District Eligibility Requirements

Project Threshold/Eligibility Standards

Project Scoring Criteria

The following eligibility requirements will apply to all members wishing to participate in the AHP program and to receive subsidies:

The FHLBank places a per member subsidy limit of 30 percent of the available subsidy in a single funding period, or 15 percent of the available subsidy each year.

AHP subsidy limited to $50,000 per unit.

The application must meet the following threshold standards in order to be eligible for funding:

Owner-occupied or Rental Housing

Project must be financially feasible, in accordance with published AHP guidelines and demonstrate a need for the AHP subsidy

Project costs must be reasonable and customary

Project must satisfy timing requirements for subsidy use:

12 months to begin using subsidy

48 months to fully use the subsidy awarded

At least 20 percent of a rental project’s units must be set aside for households at or below 50 percent of median income for the area in which the project is located

All (100 percent) of an ownership project’s units must be set aside for households at or below 80 percent of median income of the area in which the project is located

Use of Subsidy

Retention

Only applications with provisions for maintaining the housing for low-income persons for specific periods of time (i.e., five years for owner-occupied housing and 15 years for rental housing) will be considered in the application process. The methodology for ensuring retention must be a legally enforceable restriction in the warranty deed or restrictive covenant to the warranty deed requiring that the Federal Home Loan Bank of Cincinnati be given notice of any sale or refinancing of the AHP-assisted unit(s).

Project Sponsor Qualifications

Sponsor must demonstrate a track record of conceptualizing, financing, developing, completing, and operating projects of similar size/type.

If the sponsor has received prior AHP awards, the sponsor must have demonstrated a capacity to comply with all aspects of the application, reporting, and monitoring requirements of the AHP regulation. This includes providing monitoring reports in a timely fashion and utilizing funds within the prescribed timeframes.

Compliance with all applicable federal and state laws on fair housing and housing accessibility, including, but not limited to, the Fair Housing Act and Amendments, the Architectural Barriers Act, the Rehabilitation Act, the American’s with Disabilities Act, and the Equal Credit Opportunities Act.

Applications which meet the eligibility requirements will be scored using a 100 point scoring system, with points awarded based on satisfaction of nine scoring criteria. The Scoring Criteria are shown below under 2008 AHP Implementation Plan, Attachment A – Scoring Criteria.

For owner-occupied projects, the income of the targeted family determines the amount of subsidy awarded. Subsidies will be awarded that are sufficient to reduce the cost of monthly housing expenses (principal and interest, taxes, insurance, and utilities) for the targeted household to a level of at least 20 percent of their adjusted monthly income.

For rental projects, two factors are considered in determining the amount of subsidy awarded, the debt coverage ratio and the income of the targeted tenants. Subsidies will be awarded that are sufficient to maintain a debt coverage ratio between 1.15 percent and 1.35 percent and that are sufficient to reduce the cost of monthly rent for the targeted household to a level of at least 20 percent of their gross monthly income, but not more than 30 percent of gross monthly income.

Funds are available to members as below market rate loans or direct grants.

Members are reviewed for creditworthiness in accordance with the FHLBank’s existing collateral and underwriting guidelines.

Below Market Rate Loans

The FHLBank makes below market rate loans available to members at terms and maturities of at least 15 years and up to 30 years. The type of loan offered to the borrower/project must mirror the characteristics of the advance utilized by the member. At least once in every 12-month period, the member must make a principal repayment to the FHLBank equal to, or greater than, the amount to be repaid by the project/borrower to the member in that period. The FHLBank does not generally issue rate commitments on below market rate loans and will only provide subsidy sufficient to discount the rate to a level that makes the project feasible. The benchmark from which subsidy is calculated is the FHLBank’s cost of funds, which is the cost to the FHLBank System of issuing debt of like terms in the open capital markets.

The FHLBank charges no commitment fees for AHP, however, a member’s normal fees and charges may be applied. The FHLBank may charge prepayment fees to members for AHP loans that are paid in advance of the contract due date. Sponsors should therefore expect members to apply a prepayment fee to their AHP assisted loans, if applicable.

The FHLBank expects members to design lending programs that return a profit to the institution. Members may attach a mark-up of no more than 300 basis points to the below market rate loan from the FHLBank.

Members are expected to maintain safe and sound lending practices. The FHLBank encourages members to consider flexible and innovative underwriting standards that take into account a borrower’s history of making timely rent or utility payments.

If applying for a construction loan, the member submitting the application must originate and close the first (permanent) mortgage in projects with bank financing.

Direct Grants

The member who applies for grant funds must originate and close the first (permanent) mortgage in projects with permanent debt.

AHP funds provided to the project in the form of a direct grant can be loaned only under special conditions; however, they may not be used as part of a revolving loan fund. Please consult the FHLBank for further information on the loaning of direct grants.

prepayment or repayment by a borrower of the member’s loan

refinancing; or

misuse of funds.

Participating members designate an officer to serve as the AHP contact with the FHLBank and it is this person who reports on the status of the program. Sponsors assist the member by working with this designated contact person.

Project owners and sponsors are required to report, at least semi-annually, to the member on the status of projects during the development stage. The member is required to provide these semi-annual reports on the status of projects to the FHLBank. Once the project is complete, semi-annual status reports are no longer required. Thereafter, single-family homeownership programs require only a one-time income eligibility certification. Rental programs require longer-term tracking to ensure subsidy benefits remain available to low-income households for the specific retention period. Sponsors/owners must submit reports and certifications annually to the FHLBank and to members on the status of the program or project and the appropriate utilization of the subsidy. Such reports are to include tenant incomes and rent rolls.

Projects which have received an award of AHP grant funds in 2007 or later and which have not yet drawn any funds may be eligible for an early disbursement of up to 25% of the grant funds awarded. All agreements and required documents must have been executed, all funding sources must have been committed, the sponsor must be current on all required reporting, the project must be categorized as “low” or “moderate” risk, and the project cannot have had significant financial or other changes. The complete requirements are stated in “Criteria for Early Disbursement of Grant Funds” below.

Instructions and forms for requesting early disbursement are listed below. There are separate request forms for Ownership and Rental projects. Also, for informational purposes only, there is a version of the checklist the FHLBank will use in reviewing requests for early disbursement. This checklist will be completed by FHLBank staff only and is not to be submitted by the applicant.

Members and sponsors or project owners will be required to sign written agreements with the FHLBank to ensure the units are subject to legally enforceable deed restriction and to ensure appropriate pass through and use of the AHP subsidy, or in some cases, recapture and repayment of subsidy to the FHLBank.

Attachment A - Scoring Criteria (pdf)

Attachment B - Member Transfer Policy (pdf)

Attachment C - Monitoring Policy (pdf)

Attachment D - Modification Policy (pdf)

Attachment E - AHP and Welcome Home Definitions (pdf)

Attachment F - AHP Feasibility Guidelines (pdf)

Attachment G - Rentention Agreements (pdf)

Attachment H - Homeownership Set-aside
Requirements (pdf)

Criteria for Early Disbursement of Grant Funds (pdf)

Instructions for Requesting Early Disbursement of Grant Funds (pdf)

Early Disbursement Request Form – Ownership pdf | doc

Early Disbursement Request Form – Rental pdf | doc

Early Disbursement Review Checklist (for informational purposes only) (pdf)