RHS HPG Program Guide

RURAL HOUSING SERVICE HOUSING PRESERVATION GRANT PROGRAM: A GUIDE FOR APPLICANTS

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IV. COMPLETING THE PREAPPLICATION

This section identifies each component of the preapplication and notes the information and/or documentation the applicant must provide.

A. Cover Letter

Submission of a preapplication package should always be accompanied by a cover letter. The letter should specify that all of the threshold requirements have been met: the project is financially feasible; the project is within an RHS eligible area; the applicant organization fits the eligibility criteria; the public consultation, notice, and comment requirements have been met; and the preapplication is complete.

Other information which should be highlighted in the letter, even though contained in the Statement of Activities, includes a statement on the amount or percentage of leveraged funds, the population of the community, the percentage of HPG funds used for administration, whether or not there is an overcrowding component, and the results of discussions with the State Historic Preservation Officer (SHPO).

HAC also believes that it is a good idea to spell out in the cover letter the weighted points you expect your project to receive even though it is RHS responsibility to calculate them.

B. Standard Form 424.1 Application for Federal Assistance (for Nonconstruction)

SF 424.1 must be completed, and an original and two copies must be submitted to RHS with the preapplication. The form is self-explanatory, so this handbook does not provide additional instructions for its completion. The federal catalogue number of the HPG program (you will need this when filling out the 424.1) is 10.433.

C. The Statement of Activities

The Statement of Activities is a narrative that must contain the 17 required components shown in RD Instruction 1944.676, within 1944-N. Simplified, those 17 components include the following types of information:

the types of and conditions for financial assistance
Provide complete detail on financing mechanisms chosen. Use examples showing preliminary cost estimates for preservation and payments. Indicate how the particular financing plan will be used. Also indicate whether the program is for homeowner, rental, or cooperative assistance.
the process for selecting HPG recipients
Include information on outreach, recipient selection, determining preservation needs, performing work, and monitoring/inspecting work performed. On recipient selection, the key is to have a fair and unbiased process for selection that reflects a policy of nondiscrimination.
the process for identifying potential environmental impacts in the units to be preserved
Organizations are required to follow the environmental guidelines in Exhibit F-2 to 1944-N (located in Appendix I of this handbook). In addition, a mechanism must also be established to coordinate with programs that provide rehabilitation or preservation of historic properties. See RD Instruction 2000F and/or contact the State Historic Preservation Office (SHPO).
the development standards to be used
Use one of the following standards:
- a Voluntary National Model Building Code (contact RHS to determine the voluntary national model codes used in your state);
- RHS standards;
- Secretary of Interior's Historic Standards (SOI standards); or
- local standards, if they exceed any of the above (provide documentation).
If RHS standards are not used, include evidence of acceptance by the local jurisdiction.
The path of least resistance may be to use RHS approved standards except for units which the SHPO has found to be historic. In those instances the SOI standards are applicable.
the time schedule for completing the program
Include outreach, the application process, work write-ups, contract bid process, applications for loans or other assistance, actual preservation work, inspections, audit, and reports to RHS in the time schedule.
the staffing required to complete the HPG program
Provide list of the employees who will perform work for the program and indicate the percentage of their total work time to be used for the HPG program.
Show source(s) of non-HPG compensation with commitment for the HPG contract period.
If the employees are currently on staff, name them and provide data on their experience. Make sure you have employees to perform, at a minimum, screening, work write-ups, monitoring, bookkeeping, and other secretarial support.
the estimated number of very low- and low-income minority and non-minority households to be assisted
For rental and cooperative property assistance, include the number of units and the term for restrictive use (minimum is five years) for very low- and low-income persons.
the geographic area to be served by the HPG program
Identify the specific location(s) and attach a map. If the service area is not concentrated or contiguous, provide justification, such as the fact that the location is a remote rural area (which is a priority for HPG).
the annual estimated budget for the program year
This requirement, stated in 1944-676(b)(ix) to RD Instruction 1944-N, is self- explanatory. Develop a chart showing total funding for HPG program. Separate administration and preservation activities, and indicate and identify leveraged funds. Be sure to provide complete detail and to show the sources of funds. Separate administrative funds by source. Remember that the limit is 20 percent of HPG funds for administration and that less than 20 percent must be used to gain rating points. Also remember that loans received cannot be used for administration since recipients cannot be charged by the grantee for technical or administrative services. Detail where HPG funds will be used separately. Provide an HPG draw-down schedule and a brief explanation of why funds will be drawn in that manner.
The budget should include direct and indirect administrative costs.
indirect cost proposal
This is required in 7 CFR Parts 3015 and 3016 and OMB circulars 87 and 122 when the applicant has another source of federal funding in addition to RHS HPG. Also see page 16 of Exhibit C to 1944-N (Appendix E to this handbook).
the accounting system to be used for the program
Describe your bookkeeping system. The bookkeeping system must be in compliance with 7 CFR Parts 3015 and 3016. Note conformance for information required in RHS quarterly reports.
the method of evaluation to be used to determine the effectiveness of the program
Identify who will make evaluations. Demonstrate conformance to RHS quarterly reporting. Indicate and describe if any third party will also make an evaluation. Include a monitoring plan for rental and cooperative properties, if applicable. (Follow-up supervision is not required for owner-occupied properties.)
the sources and amounts of financial resources (other than HPG)
List each source and amount separately. Indicate if it is for specific purposes. List and identify sources of funds for HPG activities, housing development, and supporting activities (including administration). Leveraged funds, to count for ranking points, must increase the extent of rehabilitation, or lower the income levels being served.
the proposed use of program income, if any
Program income will normally include interest paid by recipients on direct loans and interest from deposited resources. Show the use or planned use of this income (e.g. invested for use in subsequent HPG project or invested for use in organization's weatherization program). HPG or HPG-related use of program income for low- and very low-income families will be a plus on the application. (Program income may be earmarked for use as matching funds, direct subsidy, etc. for future low- and very low-income housing projects.) Describe the tracking system for monitoring program income use.
the plan for disposition of security property by virtue of loss of legal status, dissolution, etc.
If any financing mechanism is used requiring security (mortgage, note pledging payment of a grant upon sale, etc.), a plan must be included to address the possibility of the organization's demise. The plan must identify a third party, such as a housing authority that is willing to assume the program servicing or a public agency that pledges to develop a new entity to carry on HPG responsibilities. This requirement is not capricious since the organization could be short-lived but have provided a 20-year mortgage through the HPG program.
other information necessary to explain the proposed HPG program
- List the involvement and support of public officials and/or other groups. See Section M below for guidance.
- Include narrative information on the area to be served. See Section G below for guidance. (1944.676 (b)(5))
- Review the threshold and weighted selection criteria. Include a checklist of the items and your compliance. Provide any explanation not adequately covered elsewhere in the Statement of Activities.
- When the applicant will be the contractor, document savings over the conventional contract method. RHS will expect a detailed explanation.
outreach efforts
Include a narrative and outline on the method of outreach to the community to be employed, with specific references to outreach to minorities.

D. Experience and Capacity

This section provides the applicant organization with the opportunity to prove it is qualified to operate the HPG program. List all organizational experience in housing repair, rehabilitation, weatherization, and other types of housing development. Include all other organizational experience.

In addition to organizational experience, list the housing rehabilitation and/or development experience of staff and/or members of the board of directors. This is also the place to identify experience of proposed staff member(s) who will be assigned to the HPG program, particularly if there is no other pertinent experience.

E. Legal Existence

The applicant must provide the following information and documentation for itself or, if it is a consortium, for each organization member of the consortium.

a copy of, or citation to, the specific provision of state law under which the organization was organized;
a certified copy of articles of incorporation and bylaws (applicable charter, etc. for public bodies);
evidence of good standing by the State (for corporations in existence for one or more years); and
the names, addresses, and occupations of members, directors, and officers (include name, address, and principal purpose of organizational members).

Note that RHS requires that each member of a consortium have a definitive HPG role. A member cannot serve as merely a conduit or central point for fund disbursement.

F. Financial Statements

A private nonprofit entity must submit its most recent audited statement, a statement on the status of all prior grant audits, and a signed and dated current financial statement. The statement must show the amounts and specific nature of assets and liabilities and repayment schedules for any debts.

Form RD 442-12 is included in the sample preapplication only to note that RHS requires the applicant to provide the information that appears on this form.

G. Narrative on Area to be Served

In this section, the applicant should provide a brief narrative on the area the HPG project will serve. Include general information, a statement on the population of the community(ies) where the project is to occur and its (their) metro or nonmetro status, statistical data on housing conditions and income, pertinent Census or other official planning data, and a map(s) and photographs of typical units. Note any neighborhood improvement or community renewal (public or citizen) activity related to the HPG proposal. (See the sample preapplication for example.)

H. Component to Alleviate Overcrowding

Detail what action will be taken to lessen or eliminate overcrowding. Note that overcrowding is defined as being in excess of the occupancy standards listed in Section 1944.656 of Instruction 1944-N.

I. Applicant's Other Activities

Describe the organization's other activities that will be continuing during the proposed period of the HPG program. Document funding and funding sources for those activities. If possible, obtain a statement of support from the sources that have agreed to provide funds for the HPG project as well as those that will provide funds for the continuation of the applicant's other activities during the HPG contract period. Relate this information to the budget information contained in the Statement of Activities.

J. Other Information Relative to the Selection Criteria

Specifically address the selection criteria (both threshold and weighted) in this section. Include a checklist of the items and your compliance.

K. Environmental Information

The applicant is required to submit Form 1940-20 "Request for Environmental Information" for the overall project area with the preapplication. Exhibit F-1 to 1944-N (Appendix H to this handbook) explains how to fill out the form. Refer to RHS State Resource Management Guides and HACs "RD Environmental Regulations: A Guide for Rural Housing Applicants" for additional assistance.

The use of HPG funds for rehabilitation does not require the completion of an environmental review for each unit to be rehabbed. However, if there is environmental impact on an individual unit (such as its location in a flood plain or a wetland or the presence of an environmental impact such as radon gas) or if the proposed workplan is not approved by the Advisory Council on Historic Preservation, an environmental review will be required for that unit. Applicants must include in their preapplication a process for identifying such units (see Exhibit F-2, Appendix I, for guidance).

For each unit for which an RHS environmental review is required, the applicant must provide (in the final application) Class I environmental information utilizing Form RD 1940-20. See Exhibit F-1 (Appendix H to this handbook) or the HAC "RD Environmental Regulations: A Guide for Rural Housing Applicants" for guidance. The applicant must also identify properties with specific environmental categories, such as floodplains or wetlands and coastal barrier resources systems.

However, Class I information should be maintained in the grantee's file for each actual unit to be rehabilitated. See sample preapplication for a copy of Form RD 1940-20.

L. Historic Preservation

RHS, the National Conference of State Historic Preservation Officers and the Advisory Council on Historic Preservation signed a Programmatic Memorandum of Agreement for the HPG program. Essentially it requires that applicants consult with the State Housing Preservation Officer (SHPO) regarding planned work and submit a copy of the Statement of Activities to the SHPO. Applicants should also provide the SHPO with information including ages and pictures of proposed or typical dwelling units in the project area. With this information, the SHPO will be able to advise the applicant if any historic or potentially historic buildings are in the proposed project area. (Historic is defined as listed on or eligible for listing on the National Register of Historic Places.) However, applicants are also required to submit in the preapplication a proposed mechanism for determining whether buildings proposed for rehabilitation are historic properties and whether rehabilitation may affect historic properties.

In the event that any of the units targeted for rehabilitation are found to be historic properties, the applicant must submit a detailed plan (developed in consultation with the SHPO) for rehabilitating or repairing each historic unit, including information on what standards are to be used. It is important to include in the preapplication evidence that the SHPO has been consulted about this program and concurs with it. Applicants may want to use the Secretary of Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (SOI standards). If rehabilitation on the exterior of the building is minor and will not change its architectural style, the SHPO may be persuaded not to impose restrictive conditions on specific historic properties.

To avoid problems, early contact with the SHPO is strongly recommended. One purpose for early contact is to identify types of housing structures that may trigger the use of Historic Preservation Standards. Evidence of the results of the consultation with the SHPO must be clearly documented in the preapplication. Another reason for early consultation with the SHPO is to assure completion of all procedures for submission of the preapplication to Rural Development by the deadline.

There must also be coordination with other organizations and programs providing assistance for rehabilitation of historic properties.

Applicants should read RD Instruction 1944.673 and Attachment 2 of the Programmatic Memorandum of Agreement for additional guidance (RD 2000 FF).

Compliance with the guidelines set forth in Exhibit F-2 to 1944-N (Appendix I) will satisfy most of these requirements, except for the requirement for coordination.

M. Public Participation

Three distinct components of public involvement are required, and documentation from and the results of each must be included in the preapplication.

Applicants must consult with county and/or local officials while preparing the Statement of Activities, and the proposed program should reflect consultation with those leaders during the design stage. In addition, the preapplication should include statements from county and/or local officials documenting that the program is beneficial and not duplicative.
The Statement of Activities must be submitted early to state or regional officials for intergovernmental review as per Executive Order 12372 (the replacement for the former A-95 process). Indicate in the preapplication what has been submitted and include statements and related correspondence documenting that contact.
A notice that the Statement of Activities is available for review must be published in a general circulation newspaper, and 15 days must be allowed for public comment. Note that the public notice and time period must be completed prior to submission of the preapplication to RHS. This means that the notice can be published no later than 16 days prior to the last date preapplications will be accepted by RHS. The preapplication must include evidence of publication of the notice, a summary of public comments based on the notice, and a description of how comments were dealt with in the Statement of Activities (resulting changes). These publication requirements are not applicable to Indian Tribes, Nations, etc. However, a tribe (or nation, etc.) must document how it publicized the project to a majority of the tribe.

N. The "Equal Opportunity Agreement" (Form 400-1) and the "Assurance Agreement" (Form 400-4)

The applicant must submit an original and one copy of each of these forms. Neither of these forms is required on Indian Reservations.

O. An Important Reminder

Applicants should bear in mind that the information on Form RD 424.1 (the preapplication), the information in the budget, and the information in the Statement of Activities must be consistent!

V. THE SAMPLE PREAPPLICATION

A. Introduction

For this sample we selected a location (New York), dollars, units, etc. arbitrarily, but did so in full recognition of RHS selection criteria.

We arbitrarily used a $100,000 one-year grant proposal. New York was allotted $552,000 for fiscal year 1993. If more than one eligible application is received no single organization may receive more than 50 percent or $276,000 of this amount. However, $276,000 is not the maximum that may be requested.

The sample preapplication assumes a $100,000 HPG grant -- $14,500 of which is used for administration -- and $100,000 in leveraged funds. $14,500 of the leveraged funds are also used for administration. Administrative costs represent 14.5 percent of total project cost. $85,500 of the leveraged funds are a loan from the state, and the $14,500 in leveraged administrative funds are a grant. (Note that administrative leverage does not count in weighted selection criteria.)

This sample preapplication is only partially complete. A blank Form RD 442-12 is used to represent a financial statement. (This particular form is required in New York; applicants in other states do not need to use this form but are required to submit all of the information it requests.) Only part of the Standard Form 424.1 is completed. Most of that form is self- explanatory, and applicants complete the entire form in accordance with its self-contained instructions. In general, this guide supplies explanations or information only where guidance might be warranted. Items that seem clear are not filled in or discussed in the sample, but of course you must fill them in before submitting your preapplication to RHS. Again, we strongly advise you to acquire and use the HPG program instructions from RHS.

In the sample preapplication, specific references to weights are included even though some RHS National Office officials believe that to do so is self-serving and that computing weights is the agency's job. HAC believes it is too important to take for granted that RHS will find in the preapplication all information relevant to weights.

Finally, notice that the sample preapplication is in "Arial" typeface. Explanations and guidance provided by HAC are in "times roman" typeface.

B. Contents

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