NOTICES
HOUSING FINANCE AGENCY
Homeownership Choice Demonstration Program; Request for Proposals
[30 Pa.B. 2093] The Housing Finance Agency (Agency) announces a request for proposals (RFP) to provide funds for the development of single family homes, for purchase, in urban communities.
Background
After several decades of booming suburban development, there has been a recent increase in the amount of interest surrounding land-use decisions and growth. A number of constituencies have espoused the position that ''suburban sprawl,'' if unaddressed, could have negative environmental, economic and societal consequences. These groups argue that unless alternatives are identified, unchecked growth could cost the Commonwealth millions in public infrastructure dollars; continue to concentrate poor and minority families in urban areas with limited access to jobs or schools that provide quality education; and continue to weaken the sense of community across this Commonwealth.
In July of 1997, Governor Tom Ridge responded to increasing concern about current municipal land-use patterns with the establishment of the 21st Century Environmental Commission (Commission). The Commission's mandate was to develop and help implement environmental strategies designed to provide a better environment for future generations without inhibiting their ability to prosper. Further, the Commission was charged with helping government to assert its role as an efficient capable steward of the environment, establish policies and practices that effectively support the goals of environmental quality, personal and community well-being, and economic prosperity.
The Commission issued a final report in September 1998 which detailed a number of key strategies sustaining this Commonwealth as a desirable place to live, work and raise a family. One of these recommendations was the revitalization of this Commonwealth's older urban communities to combat suburban and exurban sprawl. The report strongly states that to counteract suburban sprawl, urban places must be economically and environmentally healthy and desirable places to live.
An important component of Agency's mission is to make this Commonwealth a better place to live while fostering community and economic development. To achieve this mission, the Agency recognizes that affordable homeownership is a vehicle for both increasing a geographic area's economic diversity and marketability. The presence of long-term investors (that is, homebuyers) builds optimism and hope in a community and signals that urban neighborhoods hold promise for becoming healthier, more attractive places in which to raise families, shop and work.
The challenge is to craft strategies that encourage older urban communities to become competitive with suburban and rural areas. While increasing urban homeownership opportunities is a step in the right direction, significant hurdles remain before urban neighborhoods become attractive alternatives for homebuyers. The field of community development, including comprehensive community revitalization initiatives, offers an opportunity to strengthen and complement urban homeownership efforts. An urban homeownership choice demonstration program would be consistent with and complement the Ridge administration's effort to reconfigure the dynamics of economic growth through the Keystone Opportunity Enterprise Zones.
The Homeownership Choice Demonstration Program (HCDP)
For urban areas to become more attractive, it is clear that a significant undertaking is required. This effort should seek to both attract additional homeowners to urban areas, while simultaneously addressing structural obstacles that make the urban development marketplace less than attractive. To this end the Agency's Board has set aside $5 million to sponsor a demonstration program that will encourage market-sensitive and innovative land use planning concepts in urban areas, as well as work in concert with community revitalization efforts. The focus of the program is the development of new homeownership opportunities and the transformation of distressed urban neighborhoods into attractive places to live.
The Guiding Principles for the HCDP include the following:
Link to comprehensive approaches. Although homeownership is an important part of any neighborhood revitalization agenda, it is not sufficient by itself to transform distressed urban areas. To achieve measurable impact, projects need to be conceived within the context of overall strategic plans, designed to produce significant scale. Recognizing that the resources that could reasonably be brought to bear through this demonstration would be insufficient to transform entire neighborhoods, the Agency intends to maximize potential impact by coordinating the demonstration with efforts that seek to address some other factors that contribute to negative urban environments (that is, unemployment, crime, lack of green or open space, and the like). The HCDP provides an opportunity for the Agency to work collaboratively, comprehensively and efficiently with public and private sector partners undertaking comprehensive neighborhood revitalization projects.
Transfer cost-effective homebuilding skills to urban areas. For-profit homebuilders operate primarily in the suburbs. However, the skills and knowledge that these homebuilders often possess are much needed in urban areas. The HCDP seeks to make urban homebuilding sufficiently attractive to transfer to urban areas the efficiencies and techniques which enable builders to produce low-cost, high-quality suburban homes. To ensure the transfer of skills beyond the program, for-profit developers should work in partnership with local nonprofit developers or Community Development Corporations (CDCs). These nonprofits should already be engaged in the types of comprehensive revitalization activities that are needed to complement a homeownership initiative. To encourage partnership and learning at the municipal level, applications for funding through the program should be a joint effort between a for-profit builder, a nonprofit and the local government. To ensure that local resources are better focused on the demonstration program in that area, municipalities are limited to one application.
Increase homeownership opportunities and choices in urban areas. Currently, there exists a homeownership gap that divides the suburbs from the cities. Approximately 73.7% of suburban families own their homes, compared with just 50.5% of families in central cities. A central focus of the program is the development of homeownership opportunities in urban areas. Further, these opportunities must be structured so as to be viewed as attractive choices and potential alternatives to homeownership opportunities in the suburbs. To increase the overall number of homeowners, use of program funding is to be directed to producing homes and homeownership opportunities.
Encourage diversity of homeownership. An important element of strengthening urban neighborhoods is reducing economic and social isolation. While 73.5% of white families in America are homeowners, only 45.5% of Latino families and 47% of African American families own their homes. Applications must include an Affirmative Fair Housing Marketing Plan.
Build mixed-income communities. While the program will pursue the development of affordable housing opportunities for first time home buyers, these projects should be largely indistinguishable from neighboring market-rate properties. In this manner, the properties should attract home buyers with a wide range of incomes. In the event that local matching support has certain restrictions on its use, the HCDP funds may be designated to target low-, moderate- and middle-income families.
Develop at scale. To have an impact on an urban area's economic and social viability, it will be necessary to produce a demonstrable critical mass of revitalization within small, select neighborhoods. By ''critical mass'' is meant the achievement of a scale of development sufficient to generate spontaneous reinvestment in a community. Therefore, the HCDP will consider efforts that would achieve the development of no less than 50 homeownership units in municipalities with a population of 50,000 or more and no less than 25 homeownership units in those municipalities with a population of 50,000 or less.
Focus on new construction. New homes transform neighborhoods by attracting the residents, businesses and jobs that urban areas need to reverse decades of decline. An emphasis is placed on the construction of new homes.
Focus on strategic locations. The HCDP proposals should target those areas within municipalities of a sizable population which have experienced significant depopulation while their surrounding suburban communities have experienced significant growth.
Leverage Agency funds. To extend the impact of the Agency's funding, support through the program must be matched on a 1:1 basis by local applicants. Of this amount, a minimum of 50% of the funding should be contributed by local government. The Agency intends to provide its funding as a loan, with flexible repayment and deferred interest provisions. Applicants are encouraged to devise innovative methods to secure and repay agency funds.
Insure long term affordability. The energy efficiency of the housing developed is an important factor in maintaining affordable operating costs. Applicants must include a description of the energy efficiency standards and specifications which they will meet. Applicants are encouraged to be innovative in the use of renewable energy technologies, or such other energy efficiencies as will facilitate long term affordability.
Increase net investment. This demonstration is intended to in a small, yet ambitious, manner counteract some market inefficiencies and is not intended to address the viability of public housing and HUD's efforts to shift the costs for the operation of such public housing units. Thus projects which are a part of, or result from, public housing restructuring or mixed finance applications will not be considered for participation in this demonstration. An outcome of the program should be a net increase in local affordable housing investment.
Requirements The HCDP Development
The design of the proposed housing development must address the Guiding Principles of the HCDP.
1. The HCDP proposal must detail plans for the development of no less than 50 homeownership units in municipalities with a population of 50,000 or more and no less than 25 homeownership units in those municipalities with a population of 50,000 or less.
2. Developments need to be conceived within the context of comprehensive municipal strategic plan, designed to produce significant scale.
3. The comprehensive municipal strategic plan should specify plans for economic development and include other physical or public safety improvements proposed or in place, such as sidewalks, street lights and the proximity to or availability of other community services and amenities such as transportation, schools, shopping areas and parks, and the like.
4. The HCDP development homeownership opportunities must be structured so as to be viewed as attractive choices and potential alternatives to homeownership opportunities in the suburbs.
5. An emphasis is to be placed on the construction of new single family homes, including development of duplex and townhouse as well as detached units. The product mix is to be based upon the overall needs of the community.
6. The HCDP development must show coordination with efforts that seek to address some other factors that contribute to negative urban environments (that is, unemployment, crime, lack of green or open space, and the like).
7. The use of HCDP funds is intended to target low-, moderate- and middle-income families. However, only those purchasers with incomes at or below 115% of area median income are eligible for the Agency's single family mortgage loan programs.
Note: In striving to build mixed income communities, the Agency may consider the entire area and not simply the new HCDP development in its evaluation.
8. The proposal must show a time-line for the proposed development, including, but not limited to, budgets, access to matching or leveraging funds, site control, construction schedule and overall time to completion and occupancy.
9. The outcome of the HCDP development should be a net increase in local affordable housing investment.
10. Proposals which are a part of, or result from, public housing restructuring or mixed finance applications will not be considered for participation in this demonstration.
The Proposal
1. Proposals for funding through the program should be a joint effort between a for-profit builder, a nonprofit and the local government. Proposals coming from first class cities must be generated through and submitted by the municipal government.
2. For-profit homebuilders/developers should work in partnership with local nonprofit developers or CDCs.
3. The HCDP proposals should target those areas within municipalities of a sizable population which have experienced significant depopulation while their surrounding suburban communities have experienced significant growth.
4. Applicants are limited to one proposal per municipality.
5. The Agency's funding must be matched on a 1 : 1 basis by local applicants.
6. A minimum of 50% of the match funding should be contributed by local government.
Examples of sources for local government matching funds may include, but are not limited to, funds made available through, CDBG, HOME and the Department of Community and Economic Development's Community of Opportunities Program.
7. Applicants should address all the key features of the proposed development and include specific outcomes to be achieved, including how the HCDP funds will make urban homeownership more attractive and affordable.
8. It is preferable that HCDP homeownership opportunities, especially those specifically intended for first time home buyers, be offered in conjunction with the creation of a viable homeownership association, possibly through a partnership with a community based nonprofit organization.
A proposal must include:
1. The amount of HCDP funds requested and proposed use of funds.
Note: HCDP funds may be used for housing development and housing related expenditures only, for example: land acquisition, infrastructure, mortgage write-downs for qualifying buyers (those at or below 115% of area median income) to ensure affordability.
2. An outline indicating how the HCDP funds will be secured and how repayment will be achieved over the life of the Program.
3. A description of the proposed HCDP development, its scope, marketing plan and a comprehensive description of the need for and the expected effect of the HCDP development and funding.
4. Detailed plans and drawings of the neighborhood and proposed site, including any proposed municipal improvements not part of the HCDP proposal.
5. A definitive market study showing the HCDP development as complementing or part of a comprehensive municipal plan that would include other physical improvements either existing or proposed for the neighborhood.
6. A narrative on the effect of the proposed HCDP development on the current residents and any relocation of residents that may be necessary with plans to do so.
7. An Affirmative Fair Housing Marketing Plan.
8. A description of the energy efficiency standards and specifications which the proposed HCDP development will meet.
9. A detailed plan to leverage resources for the project, a list of the sources of matching and/or leveraging funds and a time-line for fund availability.
10. A detailed breakdown of percentage of funding support and degree of municipal participation.
11. A description of all other efforts that will be offered or undertaken by the appropriate governmental entities in support of the applicant and the proposed HCDP development, including evidence of appropriate zoning.
12. A list of community linkages and partnerships in support of the HCDP development.
13. A list of contacts for each of the partners in the HCDP proposed development, for example, municipality, developer, contractor, CDC, nonprofit, and the like, to include: name, full address, telephone number, fax number and E-mail address.
14. A brief description of any previous experiences in the community, with the developer, the nonprofits and the CDC, and the like.
* The Agency encourages applicants to provide additional information, ideas and proposed linkages beyond what is required.
* Applicants are also encouraged to provide statistical analyses and data to support the concept.
The Process
The process is designed to include 2 phases. The first is the application phase. Proposals must be received by the Agency no later than 5 p.m. on Friday, June 30, 2000.
The second is the evaluation phase. The Agency will evaluate all proposals and inform applicants of a decision by Thursday, August 31, 2000.
The Agency monitoring and municipal reporting requirements will be based upon the use of HCDP funds.
* Although the Agency will have mortgage funding available for those purchasers who qualify for the Agency's single family loan programs, mortgage funding through the Agency is not a requirement.
Note: One qualifying factor is that the purchaser be a first time home buyer, unless the municipality is in a designated target county--then the purchaser need not be a first time home buyer to qualify for the Agency funding.
Decision factors
Funding decisions will be based upon the Guiding Principles enumerated in the program description and the criteria set forth in the Development and Proposal Requirement sections of this RFP.
Although all criteria must be addressed and all will be evaluated, priority will be given to those proposals demonstrating a high degree of municipal participation, support and leveraging of funds. Proposals that demonstrate a substantial positive overall effect on the neighborhood/community, build upon the existing network of community organizations, programs and services, build mixed-income communities and/or are evaluated to be a vital part of a comprehensive economic development plan will also be considered more favorably.
Another significant factor is site control. Those projects exhibiting the greatest degree of site control, all else being equal, will be viewed as being most ready to proceed and therefore receive favorable consideration in the competitive evaluation.
Additionally, consideration will be given to the experience and previous success of the partners' prior developments. The Agency recognizes that in some areas of the Commonwealth, due to the lack of experienced nonprofits, home builders may have to partner with less experienced nonprofit partners.
Proposal/application material will become the property of the Agency. The Agency reserves the right to amend or modify this demonstration program at any time and may determine to discontinue this program at any time. Costs associated with this proposal/application will be the responsibility of the applicant.
Submit proposals to Robert F. Bobincheck, Associate Director--Office of Strategic Planning and Policy, Pennsylvania Housing Finance Agency, 2101 North Front Street, P. O. Box 8029, Harrisburg, PA 17105-8029.
Please submit questions regarding the Program to Robert Bobincheck in writing. Persons may also submit questions by fax--(717) 780-1833, or by E-mail at bbobincheck@phfa.org.
Responses to questions will be posted on the web site www.pfha.org.
[Pa.B. Doc. No. 00-679. Filed for public inspection April 21, 2000, 9:00 a.m.]
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