Small Rental
Property Program

Small Rental Property Program - About Us and FAQs


adobe logo Note: You will need the Adobe Acrobat Reader, available as a free download, to open and print several of the documents (PDFs) on this page.


What is the Small Rental Property Program?

The Small Rental Property Program (SRPP) provides incentives to owners of small scale rental properties to help restore their damaged units and offer them at affordable rents to income eligible tenants. Small rental properties are those with one to four rental units, which include single family, duplex, triplex, and fourplex buildings, or up to 4 individual structures. Before the disaster, a large portion of low to moderate income working families resided in single-family homes and small rental properties. Often, these were owned and operated by Louisiana property owners. The repair of these rental properties, in conjunction with the other Road Home programs, ensures that families are given the opportunity to return to Louisiana.

What agency is in control of the Small Rental Property Program’s funding?

The US Department of Housing and Urban Development (HUD) provided Community Development Block Grant (CDBG) funding to the State of Louisiana’s Office of Community Development (OCD). The Small Rental Property Program (SRPP) is run with the assistance of a team of private companies that specialize in housing and community development.

What does ‘small rental properties’ mean?

Small rental properties are those with one to four rental units, which include single family, duplex, triplex, and fourplex rental buildings on one tax parcel. The term “units” refers to residential dwelling units that provide complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.

What is a forgivable loan?

Incentives are made in the form of a no interest, no payment, forgivable loan requiring property owners to maintain affordable rent levels for a certain fixed term (see Do I Have to Repay…). The Small Rental Property Program (SRPP) requires property owners to offer lower rents and, in exchange, gradually forgives the entire amount of the loan. The award provides an incentive to property owners to keep rents affordable to workforce families, while allowing owners the flexibility to leave the SRPP before the entire loan is forgiven. Refer to Award Levels (PDF/1MB) on the Forms, Guides, and Publications page.

What is an affordable rental unit?

The rent on an affordable rental unit is calculated based on the income level of the tenant and the size of the rental unit. It is anywhere between 50-80% of the local Fair Market Rate. Landlords are offered government funded incentives to produce affordable rental units to low- to moderate-income families whose income is below the area median income (AMI). These families would otherwise not be able to afford rental housing.

Is the program still accepting applications?

At this time, the Small Rental Property Program is not accepting new applications.

Do I have to repay the money I receive from the Small Rental Property Program?

Only if you do not fulfill the affordability period agreed upon at the time of your closing. If the affordability terms of the loan are not met, the loan may be subject to partial forgiveness. Forgiveness of the awards occurs in staged intervals from the date of the final disbursement. The rate of forgiveness depends on the applicant’s selection at the time of application.

Applicants who self selected and received points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to a “Modified Forgiveness Option.” This simplified forgiveness schedule is a straight line methodology of forgiveness. The Loan will be amortized yearly from the date of the final disbursement.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 10% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units (or 50% of the required time period) the loan will be forgiven at 50% and the balance due on the loan would be $60,000.

Applicants who did not self select and receive points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to an “Accelerated Forgiveness Option.” This simplified forgiveness option uses a “double the straight line method” used in the “Modified Forgiveness Option.” The Loan will be amortized yearly from the date of final disbursement.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 20% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units the loan will be forgiven at 100% and the balance due on the loan would be fully forgiven at that time.

Will you deduct insurance payments, FEMA assistance or SBA loans from the award?

Applicants participating in the Construction Management Initiative Option as well as owner occupants of three and four unit properties who receive compensation for their home are required to deduct these other benefits. The heritage Incentive Program does not require rental property owners to deduct any insurance payments, FEMA assistance or SBA funds from their award.

What’s the difference between national flood insurance program and regular flood insurance?

There is no difference. It is the same program.





How are rental incentive awards calculated?

Eligible applicants receive the lesser of the following two amounts: (1) The amount selected by the property owner corresponding to the affordable rents they choose for their units or (2) 100 percent of the total cost to repair or reconstruct their storm-damaged property. Refer to the Choosing Your Awards (PDF/1MB) on the Forms, Guides, and Publications page.

What properties are eligible?

Single-family, duplex, triplex and fourplex rental buildings located on a single tax parcel that suffered damages of $5,200 or greater from either Hurricane Katrina or Rita and that are located in the 13 designated parishes are eligible for rental funds. Town homes and condominiums are also eligible to apply to the Small Rental Property Program if they meet all general eligibility requirements and specific conditions for condominiums.

Am I eligible if I already applied to The Road Home Homeowner Assistance Program?

Homeowners who also own separate rental property and have applied to both the Homeowner’s Assistance Program (HAP) and the Small Rental Property Program (SRPP) may be eligible for awards in both programs. Owner occupants of duplex properties, those in which the owner resides in one unit and makes the other available for rent, may have applied to either the HAP or the SRPP but may only accept an award in one program.

Property owners who lived in one unit of a three- or four-unit property with their tenants are not eligible for HAP but are eligible for SRPP. These owner occupants are eligible for a grant for the unit they reside in as well as incentive awards for units they agree to rent at affordable rates. They will be provided personal application assistance and may be eligible for additional funding.

However, property owners who received a grant award from HAP and who have applied for a rental award for other structures on the same tax parcel may be eligible for both. The other structures must contain affordable rental units and must meet all other SRPP requirements.

Example: If a property included a single family dwelling where the owner lived and a separate duplex on a single tax parcel, and the applicant received an award from HAP for their single family home, the homeowner may be eligible for a SRPP award on the duplex (provided it meets all other SRPP eligibility requirements).

Note: Units that share a roof (i.e. one contiguous roof line) are not eligible to receive SRPP assistance in addition to a HAP award.

Did I have to own the property at the time of the storm?

Yes, in Round 1 only. In Round 2, investors who purchased or acquired ownership of residential rental property after the storms are eligible to apply. However, these owners (i.e. new investors) received a lower preference for funding than owners who owned their property before the hurricanes.

Am I eligible for a rental incentive award if construction has already started on repairs?

Yes, you are still eligible for the Small Rental Property Program and may use the cost of the completed work to determine the total cost to repair.

If I already received an award from the Homeowner Assistance Program (HAP), but I have separate rental units on my property, am I eligible for the Small Rental Property Program (SRPP) for those rental units?

Property owners who received an award from HAP for their home are eligible for a rental incentive award for separate structures on the same tax parcel. The other structures must contain affordable rental units and must meet all other SRPP requirements. Units that share a roof with the owner’s home are not eligible for SRPP assistance.

Can a property owned by a non-profit organization that applied for assistance in the Small Rental Property Program set-aside undergo a change in ownership after application and remain eligible for the Small Rental Property Program?

Yes. Due to a change in policy, nonprofits participating in the set aside may undergo a change in ownership prior to closing and still remain eligible. The new ownership entity must be an IRS registered 501(c)(3) nonprofit organization registered to do business in the State of Louisiana.





I am thinking about changing the rent tiers of my rental units. What am I allowed to do?

You are allowed to adjust the affordable rent tiers you selected on your application up until your final disbursement. You may also change from a market rate unit to an affordable unit or the reverse, however, the Small Rental Property Program’s decision is based upon availability of funds. Note that changes in rent tiers may change your award amount. Note: if you received a bonus for mixed-income units you could lose it.

What are the income eligibility limits for tenants renting my affordable units?

The allowable income for your tenants depends on the affordability level you chose for your units, the size of your units, and the parish your property is located in. Refer to the Area Median Income (AMI) Limits from our website’s Forms, Guides, and Publications page.

I have a unit that is completely repaired and that I would like to rent, but I haven’t received my final inspection or my incentive award yet. Does the Small Rental Property Program (SRPP) allow me to lease it?

Prior to a tenant moving into your property, you must have received a Certificate of Occupancy (or equivalent certification) from your Parish and have submitted the necessary tenant documentation to the SRPP to ensure the tenants are eligible for your selected AMI tier. If you are unsure if your tenants are eligible, call The Small Rental Property Program at 1.888.762.3252 and select prompt #3 to speak with your Case Advisor. Also refer to the Guide to Tenant Selection and Requirements and Area Median Income (AMI) Limits from our website’s Forms, Guides, and Publications page.

What is the penalty for a property owner who permanently displaces their tenants?

If an owner evicts a tenant in a manner that qualifies the tenant for permanent displacement benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA), the Small Rental Property Program (SRPP) will deduct the permanent relocation costs from the owner’s award while allowing the owner to continue in the SRPP.

If an owner enters the property into Section 8 program, how will this work with the program?

The rent paid directly by the tenant cannot exceed the maximum rental amount for the AMI tier selected.

Are owners allowed to change rent tiers? What should owners do if they want to change rent tiers?

If a property owner wishes to change rent tiers, they must remain in the Incentive Program. Property owners are not permitted to change rent tiers in the Initiative Option.

Will the state have to be notified each time a new tenant signs a lease?

Yes. It is a Small Rental Property Program (SRPP) requirement that all new tenants must be pre-approved for income eligibility by the SRPP prior to lease.

Can owners rent to relatives?

Yes, provided relatives are income eligible and the tenant is approved by SRPP.

Can a tenant move in after the construction is complete?

Yes, however, all pre-approval requirements apply.

Is a program inspection required before a tenant can move in?

No. However, property owners must provide potential tenants with a Move-in Notice prior to executing a lease agreement.

What if a tenant is income eligible at move in, but receives a raise? Do landlords have to report this to the state?

Tenant income eligibility is verified at initial lease-up only. There is no income recertification required for the same tenant.





What are all the steps required in the Small Rental Property Program before I receive funds?

For a detailed listing of the steps required, please refer to the SRPP Process Flow chart and the SRPP Overview and Checklist.

What is a Commitment letter? When do I get it?

Commitment letter reserves the forgivable loan that you will be awarded once your units are repaired and you have identified tenants whose income meets the affordability levels you chose for your units and you meet all program requirements. To receive a Commitment letter, you must have returned all documents from your Conditional Award package. The Small Rental Property Program (SRPP) will then verify that a number of requirements concerning you and your property have been met. The timeframe depends on the individual requirements specific to each loan (these include verifying your ownership of the property, determining its proximity to amenities, passing a required Federal environmental review, determining if a Homeowner award has already been made to your property, etc.) and whether your particular situation is complex or straightforward. Once these requirements are met, the SRPP issues your Commitment letter.

What happens after I get a Commitment Letter?

After your Commitment letter is issued, you have nine months to finish your repairs and identify income eligible tenants for your affordable units. If the nine month period is too short, you can request a time extension prior to the nine months elapsing. When you complete your repairs, you should request a Certificate of Occupancy (or equivalent certification) from your Parish. Once you have it, notify the Small Rental Property Program (SRPP) and one of our evaluators will call you to arrange a time to inspect your property. If your property was built prior to 1978 and has not already been certified to be free of lead-based paint, the SRPP will have a Lead Risk Assessment conducted on the affordable units and any common areas that are shared by those units. This is done at the SRPP’s expense. For more information download the Lead Risk Assessments (PDF/40k) flyer. Once the property is found to be free of lead hazards, a SRPP Final Inspection will be scheduled. This is how the SRPP ensures that your units meet all requirements and contain the features that you said on your application would be there.

I’ve passed my Final Inspection, what’s next?

When you pass your final Small Rental Property Program (SRPP) inspection, you should look for income eligible tenants to rent your affordable units. The SRPP has partnered with the Louisiana Department of Health and Hospitals to help identify affordable rental properties in Louisiana, including units that are accessible for people with disabilities. You will need to list your rental property(ies) at www.LAHousingSearch.org, a site that enables prospective tenants and displaced residents nationwide to view available affordable units. Once you have identified possible tenants, you will need to collect information from them to document that their annual household income matches the rent requirements of your units. Download the Guide to Tenant Selection and Occupancy Requirements and Area Median Income (AMI) Limits from our website’s Forms, Guides, and Publications  page.  Consult with your case advisor if you have any questions. When you have passed the final SRPP inspection and provided the required tenant income documentation and lease showing the rental amount to the SRPP, your file will be submitted for a final review by the program in order for it to be approved for disbursement. You will be scheduled for closing and will receive your award.

What is the status of my award?

To learn your individual status and determine where you are at in the process, call The Small Rental Property Program at 1.888.762.3252 and select prompt #3 to speak with your Case Advisor.

Why don’t you just send me a check?

The purpose of the Small Rental Property Program is to ensure that rental units that were damaged or destroyed by the storms become available once again to the working families of the hardest hit parishes in Louisiana at affordable rental rates. The only way to guarantee that the money set aside for this purpose actually produces quality affordable rental housing for our citizens is to award the money to small property owners once the repairs are completed and eligible tenants are identified.

My property was built prior to 1978 and now the Small Rental Property Program is requiring me to have a Lead Risk Assessment (also known as Lead Based Paint Risk Assessment) conducted. What should I do?

We advise you to spend a few hours preparing your property to increase the likelihood that you will pass the Risk Assessment. The key steps involve making sure that no painted surfaces are chipping or flaking, that any construction debris is removed from the site, and that you have thoroughly wet-cleaned all surfaces and vacuumed with a High Efficiency or other high-quality vacuum cleaner. For more information, download Lead Risk Assessments (PDF/40k) flyer.

What must I do to address lead paint hazards if they are identified?

Your risk assessment inspection report will contain site specific recommendations. In general, lead hazard reduction will require:

  • Stabilizing all painted surfaces with a primer and top coat /-1``
  • Growing grass or ground cover on all bare soil
  • Cleaning and sealing all horizontal surfaces

For more information, download Lead Risk Assessments (PDF/40k) flyer.

What is the Advanced Funding Option (AFO)?

The Advanced Funding Option allows eligible applicants to receive a portion of their award prior to completing all Small Rental Property Program requirements. Applicants who elect to participate in this option are subject to deadlines.

Who is eligible to participate?

If you have received your Commitment Letter from the Small Rental Property Program (SRPP) and you have received a Certificate of Occupancy, you may receive an advance of your award amount provided you meet specific eligibility criteria. To find out if you are eligible for this option and how much you would be able to receive in advance, please call the Small Rental Property Program at 1.888.762.3252 and select prompt #3 to speak with your Case Advisor.





What is the Construction Management Initiative Option (CMIO)?

The purpose of the Construction Management Initiative Option is to provide existing Small Rental Property Program (SRPP) awardees Program-managed construction oversight and funding. Applicants eligible for the Initiative Option chose this option to facilitate upfront construction financing. Eligible applicants currently in the SRPP chose to continue in the Incentive Program or participate in the Initiative Option. All other Program obligations under the Incentive Program, including, but not limited to affordable housing requirements and URA federal regulations, apply in the Initiative Option. All Initiative Option Applicants are required to meet scoring criteria committed to under the Incentive Program with the exception of washer and dryer or window AC units and are not be eligible for extended affordable period in lieu of scoring criteria unless the scoring criteria cannot be met due to physical constraints of the construction. Applicants are not permitted to change AMI tiers.

What is the difference between the Incentive Program and the Construction Management Initiative Option?

There are several differences in the two programs. Put simply, in the Incentive Option, the applicant is responsible for the construction of their property and receives their full award upon completion of construction and meeting all program requirements. In the Construction Management Initiative Option, the program provides a construction contractor and manages the construction process. The award amount is disbursed through intermittent draws to the Construction Contractor throughout the construction process. For a full comparison of the two programs, please download the SRPP Incentive and Initiative Option Comparison chart.

How are the contractors and applicants going to decide on quality of materials?

The Small Rental Property Program (SRPP) specifies the type and quality of materials that must be used by all SRPP contractors. SRPP inspectors and construction managers will ensure that these materials lists are followed.

If a contractor discovers that additional funds will be needed to complete the property, after construction has begun, will the owner be able to request additional funds from the Small Rental Property Program?

The program may consider additional funding, on a case-by-case basis, if the total additional funding does not exceed 25% of the construction contract and the total resulting award does not exceed the Initiative Option maximum allowable award.

Will mold remediation be included in the estimate of repairs?

Yes, mold remediation may be included in the estimate of repairs.

Who carries the Builders Risk insurance?

The contractor is responsible for obtaining Builder’s Risk insurance during construction.

Is Builders Risk the only type of insurance required?

The Small Rental Property Program (SRPP) requires the contractor to carry Builder’s Risk insurance and all insurances required by the State of Louisiana for construction contractors. In addition, the property owner must carry property insurance, flood insurance and all insurances required by the closing documents.

Must owners have an active/on-going construction contract in order to have the owner’s existing contractor approved for this Initiative Option?

Only contractors who are currently under contract, with the owner, to perform the work needed at the units to be assisted through the Initiative Option will be able to apply for approval through the SRPP.

How do owners get their contractor approved by the Small Rental Property Program (SRPP)?

If an owner is under contract at the time of acknowledgement of participation in the Initiative Option, the SRPP will work with the contractor for possible qualification. The SRPP will request the required information including the name, contract information and a copy of the current contract.

All contractors must have been approved by the SRPP prior to 2012. The SRPP’s construction staff reviewed and analyzed the existing documents, including the construction contract and scope of work, to determine suitability for the Initiative Option. SRPP construction staff reviewed the contractor’s bid prices and compared Estimated Cost to Repair (ECR) by each line item to ensure cost consistency. The SRPP staff reviewed the contractor’s qualifications as listed below to determine suitability for the Small Rental Property Program:

    1. Experience – How many years


    2. Products – examples to meet SRPP standards


    3. Personnel – how qualified for this type work


    4. Permits, Registration, Certificates – LA. State Board of Contractors License for type of construction


    5. Proof of Payment & Performance Bonds – Bond for remaining amount of work to be performed


    6. Capacity to Perform – How many currents projects are in process?


    7. Financial Statements – Good standing with the LA. Dept. of Revenue


    8. Warranty Policy – What type of warranties do they provide?


    9. Insurance – to meet State requirements.


    10. Quality Control Program – What type of program do they have?


    11. Health & Safety Program – What type of program they have?


Do the contractors have workman’s compensation insurance?

SRPP contractors are required to carry and maintain all insurances required by the State of Louisiana.

Once the contractors are chosen, how soon will work begin?

Construction will begin after closing has occurred and all permits are acquired.

What kind of warranties are in place for faulty construction?

The structure is warranted for 5 years and the workmanship for 1 year.

Does the SRPP have enough contractors to complete the total number of properties in the Small Rental Property Program within a reasonable period of time?

Contractors were selected as part of a State of Louisiana Request for Proposal. Contractors were required to provide evidence of capacity as part of their RFP submission.

Will “access” be part of the construction estimates (ex, driveway, sidewalk)?

Yes, driveways and sidewalks will be considered as part of the construction estimate if they existed prior and/or are required by local safety and permitting.

If the property owner has a disagreement with the contractor, who will be the one to settle it?

The SRPP will actively mediate in such situations.





What are Duplication of Benefits?

Under the Stafford Act persons and businesses may not receive federal funds from two or more sources for the same disaster or emergency. As a result, the SRPP must ensure that deductions are made from an Initiative award equal to other Federal or insurance proceeds. This is called Duplication of Benefits. When these funds are used for certain Allowable Activities the deduction may be reduced.

How do the market rate units factor into the award and Duplication of Benefits?

Market rate units do not factor into the award. All Duplication of Benefits and Allowable Activities for the entire property are calculated on a pro-rated basis based on the square footage of the affordable units versus the entire structure.

How is the Hazard Mitigation Grant treated in the Duplication of Benefits?

SRPP applicants are ineligible for participation in the Hazard Mitigation Grant Program.

Should owners report funds received from FEMA?

Yes, all forms of assistance and insurance proceeds must be disclosed to the SRPP not just FEMA. The SRPP will also verify this information via a third party.

Do owners have to provide documents showing SBA funds were returned?

Documentation supporting the return of funding must be provided to the SRPP in order to prevent that funding from being considered a Duplication of Benefits.

Will FEMA proceeds reduce the award?

FEMA or SBA proceeds could reduce the Initiative Option award if the money spent from the FEMA or SBA grant is not spent on Allowable Activities.

What if an owner received SBA funds, but returned those funds – How is that factored into Duplication of Benefits?

Funds that are returned are not counted in the Duplication of Benefits.

If an owner has attorney fees in an insurance settlement, will that count as an Allowable Activity?

Legal fees in an insurance settlement will not count as an Allowable Activity and therefore will have no impact on the Initiative Option award.

What if an owner received an owner occupied award in the Small Rental Property Program? How will that be treated?

The Owner Occupant award will be considered a Duplication of Benefits. The applicant will be allowed to submit Allowable Activity documentation for any Owner Occupant award funds received which have been used to repair the subject property.

How will damage from hurricane Gustav affect our Duplication of Benefits and Allowable Activities?

Funding received from hurricanes Gustav and Ike is not considered Duplication of Benefits for the Initiative Option.

If an SBA loan covers multiple properties, how will it be prorated?

The funds will be prorated based on how the SBA allocated the funds.

Are small rental properties eligible to participate in the elevation grant program?

No, Small Rental Property Program properties are ineligible for participation in the elevation program (HMGP).

Historic properties – The state had grants to help with historic properties, will this be counted against owners?

Yes, according to the US Department of Housing and Urban Development all forms of assistance related to Hurricanes Katrina and Rita must be included in the calculation of Duplication of Benefits for SRPP.





What are Allowable Activities?

Allowable Activities are expenditures made by the applicant that are used to repair the small rental property. These are repairs that would have been considered eligible for SRPP funding had the owner not received other assistance. Allowable Activities reduce the Duplication of Benefits.

Is loss of rents considered an Allowable Activity?

No. Loss of rents is not considered an Allowable Activity.

Will an owner be reimbursed for repairs that are already done?

No, there is no reimbursement for work already completed. Work completed may be considered Allowable Activities and those funds will not be deducted from the Initiative Option award. However, applicants will not be directly reimbursed for money spent on repairs.

Do the applicants receive any funds directly?

No, funding will be paid directly to the contractor through a series of construction draws based upon percentage of completion as verified by the SRPP and property owner.

After the small rental property is completed, are the funds still forgivable? Is the Initiative Option award considered a loan or a grant?

Yes. See the excerpt from the General section below for details.

Do I have to repay the money I receive from the Small Rental Property Program?

Only if you do not fulfill the affordability period agreed upon at the time of your closing. If the affordability terms of the loan are not met, the loan may be subject to partial forgiveness. Forgiveness of the awards occurs in staged intervals from the date of the final disbursement. The rate of forgiveness depends on the applicant’s selection at the time of application.

Applicants who self selected and received points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to a “Modified Forgiveness Option.” This simplified forgiveness schedule is a straight line methodology of forgiveness. The Loan will be amortized yearly from the time the unit is occupied by an eligible tenant.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 10% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units (or 50% of the required time period) the loan will be forgiven at 50% and the balance due on the loan would be $60,000.

Applicants who did not self select and receive points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to an “Accelerated Forgiveness Option.” This simplified forgiveness option uses a “double the straight line method” used in the “Modified Forgiveness Option.” The Loan will be amortized yearly from the date of last disbursement.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 20% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units the loan will be forgiven at 100% and the balance due on the loan would be fully forgiven at that time.

Will “force-placed” insurance be counted in Allowable Activities?

Insurance costs are not considered Allowable Activities.

Do upkeep and routine maintenance count as Allowable Activities? (Ex: mowing grass, general maintenance.)

Routine maintenance and upkeep are not considered Allowable Activities.

What if the property was gutted – not demolished – will this be considered as an Allowable Activity?

Rehabilitation and reconstruction are both Allowable Activities and demolition costs are considered Allowable Activities. Only if it is considered a Duplication of Benefits.

What happens if an owner cannot locate all of the receipts for repairs to prove Allowable Activities?

Property owners who cannot locate all the receipts for repairs should list those items on the Allowable Activities worksheet in the “no receipts” column. At closing, these owners will be required to sign an affidavit attesting under penalties of perjury that the listed repairs are true and accurate.

What if an owner didn’t receive any funds: FEMA, SBA, etc will the owner be able to count any of the work already done to the property toward Allowable Activities?

No, Allowable Activities are a mechanism to off-set the Duplication of Benefits penalty. If there is no Duplication of Benefits there is no penalty to off-set.

What if an owner rented equipment to do some of the repairs at an earlier time; can this be used to offset the Duplication of Benefits penalties?

Equipment rental is considered an Allowable Activities depending on the need for the equipment and if there is Duplication of Benefits to off-set against the Allowable Activity.

Are taxes and insurance Allowable Activities?

No. Taxes and insurance are not Allowable Activities

Is “sweat equity” considered an Allowable Activities?

No. Sweat equity is work physically completed by the owner on the property. Only repairs completed under contract with a contractor can be considered Allowable Activities.

Is a special grant for historical property restoration a Duplication of Benefits?

Duplication of Benefits are funds received as a result of hurricanes Katrina or Rita. If the Historic Grant is received as a result of these storms it is considered a Duplication of Benefits.

Is there an interest rate charged on this Initiative Option?

There is no accruable interest rate charged in the Initiative Option.

Will termite treatments/contracts be used as an Allowable Activity?

Pest control is not considered an Allowable Activity.




What are the tenant requirements for the Initiative Option?

The basic tenant income requirements are the same for the Initiative Option. However, in the Initiative Option the property owner will have sixty (60) days from the date the final inspection was passed to provide the SRPP with income and lease documentation for eligible tenants. If tenant information is not received within sixty (60) days, a non-compliance letter will be sent informing the owner that they have forty-five (45) days to remedy the situation. If property owners have not provided eligible tenants with lease documents by the end of forty-five (45) days, the SRPP will begin the process to recover program funds from the property owner.

Can I change my AMI once I am in the Initiative Option?

No, once you have been accepted in the Initiative Option, you are not allowed to make AMI changes.





If there is a funding gap, when do owners need to provide the funds?

Gap funding provided by the property owner must be provided at closing and will be held in escrow until needed. The property owner will be required to provide certified funds at the time of closing.

What happens if the cost to repair is over the maximum, will owners have to come up with the difference?

If gap funding is necessary it is the property owner’s responsibility to obtain financing.





What obligations would owner’s heirs have in the Initiative Option if something were to happen to the owner?

Heirs are obligated to the same covenants, restrictions and affordability period placed on the property or repayment of the loan.

Are the forgiveness terms the same in the Initiative Option as they are in the Incentive Program?

Yes. See the excerpt from the General section below for details.

Do I have to repay the money I receive from the Small Rental Property Program?

Only if you do not fulfill the affordability period agreed upon at the time of your closing. If the affordability terms of the loan are not met, the loan may be subject to partial forgiveness. Forgiveness of the awards occurs in staged intervals from the date of the final dispursement. The rate of forgiveness depends on the applicant’s selection at the time of application.

Applicants who self selected and received points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to a “Modified Forgiveness Option.” This simplified forgiveness schedule is a straight line methodology of forgiveness. The Loan will be amortized yearly from the time the unit is occupied by an eligible tenant.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 10% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units (or 50% of the required time period) the loan will be forgiven at 50% and the balance due on the loan would be $60,000.

Applicants who did not self select and receive points in the scoring and ranking process with regards to guaranteed affordable rent options in the program and priority groups are subject to an “Accelerated Forgiveness Option.” This simplified forgiveness option uses a “double the straight line method” used in the “Modified Forgiveness Option.” The Loan will be amortized yearly from the date of last disbursement.

Example: If the applicant has a $120,000 loan with a ten year term of affordability. The loan will be forgiven at 20% each year for every year, since the date of closing, in which the affordability period has been met. Therefore, if the applicant has provided 5 years of affordability for the designated units the loan will be forgiven at 100% and the balance due on the loan would be fully forgiven at that time.

Can owners sell the property after the construction is complete?

The property cannot be sold during the construction process. If the sale occurs within 1 year of the final disbursement, the new owner must agree to assume responsibility for the regulatory agreement and continue to participate in the Small Rental Property Program. If the new owner does not agree to participate in the Small Rental Property Program, the property is deemed in violation of the program regulatory agreements and the owner applicant must repay the incentive loan and 8% penalty.

Will owners receive the difference between the Initiative Option and Rental Incentive awards?

No. The property can only qualify under one.

Is the affordability period the same for both the Initiative Option and Incentive Program?

Yes, the affordability period is the same for both the Incentive Program and the Initiative Option.

Can an existing construction loan or mortgage remain on the property for the Initiative Option if opened after the storm?

Yes, a mortgage or existing construction loan may remain on the property.

Are these loans taxable?

The SRPP is not qualified to provide tax guidance or assistance. Please ask a tax professional.

Does this Initiative Option in any way put the Incentive Program funds in jeopardy?

No. Participation in the Initiative Option is the property owner’s choice. However, the property can only receive funding for one or the other.

Can a property owner have a larger structure through the Initiative Option?

No. The footprint of the original structure and approximate square footage must be maintained. Each case must be evaluated individually based on appropriate codes and restrictions.

Will owners be compensated for demolition and construction costs?

Reimbursement for demolition and construction already done will come in the form of Allowable Activities that off-set the Duplication of Benefits. There is no reimbursement or compensation for costs incurred by owners.

Is there a lien against the owner’s property after the construction is complete?

Yes, a lien is placed on the property for the length of the affordability period.





What is NSP3?


For details on this option within the SRPP, click here: NSP3 Factsheet

DUPLICATION OF BENEFITS

1. When will Duplication of Benefits be calculated for NSP3?

The Benefit Determination and Verification team will conduct a Duplication of Benefit/Allowable Activity analysis before the file is sent to the Construction team to start the bid process.


2. Will DOB proceeds reduce the award?

FEMA or SBA proceeds received on the property could reduce the NSP3 award if the money spent from the FEMA or SBA grant is not spent on ALLOWABLE ACTIVITIES. If the award calculation results in a funding gap, the property will not be eligible for the NSP3 Option. If expenses are indicated on the DOB/AA worksheet, the receipts must be provided in order to confirm NSP3 eligibility.


FUNDING

3. Is the NSP3 award a separate award from the SRPP award?

Yes. The applicant will attend two closings and have two loans on their property: one for NSP3 and one for SRPP Incentive award.


4. Is the previous SRPP loan subordinate to the NSP3 loan?

SRPP will follow direction from OCD-DRU if there is a request to have the SRPP loan subordinate to NSP3.


5. Do applicants receive any NSP3 funds directly?

The applicant will not receive any NSP3 funds. Funding will be paid directly to the contractor through a series of construction draws, based upon percentage of completion, as verified by SRPP and the property owner. .


6. Is the NSP3 forgiveness period different from other SRPP options’ forgiveness periods? If they are different , which period should the applicant follow?

All NSP3 Option loans shall adopt the “Modified Forgiveness” schedule and follow current SRPP policies. The amount of forgiveness is based on equal installments to be determined based on the loan term (5, 10, 15 or 20 years) over the years of affordability, as required by the SRPP. The applicant will be required to adhere to both loan terms; however, the terms will run concurrently. For example, if the NSP3 term is 20 years and the SRPP term is 15 years, the property must adhere to program requirements for 20 years. The “Accelerated Forgiveness” schedule is not allowed.


7. What if the Operating Income Analysis reflects a negative cash flow on the property?

The applicant will still be eligible to participate in the NSP3 Option. However, SRPP strongly encourages the applicant to deposit funds (incentive funds) into a reserve account to help cover property expenses over the term of the loan.


8. What happens if the cost to repair exceeds the maximum, will owners have to come up with the difference?

Since the NSP3 Option funds are considered “gap funding”, the cost of each rehabilitation project may not exceed the maximum potential award amount. Additional gap funds (provided by the Applicant) are not allowed or required. If the cost to repair or rebuild the property is greater than the maximum award per unit ($100,000 for rehabilitation, $150,000 for re-construction), then the applicant is ineligible for the NSP3 Option.


9. Can an applicant receive an AFO disbursement after construction is completed but before they have found tenants?

No. Since the property is completed at this point, the Applicant should complete any remaining program requirements (tenants, LA Housing, etc.) in order to receive the final AFO disbursement. There is no longer a reason to fund an initial or middle AFO disbursement, which was designed to cover property expenses needed to obtain a certificate of occupancy and pass final inspection. In good faith, remaining funds should be disbursed upon program completion.


CONSTRUCTION

10. Will Change Orders be allowed?

No. Change orders are not allowed under the NSP3 Option; however, they may be considered on a case-by-case basis if the revised total award is within the maximum allowed by the program.


11. Can an applicant use their existing contractor for NSP3?

No, generally speaking. If the NSP3 applicant has an existing contract with a non-program approved contractor, the applicant will not be automatically excluded, but will have the lowest priority in the funding pool if he/she is allowed to move forward. The existing contract must be cancelled and the required lien period must occur prior to any NSP3 closing.


12. What if the property was originally three units?

Zoning requirements for this area of the 9th Ward of New Orleans have been confirmed at a maximum of two (2) units. If the property was originally three (3) units, the third unit can’t be rebuilt without a waiver from the Zoning Board and/or local jurisdiction. Applicants will be given the opportunity to adjust the bedroom sizes in the two units to accommodate for the extra space, subject to program requirements.


13. If an applicant chose to rebuild/repair a single family home on their SRPP application, can they decide to build a duplex?

If the applicant indicated on their original application that AFTER REPAIRS the unit would be a single family property, then they must rebuild a single family property. The applicant cannot add another unit to the application once the application is submitted.


14. What is the process if a property is reduced from four units to two units based on zoning requirements? For example, if the property closed on AFO based on a four unit property, but zoning requirements now dictate rebuilding two units.

  • If the property has not yet closed, then SRPP will revise the Incentive/AFO award based on a two-unit property and process the NSP3 Option based on a two-unit property.
  • If the property has received an AFO disbursement based on four (4) units, we will follow current SRPP process and recalculate a revised award based on two (2) units. This may result in an award reduction or an over-funded situation.
  • The NSP3 award will be based on the property size allowed by zoning.

15. What appliances will be included in the bid?

SRPP requires that “all appliances” be included in the cost to complete construction on NSP3 properties. Appliances and scoring items may include stoves/ranges/ovens, refrigerators, clothes washers, clothes dryers, dishwashers, ceiling fans, hot water heaters, heating and air conditioning units and UVGI requirements (lights). Any scoring items ─ and any item necessary to conform to Green standards or Universal, Visitability or Permanent Supportive Housing standards, etc.─ if applicable, must be included in the bid.


16. Are all units to include ES appliances, tankless hot water heater and 14 Seer A/Cs, or just conventional ones?

  1. Are we requiring 14 Seer A/Cs or conventional A/C on all properties?
    It depends upon the applicant’s initial application. If the applicant selected 14 Seer A/C, then it’s required. If 14 Seer A/C was not selected, then a conventional A/C will be installed. (Note: This is considered a scoring item.)
  2. Tankless hot water heaters or conventional?
    It depends upon the applicant’s initial application. If the applicant selected a tankless hot water heater, then it’s required. If he/she did not select a tankless hot water heater, then a conventional hot water heater will be installed. (Note: This is considered a scoring item.)
  3. Energy Star appliances? All installed appliances will be Energy Star wherever possible.
  4. Garbage disposals? Garbage disposals are not considered appliances and are not included unless selected on the application.

17. Can an applicant negotiate an extended term to change original scoring items?

No. An applicant cannot opt out or negotiate an extended term of affordability to change original scoring items. All scoring items on the original application will be included in the construction bid.


18. What building standards must be followed for NSP3?

All properties in the NSP3 Option must adhere to Davis Bacon, HUD Section 3 Requirements and National Emissions Standard for Hazardous Air Pollutants (NESHAP). All properties must be built to green standards (SRPP recommends using the Louisiana Rebuilds Standard) and must comply with all applicable State, parish, and municipal zoning, building, housing and other codes, ordinances and regulations, and Advisory Base Flood Elevations.


19. Will there be an Incentive Final Inspection required (for the Incentive loan) on NSP3 properties?

No. The inspection process will mirror the CMIO process. Once the NSP3 property is completed and all disbursements made to the contractor, the property will have already had all necessary inspections.


20. How are NSP3 funds disbursed?

SRPP will disburse funds to the general contractor in accordance with established draw schedules to be paid during each phase of construction. The draw schedule is based on the CMIO draw schedule.


PROGRAM RENTS / TENANT REQUIREMENTS

21. Will the 180-day vacancy rule follow SRPP CMIO rules?

Yes. All properties must be currently vacant and have remained vacant since November 1, 2006.


22. If an owner enters the property into a Section 8 program, how will this work with the program?

Existing SRPP process and policies will apply.


23. Are owners allowed to change rent tiers? What should owners do if they want to change rent tiers?

Changes in the Area Median Income (AMI) tiers may be considered, subject to existing program requirements. Market rate or Owner Occupant units are not allowed. All units must be affordable.


24. What if an owner received an Owner Occupant Award in the Small Rental Program? How will that be treated?

Owner Occupied properties are not eligible for the NSP3 Option. All units must be affordable rental units in order to participate. If the Owner Occupied unit has not closed on the OO award, the applicant may be allowed to change the unit to affordable subject to existing process and policies.


25. Will the state have to be notified each time a new tenant signs a lease?

Yes, SRPP requires all new tenants (for all loan types) be pre-approved for income eligibility by the SRPP prior to lease execution and move in.


26. What are the time constraints for leasing up rental units?

Property owners have 105 days from the date the program approves the final inspection to submit required tenant documentation on eligible tenants. Property owners who experience difficulty in identifying prospective income-eligible tenants may contact SRPP’s Applicant Consultation Services who will assist.


27. What if a tenant is income eligible at move in, but receives a raise? Do landlords have to report this to the state?

Tenants remaining in place beyond the term of their initial (program approved) lease will not be required to submit income certifications in subsequent years. While property owners will never be forced to replace tenants whose income increases after their initial certification, all new tenants will be required to complete an income certification.


LOAN TERMS AND CONDITIONS

28. Are the loan terms in the NSP3 Option the same as they are in other SRPP options?

No. Loan terms in the NSP3 option are determined first by whether it’s a new construction or a rehabilitation project, then, if rehabilitation, by loan amount. If the property is deemed to be a “rehabilitation (or renovation)” project and not a “reconstruction (or new construction)” project, the term of the NSP3 loan shall be based on the sum total award of all units and not be considered individually. Term is based on a per project basis, not a per unit basis. All properties deemed “Rehabilitation” shall have a NSP3 loan term between five (5) and fifteen (15) years based on the following loan amount:

  • 15 Years, > $40,000
  • 10 Years, = $15,000 - $40,000
  • 5 Years, < $15,000

All properties deemed “New Construction” shall have a NSP3 loan term of twenty (20) years.

29. Do NSP3 Option funds take the place of the Incentive funds?

No. The applicant may receive their Incentive Award after construction is completed and all NSP3 option disbursements have been made. The file can be processed for the remaining AFO or Incentive funds. The applicant will close on two loans.





The Office of Community Development Disaster Recovery Unit does not discriminate on the basis of race, color, national origin, sex, age, religion or disability, and provides, upon request, reasonable accommodation, including auxiliary aids and services, to afford an individual with a disability an equal opportunity to participate in all services, programs and activities. Towards this end, we continually strive to make our web platform friendly to screen readers and other accessibility-related software, and provide accessible documents where possible. Any person requiring assistance, or who would like a copy of a specific document, should contact the Special Needs Coordinator at (225) 276-2738. TTY callers please use the 711 relay or dial 1.800.846.5277.
Program funded by the U.S. Department of Housing & Urban Development.
Housing centers are accessible and reasonable accommodations will be provided as requested.
All content © 2012 The Road Home Program