For-Sale Development Program

About the Program

The purpose of the For-Sale Development Program (FSDP) is to provide construction financing to nonprofit or for-profit developers (with non-profit applicants) for the substantial rehabilitation or new construction of for-sale housing. The FSDP provides low interest rate construction loans and/or grants for the purpose of increasing the supply of affordable housing to promote homeownership and eliminate substandard housing by ensuring compliance with applicable health, safety, and property codes and standards.

Upon completion of the project, the unit must be sold to owner-occupants who are at or below 80% of Area Median Income (AMI).

Eligible Borrowers

1.     Non-profit developers;

2.     For-profit developers;

To be eligible for HOF funding, a for-profit developer must enter into a Memorandum of Understanding and/or Letter of Intent with the nonprofit entity which describes the relationship between the nonprofit applicant and the for-profit developer.

Borrower Requirements

1.     Be in good standing and qualified to borrow within the Commonwealth of Pennsylvania.

2.     Have the legal capacity and all necessary legal and corporate authorization to incur the obligation of the loan.

3.     Agree in writing to assist with the relocation of tenants displaced as a result of the rehabilitation or new construction.

4.     Agree in writing to pay Davis-Bacon Prevailing Wages and State Residential Prevailing Wage to the extent required by the Federal Government and the Commonwealth of Pennsylvania.

In accordance with City Council Bill No: 2016-0602, “Non-Profit” means a non-profit organization (1) that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code and (2) that is providing affordable housing or combating community deterioration among its tax-exempt purposes. The term shall not include a non-profit organization which is controlled by a for-profit or public entity. The term “Neighborhood-Based Non-Profit” means (1) a non-profit that has a substantial base of operations within the neighborhood where the housing to be funded by the HOF is located, or (2) a tenant association that represents the tenants in the housing to be funded by the HOF.

If a for-profit developer is working in cooperation with a non-profit developer, to be considered a complete proposal, applications must include an executed agreement between the non-profit applicant and for-profit developer. This document should detail the role of each party during different development phases (design/pre-construction, construction, post-construction, etc.), joint responsibilities, as well as other details that comprehensively describe the development team’s composition and function.

Eligible Properties

To be eligible for the FSDP, the following requirements must be met:
1.     Each property constructed under FSDP must be a permanent structure within the City of Pittsburgh primarily for year-round, owner-occupied residential use.

2.     Each property must comply with local zoning requirements.

3.     An eligible borrower must own the property prior to or at the FSDP closing. The borrower shall provide assurance of title or evidence of ownership that is acceptable to the URA and consistent with prudent lending practices.

4.     Upon project completion, properties financed under FSDP must be sold to owner-occupants who are at or below 80% of the Area Median Income (AMI).

5.     For properties being rehabilitated under FSDP, rehabilitation costs must equal at least 20% of the total development cost of the project.

6.     Eligible housing types include detached, semi-detached and townhouse units. Multiple unit structures developed as condominiums or cooperatives are also eligible.

7.     Each property must comply with Environmental Review regulations and procedures to the extent they are required by the Federal Government and/or the Commonwealth of Pennsylvania.

Eligible Activities

Funds under the Programs may be used for the acquisition of property, site preparation and development, as well as the hard and soft costs associated with the rehabilitation and new construction of single family for-sale housing. CDBG funds will only support rehabilitation of single family for-sale housing.

Eligible Costs

Loans and grants may cover property acquisition costs; site development costs; hard costs associated with the construction of the project; and soft costs associated with the project, such as appraisal fees, architectural and engineering fees, legal fees, construction interest, insurance during construction, financing fees and closing costs. FSDP grants used to fund construction activities will trigger prevailing wages.

Affordability Period

1.     For developments where the FSDP funds must be used as a loan, the affordability period will be for a minimum of 15 years. A deed restriction will be recorded on the property.

2.     For developments where the FSDP funds are used for a grant only, or for both a loan and a grant, the affordability period must be for will be for a minimum of 15 years but not more than 99 years. A deed restriction will be recorded on the property.

Forms of Financing

FSDP financing can be lent/granted in one or more of the following forms:

1.     Construction loan to be repaid by the sale of the housing units.

2.     Construction grant to bridge the difference, or a portion of the difference, between total development cost and the forecasted sales price(s) of the housing unit(s).

3.     Predevelopment loan to a non-profit developer prior to the developer taking title to the property to be developed or prior to construction loan closing. The predevelopment loan may be used for costs necessary to determine the feasibility of the proposed development including, but not limited to:

i.          Site control (option or sales agreement)

ii.          Design development

              i.   Geo-technical analysis

              ii.   Environmental analysis

              iii.  Engineering

              iv.  Reasonable costs of obtaining additional sources of pre-                development financing

Maximum Funding Amount

  1.     The maximum amount of FSDP funds per rehabbed unit cannot exceed $100,000.00. FSDP funds may be conveyed in more than one form (e.g., loan, grant, deferred mortgage commitment); however, the total FSDP investment shall not exceed $100,000.00 per rehabbed unit.

2.     The maximum amount of FSDP funds per newly constructed unit cannot exceed $130,000.00. FSDP funds may be conveyed in more than one form (e.g., loan, grant, deferred mortgage commitment); however, the total FSDP investment shall not exceed $130,000.00 per newly constructed unit.

3.     If FSDP funds are conveyed in the form of a construction loan, the maximum loan amount will be limited to 30% of the post-appraised value of the project for for-profit developers.

4.     If FSDP funds are conveyed in the form of a grant, the maximum grant amount cannot exceed the difference between the total development costs and the total proposed sales price(s) for the project unit(s).

5.     If FSDP funds are conveyed in the form of a predevelopment loan, the maximum amount of the FSDP pre-development financing cannot exceed the lesser of (i) 50% of the URA-approved pre­development budget, (ii) $33,000.00 per housing unit, or (iii) $100,000.00 where the project occurs on multiple properties.

Instructions to Apply

Application review may take up to 60 days during which URA staff may contact applicants to discuss materials submitted. Selected applications will be advanced for loan approval consideration.

Fully completed applications will be evaluated in accordance with the Program Guidelines and Criteria listed below:

1.     Feasibility Criteria

• Readiness to Proceed
• Capacity of the Development Team
• Compliance with Program Funding Guidelines

2.     Policy Objectives

• Geographic Diversity
• Non-Profit Participation
• Level of Affordability
• Affirmatively Further Fair Housing

How to Apply

1. Review the For-Sale Development Program Guidelines
   
   

2. Download and complete the following documents to be included in your application:
   
   For-Sale Development Program Application Narrative

   Excel Workbook
   
   

3. Submit your application via the Ion Wave platform. Note, if you are not already registered with Ion Wave, you will first need to complete the registration process.
   
   

SUBMIT APPLICATION