hud nsp webinar: changing developer agreements · this webinar will inform nsp grantees about...

HUD NSP - Changing Developer Agreements, 11/15/11 Kent Buhl: "Changing Developer Agreements," a webinar for all NSP grantees and their partners. This webinar will inform NSP grantees about crafting strong developer agreements and negotiating amendments of existing developer agreements that have proved to be unworkable. Participants will learn how to structure or negotiate workable provisions for timely performance, budget controls, developer compensation, subsidy amounts, flow of funds, long-term affordability requirements, grantee approval of plans and budgets for individual homes, monitoring, enforcement, and other key points of developer agreements. The webinar will also addresses how RFPs, RFQs, and policies and procedures documents should be compatible with, and reinforce, developer agreements. It will highlight available toolkits and technical assistance for follow-up. This webinar is interactive and participants will have an opportunity for questions and answers during and after the completion of the presentation. So with us today is Peter Werwath. He is with Enterprise Community Partners, located in Columbia, Maryland. And from HUD's NSP office we have -- or will have -- John Laswick with us and we do have Hunter Kurtz. And they're here to help us field your questions at the appropriate times. So greetings to all of you. And I will now turn the proceedings over to Peter. Hi, Peter. Peter Werwath: Thank you, and welcome, everyone. Kent has already described the sessions so I will just briefly go over the agenda in the order of topics that we're going to cover. First thing is really the context that developer agreements need as Kent mentioned to be compatible with RFPs, RFQs and policies and procedures. We'll look at the key provisions of developer agreements. And things that you've already mentioned will come up in this section where we're down into the real details of developer agreements: how to negotiate them, what some of the key points to include would be, how to solve problems, deal structures, scope of services, compensation -- one group of topics. And then control overflow of funds Net proceeds -- we know that net proceeds of home sales is an issue that often comes up and wasn't always addressed in some of the earlier NSP developer agreements. We'll talk about deal underwriting criteria and then contract monitoring enforcement. And again, these four general points I've just made are -- we're going to talk about in terms of what to put in developer agreements. We're not going to be able to go into much depth in these and solve underwriting problems and budgeting problems. So we will cover issues that you bring up as well as we can, but the main subject is developer agreements. And then there will be a section on negotiating changes -- what gives you the right to do that? Can it be done voluntarily? Can you put a sort of pressure on developers in certain circumstances to change agreements? That's what that part is about.

HUD NSP - Changing Developer Agreements, 11/15/11

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And then, finally, where to go for templates and assistance. And then we'll have an open Q&A at the end but, as Kent mentioned, because there's a lot of material here we're going to take a couple of breaks. And so next slide. So we've got some comments. I don't want to address these immediately. I just wanted to hear what some of your larger concerns were. And let me just address these comments that are over in the Q&A box very quickly. We will get to -- make sure we get to the question about nonprofits providing the second mortgage assistance and holding the note. We will get to that. Some recipient agreements, developer fee was paid; how do we remedy the situation? We'll get to that. The simple answer is to amend the said recipient agreement into a developer agreement. That's the best we can say. And we'll get to how you might negotiate that. Bidding out -- I'll make a note of that. We'll get to that under the requirements you're putting on developers. Again, I don't want to answer all these questions now. We'll keep things in order but we'll make sure we get to that. Not incurring program income. We'll certainly talk about how to structure -- the difference between program income to a subrecipient and the fact that net proceeds and other income to developers not immediately program income. So we'll get back to that. And then, account for unexpected costs. Well, a simple answer is contingencies. And there was a comment two minutes ago -- I can't hear you. So Kent, can you come on and address that? Kent Buhl: Yes. If you can't hear -- if that's still true then you can't hear what I'm going to tell you which would be to click the info tab in the upper left of your screen and call back in using that information there. Peter Werwath: Okay. Thank you, Kent. So again, this wasn't a time to answer questions. It was a reality check to hear what you want to learn about. And we will make sure we cover all those in the Q&A period. We want to proceed in logical order. So the learning objectives of this session are that participants will gain knowledge that helps them structure agreements and related policies and procedures, RFPs, RFQs -- all of which work together to encourage timely performance and maximize production and you get the community impacts that we're all looking for from the NSP program. Allows sufficient grantee oversight and controls. There was the comment made about the developers not bidding out the jobs. How do we make sure that happens? I guess another question is do we want to require bidding? Certainly the controls you want should be in the agreement, if they're reasonable. And then, controlling costs, they're doing several parts of the agreement. Budgets, limits on expenditures and so forth can control costs and conserve your subsidy funds so they go further. And then, certainly, handling of the net proceeds of sale. Proper handling of that will give you funds that can be recycled. And then finally, we're going to show you where to go to get document templates that address these very issues. And also to get technical assistance to help


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adapt your agreements, that you have, in better form or take one of these templates and create a new agreement. The context again, as we mentioned in the beginning, these developer agreements don't exist all by themselves and they can't -- really, shouldn't -- cover every detail. A developer agreement normally is not a policies and procedures manual. And if you don't have one, you're going to have to make some allowances. We strongly suggest that you adapt one from your HOME program or use one of the templates on the NSP toolkit to create a policies and procedures manual because things go much better if there is a manual that follows the course of the progress of the project form acquisition to construction through rental or sale of the units or step-by-step fashion and has all the procedures and references to forms and so forth so both the developer and the agency staff will know what to do at that point. And so if you were to do this and had a good program manual, it does not have to be recited -- cut and pasted into a developer agreement, it could be incorporated by reference. It's a road map and rule book for developers and staff. And I think we've all become aware that these policies and procedures are lacking. There's a lack of clarity. There could be a loss of control by grantee and some results that you don't want happening. So there are two sample program manuals from the NSP toolkit. They're both single family. One's for ownership programs -- home sale programs -- the other's for rental development. And it's, as I mentioned, essentially a policies and procedures document. Following the steps of the development process and sequence, we find the sequential layout of a program manual really makes them more readable and understandable; you know, step one, step two, etc. Rather than having sections on compliance with this issue, compliance with that -- more of a topical organization can become a little more confusing. But in any case, it needs to be clear and understandable by staff and developers. There are complimentary, we mean coordinated, related, RFQs and developer agreement forms in these toolkits, particularly in the single family toolkit. In the multifamily toolkit there is not a -- at least the last time I looked, there is not a procedures manual per se. But in multifamily there are definitely very excellent RFP/RFQ forms for different approaches for selecting developers. And instead of a developer agreement under multifamily you will see typically examples of loan agreements. The assumption with a multifamily project is that one of the easiest, most effective ways to enter into agreement with a developer is simply loan them the funds and put in the usual liens and regulatory agreements and so forth that go with the loan, even if it's a soft subsidy loan that doesn't require monthly payments. But certainly none of these documents should contradict one another. And they should minimize redundancy. So if you have an RFQ for developers, then a program manual, and a developer agreement, it's very important they don't contradict one another because they can undermine your ability to enforce the agreement.


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So there's some -- let's talk for a moment about deal structure. And by deal structure we mean in this sort of broad brush; what's happening between the grantee and developer. One of the key issues we find is this agreement for a single identified property? That's fine if it's a large project and it's probably most appropriate. But we find a lot of agencies are using a single property agreement for whole pipelines of single family homes. And it does, in some cases, slow things down depending on the approval process. So we've found some developer -- grantees have allowed, for lack of a better word, a blanket agreement that covers multiple homes can speed up acquisition and processing. It gives -- basically gives the developer an allocation of funds but, of course, not a transfer of funds. And they can draw against that allocation as they're acquiring properties. They don't have to go out, identify, get under site control five, 10, or 20 homes and then come in and apply and get approved, in the mean time possibly losing control of some of those homes. It's more of a pipeline approach. Developers can be more nimble but you do need to guard, with this system, that you have very tight underwriting oversight checkpoints where you do not release funds, you do not approve purchases, you do not approve construction scopes of work unless they're submitted to you and approved by you. We'll get to one of the questions that came up earlier. Of course, I think almost everyone's aware by now there are two major kinds of agreements: developer agreements and subrecipient agreements. The developer agreement allows for a percentage for or a fixed dollar amount developer fee. It allows developers to designate contractors. It addresses another question that came up. No. They don't have to bid. You can require them to bid and we'll get to that in the discussion. There's some good reasons to go both ways here. And there's a lot more flexibility with the usual federal, administrative and financial rules. Subrecipient agreement is required for all public entities including public housing authorities and under the NSP program, any co-grantees. It's cost reimbursement only. There are no fees, percentage or fixed fees allowed. And the procurement and other rules are more strict. So to address the question that came up earlier -- again, the answer there would be if the subrecipient is willing I would say your best approach would be to sit down and renegotiate the agreement and turn it into a developer agreement. A number of grantees have done that. Now it sounds like, in your question -- maybe you can phrase that when we have the open question again and we can get into the details. But if it's about activities that have gone on in the past there probably should be a preamble in the agreement saying this replaces the previous agreement. You might even recite the fact that there were some incorrect terms and that's now being corrected retroactively. Definitely consult with your attorney about the wording of this developer agreement. It should reference back to the subrecipient agreement and activities that went on under that agreement. And I don't know that we can say a lot more about that by long distance without knowing about the deal or agreement. But you can bring it up on the open mic section if you like.


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Okay. Let's see; I need to advance this. The scope of work. The developer can play multiple roles. And I'm not sure everyone's well aware of this, but the developer can also be a general contractor, can also be a home sales agent in a case where there's no broker being hired. And their -- what you might call add-on fees, additional fees are allowed but they must be reasonable. So, for instance, a developer could get a 10 or 15 percent developer fee; a normal overhead in profit amount for being a general contractor in addition to that, because it's a different function; and also a reasonable sales fee of four, five, or six percent, whatever the prevailing rate might be for marketing and selling the home. Timing of fees. A lot of grantees are doing these in stages, some don't. Some pay them all at the end which is better for deep pocket developers. A lot of nonprofits, especially smaller ones can't float their internal costs for the three, four, five, six months, maybe even longer that it takes to rehab and sell a home. So you could consider doing this in stages. It's perfectly fine. We see agreements that have a third on acquisition, a third on completion of rehab or construction, and a third on sale. That's a fairly common structure but no the only one. Scope of work should also be very clear about who does what. Who's completing the environmental review work? Some grantees require the developer to do certain leg work, fill out forms, provide information or other grantees handle this entirely themselves without any developer involvements. So you've got to be clear about that. Who takes the application for NSP assistance and does the income certification? We know that not every beneficiary buying a home signed an application to get the home and to get the second mortgage assistance. But it's an awfully good practice to have that application form where you're taking the information from the client. It's certainly done informally but it's much better to call it an application, consider it an application, and to say yes or no, this is approved, you're moving ahead or not. It's just a better way of doing business. So the question is who handles that? It's often the developer. The developer often has to collect the information for the income certification sometimes they're asked to complete it, keep it on file -- and sometimes the grantee looks at the information and completes the certification. Other questions like who provides home buyer counseling? Who does the grantee consider capable of doing that? Experienced and able to help folks actually take care of their credit problems -- be able to buy a home. If it's a rental property, who will manage it? A lot of times on a bigger project these roles are filled and understood and referenced in the developer's proposal. But if it's a blanket agreement for a number of single family homes, perhaps some of these roles, like the counseling role, are not identified. The broker -- the real estate broker role -- these are very important concerns of the grantee that these be capable people doing the counseling, selling homes, and so forth. We advise an agreement -- if it doesn't identify who's doing these things -- as selection criteria and the grantee has the right to approve or deny those selections.


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Delivery schedule. We see a lot of agreements that don't have one; they just have a final completion date. Maybe the developer was given hundreds of thousands of dollars in funding allocation to complete multiple homes and there's just one due date. We don't think that's advisable. It doesn't give you much control. And so it should have intermediate deadlines and milestones. And we have some samples of that that we're going to refer to at the end that are available as downloads from the HUD's learning center. And also they're in the NSP toolkit. So we're going to stop now and take some questions just on the subject matter we're covered so far. The next section is going to be on budgets, net proceeds of sale -- more of the compensation issues. So if we could restrict the questions to the subjects we've covered so far, we'd appreciate it. Kent Buhl: James has a concern -- he was one of the ones who submitted originally -- said that one of his concerns was about the scope of work, I guess; how to account for unexpected costs that come up later after the agreement? Peter Werwath: Well, there can be two levels of contingency allowed in the budget. There can be a construction contingency. It's usually advisable to have 10 percent for rehab, maybe 5 percent for new construction. But there also could be a development contingency line that could be used for overruns and things like soft costs, holding costs, and so forth. I think the biggest insurance -- the little danger in having a development contingency is that people who have a contingency like that will go find expenses to charge against the NSP funding. So you may want to think long and hard before you do that. But I think the biggest insurance before the unexpected cost is doing a careful budget -- cash flow projection over months -- the things that tend to run over are construction which can come from not having real tight specs or a good estimate in the beginning, so that's a quality control thing, or not having a contingency. But the other costs that might overrun would be holding costs. So doing a very careful estimate of those in advance would be important. If it's happened and you got to deal with it, you would have to amend the agreement to increase the funding, if these are approvable costs and reasonable costs. Kent, do you want to take some more questions? Kent Buhl: Yeah. Let's see what else we have here. Peter Werwath: How about the one on Habitat? Kent Buhl: Sure. Habitat -- Peter Werwath: There's one -- subrecipient agreement with Habitat includes the developer agreement for each house. Kent Buhl: I think that's the follow-up to his original point which says, "I'm very concerned the developer is not bidding out all the jobs for the individual homes." Peter Werwath: Well, they're not required to as a developer. They're not subject to the procurement rules that a grantee or subgrantee or subrecipient would be affected by. That being


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said, you do need to verify the cost reasonableness of their construction budget. So that if there are no bids, you certainly need to do your own independent estimate of your costs. Obviously there has to be a work write-up or a scope of work plans and specs for the home. It's really the grantee's responsibility to review all and make sure the costs are reasonable and complete and nothing's left out. If you want to require them to bid, you need to put that requirement in the developer agreement. So I'm going down to the other question from Carl Freeman and the city subrecipient agreement for Habitat includes a developer agreement for each house. Well, that's a bit of a muddle. We'd suggest that you send the complete details to the 'ask a question' on the NSP website or request technical assistance which can be provided remotely. The problem I see you have is that apparently there's a master agreement that's a subrecipient agreement and underneath that there's apparently an authorized developer agreement for each individual house. And that sounds like a problem because if it's characterized as a subrecipient agreement, a top level agreement, it'd be my opinion, you cannot pay fees to Habitat. It would be cost reimbursable and I don't think you should consult your attorney and technical assistance providers. But a subordinate agreement to a subrecipient agreement, in my opinion, would not -- could not purely be a developer agreement. So that's the kind of case specific issue -- we just can't get into it any more than that, unfortunately. Please present your specifics to "Ask A Question" or ask for on call TA. But thanks for asking that question. Kent Buhl: And we have John Laswick. John, did you have anything to add to this or another answer. John Laswick: No. I was just going to make a point earlier when Peter's talking about the scope services and who has which roles and responsibilities -- is that there's been some confusion that we need to correct on one of our policy alerts. But it gives -- one of our policy alerts from last summer, August 2010, makes it sound like you can't have a developer that provides housing counseling services. And what that means is you can't have the developer as the developer doing it, but if they have an approved housing counseling agency they can also do that but it needs a separate contract. It's kind of a fine point but I think people have gotten a little frustrated with that. I would second Peter's assessment of that most recent question that once you've got a subrecipient agreement, I think it's kind of hard to turn that around in the subsidiary agreement. So we can work with you on those. Peter Werwath: Thank you John. Kent, do you want to take some telephone questions? Kent Buhl: Yep. Yep. Let's go to Jennifer. Hi, Jennifer. Jennifer Morrison, are you there? Q: I am here.


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Kent Buhl: Great. So you gave us some more information about -- the original question was about some recipient agreement. And maybe that should be turned into a developer agreement. So go ahead. Q: Well, this is just -- I love that word "muddle" that you use because this is what this is. So in the beginning we had a subrecipient agreement I would say about, I don't know, $1.4 million -- first-time home buyer. In the subrecipient agreement they allowed the developer -- we weren't here then, don't we all say that anyway -- they allowed $25,000 up front, sort of an [inaudible] cost. And then, for every household they had a developer fee of about $15,000 per house. And this is on all her subrecipient agreement. So now, 80 percent of the grant is expended. Of course the nonprofit was also providing housing counseling, and this is before all of the clarification came out. So now we're really trying to fix this because they should not have been receiving a developer fee under subrecipient but its' really a challenge for our local HUD office because we're 80 percent through. At one time we were going to amend the subrecipient agreement to become two parts: one, a developer agreement for the acquisition rehab and then a subrecipient agreement with the housing counseling portion. But that doesn't -- I think HUD's concern is since we're so far along, is that really a good way to go. I was just wondering if you had any other examples of other localities that have worked their way through this because I'm sure we're probably not the only one. Peter Werwath: John, I'm going to have to ask you to give your advice on this one. I said earlier I felt, just based on the facts before us here, that going back and rewriting the agreement and retroactively declaring that the original agreement had some internal conflicts, or whatever the case may be -- but the it's probably better to go back and fix it than do nothing. And I think the idea of breaking it into a developer agreement and a counseling subrecipient agreement would be very typical and it would be what I would advise. John do you have any concerns about that retroactivity or is this something they should discuss with the field office? What's your advice? John Laswick: Well, it sounds like she is doing that already. I mean, you're correcting a problem one way or another. I don't think there's any big philosophical problem with making that kind of a change. Whether it makes more sense to change it retroactively or just sort of adjust it retroactively. For example, probably the biggest thing is the fee. So you've got to look at, well, what do they use that fee for? Is that really just what a subrecipient would've received as activity delivery costs? If it is then maybe you can just characterize it that way. Probably it isn't. Probably activity delivery costs are buried into development costs where most developers put them. In which case, I think we might have to sit down with your -- what's your field office telling you on this? Q: Well, we're working with Tangela Rivier [ph] and Michael Flores. We're in the Phoenix area. But I think it's -- I like what you said initially in the resolution and the preamble portion. I mean


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you could really explain that by even recent HUD clarification rules established have changed. I think there's a way to do it and I think it's cleaner to redo it, really. John Laswick: I guess the first question I'd ask is has there been any harm done in the sense of overpayments or underperformance or anything like that? If you're happy with the work that's been done and you feel that the compensation's been fair for the amount of work that's been done and is in line with other comparable developments in your area then I wouldn't have a problem going back and saying, look, we really meant this to be a developer agreement and we're just going to have to rewrite it in a way that makes that more clear. Q: Right. And we're worked really close with our HUD field office. I mean, we've gone -- they've given us great advice and we do believe that we've done an assessment of: is the developer fee reasonable; and all of those types of things. So we're getting our way through it, it's just -- and certainly, for NSP3 we will be much better off knowing what we know now. But thank you for this. I really appreciate your time on the question. John Laswick: Sure. Peter Werwath: And there is a -- you can request technical assistance which, in this case would be over the phone and by e-mail if it -- HUD would approve that. Q: Yes. And they have mentioned that to us as recent as today that we should go ahead and use that technical assistance. And we will do that. John Laswick: A lot of these things are just kind of messy enough that it's more than you can deal with through the question box, or more than you can deal with just over the phone. So that's definitely a resource for everybody and we talk to the Phoenix folks on a regular basis. So if they're having problems they can call us. But I think it's better to get it straight and sort of acknowledge that -- well look, we tried to do something but we didn't do it right so now we're fixing it. Q: Right. And your point is very well taken. We had a lot of new home buyers out here and their program's running well and that's really -- John Laswick: Yeah. That's the big thing but when we look at corrective actions. For example, if we were to say, and I don't think we necessarily would, but if we would've found this in a monitoring finding and you didn't realize you were doing it. You know, our priorities are first, to stop the problem from continuing; second, to stop it from happening again. And so that's essentially what you're doing now and we don't have to assess monetary penalties or that sort of thing when there aren't any real problems that have occurred. It's just that -- I think a lot of folks have been having a crash course in development finding and development agreements. And the reason we're having this webinar today is that our field staff has been telling us, hey there's all sorts of crazy stuff going on out here. Let's help people fix it. Q: Right. Thank you.


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Peter Werwath: Thank you. And Kent, do we have another question on the phone? Kent Buhl: Yes. Yes we do. Let's go to Getta Becca [ph]. And here we go. Hi. Are you there Getta Becca? Q: Yeah. Hello? Kent Buhl: You've got a question about deal structures. Q: Well, the question was, we are a nonprofit developer and we had an agreement with the grantee to develop. And we were told on two occasions -- on a multifamily deal the nonprofit developer was told they cannot be in the ownership structure. The proposal was the grantee is also nonprofit and we wanted to jointly hold the multifamily nit. And the -- we were told that this would be like a CDBG rule that says unfair compensation or whatever they called it. John Laswick: It's on an apartment deal? Q: It's a multifamily apartment deal. John Laswick: Okay. And you're subrecipient of another nonprofit. Q: No. We have a developer agreement with the grantee. John Laswick: Okay. Developer agreement. But the grantee is a nonprofit -- Q: And it's a nonprofit that we worked with over the years together on other projects. So we proposed to have join ownership. John Laswick: And where is this supposed undue enrichment or whatever, coming in here? Q: It's from the administrators. John Laswick: So what are they looking at? I mean, is there such a great cash flow or something that you guys are going to be taking vacations to Brazil or something? Q: No. There won't be any cash flow. I mean, we haven't even developed it yet. In the initial phase we're using the acquisition money for NSP funds and then we have yet to raise financing to make the deal work. So we initially structured it as a 50/50 ownership they said, no you can get into an ownership position. John Laswick: Well, I think you should probably write this into the "Ask A Question" but I -- there may be situations where that's warranted, although I think I've heard of other situations where that happens. Are you say that they're saying that it has to do with your status as a developer or your status as a nonprofit or that they're just uncomfortable with the cash flow and what happens?


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Q: No. They didn't even go that far. There was just -- they just pulled out the CDBG rule. They said, this will be looked as an undue enrichment because the nonprofit is coming into the deal with no equity in the deal. John Laswick: Right. Well, let me clarify that. Something that we have been realizing here is that an undue enrichment applies to for-profit developers. It doesn't apply to nonprofit developers. Nonprofit developers have to ensure that their costs are reasonable but that doesn't mean that they have to bring in cash into the deal. My God, we wouldn't be doing anything if that were the case. Q: That was the exact argument that you're not putting anything into the deal so you just can't get into ownership position. Peter Werwath: Well, this is Peter. There sounds like there would be a downside to this if the grantee jointly owns the property. It may not be a downside for you, but -- John, am I correct in saying that if the grantee is part owner then the net rental income would be program income? John Laswick: Well, it could be. It depends on how the -- Peter Werwath: You know what; let's keep the webinar to kind of general principles. This is a great question but we really need to know all the details of the deal. If you don't mind submitting it to 'ask a question' if it gets too complex. Certainly the on-call TA is available. [talking over each other] John Laswick: Put it into the "Ask A Question." I mean, those things move through the system pretty quickly. And they also get us involved when they run up against sort of policy calls or internal HUD rulings or whatever that the TA providers can't get. We meet on those every week so we should be able to get you an answer pretty quickly. Peter Werwath: Kent, I think we need to move on through the presentation. Kent Buhl: Sure. Keep going. Yep. Peter Werwath: Okay. So we've now talked about developer compensation. We've covered these points before. Of course they can earn developer fees, potentially general contractor overhead and profit fees if the developer is acting also in a role of general contractor, and a sales fee. We're not encouraging you at all to overpay, certainly not double-dip. These should be three distinct roles and the fees for each of them should be reasonable and in line for market fees for these functions. But it is legitimate to structure your agreement that pays all three categories of fees. Now we get to the net proceeds of sale which I hear from John and others, is kind of a recurring problem more and more. A developer doesn't own the net proceeds of sale. There can be


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arrangements, and I think it's been discussed in other webinars, how net proceeds might be left with a developer as sort of a restricted fund or an escrow for future projects. But it really would be in the case of a for-profit undue enrichment to let them keep the net proceeds of sale. And it probably would be seen as just not real good business principle to just let these net-proceeds go and assume they're going to be properly used and so forth. So we've seen an awful lot of questions about this and as we work through a number of examples it seems like the best solution is to have it remitted back to the grantee, or in some cases we've seen where it's gone into some kind of local trust fund to be reserved for similar work. So the basic idea is that you shouldn't assume that the developer owns it. There've been some disputes over this. Obviously when an agreement is silent, the developer -- particularly some of the for-profit developers who don't have a very easy road these days are trying to get all the profit they can out of these deals. I know one developer who got a fee and then demanded the net proceeds back in addition and the agreement was silent. Now that's a mistake. It's a mistake that actually constitutes, I would submit, a violation of NSP rules -- the underlying CDBG rules. This is a very important area to pay attention to. John Laswick: Well, and I would just say that the issue we're seeing is that people are realizing there are these open ends in their agreements. And so the important point is to get your developers back in there even though they don't have as much motivation to renegotiate as you might, you'd probably want to remind them that these things are -- almost all of these things that auditors find can get into repayment. So they're not going to be able to get away with it, so to speak. Peter Werwath: Yeah. We'll talk a little further on about how to approach a renegotiation like that. We'll give you some tips on doing that. And John wanted me to spend a minute covering the developer fees, how to set them just because there's so many questions that come up about this. We can't give you a certain answer because there are so many variables. One thing to look at obviously, is what is paid and earmarked for similar types of development work. I think you'll find the low-income housing tax credit program is a benchmark. I would typically consider those, not in every state but in many states, the upper end of what fees can be paid because the tax credit developer usually has a two- or three-year project on their hands with an awful lot of preparation work; very complex financing work. So that's kind of on the upper end. And it is what the local government is paid in other kinds of deals or -- other agencies in the state pay, is certainly a benchmark. But in this chart, I don't want to go through the entire chart but you can download this -- but there's factors and favor in what we say are lower fees, and there are factors and favor in higher fees. And generally the less work the developer's doing, the less investment they have in the project, the quicker it goes, they're not paying holding cost -- those are things that would indicate them earning a lower fee. And on the other hand a very complex project, their marketing and sales needs to be closely managed and it's very difficult, they're absorbing all the internal overhead in project management


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cost if they put up some of their own cash, they borrowed funds at risk, especially if they have to pay holding costs out of the fee; those certainly would indicate a higher fee. But we'll take some questions on that if you have them. The other thing the agreements really need to address -- or a program manual if you have one, is actually a better place to control this kind of detail would be a policies and procedures manual. It gets very difficult to cover all these points, and say an addendum to a developer agreement -- but basically these are checkpoints that we think should be written into agreements that give the grantee the right to approve or deny at these points. The first group would be the acquisition checkpoint, where we advise that you look at plans and specs or work write-up, sources and uses performance; they have the environmental review done, certainly before the acquisition occurs, hopefully long before that; relocation plan in place if necessary; and a project delivery schedule -- say this is multiple units that are going to be done at different times. So those are things that you should require. They're due diligence items. And again you, as a grantee, have to reserve the right to say no. These aren't sufficient documents. They don't represent good budget. We're underwriting this and it doesn't look good. So you can approve or deny. Obviously I don't think we need to say the things you need to do during construction. We're all pretty familiar with that. But another checkpoint that's kind of overlooked is the settlement sheet for the final closing when a home is sold. I'm not sure everyone's aware but settlement sheets are drafted before the closing, often a week or two before the closing. These really need to be reviewed and you need to have the right to review it to make sure the developer is not taking out too much money in terms of net proceeds. They can certainly -- you can allow the final developer fee installment, sales agent fee and other costs to come out of net proceeds but that's a very important check point. So here's an example of disposition of net proceeds. I'm not going to spend a long time on this at all but if the house sells for $100,000 -- which is, generally speaking, should be market value -- should determine the price. Developer closing cost comes out of that, that's fine -- final installment of fees, sales agent fee. Let's say the developer took out $40,000 loan from their favorite bank to cover the rehab cost because NSP didn't cover them. That's perfectly legitimate to come out of the gross proceeds. And then out of that -- in this equation you also take out any homebuyer assistances converted to a second mortgage. And you have, out of that, net proceeds. So actually, one of the tools we put up in the learning center -- it's not available in the toolkit yet -- I think it's identified as project budget with analysis of net proceeds. And I think you could find that very useful to adapt and even attach as a required document either for your developer agreements or require that it be part of the due diligence items that you approve when you approve an acquisition. Let's say you have an agreement that allows developers to buy multiple units. So a very important control feature is the budget. And again, if you have a single property agreement, that budget should be with the agreement. If it's a blanket agreement that allows future acquisitions, you should have a checkpoint where they submit this budget. And in the


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interest of time I'm not going to go through all of these points that go back and refer to this. But keep in mind that the grantee has the right and obligation to control fees and costs and we would submit even those that are not NSP funded. We've heard some grantees say, well, if we were funding the project we would only allow a 10 percent developer fee but because others are participating and they allow a 15 percent -- well, all well and good. But I just remind you that you with your NSP funds are funding the feasibility gap and the higher the costs go, the more money you have to put out conversely. If the costs like developer fees can be controlled you will save some money for future projects. We'd again say that you do have the right and obligation to control all the costs if you're helping to finance the deal. We think this is a really useful way to look at a budget. This is one format that shows total cost NSP-funded, funded by others. It's not a complete budget. It just shows you the line items but that's a really great way to think about a project and we suggest you use a format like that. So you're starting in a project in the beginning with all this, not only NSP money budgeted, but knowing that other sources are funding the total cost. So you have a complete development cost budget. Just a moment here goes back to a previous point of controlling cost. This isn't just controlling cost but we suggest you really need some criteria, written criteria that would be referred to in the developer agreement if they're in a separate document. They might be written into the developer agreement -- probably better to do that. As to what the maximum NSP funding per unit would, maximum development subsidy write down, and the maximum homebuyer assistance -- see they're all things that determine, ultimately, how much money is used temporarily in a unit and speaks to whether they're leveraging money or not. But most importantly it controls -- allows you to control -- how much money stays in a project. We work with a couple of grantees that I have to say aren't doing that underwriting at all. There's a blanket amount they've given to developers. There's not necessarily a firm requirement to do one, two, or three units with that money. They're very flexible and we think that's not a good situation. There should be this underwriting step. Ensuring NSP compliance. I'm sure everyone on this call that's attended any other webinars is familiar with all these compliance issues. I won't go through the list but any agreement should have the list of and details on these typical federal requirements, not to mention state and local requirements for insurance, permits, and so forth. Very important -- and the developer agreement templates and the NSP toolkit that I think most of them, if not all of them, have a sample section like this. And we certainly recommend you use those or amend them. Just to the point of what's not applicable, we mentioned earlier, developers are not subject to the same requirements as nonprofits. Again, in the interest of time, we're running a little over here, so I just refer you to this PowerPoint but also, more importantly, to some of the agreement


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templates that have very specific language about what developers are subject to and not subject to as compared to subrecipients. Okay. One of our last points on the terms of the agreement is monitoring enforcement. Of course, we talked about those checkpoints earlier, that's where your monitoring comes in. Your key checkpoint, this probably goes without saying, is approving your payments or not. Get all your due diligence documents in to review them, to take them seriously, and to deny payment even to the point of denying the acquisition going ahead if things aren't as they should be. And other enforcements, so to speak, if you don't have an "or else," this agreement will possibly get you in trouble. So you need a clear ability to cancel a developer's budget allocation or cost. We think it's highly advisable even if you have us in your agreement, to pose a lien on your property for the amount of the NSP funding. This is not happening in every instance. There are deed restrictions being filed. There are simply agreements that have no filing in the real estate records. Therefore it is conceivable that any developer to go out and get another loan on it would be not just seniored, it would be the only secured funding on the property which could open things up to abuse. But more importantly it just gives you a way to make sure you get repaid, for instanced, that net proceeds of sale. We think that in almost all cases you should seriously consider having a lien on the property for the amount of NSP funding that you put in during the developmental period. If it's a rental project that's funding some of it or all of it could roll into permanent financing. So -- a few more questions at this point. Kent, do you want to take over? Kent Buhl: Yeah. And let's go to Samite [ph]. Samite, are you there? Q: Hello? Kent Buhl: Hi. Q: Hello. Kent Buhl: Go ahead. You had a concern about not incurring program income with Habitat and how to structure the loan with them. Q: Yes. And then I did hear you state that it was not considered undue enrichment -- because the state is telling us that how we structured our loan, and we're trying to work out the kinks, it's all NSP subsidy. We don't have a first for the recipient for the home. That's how we structured it. And they're saying if we structured it that way it looks like there will be undue enrichment to Habitat. John Laswick: Well, I said that it's not -- it wouldn't be termed undue enrichment. I think you still need to specify what they'll do with those bonds but some organization like Habitat or other groups that are only doing these kinds of activities -- we're less concerned that it's going to end up in somebody's pocket. It's not to say it wouldn't happen but for the most part it's less of an


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issue that it's open ended. But you really need to close that off either way and specify that -- well you going to keep doing NSP eligible properties until that money runs out or however you set it up so that you have some sense of what's going on and ideally they'll be telling you what they're doing with the money down the road. Peter Werwath: We helped negotiate this with one local NSP grantee and their local Habitat affiliate and what was agreed on very amicably was that the NSP funds would go into the acquisition or rehab or new construction. Usually the acquisition was nil because the already owned property. The terms were that the -- it was written in the developer agreement and also -- that the funding would roll into -- from a development financing into the permanent financing, so the only thing -- there was no return to Habitat at the time of sale. There were no cash proceeds of the sale so the NSP funding essentially became a part of the 20 year mortgage that this nonprofit wrote. And the only thing the agreement said about this was that the NSP funded portion of those mortgages had to be returned used in a revolving loan fund to make future loans like that. Otherwise it would be arguably unrestricted funds. They could use it to pay salaries and so forth. I think, arguably that could be permitted but this grantee and the Habitat group wanted to make sure that money remained capital that could be used to write mortgages. So that was a amicable solution and I think a good one. And there was language in the agreement that said that these funds will stay in a revolving loan fund, that is a restricted account, and they will audit that account and provide audits on request. John Laswick: All right. Given the seller financing that Habitat does is a typical way of doing business, that makes a lot of sense and that would get some funds out of that gradually but it just feeds back into their regular work. Peter Werwath: So I'm going to keep giving pitches for on-call TA. If you're stuck on these terms -- different providers who respond to this generally all have a set of examples and documents that might be a quick way to fix this. I'd say it's probably a little too complicated for an FAQ. But if you're stuck on this and need help, certainly there are folks who can help you resolve this pretty quickly. And certainly, keep in touch with the field office about what you're doing. John Laswick: Right. And I would just say that those who are -- we can authorize up to 16 hours which is enough to solve most problems I think, or we could expand it if we have to. But we go through those every week so this isn't something you're going to have to wait months for. We can turn those requests around at least every week and get that right out to you. Peter Werwath: Kent, do you want to take a few more questions? Kent Buhl: Yep. Let's go to Catherine Dachowski and I'll unmute you. Are you there, Catherine? Q: Yes. I'm here.


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Kent Buhl: Great. Can you go over your question about developer fees? Q: It's about sales proceeds. We're a developer and we had an agreement in the beginning to use sales proceeds to complete an additional number of units. And so the units were purchased and then the state decided that all the sales proceeds had to be returned. So this is leaving us as the developer without the funds to complete all the units that had been required. It's a difference of opinion between the developers, the grant subrecipients, and the state. What's the best way that we can get this resolved? We've tried contacting representatives at the statehood office. We're still working on it. Peter Werwath: Let me take a first pass at this and I think John will probably add some additional comments. Boy this is tough to comment on because we don't have the agreements in front of us but let me assume this: the agreement you originally signed very clearly said you could keep net proceeds to invest in additional units. And you, on the basis of that -- you relied on this agreement to go out and acquire properties you thought you could use this money on. Q: Correct. Peter Werwath: I'm going to guess that the language of the agreement wasn't very specific about the reuse part of it? But none the less, if it's fairly specific -- this is a lot of what ifs here but it sounds like it may have been a valid agreement. They're demanding it to undue some of the terms of the agreement and this gets so into contract law and NSP rules and so forth that I just don't think we can say a lot more on the phone. And I think that we could, through an FAQ -- better yet, the on-call -- I mean, we could analyze the agreement. But TA providers are not authorized to offer legal advice and I'm not doing it now. But it's certainly about the enforceability about the agreement. That's a question for your attorney. Having said all that, if you could work out something amicable where you go in and change it. You know, you work out something where you do get those funds back -- they go into program income but they reserve those funds for you. That'd probably be the best out because it -- Q: Well, that's what we're trying -- yeah, we've tried to do that. We've hired an attorney who's sent up comments. We're just at an impasse. We're at a complete impasse. So I didn't know if there was any other avenue to the NSP technical assistance to more forward. Peter Werwath: Yeah. John, do you want to take a stab at this? I mean, we could look at the agreement but I don't think any TA provider could say whether or not they have a valid case to enforce the agreement. That's a legal opinion. John Laswick: So you're talking to the state or you're talking to the HUD field office or both? Q: Both. John Laswick: Okay. And the HUD field office has said what?


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Q: The state decides. John Laswick: Okay. All right. Well -- Q: I mean, all we want to do is finish the units that we've already required and then return any other funding. John Laswick: Right. Okay. Why don't you send me an e-mail that describes what's going on, a kind of summary, and we can start looking into it and seeing who's done what here. I agree with Peter, it's probably a legal issue for starters but even if you've got a strong agreement and they're asking for the money back, that doesn't seem to be solving the problem. I think my e-mail address is going to be listed somewhere at the end of this, but it's [email protected]. And this is going to take some digging. Kyle: Thank you Catherine. And let's see. Charles had a question, which is, "Is it required by HUD for a nonprofit that's been awarded a developer agreement to follow federal procurement rules even if procurement requirements were not written into the developer agreement? Peter Werwath: Well, of all the facts there is presented here -- no. It's not required that you follow the procurement rules that would apply to a local government, unit of government or a nonprofit. You can designate contractors, building contractors, service providers such as appraisers and so forth. You do not have to go through the procurement rules. John Laswick: What is required is that the -- Peter Werwath: And we don't see your agreement, of course, and there may be some details in there that we don't understand. Certainly a grantee's right to tell you, well you may be a developer and you may have the right to designate all these contractors but we want you to bid it. That would be within their right. So if that is in the agreement, you need to do that and you have to do it. John Laswick: But assuming it's not in the agreement, you do have to demonstrate that your costs are reasonable. Bidding is one way that you do that but there are other ways to you do that. And even the developer that's got a general contractor that they work with all the time -- those people go out and get the quotes on the major work elements and so forth. So if that's happening, it doesn't have to be a formal, closed bid type of a -- sealed bid process that governments typically go through but you can establish that you've found a cost more reasonable in a number of different ways, that's one of them. You can use comparable cost data from a professional advisory services and that sort of thing. But Peter's right, if it's in the agreement they can require it but I think you said it wasn't. Peter Werwath: Okay. Well, we're running a little long with this. There's a lot of details. I'd like to move on to the last section, it's not too long, and then we'll take questions even after that.


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But now we're on to how you do renegotiate agreements. What are the triggers? This has come up a number of times. From a grantee standpoint one problem would be them not meeting their spending deadlines, them not moving fast enough. If there were clear terms in the agreement about their spending deadlines they could be certainly out of compliance. In any case it's a problem. The terms of the NSP funding, eligible uses weren't spelled out clearly. Existing agreement was wrong or silent in relationship to NSP or CDBG regs which usually would make the agreement, or certain actions, out of compliance because almost all agreements say you must comply with applicable state, federal, and local laws. So that again would be a form of contract violation, so to speak. Maybe it's not a lack of clarity or a lack of following rules, not at a fault, but the developer simply wants more subsidy or higher fees. We have seen agreements negotiated where fees seem radically low, like in the $2,000 to $3,000 a unit which would not even cover the developers overhead. We've seen projects that didn't have enough subsidy to do what the grantee and developer wanted to do. So if there can be amicable negotiations on this, you certainly have the right to change those terms. But if a developer is just strong arming you to get more money out of a deal because they didn't do their budget right or didn't manage a project well, that sounds more like a default where you don't reward folks for a mistake. One of the questions came up, this is kind of esoteric if you will but it does come up. Identify of the developer wasn't clear in the agreement. They put down a nonprofit when it was an LLC controlled by a nonprofit or a for-profit. It had a somewhat related organization that was really doing the developments. So it's very important at the application stage, at the proposal stage, to be absolutely clear about the legal entity that you're dealing with. Not the one necessarily that's applied to you, but the one that will be the developer. Those mistakes do happen. So how do you go about -- this has come up a couple of times, things are out of kilter. Talking about the grantee here but also we had one developer that says they're being asked to do something that they didn't agree to. But let's look at it from the grantee's point of view. How do you renegotiate an agreement? Well, one clear piece of advice is if a developer is in default, you can declare default. And that becomes, shall we say, kind of a leverage to renegotiate things or you may just want to go through closing out the agreement and moving on to another developer. But a lot of these agreements were not completely thought out. It's a new program, there were a lot of unknowns, there were a lot of guidance that came out over time and even if it was an unintentional error, a lot of agreements as it mentions a bottom here, could be considered null and void because they did not cover some requirements. For instance, if they're silence on net proceeds of sale, completely silent, and I were negotiating with a developer I would say, look, it's silent on this but we can't give you the net proceeds because if you're for-profit -- because it would be undue enrichment. We're not going to do it. And so we can either amicably settle this and amend the agreement or let's talk about cancelling


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it out. So sometimes you have to play hardball to get the developer to come to the table and renegotiate. I think there are a lot more cases where this can be done by mutual agreement. I've seen it quite a few times already where it's in everyone's interest to clean up the agreement and make it workable. So here's the suggestions here of what sort of positive reinforcement might help bring the developer to the table. Remind them that if you need to, you want to have a long-term relationship. You think it's in their interest to preserve that. You certainly don't want to have any negative audit findings coming out of this. So if the developer isn't completely in default, which gives you a lot of leverage to renegotiate, you can still use persuasion. So I just want to mention -- we've mentioned all through here, I won't go through every point here -- but there are a lot of appropriate documents in the toolkits that you might want to use. I would point out that some, rather than others -- as opposed to others, cross-reference each other. So really look at them carefully and note the other documents they reference or cross reference. For example, there are a couple of developer agreement templates that refer to specific program manuals or loan agreements and so forth. So the more you find a little sep [ph] that's cross referenced with each other, the better off you will be in using these as templates. And here are just some names of the downloads, I'm not going to read these off. You can go in and download this PowerPoint. There's also a guide second to the bottom item here. The guide to negotiating developer agreements has a whole list of documents that you may want to look at. There's assistance available. We've referred to "Ask A Question." We think it's appropriate primarily for focused questions on NSP compliance. If you're asking a lot of questions about a developer agreement and the TA provider doesn't see that agreement, doesn't know the context, doesn't know the concerns of the person on the other side of the table whether that's a grantee or a developer, it's very tough to give accurate answers. So on these developer agreements, by and large, unless it's a real straight forward policy question, it seems like on-call TA generally works much better so that somebody can actually read the agreement and learn about the context. So, lastly, this is the links you go to. Again, we won't hover on this or spend any time on it but you can go back and look to these links for resources. We want to save a little time for additional questions and answers. And please give us your feedback. If you have to sign off now, we really, really appreciate you giving us feedback. Tell us how we can do a better job or what parts of this presentation you liked the best so we can present future webinars that are useful to you. We appreciate that. So in the meantime let's go to some more questions and answers. And Kent, when do we need to close this out? Kent Buhl: We have up to a half hour of the questions left; that long. And we'll see how that goes.


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Peter Werwath: Okay. Kent Buhl: Audrey has been waiting very patiently for sometime. Hi, Audrey. How are you? Audrey Spencer Horsely [ph], are you there? Q: Yes. I am. But you've answered my question. Thank you. Kent Buhl: Okay. Great. If you could just click your lower hand button, that would be helpful. And let's go back to Getta Becca. Q: Yes. My question is, I had a nonprofit -- John Laswick: We're having trouble hearing you. Kent Buhl: Yep. Can't hear you. Q: Hello? Kent Buhl: That's better. Yep. Q: Yeah. The question was I had a nonprofit developer -- Peter Werwath: You're back -- I think you're on a speakerphone. You're going to have to get closer. Pick up the receiver. Q: Okay. I was just asking, can a nonprofit developer be the beneficiary of her second mortgage assistance given to a home buyer and then reuse that for future buyers in the future? Peter Werwath: The answer is -- subject to John Laswick saying I'm wrong -- but I believe that, in almost any instance where the grantee wants to allow that and controls how you reuse the proceeds, that there's some control language, that that would be okay. And we already referred to an example of the Habitat groups where we've worked out arrangements where they -- it's not quite the same. They used the NSP fund to fund the first mortgage and they simply agreed to, in their agreement, to return the payments on that mortgage and to revolving loan fund to make future loans. So John, any comments on that? I don't see any problems if it's well-documented. John Laswick: I agree. You might find some useful instructions in the program income policy alert that came out in June, the past June of this year. There was a little bit of confusion about cash flow on multifamily deals. If this is just single family and you're going to be getting a lump sum or payments over time then that's just program -- those are just revenues to a developer that could be allowed in the development agreement to be used for other similar projects. Q: Okay. Thank you.


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Peter Werwath: You're welcome. Kent, do we have more questions? Kent Buhl: We do. And I'll get to Verna [ph] in just a second. First I just want to let you know that there are sample written agreements in other files relating to this topic for a single-family rental and for home ownership programs. And they will be posted here -- John Laswick: They're already up. They're up. Kent Buhl: -- they're up and they'll also -- at some point it will go from previous sessions -- or from upcoming sessions to the archive in the previously held session. I imagine that will happen very shortly so you can get to see a number of examples of developer agreements and other files relating to this. You can also know that there are a number of more HUD webinars -- NSP webinars coming up, starting the day after tomorrow with open forum Q&A. Three more in December and there wasn't enough room to fit all of the ones in January on this slide, but they go to the 17 and beyond. So I hope you come back for some more of those. And now let's go to Verna. Hello Verna. Q: Can you hear me? John Laswick: Yes. Kent Buhl: Yes. Q: Hi. How is everyone this afternoon? Kent Buhl: Doing well. And if you could speak up a little more that would be helpful. Q: Can you hear me? Kent Buhl: Yes. Q: Okay. I'm calling from Memphis and I just had a question regarding multifamily rehab. And I know that you all have gone over earlier in the presentation that if it's a developer they can pretty much do what's reasonable if you do not bid the project. But in our case the bid developer is moving forward with the bid process. And the question has come up, if the developer can execute a cost fee with guaranteed price type contract with the contractor. Peter Werwath: Could you explain Verna a little more of what you mean by the cross fee was guaranteed price -- Q: I guess it's a fixed -- if they could negotiate or -- we've run into a situation we've gone out to bid once and it was just way out of alignment. So we're going back now with suggesting that the developer fix or specifically state that this is the budget. And if the numbers are still out of kilter that they can enter in to some sort of cost-fee with guarantee; that they would be allowed a fee


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with a guarantee price, meaning that the developer or the contractor would assume all risk at that point if anything goes over price. Peter Werwath: So you're basically saying, can they -- the developer -- enter into a fixed rate contact with the builder. Is that correct? Q: That's correct. That's correct. Peter Werwath: Yes. I mean that's preferable; far preferable. I would just caution you this that if all the bids have come in high and suddenly the developer has come up with a fixed price bid from a contractor that's 10 or 20 percent below all the bids you'd had before, I would really have your construction experts go over that with a fine tooth -- because it could be underbid and you'll just get into trouble later. You know, the GC might have promised a fixed fee but they don't complete. They don't know how big of a project it is. If they've got a bid bond under work -- Q: Yeah. Yeah they do. Peter Werwath: -- so that's a lot of assurance. I'd say you're probably okay if you've checked for cost reasonableness. Not that it's just too high, but it's too low as well and you're bonded, you should be fine. John, do you have any more to say about that? John Laswick: No. Q: Okay. Well, I'm headed to the architect's office now to meet the developer but I just wanted to -- Peter Werwath: Fixed price is great. Cost plus contracts are not great. They're open-ended. Q: Right. Right. Exactly. Exactly. But like I said, you made very good points about your bid documents being very tight. And that, to me, is the key of making sure that you're communicating well, especially for rehab. Peter Werwath: You got to have the specs that you can do a very accurate cost take off from plans and specs. You've got to be able to figure out square footage and carpet and dry wall and rooms of paints and squares of roofing. If you can't figure that it's a little less sure that it's going to get done. But if they say they're going to do all the dry wall and all the roofing and so forth for a fixed price and there's a bid bond and it's within a cost that you've seen before or can verify then it's great. Much better than cost plus. Q: Yeah. And I think when you're having rehab it's always those hidden things like the structural without having to rip out everything. I mean, we've ripped out just about everything through our environmental -- Peter Werwath: Yeah. That's why you hold about 10 percent even if it's a real old building with a lot of unknowns, maybe even a 15 percent contingency that you would approve only with


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change orders, but it's very important to have that contingency. But I will say a lot of so called hidden problems weren't really hidden at all and the spec writer just missed a bunch of stuff. Q: Right. Or a lot more investigation upfront and especially I find it's in site infrastructure where you end up losing yourself on most of these rehabs. Peter Werwath: Right. Q: I appreciate that. I just wanted clarification on that. Peter Werwath: I think we can take a few more questions Kent, if there are any. Kent Buhl: At the moment I see none. John Laswick: Well, let me put a -- I want to put a plug in for Peter's -- one of the items listed that are available on the resource exchange learning center is a guide to writing and changing NSP developer agreements which is a brand new guidelines that has several charts that go over a lot of the issues that we talked about today maybe in a little more detail or maybe more particulars. And so I think you ought to take advantage of that. I think Peter's probably selling himself a little bit short on the guide to the development agreements and the manual for single family homes, which he wrote, and I think are really useful for being plain English kind of versions to those. Your attorneys might not like it but you'll understand it and I think that's probably more important. You don't want to have to adopt all these things but if you understand what's at stake, you're going to be much better off. Kent Buhl: Okay. And you'll be taken to a survey when you leave this event and please take a moment to answer those questions, give us some feedback we always appreciate especially your written comments. And I'd like to thank Peter for all his time preparing for today's webinar and for preparing all the sample documents that John was just mentioning; to John, for your help in answering questions and Hunter today. And I guess that's it. So we look forward to seeing you on a future NSP webinar. Next one is Thursday. Take care, everyone.

hud nsp webinar: changing developer agreements · this webinar will inform nsp grantees about...

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