Substantial amendment for the FFY 2000 consolidated plan for the State of Georgia

SUBSTANTIAL AMENDMENT
FOR THE
FFY2000 CONSOLIDATED PLAN FOR THE STATE OF GEORGIA
Roy E. Barnes Governor
PREPARED BY: GEORGIA DEPARTMENT OF COMMUNITY AFFAIRS
Jim Higdon, Commissioner

SUBSTANTIAL AMENDMENTS
A. INTRODUCTION
The State of Georgia Consolidated Plan describes how State, local, private, and federal resources will be used to increase the supply of affordable housing for low and moderate income Georgians, establish and maintain a suitable living environment, and expand economic opportunities for its citizens. The plan focuses on the use of funds from HUD's four consolidated formula programs - Community Development Block Grant (CDBG), HOME Investment Partnership (HOME), Emergency Shelter Grant (ESG), and Housing Opportunity for Persons with AIDS (HOPWA) - to meet the affordable housing and community development needs of Georgia. The document updates the state's assessment of the housing needs of low and moderate income Georgians; provides a five-year Strategic Plan outlining priorities, objectives and the investment of resources to meet these goals; and includes an Action Plan for use of FFY2000 consolidated formula funds to meet its identified priorities and objectives during SFY2001 (July 1, 2000 June 30, 2001). In anticipation of updated Census 2000 information, this plan is considered an Interim plan and will be updated with new data when available. The State's allocation of CDBG, HOME, ESG and HOPWA funds and activities during SFY2001 are under the full authority of the Georgia Department of Community Affairs (DCA). The State's Action Plan for SFY2001 reflects the FFY2000 consolidated program funding amounts for which the State is eligible to receive from HUD. This allocation is divided between programs as follows: CDBG ($43,583,000); HOME ($18,292,000); ESG ($1,826,000); and HOPWA ($1,333,000). In addition to the federal consolidated formula funds, the State will draw upon the resources of the State Housing Trust Fund for the Homeless, the federal Low Income Housing Tax Credit, the Georgia Housing Tax Credit, and the proceeds of mortgage revenue bonds issued by the Georgia Housing and Finance Authority. The Georgia Department of Community Affairs will serve as the lead agency in the State's implementation of the Consolidated Plan for SFY2001.

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B. HOME INVESTMENT PARTNERSHIP PROGRAM (HOME)
The Georgia Department of Community Affairs (DCA) is the Participating Jurisdiction (PJ) and recipient of the State of Georgia's allocation of funds from the federal HOME Investment Partnerships (HOME) program.
The State of Georgia was allocated $18,323,000 in FFY2000 HOME funds to address housing needs. The State agreed to transfer $31,000 of its total allocation to Clayton County to enable this locality to meet the federal threshold limit to be awarded funds directly from HUD. Clayton County will assume total responsibility for the proper administration of these shortfall funds according to all HOME Program regulations and requirements. As a result, the total amount of HOME funding available to the State for administration is $18,292,000.
AMENDMENTS DCA has developed two new programs and modified the funding distribution of two other programs that will receive FFY2000 HOME funds:
The Small Rental Housing Development Fund (tentative name) will provide funds to eligible nonprofits for the construction of up to ten (10) units of rental housing targeted to low/moderate income families in rural areas of the State in which the larger HOME Rental Housing Loan Program projects are not economically feasible. During the initial program year, eligible nonprofits will include qualified public housing authorities and their subsidiary nonprofit agencies. Funds may be used for land acquisition, construction and eligible soft costs. DCA will solicit applications to the Fund by means of a Notice of Funding Availability that will be mailed to local public housing authorities outside of the 20-county Atlanta MSA and the counties of Bibb, Chatham, Clarke, Dougherty, Muscogee, and Richmond.
Applications will be evaluated in accordance with minimum threshold requirements, and competitive selection criteria, including but not limited to market and financial feasibility, income and rent restrictions, site and location characteristics, proposed development characteristics, and compliance history. Only those applications that meet threshold requirements, are economically feasible in the proposed market area, and are ranked among the highest scored applications will be considered for financing.
The HOME CHDO Operating Assistance Fund will provide assistance to selected state qualified CHDOs in coordination with technical assistance from experienced providers. Funds may be used for salaries and administrative costs provided that quarterly housing goals of the CHDO are met. The maximum award amount per CHDO annually is $60,000.

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DCA will accept applications in conjunction with participating technical assistance providers. Applications will be evaluated based on all Threshold requirements as established in the Request for Proposal. DCA has modified the funding allocation process for the HOME Rental Housing Loan and HOME CHDO Loan Programs. DCA will continue to allocate funds following the process outlined in the Qualified Allocation Plan (QAP). This will be the primary process for awarding funds through these programs. However, if HOME funds remain after DCA has reviewed and made its funding decision on all applications made through the QAP process, DCA will consider other applications presented to DCA on a first come, first served basis. The applications must meet applicable minimum threshold requirements as stated in the QAP to be considered for funding. Additionally, DCA will conduct a financial feasibility review and will confirm that the project meets all quality standards as set forth in the QAP. Funding determinations through both application processes will continue to be made at DCA's sole and absolute discretion.
B. PRIORITY STATEMENTS
The Consolidated Plan divides the State's priorities into two categories based on function: (1) priorities to directly benefit low and moderate income households and (2) priorities to improve the production capacity of Georgia's affordable housing providers. One of these Direct Benefit priority statements has been slightly modified. The modification appears below in italics.
To provide financial assistance to eligible local governments to meet their
locally identified community and economic development needs. Additionally two statements have been added to the Direct Benefit priority statements:
To increase the number of jobs in non-entitlement areas available for low and
moderate income persons.
To provide funds for eligible units of local government to help meet their
immediate health and safety needs.

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C. PUBLIC COMMENTS
The public comment period for this Substantial Amendment was open from December 14, 2000 to January 15, 2001. DCA received one written comment shown below: COMMENT #1 Mr. Jerry Braden, The Braden Group: I appreciate the opportunity to comment on the proposed changes. My comments are by section as follows:
New Program: I support the concept of a new program but I believe it would be in the best public interest to make this available to both private and nonprofit sectors and to require the same high standards of experience as required for the other multifamily programs. There are many for profit developers who own apartments in rural areas with adjacent vacant property that would fit nicely with this new concept. Also, the primary nonprofits with any expertise in rural areas in the area of housing are Public Housing Authorities. The largest majority of these have a poor record of management and maintenance and targeting a new program to those entities could have significant adverse consequence for a new program.
CHDO Assistance: There are presently 37 approved CHDOs in Georgia and, during last year's funding round, CHDOs and other nonprofits received a significant portion of the awards. I would hope that DCA is not moving toward the creation of an unfair playing field between profit developers and CHDOs because I believe that the private sector has long been the mainstay of producton of good affordable housing complexes in Georgia. CHDOs and nonprofits already have their own set-aside for funding and I do not believe this new program is warranted.
Modified Funding Allocation Process: I do not believe this concept should be adopted by DCA. I am not sure what is meant by "first-come, first-served basis" because the concept seems to be almost entirely the opposite to DCA's long term process of adequately designing programs through public input, implementing them through rigid deadlines and having a fair testing of each competing application. To me "first-come, first-served basis" smacks of someone being tipped off in advance so that they are first in line for funding. I believe if this concept is adopted that DCA would open itself up to the appearance of impropriety through the enormous State Government political process. DCA already has the ability to correct inequities and to geographically balance the distribution of funds through the QAP. At no point in the past has the QAP failed to produce enough applications to use HOME funds and that is not likely to happen in the future. These applications cost between $10,000 and $40,000 each and I believe DCA should respect the process and distribute funds according to the QAP.

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STATE RESPONSE: DCA appreciates the comments received in regards to the proposed changes to the State's Interim Consolidated Plan, but believes that the proposed modifications will substantially benefit low and moderate income Georgians. DCA will begin implementation of its Small Rental Housing Development Fund (tentative name) using local public housing authorities (PHAs) as the means to deliver this product to the market. The approach is due to the limited funding available for the program combined with the expectation that such small-scale development would be profitable only for entities already managing housing in these areas. Additionally, PHAs offer a potential resource to the affordable housing development community that has not been fully tapped. Our experience with local PHAs has been positive and we are excited about the opportunity to help to expand the role of PHAs in local communities. During the program's first year, DCA will limit the availability of these funds to PHAs and their associated nonprofits. In future years, DCA will evaluate expanding this program to other housing providers. The CHDO Operating Assistance Fund will allow DCA, for the first time, to take advantage of the opportunity currently allowed by the HOME regulations to provide funds to assist in the capacity development of nonprofits throughout Georgia. While larger communities, such as Atlanta, are sufficiently represented by CHDOs, most of rural Georgia is not adequately served. The purpose of this program is to assist in the development of these nonprofits and to ensure that the State meets the 15% CHDO setaside requirement of the HOME program. The funds are not used to directly support a project. DCA will make up to $60,000 available to any one CHDO to pay for salaries and other administrative costs. HUD regulations limit to 5% the amount of funds that may be used for operating assistance from any annual allocation of HOME funds. During SFY2002, DCA has allocated approximately $155,000 to this program or less than 1% of the funds allocated to the State. DCA has proposed the modified allocation process for the HOME Rental Housing Loan and HOME CHDO Loan programs as a result of the very limited number of HOME applications received and funded during the most recent application round. In the past, the allocation of HOME Rental Housing Loans through the Qualified Allocation Plan competition was the only allowable method of distribution. Given the large portion of HOME funds allocated to the Rental Housing Loan program, it is possible that funds might not be used in sufficient time to prevent recapture by HUD. DCA will continue to use the established Qualified Application Plan-as the primary means for the distribution of these HOME funds. DCA expects that in most years all HOME Rental Housing Loan funds will be exhausted using this process. However, DCA believes that it is wise to adapt its processes to allow for the efficient use of funds in the event sufficient applications are not received as expected. This change will enable DCA to more speedily fund affordable housing in Georgia and will assist DCA with meeting all

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commitment and expenditure mandates required by the federal HOME program, thus avoiding recapture of funds by HUD.

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