Housing Trust Silicon ValleyNon-Profit

Identifying Number: 2020-001 Special Tests and Provisions Federal program information Capital Magnet Fund CFDA 21.011 Criteria: Per Section 4.1 of the Capital Magnet Fund (CMF) award agreement, evidence of commitment shall be demonstrated by an executed, written, legally binding commitment agreement unless the requirement of 12 C.F.R. 1807.501 (b) for such agreement is waived by the CDFI Fund pursuant to 12 C.F.R. 1807.105 and alternative documentation is approved. The commitment agreement or approved alternative documentation must demonstrate that the CMF award will be provided to a qualified family, developer, project sponsor, or in the case of Loan Loss Reserves to a lender, for Affordable Housing Activities or Economic Development Activities for an identifiable project, and under which one of the following occurs: a. Construction can reasonably be expected to start within 12 months of the commitment agreement date; or b. Property title will be transferred within six months of the commitment agreement date; or c. Construction schedule ensures Project Completion within five years of the effective date of the assistance agreement. Condition: Housing Trust Silicon Valley?s evidence of commitment was not demonstrated by a legally binding commitment agreement that contained one of the three requirements noted above as per Section 4.1 of the CMF award agreement. Housing Trust Silicon Valley holds its developers receiving CMF assistance accountable under 4.1(c) above and this condition to the award has been verbally communicated and discussed with these developers. Housing Trust Silicon Valley notified its developers of the commitment to use CMF funds via email. Context: Although management is internally tracking project completion dates on all housing projects that have received CMF assistance, Housing Trust Silicon Valley?s commitment documentation is not designed to specifically address these requirements. Effect or potential effect: Commitment of funds is not documented in compliance with Section 4.1 of the CMF award agreement. Cause: The finding was a result of management?s belief that it would be difficult for a borrower to commit to the requirements related to Section 4.1 of the CMF award agreement at the lending date given the lending is to support pre-development activities and its reliance on a response received from the CDFI Fund via AMIS service request with the Compliance Portfolio Manager that the communication form used would be sufficient for Housing Trust Silicon Valley. Questioned costs: $0 Recommendation: Housing Trust Silicon Valley should formalize terms in a commitment agreement to document compliance with Section 4.1 of the CMF award agreement. Views of responsible officials and corrective actions: Management has ensured staff and management have adequate knowledge over the topics discussed within this finding.