Small Property Loan Program (SPLP) 

The Small Property Loan Program (SPLP) provides financing to eligible property owners of affordable housing with five (5) to fifty (50) units to rehabilitate and make repairs, where they lack access to adequate financing, that address health hazards and unsafe living conditions. The maximum grant per project is $1,000,000, and $65,000 per dwelling unit.  

PROGRAM ELIGIBILITY 

Nonprofits, for-profits, and individuals that own rent-and income-restricted affordable or low rent housing in the District of Columbia. The housing accommodation would also need to meet the following criteria: 

• have between 5 and 50 housing units;
• be at least 51 percent occupied; 
• The rents and utilities of at least 50 percent of housing units must be affordable to low- to moderate-income households who earn below 80% MFI and where most of the occupied units are occupied by households with incomes at or below the MFI. 
• be in generally good shape, without housing violations (although funds can be used to clear housing violations), units with several discrete maintenance or upgrade projects that will improve the lives of residents, with a formal emphasis on complementing efforts by other government programs to improve the energy efficiency and environmental performance of the property and comply with tightening green building codes and requirements. 
• The scope of work funded by this loan can be part of a larger rehabilitation project but the work it funds must be discrete and outlined in a separate scope of work that can be independently verified. 

LOAN TERMS 

It is anticipated the loan would have terms along the following lines:  

• The maximum loan amount would be $65,000 per dwelling unit or $1,000,000 per project,  
• The maximum term of the loan would be 10 years unless a deferred payment option is selected.  
• The minimum term of the affordability covenant would be 10 years, and it would increase based on a set schedule based on the amount and terms of the loan.  
• The minimum level of affordability after the completion of the project would be rent and income restrictions at an average of 60% of MFI for all units or 100% of the units below 80% of MFI,  
• Owners can reapply for new funding three years after a previously funded project has been completed if they have clean hands and are in good standing on any previous loans.  
• Owners would be responsible for completing the work and the release of retainage of not less than 10% would be subject to final inspection.  
• The interest rate would be below market and payments of principal or interest may be deferred during the construction period or longer. Under some circumstances, payment of the principal and interest may be deferred until the property is sold, transferred, or comes to end of its useful life. Deferred payment loans may be secured by a second deed of trust on the subject property.  
• Deferred Loans would require the minimum term of affordability covenant be 10 years. After 10 years, the covenant would remain enforced until repayment of the principal and interest or for the life of the loan.  
• The owners would have to show a minimum 10% cash contribution to the proposed work or a 50% match from non-DHCD-related sources such as private financing or District or federal energy or greenhouse gas programs.  

LOAN PROGRAM PROCESS 

The process of receiving funding from the program would follow a process like other loans provided by the department. Applications would be taken on a rolling basis: 

1. Completed Application – Applicants must complete all components of the application prior to applying. This includes all the required documentation listed in the application. Along with entity financial reporting and statements, loan applications must be accompanied by proof of equity contribution, operating pro forma with debt coverage ratio. The application will also include a contractor information form to identify the proposed general contractor, if the general contractor is not the borrower, and a construction narrative. 
2. Threshold Review – DHCD will review the application and complete a threshold financial review of the capacity of the applicant. The applicant will be informed within thirty days of a completed application whether they are eligible and have passed threshold review. 
3. Underwriting kickoff meeting – Applicant will be invited to meet with DHCD Housing Preservation Unit staff to discuss the application, the needs of the property, and the program. 
4. Assessment of Requested Assistance – Applicants that determine they wish to proceed with the program will submit a third-party Physical Needs Assessment from a licensed professional. This will be used to assess the proposed scope and determine whether other important items are being neglected. 
5. Scope of Work – DHCD will make the final determination of the approved Scope of Work (SOW) and applicants will only be accepted into the program when they accept a final scope. 
6. Underwriting – Once the scope is agreed to, the loan will undergo final underwriting. At this stage, if the borrower is not the contractor, the borrower will submit a Sworn Statement from and evidence of a surety bond from their selected contractor. 
7. Approval by all Lenders – All property lienholders must provide consent for DHCD to place a lien on the property and a 10-year affordability covenant on the property. 
8. Closing – Loan documents and the affordability covenant are signed by all parties. 
9. Recording – the lien on the property and the covenant are recorded by the owner at the recorder of deeds. 
10. Inspections – DHCD will have the opportunity to inspect the work as a condition for fund withdrawal. At least 10% of the funds must be held for final payment after all inspections are complete and the project is determined by DHCD to be complete. 
11. Compliance – The loan and covenant would be transferred to the Portfolio and Asset Management Division for compliance.