Rental Property Owners, Existing Affordable housing developers and Landlords|

 

Are you a developer of a multifamily project and seek instructions on your existing residual receipt loan? Email your question or request to: hcidla.requesttoassetmgmt@lacity.org for reserve withdrawal requests, delinquent notices, residual receipt calculation disputes, loan amendments, subordinations, and other inquiries.

ANNUAL AUDITED FINANCIAL STATEMENT SUBMITTAL & RESIDUAL RECEIPTS LOAN PAYMENT GUIDELINES

Borrowers of residual receipt loans are required to submit annual audited financial statements (AFS) and loan payments by the payment date indicated in the loan agreement.  AFS may be emailed to HCIDLA.RR@lacity.org or HCIDLA.CRA.RR@lacity.org.

The audited financial statements should clearly describe the actual paid versus accrued amount of fees, debt service and details of deposits and withdrawals from the operating and replacement reserves of the multi-family property with a City residual receipts loan. The total amount of the deferred developer fee, the total amount paid and the amount outstanding should be described in a separate note section entitled “Deferred Developer Fee.” Click on this link to access an example of the separate note section.

Borrowers will also need to complete and submit a Calculation of Residual Receipts using data from the annual audited financial statements for each respective project. LAHD may make any necessary adjustments to the Calculation of Residual Receipts before issuing a final invoice for any underpayments, or a final credit for any overpayments.

Borrowers may authorize designated signatories to make written requests, agreements, amendments or other transactions for your loans. Borrowers may complete and submit the LAHD Authorized Signature Card to make sure signatories are current.

WITHDRAWAL REQUESTS

It is LAHD policy that borrowers maintain adequate replacement and operating reserves.  Withdrawal of these funds typically requires LAHD’s Loan Portfolio Unit’s written approval.

Borrowers must submit a formal written request to LAHD inclusive of the following:

  • Signed and dated request letter stating which project (project name/loan no./project no.) for which the request is being made, the nature of need, the specific amount to be withdrawn and from which reserve, and which bid is being selected and why (if applicable);
  • Most recent bank statements for both the operating and replacement reserve accounts reflecting the current balance; and
  • All pertinent supporting documentation, i.e.. copies of three formal bids, copies of invoices with corresponding checks, etc.

(a) Replacement Reserves are to be used to maintain or replace capitalized assets.  These assets usually include carpeting, appliances, roofing, balconies, and stairways, paved areas, etc.  To withdraw funds from the Replacement Reserve, borrowers are required to submit three bids for each type of cost ( such as roofing, carpeting, kitchen cabinets, air-conditions units, security systems, water heaters, etc.) to replace or maintain improvements or personal property, as stated above, when the total request is greater than 10% of the balance in borrowers’ replacement reserve accounts at the time of the request, or $5,000, whichever is smaller.

Three bids are not required when there is an urgent need.  Whenever the owner determines that any building, structure, premises or portion thereof is untenable or is a present, imminent, extreme and immediate hazard or danger to life or limb, health or safety, so as to necessitate the immediate elimination thereof, the owner may affect the replacement, repairs, or maintenance needed to alleviate said condition using replacement reserves without prior notice to LAHD.  If borrower has made improvements without LAHD approval, because of an urgent need, the borrower must submit documentation to LAHD soon after to substantiate the urgent need.

(b) Operating Reserves funds may be expended only when Revenue is insufficient to pay Operating Expenses (as defined in your Loan Agreement).  The definition of the items that can be paid for include only those items listed as “Operating Expenses” in the Loan Agreement between borrowers and LAHD.

Whenever the owner determines that any building, structure, premises or portion thereof is untenable or is a present, imminent, extreme and immediate hazard or danger to life or limb, health or safety, so as to necessitate the immediate elimination thereof, the owner may affect the payment for operating, repairs, or maintenance needed to alleviate said condition using replacement reserves without prior notice to LAHD.  If borrower has made improvements without LAHD approval, because of an urgent need, the borrower must submit documentation to LAHD soon after to substantiate the urgent need.

LAHD AUTHORIZED SIGNATURE CARD

Borrowers may authorize designated signatories to make written requests, agreements, amendments or other transactions for your loans. Borrowers may complete and submit the LAHD Authorized Signature Card to make sure signatories are current.

UPDATES TO RESIDUAL RECEIPTS LOAN SERVICING

For more information, please click here.

For information regarding COVID-19 operating expenses, click here.

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