Sec.8-218c-4. Underwriting criteria

The following requirements shall apply to all projects funded pursuant to these regulations:

(a) Rental properties

Prior to approving a loan, interest subsidy, or loan guarantee and recommending its approval to the Commissioner, the CHDC shall ensure that the rental income from the housing units will provide sufficient funds to pay the following expenses: all property taxes, fire district taxes, water and sewer taxes, and other municipal and state taxes which may apply (taxes which are based on the value of the property shall be estimated based on the after-rehabilitation value); all outstanding loan and/or mortgage payments chargeable against the property (including the loan being provided by the CHDC pursuant to Sections 8-218a and 8-218b); a "debt service coverage ratio" of at least 1.10; all utility payments which are not payable directly by the tenants; insurance costs; management and routine maintenance; project reserves equal to 5% of the items listed above, and a return on investment not to exceed 10% of the difference between the appraised value of the property and the pre-existing indebtedness on the property as determined by the Commissioner. In addition, the outstanding indebtedness on the property (including the CHDC's loan) shall not exceed 90% of the appraised after rehabilitation value of the building.

(b) Ownership properties

Prior to approving a loan, loan guarantee, or interest subsidy and recommending its approval to the Commissioner, the CHDC shall ensure that the income from the sale of the project, whether as a whole or as individual units, will be sufficient to pay all outstanding loans and liens against the property, including the loan provided by the CHDC, and all costs associated with the sale of the project or its individual units.

(Effective May 23, 1986)