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DATE: August 31, 1999 SUBJECT: REQUEST FOR AUTHORIZATION TO INITIATE A REQUEST FOR PROPOSALS TO SELECT AN AFFORDABLE HOUSING DEVELOPER TO RECEIVE A STATE HOUSING INITIATIVES PARTNERSHIP (SHIP) FUND SET ASIDE THAT CAN BE USED TO MATCH HOME INVESTMENT PARTNERSHIP PROGRAM (HOME) FUNDS. It is requested that the data herein presented be given formal consideration by the Board of County Commissioners at its regular meeting of September 7, 1999. BACKGROUND The county's Local Housing Assistance Program has been in effect since June of 1993. During that time, the county has provided 368 loans to individual applicants who applied for assistance. According to state rules and regulations as well as the county's requirements, SHIP funds may also be used to supplement or match other state and federal funds such as the Home Investment Partnership (HOME) Program. In the past, the county has used SHIP funds to match CDBG funds in the Wabasso area. As of this time, however, the county has not set aside SHIP funds for any private developers. Recently, a private developer contacted county staff and requested that a portion of the county's SHIP funds be set aside for use by his clients as part of a development project to be partially funded through the HOME program. For FY 1999-2000, the county is scheduled to receive $750,755.00 of SHIP funds. As structured, the HOME program provides down payment and closing cost assistance to eligible persons for purchase of affordable housing. The HOME program assistance takes the form of a no interest, non -amortized, second mortgage loan to the homebuyer. That loan does not have to be paid back as long as the borrower continues to reside in the house and occupies it as his principal residence. The remaining cost of the house is financed with a first mortgage loan through sources such as FHA, sub -prime lenders, or others. HOME funds must be used for down payment and closing costs associated with the purchase of single-family, owner occupied affordable housing units by very low and low income households. To receive HOME funds in the current cycle, interested affordable housing developers must apply to the state by November 12, 1999. Like many grant programs, the HOME program is a competitive grant process. To maximize scores in this process, applicants need to secure a local match. One source of funds which may be used as a local match for HOME program funds is SHIP money. As part of a HOME grant project, SHIP funds may be used to pay all or a portion of applicable impact fees. In that case, a bank or other financial institution would take a first mortgage; the HOME program would take a second mortgage, and the SHIP program would take a third mortgage on each assisted home. Recently, a developer approached county staff and requested that the county set aside $360,000 in SHIP funds over three fiscal years for his use as a HOME program match. Staff informed the developer that no SHIP funds could be set aside for the exclusive use of one developer unless all developers had the opportunity to apply for SHIP set aside funds through a competitive selection process. As a result, staff has developed the attached request for proposals (RFP) to competitively select a developer for whom SHIP funds will be set aside for use as a HOME program local match. SEPTEMBER 7, 1999 80