12 CFR 1291.7 - Monitoring.

§ 1291.7 Monitoring.
(a) Competitive application program—(1) Initial monitoring policies for owner-occupied and rental projects—(i) Adoption and implementation. Pursuant to written policies established by a Bank, the Bank shall monitor each AHP owner-occupied and rental project under its competitive application program prior to, and within a reasonable period of time after, project completion to determine, at a minimum, whether:
(A) The project is making satisfactory progress towards completion, in compliance with the commitments made in the approved AHP application, Bank policies, and the requirements of this part;
(B) Following completion of the project, satisfactory progress is being made towards occupancy of the project by eligible households; and
(C) Within a reasonable period of time after project completion, the project meets the following requirements, at a minimum:
(1) The AHP subsidies were used for eligible purposes according to the commitments made in the approved AHP application;
(2) The household incomes and rents comply with the income targeting and rent commitments made in the approved AHP application;
(3) The project's actual costs were reasonable in accordance with the Bank's project cost guidelines, and the AHP subsidies were necessary for the completion of the project as currently structured;
(4) Each AHP-assisted unit of an owner-occupied project and rental project is subject to AHP retention agreements that meet the requirements of § 1291.9(a)(7) or (a)(8), respectively, of this part; and
(5) The services and activities committed to in the approved AHP application have been provided in connection with the project.
(ii) Back-up and other project documentation. The Bank's written monitoring policies shall include requirements for:
(A) Bank review of back-up project documentation regarding household incomes and rents maintained by the project sponsor or owner; and
(B) Maintenance and Bank review of other project documentation in the Bank's discretion.
(iii) Sampling plan. The Bank shall not use a sampling plan to select the projects to be monitored under this paragraph (a)(1), but may use a reasonable risk-based sampling plan to review the back-up project documentation.
(2) Reliance on long-term tax credit monitoring for rental projects. For completed AHP rental projects that have been allocated federal Low-Income Housing Tax Credits (tax credits), a Bank may, in its discretion, for purposes of long-term AHP monitoring under its competitive application program, rely on the monitoring by the state-designated housing credit agency administering the tax credits of the income targeting and rent requirements applicable under the Low-Income Housing Tax Credit Program, and the Bank need not obtain and review reports from such agency or otherwise monitor the projects' long-term AHP compliance.
(3) Reliance on other long-term governmental monitoring for rental projects. For completed AHP rental projects that received funds other than tax credits from federal, state, or local government entities, a Bank may, in its discretion, for purposes of long-term AHP monitoring under its competitive application program, rely on the monitoring by such entities of the income targeting and rent requirements applicable under their programs, provided that the Bank can show that:
(i) The compliance profiles regarding income targeting, rent, and retention period requirements of the AHP and the other programs are substantively equivalent;
(ii) The entity has demonstrated and continues to demonstrate its ability to monitor the project;
(iii) The entity agrees to provide reports to the Bank on the project's incomes and rents for the full 15-year AHP retention period; and
(iv) The Bank reviews the reports from the monitoring entity to confirm that they comply with the Bank's monitoring policies.
(4) Long-term monitoring policies for rental projects—(i) Adoption and implementation. In cases where a Bank does not rely on monitoring by a federal, state, or local government entity pursuant to paragraphs (a)(2) or (a)(3) of this section, pursuant to written policies established by the Bank, the Bank shall monitor completed AHP rental projects under its competitive application program, commencing in the second year after project completion to determine, at a minimum, whether during the full 15-year retention period, the household incomes and rents comply with the income targeting and rent commitments, respectively, made in the approved AHP applications.
(ii) Annual project owner certifications; backup and other project documentation. A Bank's written monitoring policies shall include requirements for:
(A) Bank review of annual certifications by project owners to the Bank that household incomes and rents are in compliance with the commitments made in the approved AHP application;
(B) Bank review of back-up project documentation regarding household incomes and rents maintained by the project owner; and
(C) Maintenance and Bank review of other project documentation in the Banks' discretion.
(iii) Risk factors and other monitoring—(A) Risk factors; other monitoring. A Bank's written monitoring policies shall take into account risk factors such as the amount of AHP subsidy in the project, type of project, size of project, location of project, sponsor experience, and any monitoring of the project provided by a federal, state, or local government entity.
(B) Risk-based sampling plan. A Bank may use a reasonable, risk-based sampling plan to select the rental projects to be monitored under this paragraph (a)(4), and to review the annual project owner certifications, back-up, and any other project documentation. The risk-based sampling plan and its basis shall be in writing.
(5) Annual adjustment of targeting commitments. For purposes of determining compliance with the targeting commitments in an approved AHP application for both initial and long-term AHP monitoring purposes under a Bank's competitive application program, such commitments shall be considered to adjust annually according to the current applicable median income data. A rental unit may continue to count toward meeting the targeting commitment of an approved AHP application as long as the rent charged to a household remains affordable, as defined in § 1291.1 of this part, for the household occupying the unit.
(b) Homeownership set-aside programs: Monitoring policies—(1) Adoption and implementation. Pursuant to written policies adopted by a Bank, the Bank shall monitor compliance with the requirements of its homeownership set-aside programs, including monitoring to determine, at a minimum, whether:
(i) The AHP subsidy was provided to households meeting all applicable eligibility requirements in § 1291.6(c)(2) of this part and the Bank's homeownership set-aside program policies; and
(ii) All other applicable eligibility requirements in § 1291.6(c) and § 1291.6(f) of this part and the Bank's homeownership set-aside program policies are met, including that the AHP-assisted units are subject to retention agreements required under § 1291.6(c)(5) of this part.
(2) Member certifications; back-up and other documentation. The Bank's written monitoring policies shall include requirements for:
(i) Bank review of certifications by members to the Bank, prior to disbursement of the AHP subsidy, that the subsidy will be provided in compliance with all applicable eligibility requirements in § 1291.6(c) and § 1291.6(f) of this part;
(ii) Bank review of back-up documentation regarding household incomes maintained by the member; and
(iii) Maintenance and Bank review of other documentation in the Bank's discretion.
(3) Sampling plan. The Bank may use a reasonable sampling plan to select the households to be monitored, and to review the back-up and any other documentation received by the Bank, but not the member certifications required in paragraph (b)(2) of this section. The sampling plan and its basis shall be in writing.
[71 FR 59286, Oct. 6, 2006, as amended at 73 FR 61664, Oct. 17, 2008]

Title 12 published on 2014-01-01

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U.S. Code: Title 12 - BANKS AND BANKING