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HOUSING AND COMMUNITY SERVICES DEPARTMENT

 

DIVISION 40

SEED MONEY ADVANCE PROGRAM

813-040-0005

General Purpose

The rules of OAR chapter 813, division 40 are established to administer ORS 456.515 through 456.720, specifically 456.550, 456.559, 456.574 and 456.710, which authorize the Housing and Community Services Department to provide non interest-bearing and interest-bearing advances to housing sponsors to stimulate the production of housing for persons and families of lower income in the State of Oregon. These advances will be called Seed Money Advances and will be used only to cover predevelopment costs.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0010

Definitions

(1) The meanings of words and terms used in OAR chapter 813, division 040, are consistent with definitions in the Act, and as provided in 813-005-0005 and herein. As used in these rules, unless otherwise indicated by the context:

(2) "Approval Letter" means a letter from the Department to the proposed prospective Borrower or Sponsor which provides notification of the Department's approval of the Seed Money Advance. The letter also requires the prospective Borrower's agreement to repay the Seed Money Advance at the time of land acquisition or with the first construction draw, but no later than permanent loan closing.

(3) "Borrower" means, subject to the approval of the Department, a Person, including a Qualified Housing Sponsor, who satisfies the legal, financial and credit criteria as set forth in the applicable Program rules, and who has received a Program Loan.

(4) "Nonprofit Borrower" means, subject to the approval of the Department, a Qualified Housing Sponsor who is a non-profit housing corporation, a housing authority created by ORS 456.075, an urban renewal department created by 457.035, and any city or county governing body or department or department designated by the governing body, who satisfies the legal, financial and credit criteria as set forth in the applicable Program rules, and who has received a Program Loan.

(5) "Predevelopment Costs" means expenses for architectural design, legal fees, survey and soils boring, appraisal, consultant fees, land option carrying charges, land acquisition costs, federal or state application fees or other recoverable development costs approved by the Department.

(6) "Proposal" means an application or other documentation submitted to the Department which describes the proposed housing Project and provides information which enables the Department to assess the probability of the Seed Money Advance being repaid.

(7) "Seed Money Advance Agreement" means the agreement between the Department and a Qualified Nonprofit Borrower or other Borrower which establishes the terms, conditions and procedures governing the Seed Money Advance.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0015

Eligibility for the Seed Money Advance

The prospective Nonprofit Borrower or other Borrower will demonstrate the need of a Seed Money Advance to pay Predevelopment Costs as set forth in the Proposal and will satisfy the standards of the Department for financial responsibility and stability.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0020

Limitation on Size of Advance; Source of Funds

(1) The Seed Money Advance amount shall not exceed $40,000. Seed Money Advances shall be made from the Department's Revolving Account in the General Fund of the State Treasury, subject to the availability of funds and limitations otherwise prescribed by law.

(2) Requests for Seed Money Advance Loan funds for market-studies will not exceed $7,500.

(3) The Department shall charge no interest on a Seed Money Advance provided Nonprofit Borrowers.

(4) Interest on a Seed Money Advance provided to other Borrowers shall be determined by the Department at 50 percent of the set prime lending rate established by New York commercial banks and in effect at the time the Advance is made.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0025

Application Procedure

(1) The prospective Borrower or Nonprofit Borrower may submit to the Department the following:

(a) An Proposal for Seed Money Advance in form prescribed by the Department;

(b) Articles of incorporation, bylaws and borrowing resolution of the corporation;

(c) Legal description of the site, preliminary title report and location map;

(d) Financial statements; and

(e) Statement describing the experience of the prospective Nonprofit Borrower or other prospective Borrower and its ability to develop the proposed project.

(2) The Department shall review the application materials, inspect the site and prepare a Proposal for approval, disapproval or other action at the next regularly scheduled meeting of the Council, where required by the Council or market study program. The applicant shall be informed of the Department's Proposal at least ten days before the Council meeting and shall be invited to appear personally. The Housing Council shall approve or deny the Proposal or take any other appropriate action.

(3) An Application fee of $200 will be required for requests for market study funding.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0030

Approval and Closing

(1) Upon approval by the Council of the prospective Nonprofit Borrower's or other prospective Borrower's Proposal for the Seed Money Advance, except for the market study program, the Department shall issue a letter listing the documents that must be provided or executed by the prospective Nonprofit Borrower or other prospective Borrower. Funds shall be reserved for a maximum of one year, during which time the prospective Nonprofit Borrower or other prospective Borrower will provide the Department with copies of the documents listed in section (2) of this rule. If these documents are not received within one year, the prospective Nonprofit Borrower or other prospective Borrower may be required to submit a new Proposal. If a written request for an extension is submitted to and approved by the Department before the expiration date of the approval letter, the prospective Nonprofit Borrower or other prospective Borrower shall not be required to submit a new Proposal.

(2) The Seed Money Advance Approval Letter may be subject to the following documents executed or provided by the prospective Nonprofit Borrower or other prospective Borrower:

(a) Seed Money Advance Agreement;

(b) Note (noninterest-bearing) for the Nonprofit Borrower and interest-bearing for other Borrowers in the amount of the Seed Money Advance; and

(c) Other documents unique to the Proposal or required by the Department.

(3) If the applicant holds title to the Project site, the following additional items shall be required:

(a) If the site is being used as security, a mortgage or trust deed showing the Department as mortgagee or beneficiary;

(b) A title insurance policy in the amount of the Seed Money Advance issued by an approved title company in a form acceptable to the Department and in favor of the Department;

(c) An insurance policy naming the Department as a loss payee, with comprehensive general liability coverage in the amount of $100,000 single injury and $500,000 in the aggregate; and

(d) Other documents unique to the Proposal or required by the Department.

(4) Upon receipt of the documents, the Department may disburse the Seed Money Advance.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0035

Distribution of Funds

(1) Once the Department has received satisfactory security, which may include but is not limited to an assignment of a mortgage or trust deed, the Department may disburse funds. The Nonprofit Borrower, or other Borrower, shall submit any invoices or paid receipts for Predevelopment Costs as stated in the Proposal to the Department each month with a progress report.

(2) For market study requests, the Department may waive the requirement for security at its sole discretion.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723, 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0040

Repayment

(1) The Seed Money Advance, plus a processing fee equal to two percent of the Seed Money Advance amount, shall be due and payable within two years from the date of the initial disbursement of the Seed Money Advance. The Nonprofit Borrower or other Borrower shall make repayment at the time of land acquisition, or from the initial draw against the construction loan but no later than permanent loan closing. If the initial draw of the construction loan or the proceeds from the permanent loan are not disbursed within the two year period, the Nonprofit Borrower or other Borrower shall make this known to the Department. The Department may require the Nonprofit Borrower or other Borrower to repay the Seed Money Advance in full on demand from other sources of funds. The term of the Seed Money Advance may be extended by the Department.

(2) The Nonprofit Borrower or Borrower shall report to the Department on the progress of the project and status of the permanent or construction loan at any time as required by the Department.

(3) Any amount of the Seed Money Advance remaining unpaid after the maturity date of the note shall be subject to a late fee of one and one-half percent (1-1/2%) of the unpaid balance for each month that the Seed Money Advance remains unpaid.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 10-1981(Temp), f. & ef. 8-27-81; 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0045

Waiver

The Department may, with the concurrence of the Council, waive or modify any requirement of these Seed Money Advance Program rules, unless such waiver or modification would violate applicable statutes.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 12-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; OHCS 6-2006(Temp), f. & cert. ef. 4-13-06 thru 10-9-06; OHCS 18-2006, f. & cert. ef. 10-3-06

813-040-0050

Equal Opportunity

No person receiving a Seed Money Advance under these rules shall make any distinction, discrimination, or restriction against any purchaser, occupant lessee, or prospective purchaser, occupant or lessee, relating to the sale, rental, lease or occupancy of real property, because of race, color, creed, sex, marital status or national origin.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.550, 456.559, 456.574 & 456.710
Hist.: 1HD 5-1982, f. & ef. 6-28-82; 1HD 15-1984, f. & ef. 9-4-84; HSG 8-1987, f. & ef. 3-10-87; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91

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