Subpart 1.
Generally.
For rental housing, the agency shall provide challenge
program funds in the form of a deferred loan. The agency shall provide
challenge program funds in the form of a grant if:
A. the applicant provides documentation
confirming that another funding source requires the agency's funds to be
provided in the form of a grant; and
B. the other funding source is providing a
greater amount of funding than the agency is providing.
Subp. 2.
Loans for rental
housing.
A. The agency shall award
challenge program loans in the form of a deferred loan unless an amortizing
loan is requested by the borrower and deemed financially feasible by the
agency. The agency shall base its determination of financial feasibility on
whether the rental housing shall generate enough cash flow to support the
amortizing loan. In making this determination, the agency shall consider the
rental housing's projected income less its projected expenses. The term of the
loan is 30 years from the date of the loan closing; however, the agency may
adjust the loan term based on any of the following factors:
(1) requirements and conditions of other
funding sources related to loan term;
(2) the existence of a leasehold mortgage on
the property benefited by the loan; or
(3) economic analysis by agency staff
demonstrating that the housing will not have sufficient value at the end of the
loan term to allow the borrower to repay the loan.
B. Challenge program loans bear interest at a
rate of zero percent unless a higher interest rate is necessary to allow
challenge program funds to be used with other funding sources. Principal and
interest, if any, is due and payable at the end of the 30-year term.
Subp. 3.
Grants for rental
housing.
A. The term of challenge
program grants is 30 years from the date of the grant award; however, the
agency may adjust the grant term based on requirements and conditions of other
funding sources related to the grant term or the existence of a leasehold
mortgage on the property benefited by the grant.
B. Challenge program grants must be repaid in
full to the agency if the grant recipient does not comply with the conditions
of the grant agreement with the agency. Challenge program grants must be
forgiven in full at the end of the 30-year term if the grant recipient remains
in compliance with the grant agreement throughout the grant term.
Subp. 4.
Repayment
processing fee.
The agency shall charge borrowers a repayment processing fee
when a challenge program loan or grant is repaid in full, as provided in the
loan or grant agreement between the borrower or grant recipient and the agency.
The amount of the processing fee is equal to the approximate administrative
costs incurred by the agency in processing the repayment.
Subp. 5.
Sale of housing or assumption
of loan.
The agency shall approve the sale of rental housing financed,
or the assumption of a loan or grant made, under this part if the entity
purchasing the rental housing or assuming the loan meets the agency's current
mortgage credit and underwriting standards. The agency shall charge the
original borrower or grant recipient an assumption fee in an amount equal to
the approximate administrative costs incurred by the agency in processing the
sale or assumption, as provided in the loan or grant agreement between the
borrower or grant recipient and the agency.
Notes
Minn. R. agency 148, ch. 4900, AFFORDABLE RENTAL INVESTMENT FUND PROGRAM, pt. 4900.3632
26 SR
1510
Statutory Authority: MS s
462A.06
