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FY23 Iowa City HOME-ARP Applicant Guide 1
Applicant Guide
Iowa City HOME-ARP Program
This guide outlines requirements for applicants seeking American Rescue Plan Act funds through the
HOME Investment Partnership (HOME-ARP) program allocated to the City of Iowa City. The American
Rescue Plan Act of 2021 (“ARP”) appropriated $5 billion to communities across the U.S. to provide
housing, services, and shelter to individuals experiencing homelessness and other vulnerable
populations. These funds were allocated by formula to jurisdictions that qualified for funding through the
HOME Investment Partnership Program (HOME Program) from the U.S. Department of Housing and
Urban Development (HUD).
For guidance on use of funds under the HOME-ARP Program, refer to the HOME-ARP Implementation
Notice (HUD Notice CPD-21-10). Additional policy guidance and resources can be found at:
https://www.hud.gov/program_offices/comm_planning/home-arp.
Notes to applicants
1) The application must be complete for HCDC consideration. HCDC will not review any materials
submitted by the applicant after the deadline unless requested by HCDC.
Application Timeline
The following is a tentative timeline of the application process. Dates are subject to change. Visit
https://www.icgov.org/actionplan for current information or contact staff at 319-356-5237.
1) Applications open May 27th, 2022
2) Zoom Office Hours May 31 & June 7th 9am-12pm
3) Applications Due June 14th, 2022
4) HCDC Meeting – Allocation Plan & Recommendations June 23rd, 2022
PART I. Estimated Federal Funding Available
Iowa City expects to have $1,521,981 in HOME-ARP funds available for allocation in a competitive
funding round, including up to $89,000 for non-profit operating & capacity building funds for applicants
who are carrying out the eligible activities listed above.
FY23 Iowa City HOME-ARP Applicant Guide 2
PART II. Application Requirements and Considerations
Applicants should evaluate the following HUD guidelines as well as City policies when considering the
proposals, funding estimates, and time schedules for achieving their project goals.
Program Purpose
Funds must primarily benefit individuals and households in the following Qualifying Populations:
1. Experiencing homelessness
2. At risk of homelessness
3. Fleeing domestic violence, dating violence, sexual assault, stalking or human trafficking
4. Other populations with high risk of housing instability including:
a. Households who have previously been qualified as homeless, are currently housed, and
who need additional assistance to avoid a return to homelessness.
b. At greatest risk of housing instability
i. Households with annual income <=30% of AMI who are paying more that 50% of
monthly household income toward housing costs
ii. Households with annual income <=50% of AMI AND meets one of the following
criteria:
1. Households who have moved two or more times in the last 60 days
2. Households living in the home of another due to economic hardship
3. Has been notified in writing that their right to occupy their current living or
housing situation will be terminated within 21 days
4. Households living in a hotel/motel not subsidized by other programs
5. Lives in an SRO or efficiency unit with more than 2 persons or in a larger
housing unit in which there are more than 1.5 persons per room, as
defined by the U.S. Census Bureau
6. Is exiting a publicly funded institution or system of care
7. Otherwise lives in housing that has characteristics associated with
instability and an increased risk of homelessness
Median household income limits for projects in Iowa City are as follows:
Eligible Activities
Eligible activities that may be funded with HOME-ARP include:
1. Development and support of affordable housing
2. Tenant-based rental assistance
3. Provision of supportive services (such as housing counseling, homelessness prevention,
childcare, job training, legal services, case management, moving costs, rental applications, and
rent assistance)
4. Acquisition and development of non-congregate shelter units.
FY23 Iowa City HOME-ARP Applicant Guide 3
Performance Schedule and Payment
Reimbursements can be made after the contract has been formalized. Expenses incurred before a
contract has been entered will not be reimbursable. Disbursements can be made upon receipt of 1)
invoices for labor, materials and services rendered, and 2) signed lien waivers (as appropriate) covering
all amounts to be paid. In some instances, pre-agreement costs may be reimbursed to applicants;
however, Neighborhood Services staff must be contacted prior to making any pre-agreement
disbursements to verify if the cost may be reimbursed. In case of minor cost overruns or requests for
additional funding, the City Manager and staff may approve a contract amendment that is non-substantial.
In the case of substantial changes (as defined in the Citizen Participation Plan) the Housing and
Community Development Commission and City Council must approve the change and an amended
agreement is required.
Budget Considerations
In estimating the amount of the proposal or the project budget, applicants should try to obtain
documentation for the costs and consider the following expenses:
• Appraisals, legal fees, title opinions and surveying costs for property acquisition projects.
• Building permits, engineering or surveying costs, zoning application fees, professional fees,
advertising and bidding costs for rehabilitation and building projects.
• While not a requirement of HOME-ARP funding, the City recommends that applicants leverage
private funding, volunteers, and in-kind contributions whenever possible and to include this
information on your application.
• Construction estimates should be realistic.
• Other project costs such as compliance with HUD regulations (audits, labor standards,
environmental studies, fair housing, etc.) listed in Part III below should also be included.
Scoring Criteria
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FY23 Iowa City HOME-ARP Applicant Guide 5
FY23 Iowa City HOME-ARP Applicant Guide 6
PART III. Housing
Additional Information Requirements. Before an applicant may enter an agreement with the City, the
applicant must submit updated information such as the project schedule, sources and uses statement,
construction budget (if applicable), and pro forma (if applicable) to facilitate the underwriting process.
All other funding sources must be identified and verification submitted to the City to complete a subsidy
layering analysis when multiple public funding sources are utilized.
Appraised Value at Project Completion. Each housing project, except minor home repairs, funded with
HOME-ARP funds must have an appraised value at project completion that demonstrates adequate
equity to secure any liens.
Site Location. One of the City’s goals is to encourage the distribution of housing and residential facilities
(e.g. permanent housing – rental and homeownership, transitional housing, homeless shelters, and
special needs housing) throughout Iowa City. See the Affordable Housing Location Model map below
to view where new City-assisted rental housing may be located. The map is typically updated annually
and is available at www.icgov.org/actionplan.
Pro Forma. Projects that include development of rental housing or non-congregate shelter are required
to complete a pro forma that abides by the City’s rules for project underwriting. See Appendix B on
pages 11-12 for specific criteria.
Template: https://www.iowa-city.org/WebLink/DocView.aspx?id=2040068&dbid=0&repo=CityofIowaCity
The AHLM map is updated annually. The 2021 update will be posted online at icgov.org/actionplan when
available.
FY23 Iowa City HOME-ARP Applicant Guide 7
PART IV. Compliance with Federal Regulatory Requirements
All HOME-ARP contracts include requirements imposed by various Federal-sponsoring agencies. These
include procurement standards for labor, materials, supplies and services not only related to the project
but also to the applicant's operation.
• No choice limiting actions may be made prior to receiving environmental clearance from the City
to move forward with a project. These include but are not limited to include signing contracts,
acquisition, demolition, disposition, rehabilitation, repair, new construction, site preparation, and
leasing or any other activities that commit to future activities.
• Procurement standards and subcontracting requirements are set forth in 2 Code of Federal
Regulations (CFR) Part 200. The following list briefly describes the main points in contracting for
services and purchasing supplies and materials.
• Affirmative efforts shall be made to utilize small and minority-owned businesses or sources of
supplies and services. Conflict of Interest rules will also apply.
• Construction contracts in excess of $2,000 shall comply with the Fair Labor Standards Acts.
Specifically, 1) the Davis-Bacon Act which requires contractors to pay wages to laborers and
mechanics at a rate not less than the minimum wages specified in a wage determination made by
the Secretary of Labor, 2) Copeland Anti-Kick Back Act which prohibits employers from inducing
employees to give up any part of the compensation to which they are otherwise entitled, and 3)
the Contract Work Hours and Safety Standards Act which requires contractors to compute wages
on the basis of a standard work week of 40 hours. Work in excess of the standard workweek shall
be permissible if the worker is compensated at a rate of 1½ times the basic rate of pay for all hours
worked in excess of 40 hours in the workweek. No worker shall be required to work in unsanitary,
dangerous or hazardous surroundings.
• Contracts over $10,000 shall contain requirements relating to Equal Employment Opportunity.
• Provisions for termination shall also be included in all contracts.
• Records should be kept for all procurements. Construction projects for more than $250,000 must
utilize the competitive sealed bids (formal advertisement) method of procurement. Procurement
by small purchase procedures shall be utilized for projects $250,000 or less. Contracts under
$10,000 may use the micropurchase method of procurement. Price or rate quotations shall be
obtained from an adequate number of qualified sources under this method.
• Contracts in excess of $25,000 shall contain provisions and conditions that allow for
administrative, contractual or legal remedies in instances in which contractors violate or breach
contract terms.
• Contracts in excess of $200,000 shall meet bonding and Section 3 requirements. Minimum bond
requirements include: bid guarantee equal to 5% of bid price, performance bond for 100% of
contract price and payment bond for 100% of contract price.
• Provisions regarding federal regulations on Non-discrimination, Equal Employment, Affirmative
Marketing and Fair Housing.
• Acquisition, Displacement and Relocation are also contained in the Agreement.
• Lead Based Paint regulations regarding interim controls and abatement may also apply.
FY23 Iowa City HOME-ARP Applicant Guide 8
PART V. Financial Management, Reporting, and Monitoring
Standards for financial management and record keeping are provided in 2 CFR 200. Local accountants
and agency directors experienced with federal requirements may be helpful resources.
• Each recipient shall have a financial management system that provides effective control over and
accountability for all funds, property, and other assets, must identify the source and application of
funds for federally-sponsored activities, and permit the accurate, complete, and timely disclosure of
financial results in accordance with the reporting requirements of the City and HUD.
• A separate ledger for the HOME-ARP account is strongly recommended.
• Appropriate time distribution records must be kept for employees paid with HOME-ARP funds in
addition to other funds.
• All project-related expenditures must be supported by third party documentation (invoices, contracts,
and purchase orders). Lien waivers are required from all contractors and subcontractors.
• Reductions in project costs or increases in the commitment of other funding, if any, shall be brought
to the immediate attention of staff. The impacts of these changes must be discussed with staff and
appropriate reductions in HOME-ARP funds may be made on a case-by-case basis.
In most cases, a financial audit of the project expenditures will be required. Qualified individuals who are
sufficiently independent of the agency and can produce unbiased opinions and conclusions should
conduct these audits. Audit reports should be submitted within six months of project completion and final
disbursement of funds. Organizations that expect more than $750,000 in federal assistance from all
sources are required to have an audit covering the financial activities of the organization as well as the
project disbursements as set forth in 2 CFR 200.
Neighborhood Services staff will monitor all aspects of the project beginning with pre-agreement activities,
goal setting to project closeout. Any project changes must be approved by the City. Periodically,
Neighborhood Services staff and HCDC members will conduct monitoring visits to review project
progress, financial management, construction contracts, time records related to the project, as well as
client statistics. Staff will attempt to give reasonable notice prior to the site visit.
The City of Iowa City requires quarterly reports and has a standardized reporting form. For rental and non-
congregate shelter projects, the applicant must complete project close-out forms and submit to the City
upon project completion. The period of affordability does not begin until the City has been notified and the
data entered into HUD’s information and management system. The compliance period will vary depending
upon the project type, HOME-ARP requirements, and the information contained within the HOME-ARP
application. During the compliance period, Neighborhood Services staff will request records relating to the
stated purpose of the project to see if goals have been carried out, to review the low and moder ate income
benefit requirements as established by HUD, and to monitor the financial status of the organization. All
notices and reports should be directed to:
Neighborhood Services
410 East Washington Street
Iowa City, IA 52240
FY23 Iowa City HOME-ARP Applicant Guide 9
Appendix A: HOME-ARP Consolidated Policies
The City recognizes the need to utilize HOME-ARP projects and other funding as effectively and efficiently as
possible to provide housing, services, and shelter to individuals experiencing homelessness and other vulnerable
populations within Iowa City. To assist the Housing and Community Development Commission (HCDC) in investing
funds and evaluating a project’s status and ability to proceed, the following policies shall apply to all projects
effective July 1, 2020:
I. Unsuccessful and Delayed Projects
HCDC recognizes that from time to time, there may be HOME-ARP projects that do not meet the anticipated
schedule for implementation as presented to HCDC. These circumstances may be due to unforeseen events (e.g.
unfunded applications for other financing). The following process helps ensure subrecipients use their funds in a
timely manner.
1. All HOME-ARP projects carried out by subrecipients will have entered into a formal agreement with the
City of Iowa City within one year (12 months) of award. All HOME-ARP funds must be spent prior to
September 30, 2030. Should a subrecipient fail to show adequate progress towards meeting the schedule
as identified in its application or the statutory requirements of the HOME-ARP program, the project will be
reviewed by HCDC. If a HOME-ARP recipient is unsuccessful in obtaining funds identified in the
application, HCDC will review the project and determine its viability without the proposed funds. HCDC
may recommend the recapture and reuse of the funds to City Council.
II. Allocation of Uncommitted Funds
The City may have uncommitted HOME-ARP funds that become available after the regular funding round either
through windfall income, project cancellation, or additional funds provided by HUD. In most cases, funds will be
used for administrative amendments of existing projects. In the event uncommitted funds exceed $150,000, HCDC
may choose to:
1. Provide funding to existing projects that did not receive full funding and/or to projects that submitted
applications but did not receive HOME-ARP funding, up to their full request; or
2. Hold a special funding round to solicit and fund new proposals.
If funds shall be provided to existing and/or unfunded project, applicants will be notified of the availability of funds
and asked to provide a written request for funds and how they will utilize them for their original request. If new
projects are being considered, HCDC must publish notice of funding availability and proceed with a formal
application process. In all cases the public must be given the opportunity for comment on the proposed use of
funds in accordance with the City’s adopted Citizen Participation Plan.
FY23 Iowa City HOME-ARP Applicant Guide 10
APPENDIX B: PRO FORMA INSTRUCTIONS
Developers of rental housing (including rehabilitation projects) are required to complete the pro forma at the time
of application. The purpose of this pro forma is to demonstrate that the project is financially feasible and viable
using the least amount of City funding, and to help staff and HCDC make informed decisions on the allocation of
HOME-ARP funding. This form will provide the necessary information in a format that is uniform among all rental
housing applicants.
The following are instructions for completing the pro forma and some basic information for reference. The pro
forma template allows for up to 20 years of information, however, it only needs to be filled out through the
project’s period of affordability. Underwriting is required prior to signing an agreement and an updated pro forma
will be required if applicable to ensure information is current for staff review.
Template: https://www.iowa-city.org/WebLink/DocView.aspx?id=2040068&dbid=0&repo=CityofIowaCity
Please note, cells shown in grey in the pro forma template indicate fields that should be filled out by the
applicant.
If you have any questions about the form or need technical assistance, please call Community Development
staff at 319-356-5237. Staff can also help you determine the period of affordability for the project.
Revenues [Income escalates at 2% as calculated in the spreadsheet; consistent with the Fair Market Rent (FMR)
increases for Iowa City]
Line 1 Gross Rent: Is the total amount of rent generated from the housing units, based on proposed
rent levels and expected utility allowance deductions for tenant-paid utilities (proposed rents
may be less than fair market rent (FMR), but cannot exceed FMR.
Line 2 Other Income: Include laundry income, application or pet fees, and interest income.
Line 3 Tenant Contributions: Include other payments such as rent for parking or storage space.
Line 4 Gross Income: Is the sum of Lines 1 through 3.
Line 5 Vacancy Loss: Line 1 multiplied by 5% (may be increased up to 10% depending on Applicant’s
past performance in managing units).
Line 6 Effective Gross Income: Line 4 minus Line 5.
Operating Expenses [Inflation escalator at 3% as calculated in the spreadsheet]
Line 7 Insurance: Estimated insurance expense from an agent or similar property.
Line 8 Maintenance & Structural Repairs: Repairs and replacements are typically 1% of the property’s
value, though varies depending on building age, condition, size, and use.
Line 9 Management Fees: May not exceed 10% of Annual Gross Rent, typically 5% to 7%.
Line 10 Misc. Operating Expenses: legal, accounting, advertising, owner-paid utilities, etc.
Sum of Lines 7-10 shall be no less than $3,700/unit; SRO properties in single family
homes shall be considered 0.3 units each.
Line 11 Property Tax: Estimate available from City Assessor or Johnson County records.
Line 12 Reserves: Operating reserve no less than $400/unit. If new construction, include a rent-
up reserve for Year 1 of gross monthly rent for all units x 3 months).
Line 13 Total Operating Expenses: Sum of Lines 7 through 12.
Net Operating Income
Line 14 Net Operating Income: Line 6 minus Line 13.
Debt Service [list mortgage payments for principal and interest only]
Line 15 Debt Service for 1st Mortgage.
Line 16 Debt Service for Subordinate Mortgage(s): Total payments for all junior mortgages.
Line 17 Total Debt Service: Sum of Lines 15 and 16 (should not be less than 87% of Line 14).
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Cash Flow Available for Distribution
Line 18 Cash Flow: Line 14 minus Line 17.
Line 18B Equity Investment: Amount of funds being invested in the project by the project developer\
sponsor. This does not include the equity raised through the sale of Low Income Housing Tax Credits as
they are accounted for on Line 33. A minimum contribution of $100 is required.
Cash on Cash Return on Investment [shows return to developer or investors on their equity contribution
before taxes or tax credits are included]
Line 19 Cash on Cash ROI: Line 18 divided by equity investment as shown on the application.
Debt Coverage Ratio
Debt Coverage Ratio (DCR): Ratio of estimated net operating income to debt service. Line 14 divided by
line 17. After year 3, DCR shall be no less than 1.20 or over 1.60 during the affordability period.
Encourage 1.20-1.50.
Determining Taxes
Line 20 Cash Flow: Carry over the figure from Line 18.
Line 21 Depreciation Expenses: Annual depreciation of property (27.5 year straight-line schedule).
Line 22 Amortization of Fees: Annual amortization of project fees (15-year straight-line schedule).
Line 23 Principal Payments: Calculate the amount of principal paid on all loans for each year.
Line 24 Reserves: Carry over the figure from Line 12.
Earnings (Loss) Before Taxes
Line 25 Earnings Before Tax: Equals (Line 20 minus Lines 21 and 22) plus Lines 23 and 24.
Taxes
Line 26 Tax Rate: Use 35% tax rate for for-profit organizations and 0% for nonprofits.
Line 27 Taxes Incurred (Saved): Line 25 multiplied by Line 26.
Cash Flow After-Tax
Line 28 Cash Flow: Carry over figure from Line 20.
Line 29 Taxes Incurred (Saved): Carry over figure from Line 27.
Line 30 Cash Flow After-tax: Line 28 minus Line 29.
Total Benefit Analysis
Line 31 Cash Flow After-tax: Carry over figure from Line 30.
Line 32 Rehabilitation Tax Credits: Calculate full value of rehab tax credits.
Line 33 Low Income Housing Tax Credits: Calculate full value of LIHTC annually for each of the 1st 10
years.
Line 34 Net Sale Proceeds: In year 20, calculate the estimated future market value of the property by
taking the total cost of the project as presented in this application and compound it by 2% for
each year. Place this amount on line 34.
Line 35 Net Cash Flow After-tax: Equals the sum of Lines 31 through 34.
Line 36 Return on Investment: Equals the Net Cash Flow After Tax divided by the Equity Investment.