENEFITS and therefore will not be included in the ALLOWABLE ACTIVITIES. Funds received for relocation will not reduce the award.

42. If washer/dryer/window A/C’s are not allowable activities, will the affordability period still apply?

• Yes, the affordability period will continue to apply.

43. Is there an interest rate charged on this Initiative Option?

• There is no accruable interest rate charged in the Initiative Option.

44. Will termite treatments/contracts be used as an ALLOWABLE ACTIVITY?

• Pest control is not considered an ALLOWABLE ACTIVITY.


PROGRAM RENTS / TENANT REQUIREMENTS

In the Initiative Option the property owner will have sixty (60) days from the date the final inspection was passed to provide the SRPP with income and lease documentation for eligible tenants. If tenant information is not received within sixty (60) days, a non-compliance letter will be sent informing the owner that they have forty-five (45) days to remedy the situation. If property owners have not provided eligible tenants with lease documents by the end of forty-five (45) days, the SRPP will begin the process to recover program funds from the property owner.

45. If an owner enters the property into Section 8 program, how will this work with the program?

• The payments to the landlord from Section 8 can’t exceed the maximum rental amount for the AMI tier selected.

46. Are owners allowed to change rent tiers? What should owners do if they want to change rent tiers?

• Property owners will not be allowed to change rent tiers in the Initiative Option.

• If a property owner wishes to change rent tiers they must stay in the Incentive Program

47. Will the state have to be notified each time a new tenant signs a lease?

• Yes. It is a SRPP requirement for both Incentive Program and Initiative Option that all new tenants must be pre-approved for income eligibility by the SRPP prior to lease.

48. Can owners rent to relatives?

• Yes, as long as relatives are income eligible and the tenant is approved by SRPP.

49. What if owners are having difficulty finding tenants, are there time restraints?

• The property owner will have sixty (60) days from the date the final inspection was passed to provide the S RPP with income and lease documentation for eligible tenants.

50. Can a tenant move in after the construction is complete?

• Yes – All pre-approval requirements apply.

51. Is an inspection needed before a tenant can move in?

• No. However, property owners must provide potential tenants with a Move-in Notice prior to executing a lease agreement.

52. What if a tenant is income eligible at move in, but receives a raise? Do landlords have to report this to the state?

• Tenant income eligibility is verified at initial lease-up only. There is no income recertification required.

53. The initiative policy states NO AMI CHANGES. What time frame does this apply?

• All AMI changes have been suspended as of October 15, 2009.


PROJECT FUNDING

54. If there is a funding gap, when do owners need to provide the funds?

• Gap funding provided by the property owner must be provided at closing and will be held in escrow until needed. The property owner will be required to provide certified funds at the time of closing.

55. What happens if the cost to repair is over the maximum, will owners have to come up with the difference?

• If gap funding is necessary it is the property owner’s responsibility to obtain financing.


LOAN TERMS AND CONDITIONS

56. What obligations would owner’s heirs have in the Initiative Option if something were to happen to the owner?

• Heirs are obligated to the same covenants, restrictions and affordability period placed on the property or repayment of the loan.

57. Are the forgiveness terms the same in the Initiative Option as they are in the Incentive Program?

• Yes. Awards for property owners who agree to maintain rents that are affordable to families at the 80 percent of AMI tier are forgiven in the amount of $10,000 at the end of the third year from the time the first eligible tenant occupies the unit. At the end of year five, any remaining balance up to additional $5,000 will be forgiven. The outstanding balance of the loan, if any, will then be forgiven in five equal annual installments. Awards for property owners who agree to maintain rents that are affordable to families at the 65 or 50 percent of AMI are more than 50 percent forgiven at the end of the fifth year from the time the first eligible tenant occupies the unit, depending on the size of the loan. The balance of the award is then forgiven in five equal annual installments.

58. Can owners sell the property after the construction is complete?

The property cannot be sold during the construction process. If the sale occurs within 3 years of the final disbursement, the new owner must agree to assume responsibility for the regulatory agreement and continue to participate in the program. If the new owner does not agree to participate in the program, the property is deemed in violation of the program regulatory agreements and the owner applicant must repay the incentive loan and 8% penalty. Will owners receive the difference between the Initiative and Incentive awards? • No, the property can only qualify under one program.

59. Is the affordability period the same for both programs?

• Yes, the affordability period is the same for both the Incentive Program and the Initiative Option.

60. Can an existing construction loan or mortgage remain on the property for the Initiative Option if opened after the storm?

• Yes, a mortgage or existing construction loan may remain on the property.

61. Are these grants taxable?

• The SRPP is not qualified to provide tax guidance or assistance. Please ask a tax professional.

62. Does this Initiative Option in any way put the Incentive Program funds in jeopardy?

• No. Participation in the Initiative Option is the property owner’s choice. However, the property can only receive funding through one (1) program.

63. Is HAP considered income?

• No, HAP is not considered income for the Initiative Option.

64. What’s the difference between national flood insurance program and regular flood insurance?

• There is no difference it is the same program.

65. Can a property owner have a larger structure through the Initiative Option?

• No. The footprint of the original structure and approximate square footage must be maintained. Each case must be evaluated individually based on appropriate codes and restrictions.

66. Will owners be compensated for demolition and construction costs?

• Reimbursement for demolition and construction already done will come in the form of ALLOWABLE ACTIVITIES that off-set the DUPLICATION OF BENEFITS. There is no reimbursement or compensation for costs incurred by owners.

67. Is there a lien against the owner’s property after the construction is complete?

• Yes, a lien is placed on the property for the length of the affordability period.