Virginia Law

Application for an M/D loan shall be commenced by filing with the authority an application, on such form or forms as the executive director may from time to time prescribe, together with such documents and additional information as may be requested by the authority, including, but not limited to, a determination by DMHMRSAS on such form or forms as the executive director may from time to time prescribe to the effect that (i) the mortgagor has the intent and ability to provide the services deemed necessary by DMHMRSAS for the success of a housing development intended for occupancy by persons of low and moderate income who are mentally disabled, (ii) that the proposed location and type of housing are suitable for the contemplated residents and that there exists a need in the area of the proposed location for housing for the mentally disabled, and (iii) that the development is economically feasible to the extent that it is projected to have or receive funds in an amount sufficient to pay the debt service on the proposed M/D loan and to pay for all of the requisite services deemed necessary by DMHMRSAS for the success of such a development (for those M/D developments which are to receive funding other than that directly from the mortgagor, a breakdown of the source and amount of such funding upon which DMHMRSAS relied in making its determination must be included).

The authority's staff shall review each application and any additional information submitted by the applicant or obtained from other sources by the authority in its review of each proposed M/D development. Such review shall be performed in accordance with subdivision 2 of subsection D of § 36-55.33:1 of the Code of Virginia and shall include, but not be limited to, the following:

1. An analysis of the site characteristics, surrounding land uses, available utilities, transportation, recreational opportunities, shopping facilities and other factors affecting the site;

2. An evaluation of the ability, experience and financial capacity of the applicant;

3. A preliminary evaluation of the estimated construction costs and the proposed design and structure of the proposed M/D development;

4. A preliminary review of the estimated operating expenses and income (including any estimated subsidy or assistance) and a preliminary evaluation of the adequacy of the estimated income to sustain the proposed M/D development based upon the assumed occupancy rate and estimated construction and financing costs; and

5. A preliminary evaluation of the need for such housing at rentals or prices which persons and families of low and moderate income can afford within the general housing market area to be served by the proposed development.

Based upon the authority's review of the applications, documents and any additional information submitted by the applicants or obtained from other sources by the authority in its review of the proposed M/D developments, the executive director shall accept for processing those applications which he determines satisfy the following criteria:

1. The applicant either owns or leases the site of the proposed M/D development or has the legal right to acquire or lease the site in such manner, at such time and subject to such terms as will permit the applicant to process the application and consummate the initial closing.

2. Subject to further review and evaluation by the authority's staff under § 6 of these rules and regulations, the estimated construction costs and operating expenses appear to be complete, reasonable and comparable to those of similar developments.

3. Subject to further review and evaluation by the authority's staff under 13VAC10-130-60 of this chapter, the estimated income from the proposed M/D development, including any estimated subsidy or assistance, is sufficient to sustain the operation of the proposed M/D development.

4. The applicant has the experience, ability and financial capacity necessary to carry out its responsibilities for the acquisition, construction, ownership, operation, maintenance and management of the proposed M/D development.

5. The proposed M/D development will contribute to the implementation of the policies and programs of the authority in providing decent, safe and sanitary housing for low and moderate income persons and families who cannot otherwise afford such housing in the market area of the proposed M/D development.

6. The proposed M/D development will assist in meeting the need for such housing in the market area of the proposed M/D development.

7. It appears that the proposed M/D development and applicant will be able to meet the requirements for feasibility and commitment set forth in 13VAC10-130-60 and that the proposed M/D development will otherwise continue to be processed through initial closing and will be completed and operated, all in compliance with the Act, the documents and contracts executed at initial closing, applicable federal laws, rules and regulations, and the provisions of these rules and regulations and without unreasonable delay, interruptions or expense.

The executive director's determinations with respect to the above criteria shall be based only on the documents and information obtained by him at the time and are subject to modification or reversal upon his receipt of additional documents or information at a later time. If the executive director determines that the above criteria are satisfied, he will recommend further processing of the application and he shall present his recommendations to the board. If the executive director determines that one or more of the foregoing criteria have not been adequately satisfied, he may nevertheless in his discretion recommend to the board that the application be approved and that the M/D loan and issuance of the commitment therefor be authorized subject to the satisfaction of such criteria in such manner and within such time period as he shall deem appropriate. The board shall review and consider the recommendation of the executive director, and if it concurs with such recommendation, it shall by resolution approve the application and authorize issuance of a commitment therefor, subject to the further review in 13VAC10-130-60 and such terms and conditions as the board shall require in such resolution.

A resolution authorizing an M/D loan to a for-profit housing sponsor shall prescribe the maximum annual rate, if any, at which distributions may be made by such for-profit housing sponsor with respect to the M/D development, expressed as a percentage of such for-profit housing sponsor's equity in such M/D development (such equity being established in accordance with 13VAC10-130-90 of this chapter), which rate, if any, shall not be inconsistent with the provisions of the Act. In connection with the establishment of any such rates, the board shall not prescribe differing or discriminatory rates with respect to substantially similar M/D developments. The resolution shall specify whether any such maximum annual rate of distributions shall be cumulative or noncumulative.

An M/D loan shall not be authorized by the board unless the board by resolution shall make the applicable findings required by subsection A of § 36-55.39 of the Code of Virginia. The board, however, may in its discretion authorize the M/D loan without the executive director having previously made the finding, if applicable, required by subsection B of § 36-55.39 of the Code of Virginia, subject to the condition that such finding be made by the executive director prior to the financing of the M/D loan. For the purposes of satisfying subsection B of the aforementioned code section, the term "substantial rehabilitation" means the repair or improvement of an existing housing unit, the value of which repairs or improvements equals at least 25% of the total value of the rehabilitated housing unit.

The executive director may impose such terms and conditions with respect to acceptance for processing as he shall deem necessary and appropriate. If any proposed MD development is so accepted for processing, the executive director shall notify the sponsor of such acceptance and of any terms and conditions imposed with regard thereto. If the executive director determines not to recommend approval of the application, he shall so notify the applicant.

The executive director is authorized to make allocations of funds for M/D Loans to various types of housing sponsors and developments as he deems necessary or desirable to promote and accomplish the purposes set forth herein and in the Act. Any such allocation of funds may be made based upon such conditions as the executive director may require, including without limitation, one or both of the following: (i) DMHMRSAS agrees, subject to terms and limitations acceptable to the authority, to provide funds for the developments in an amount sufficient to pay the operating costs thereof, including debt service with respect to the M/D Loan or loans applicable thereto; and (ii) the authority shall be able to finance the developments by the issuance of bonds in such amount and under such terms and conditions as the authority deems satisfactory.