SFCP Funding Provided by the HFA
SFCP funding provided by the HFA must comply with the specific requirements set forth in Chapter 30 of the Broward County Administrative Code. Developers are encouraged to review the requirements of Chapter 30 of the Broward County Administrative Code which can be found at www.broward.org.
The HFA has a selected team of financing professionals, including financial advisor, credit underwriter, SFCP trustee, and bond counsel(s), that must be used in all of its transactions as required by Chapter 30 of the Broward County Administrative Code. Chapter 30 of the Broward County Administrative Code contains the operational policy of the HFA and can be found at www.broward.org.
The developer is responsible for the payment of all costs and fees incurred in conjunction with a development transaction, whether or not the transaction is finalized and closed.
SFCP Funding Conditions
The HFA further reserves the right to refuse to proceed with an SFCP transaction if the original Application to the HFA or ownership structure has changed from the original Application, or the financing is otherwise determined, in the sole discretion of the HFA, to not be in the best interest of the HFA.
Preparation of SFCP Documents
Before the HFA will direct the preparation of SFCP documents, the following must occur:
- outside funding sources as specified within the Application must have executed commitments which are closing ready and subject only to routine closing conditions;
- the HFA must consider the development ready to proceed and highly likely to close;
- if applicable, the developer must have executed a retainer agreement and paid a minimum retainer to SFCP Counsel;
- all fees of the HFA, including the Good Faith Deposit.
Within ten (10) calendar days of receipt of a notice evidencing funding for the development, the developer is required to deposit funds with the HFA in an amount equal to the “Good Faith Deposit” as described within the Application. The Good Faith Deposit will be held by or on behalf of the HFA until:
- the SFCP closing, at which time it will be applied to the costs of issuance or other HFA approved costs; or
- the HFA has determined the development is not likely to be acquired, constructed, rehabilitated or financed with SFCP financing from the HFA; or
- a period equal to one year from the date of payment of the Good Faith Deposit has expired.
In the event of 2, or 3 above, the HFA has the right to retain the Good Faith Deposit to cover its administrative expenses (including operating expenses), expenses paid or incurred by the HFA or its staff, or on behalf of the HFA in connection with the SFCP transaction, or the fees and expenses due to any professionals associated with the transaction (such as SFCP Counsel, issuer’s counsel, the financial advisor, credit underwriter, etc.). The HFA shall, in its sole and unfettered discretion, determine the nature and amount of expenses which shall be deducted from the Good Faith Deposit before the remaining balance if any, is returned.
Developers will be required by the HFA and SFCP Counsel to execute numerous documents in connection with the SFCP financing. Additionally, the SFCP documents will contain various requirements and limitations that will be imposed on the developer. For instance, developers will be: (i) required to share financial information regarding the development as requested by the HFA, (ii) submit construction draws in HFA specified formats, (iii) secure Builder’s Risk Insurance, (iv) secure a Payment & Performance bond, (iv) execute a fixed price contract, etc.
The HFA requires that the developer fully indemnify the HFA, its members, officers, employees and agents. For example, the developer will be required to provide indemnification against any and all claims and liability relating to or arising out of the SFCP financing, the issuance thereof, or the development, and may be required to provide the HFA with an environmental indemnity. Similarly, the HFA will require the developer to indemnify the HFA against claims relating to any alleged untrue statements of material fact or material omissions contained anywhere in any offering materials, not just for those misstatements contained in the sections pertaining to the development or the developer.
The HFA shall require its counsel to draft specific indemnification provisions into the SFCP documents of all developments financed by the HFA.