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Application Kit
The application kit is available in both Word
and PDF. For additional information, please contact
Mr. Thann Young at (202) 708-2290.
PDF
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Submission
Requirements
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Regulations
governing the Recovery Fund
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The purpose of this page is to provide information about the Section 4 Guarantee Recovery Fund, a source of financing for rebuilding properties destroyed by acts of arson or terrorism.
Purpose
Section
4 is a loan guarantee provision authorized under the Church
Arson Prevention Act of 1996 (the Act). It authorizes a Loan
Guarantee Recovery Fund to provide certain nonprofit organizations
with a source of financing to rebuild property damaged or destroyed
by acts of arson or terrorism. Regulations governing the Section
4 Loan Guarantee Recovery Fund may be found at 24
CFR part 573.
Eligible
Applicants
- A
Nonprofit Organization is described in Section 501(c)(3)
of the Internal Revenue Code of 1986. Though the organization
may not have sought or obtained a ruling from the IRS under the
section, its purpose must be consistent with that of organizations
described therein.
- A
Financial Institution serves as a lender, and is a bank, trust
company, savings and loan association, credit union, mortgage
company, or other issuer regulated by the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, the Credit Union
Administration, or the U.S. Comptroller of the Currency. A Financial
Institution may also be a Pension Fund.
Eligible
Activities
- Acquisition
of improved or unimproved real property in fee or under long term
lease.
-
Acquisition and installation of personal property.
- Rehabilitation
of real property owned, acquired or leased by the Borrower.
-
Construction, reconstruction or replacement of real property improvement.
- Clearance,
demolition, and removal, including movement of structures to other
sites, of buildings, fixtures and improvements on real property.
- Site
preparation, including construction, reconstruction, or installation
of site improvements, utilities, or facilities.
- Architectural,
engineering and similar services necessary to develop plans.
- Acquisition,
installation and restoration of security systems.
- Loans
for refinancing existing indebtedness.
- Other
necessary project costs such as insurance, bonding, legal fees,
appraisals, surveys, relocation, closing costs.
Replacement
Policy
Guaranteed
loan funds are available to aid in rebuilding property damaged or
destroyed by arson or terrorism. Section 24
CFR 573.7(4) of the regulations governing the use of the guaranteed
loan funds provides that "HUD reserves the right to limit loan
guarantees to loans financing the replacement of damaged property
with comparable new property."
HUD
defines the term "comparable new property" to mean a structure or
structure(s) with similar or appropriately enhanced quantitative
and qualitative features as the arson-damaged property. Generally,
the comparable new property would be approximately the same or similar
in size, materials, systems and equipment as the arson-damaged property.
A comparable new property also means a structure that meets local
building codes (or meet local or national historic property standards,
if applicable) and is handicapped accessible.
Where
a need can be demonstrated for features not required by the local
building codes, such as fire retardant materials, security systems
or the like, HUD may allow up to an additional 20% of the replacement
cost of the comparable new property to be used to defray such additional
expenditures. Additionally, where reasonable growth assumptions
are evident, HUD may aid in building a new property that is larger
is size by twenty percent or more (square footage) than the arson-damaged
property. Such decisions will be made on a case-by-case basis and
based on the availability of funding.
Estimating
the cost of a comparable new property requires as much knowledge
as possible about the property damaged or destroyed by arson. That
knowledge may be gained from one or more of the following sources:
(1) original building plans (of the property before the act of arson
or terrorism), (2) foundation layout, footprint, other drawings
or sketches, surveys and/or photos of the original structure, (3)
photos of remaining structure(s), and/or (4) a certified statement
by the nonprofit organization of the structure's dimensions (total
square footage) exterior and interior materials, equipment and systems
(heat, air and plumbing, for example) in place before the arson
incident.
Loan
Term and Repayment Schedule
Loans
may be guaranteed for up to 20 years with flexible repayment terms
- Arson means a fire or explosion causing damage to (or
destruction of) real or personal property that a Qualified Certification
Official determines, or reasonably believes, to be deliberately
set.
- Terrorism means an act of violence causing damage to
(or destruction of) real or personal property that the Secretary
or his designee, in consultation with the Federal Bureau of Investigation,
determines to be, or reasonably believes to be, a terrorist act,
as defined by applicable Federal law or guidelines.
- Qualified Certification Official (QCO). (A) For the purpose
of certifying an act of arson. A State or local official authorized
to investigate possible acts of arson. For the purposes of this
definition, such an official is authorized to execute an Official
Incident Report or its equivalent and may be an official or employee
of such agencies as the local fire department, the local police
department, or the State Fire Marshall Office or its equivalent.
The term "Qualified Certification Official" also includes HUD,
which will consult with the Bureau of Alcohol, Tobacco, and Firearms
of the Department of the Treasury in making its determinations.
(B) For the purpose of certifying an act of terrorism. The Secretary
or his designee, in consultation with the Federal Bureau of Investigation,
shall determine whether an act of violence is a terrorist act
or is reasonably believed to be a terrorist act.
Underwriting
Criteria
Nonprofits
seeking a loan will note that Financial Institutions may use their
usual underwriting standards which may include a review of:
- Financial
statements for the past 3 to 5 years.
- The
size of the congregation for the past 3 to 5 years.
- Monthly
collections.
- Real
and personal property owned and pledged as collateral.
- A
formal cost proposal for construction or rehabilitation of all
damaged or destroyed real property.
- A
formal cost proposal of use of loan other than for the construction
or rehabilitation of all damaged or destroyed real property.
- Replacement
information.
- A
history of debt service performance or cash flow clearly available
from collections and other operations to repay the loan requested.
Additional
Information
For
more information, contact Mr. Thann Young at (202) 708-2290.
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