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Frequent Questions

Last updated 2.20.08

General Program Information

Application Process

Round 1 Award Process

Round 2 Award Process

Next Steps

New Program Developments

 

General Program Information

What is The Road Home Small Rental Property program?
The Small Rental Property program provides incentives to owners of small scale rental properties to help restore their damaged units and offer them at affordable rents to income eligible tenants. Small rental properties are those with one to four  rental units, which include single family, duplex, triplex, and fourplex buildings. Before the disaster, a large portion of moderate-income working families resided in single-family homes and small rental properties. Often, these were owned and operated by Louisiana property owners. The repair of these rental properties, in conjunction with the other Road Home programs, will ensure that families are given the opportunity to return to Louisiana.

What agency is in control of this program’s funding?
The US Department of Housing and Urban Development (HUD) provided Community Development Block Grant (CDBG) funding to the State of Louisiana’s Office of Community Development (OCD), the State agency in charge of The Road Home program. The Small Rental Property program (Rental program) is run with the assistance of a team of private companies that specialize in housing and community development. The Governor of Louisiana, the Louisiana legislature and The Louisiana Recovery Authority (LRA) have worked together with the Office of Community Development (OCD) since July of 2006 to design the Rental program.

What does ‘small rental properties’ mean?
Small rental properties are those with one to four rental units, which include single family, duplex, triplex, and fourplex rental buildings on one tax parcel. The term “units” refers to residential dwelling units that provide complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.

How are awards calculated?
Applicants will receive the lesser of the following two amounts: The amount selected by the property owner corresponding to the affordable rents they choose for their units or 100 percent of the total cost to repair or reconstruct their storm-damaged property. Refer to the Choosing Your Awards (PDF/1MB) on the Resources and Downloads page.

What is a forgivable loan?
Incentives are made in the form of a no interest, no payment, forgivable loan requiring property owners to maintain affordable rent levels for up to 10 years. The Rental program requires property owners to offer lower rents and in exchange gradually forgives the entire amount of the loan. The award is disbursed when the units are repaired and income eligible tenants are identified, providing an incentive to property owners to keep rents affordable to workforce families, while allowing owners the flexibility to leave the program before the entire loan is forgiven. Refer to Award Levels (PDF/1MB) on the Resources & Downloads page.

Do I have to repay the money I receive from the Small Rental Property program?
Forgiveness of the awards occurs in staged intervals from the time the first eligible tenant occupies the unit. Awards for property owners who agree to maintain rents that are affordable to families at the 80 percent of Area Median Income (AMI) tier are forgiven in the amount of $10,000 at the end of the third year from the time of the first eligible tenant occupies the unit. At the end of year five, any remaining balance up to an additional $5,000 will be forgiven. The outstanding balance of the loan, if any, will then be forgiven in five equal, annual installments. Award levels for property owners serving tenants at the 65 or 50 percent of AMI tiers are significantly higher than the 80 percent of AMI tier. These loans are more than 50 percent forgiven at the end of the fifth year from the time the first eligible tenant occupies the unit, depending on the size of the loan. The balance of the award is then forgiven in five equal, annual installments.

Will you deduct insurance payments, FEMA assistance or SBA loans from the award?
Only owner occupants of three and four unit properties who receive compensation for their home are required to deduct these other benefits. The Small Rental Property program is an incentive program which does not require all other rental property owners to deduct any insurance payments, FEMA assistance or SBA funds from their award.

What properties are eligible?
Single-family, duplex, triplex and fourplex rental buildings located on a single tax parcel that suffered damages of $5,200 or greater from either Hurricane Katrina or Rita and that are located in the 13 designated parishes are eligible for rental funds. Town homes and condominiums are also eligible to apply to The Road Home Small Rental Property program if they meet all general eligibility requirements and specific conditions for condominiums. View Eligibility section on our Web site to learn more.

Am I eligible if I already applied to The Road Home Homeowner Assistance Program?
Homeowners who also own separate rental property are eligible to apply to both programs. Owner occupants of duplex properties, those in which the owner resides in one unit and makes the other available for rent, are eligible to apply to either the Homeowner Assistance program or the Small Rental Property program but may only accept an award in one program or the other.

Property owners who lived in one unit of a three- or four-unit property with their tenants are not eligible for the Homeowners program but are eligible for the Rental program and are urged to apply. These owner occupants are eligible for a grant for the unit they reside in as well as incentive awards for units they agree to rent at affordable rates. They will be provided personal application assistance and may be eligible for additional funding.

However, property owners who received a grant award from the Homeowner Assistance program may now apply for a rental award for other structures on the same tax parcel. The other structures must contain affordable rental units and must meet all other Small Rental Property program requirements.

  • Example: If a property included a single family dwelling where the owner lived and a separate duplex on a single tax parcel, and the applicant received an award from the Homeowner Assistance program for their single family home, this new policy makes them eligible for a Rental Program award on the duplex (if it meets all other Small Rental Property program eligibility requirements).

  • Note: Units that share a roof are not included in this policy and are not eligible to receive Small Rental Property program assistance in addition to a Homeowner Assistance program award .

Did I have to own the property at the time of the storm?
No. In Round 2, investors who purchased or acquired ownership of residential rental property after the storms are eligible to apply. However, these owners will receive a lower preference for funding than owners who owned their property before the hurricanes.


Am I eligible if construction has already started on repairs?
Yes, you are still eligible for the program and may use the cost of the completed work to determine the total cost to repair.

Application Process

How do I apply for the Small Rental Property program?
Visit our How-to-Apply page to learn about future rounds.

What happens after an application is submitted? 
Once the round is closed and all applications are received, the Rental program verifies basic eligibility information, eliminates any late or incomplete applications then scores and ranks all the eligible applications. The Rental program issues Conditional Award letters to those applications with the highest scores. Applicants who rank below the cut-off point may be able to apply to a later round. Refer to the Funding Process page.

What should I do if I disagree with a decision made by the Small Rental Property program?
First, speak to a Small Rental Property call agent (call The Road Home at 1.888.762.3252 and ask to be put through to a Rental program expert.)  If they are unable to resolve your issue to your satisfaction and you believe that the program has reached its decision in error, you have the right to appeal.

Appeals must be filed in writing within 30 days of receiving the Rental program’s determination.  Appeals may be submitted to:

       The Office of Community Development
       Small Rental Property Program
       Attn: The Appeals Office
       P.O. Box 4729
       Baton Rouge, LA  70821

The Appeals Office will research all information related to an application only as it relates to current policies governing The Road Home award decisions. The Road Home Appeals Office will not change policies or laws set forth by the State of Louisiana or the federal government.

Download The Road Home Appeals Guide (PDF/275k) to learn more.  

Round 1 Award Process

I am thinking about changing the rent tiers of my rental units. What am I allowed to do?
If you are a Round 1 award recipient, you may adjust the affordable rent tiers you selected on your application up until you sign and return your Commitment letter. You may also change from a market rate unit to an affordable unit or the reverse before returning your letter. Note that changes in rent tiers may change your award amount. If you received a bonus for mixed-income units you could lose it, and if you did not, you may not receive one after the initial application. Round 2 award recipients may not make changes to their rent tiers.

Round 2 Award Process

What is a Commitment letter? When do I get it?
A Commitment letter reserves the forgiveable loan that you will be awarded once your units are repaired and you have identified tenants whose income meets the affordability levels you chose for your units. To receive a Commitment letter, you must have returned all of your Conditional Award documents. The Rental program will then verify that a number of requirements concerning you and your property have been met. This can take several months depending on the specific requirements (these include verifying your ownership of the property, determining its proximity to amenities, passing a required Federal environmental review, determining if a Homeowner award has already been made to your property, etc.) and whether your particular situation is complex or straightforward. Once these requirements are met, the Rental program issues your Commitment letter.

How soon can I go to closing?
After your Commitment letter is issued, you have nine months to finish your repairs and identify income eligible tenants for your affordable units. If the nine month period is too short, you can request a time extension after the nine months has elapsed. All construction needed to repair your units and comply with the building code must be finished before any award funds are disbursed. This means that you may need to secure lender financing to repair your units. (View more information on the Funding page.) Your Commitment letter should assist you in securing a loan. However, it is your responsibility to obtain construction financing and oversee the completion of any repairs.

When you complete your repairs, you should request a Certificate of Occupancy (or equivalent certification) from your Parish. Once you have it, notify the Rental program and one of our evaluators will call you to arrange a time to inspect your property. If your property was built prior to 1978 and has not already been certified to be free of lead-based paint, the Rental program will have a Lead Risk Assessment conducted on the affordable units and any common areas that are shared by those units.  This is done at the Rental program’s expense. (Refer to the Lead-Based Paint questions and answers below. For more information download Lead Risk Assessments (PDF/40k) flyer.)

Once the property is found to be free of lead hazards, a Road Home Final Inspection will be scheduled. This is how the Rental program ensures that your units meet all requirements and contains the features that you said on your application would be there. At this point you should be only weeks away from receiving your award.

When you pass your final Rental program inspection, you should look for income eligible tenants to rent your affordable units. The Road Home is partnering with the Louisiana Department of Health and Hospitals to help identify affordable rental properties in Louisiana, including units that are accessible for people with disabilities. The Rental program will list your rental property(ies) at www.LAHousingSearch.org, a site that enables prospective tenants and displaced residents nationwide to view available affordable units.

Once you have identified possible tenants, you will need to collect information from them to document that their annual household income matches the rent requirements of your units. Download the Guide to Tenant Selection and Requirements and 2007 Area Median Income (AMI) Limits from our website’s Resources and Downloads page. Consult with Rental program staff if you have any questions.

When you have passed the final Rental program inspection and provided the required tenant income documentation and lease showing the rental amount to the Rental program, a Loan Committee composed of State officials will verify the incentive loan package for final disbursement. You will be scheduled for closing and the award will be transferred to your bank account.

What is my status?
To learn your individual status, call The Road Home at 1.888.762.3252, press the Rental program prompt #1, and ask to be put through to a Rental program expert.

What are the income eligibility limits for tenants renting my affordable units?
The allowable income for your tenants depends on the affordability level you chose for your units, the size of your units, and the parish your property is located in. Refer to the 2007 Area Median Income (AMI) Limits from our website’s Resources and Downloads page.

How am I supposed to get a loan to finance my repairs?
A group of lenders are participating in the Small Rental Property program to provide both construction and permanent financing to applicants who receive a Conditional Award and progress to the Commitment letter stage. (View more information on the Funding page.) These lenders are experienced in providing construction and permanent lending services and have expressed interest in assisting Small Rental Property program award recipients to complete their repairs.

  • A construction loan is a short-term loan specifically designed to pay for construction or substantial repair of buildings or homes. These loans usually provide periodic disbursements to the property owner as the building progresses.

While the Participating Lenders are interested in working with you to restore your rental property, they will adhere to their normal lending standards when reviewing loan applications. The lender alone decides whether to retain, service or sell each permanent loan without participation by The Road Home program.

If your preferred lender is not on the participating lender list, you should contact them right away to let them know you are interested in having them work with The Road Home.

Why don’t you just send me a check?
The purpose of The Road Home Small Rental Property program is to ensure that affordable rental units that were damaged or destroyed by the storms become available once again to the working families of the hardest hit parishes in Louisiana. The only way to guarantee that the money set aside for this purpose actually produces quality affordable rental housing for our citizens is to award the money to small property owners once the repairs are completed and eligible tenants are identified.

Next Steps

My property was built prior to 1978 and now the Rental program is requiring me to have a Lead Risk Assessment (also known as Lead Based Paint Risk Assessment) conducted. What should I do?
We advise you to spend a few hours preparing your property to increase the likelihood that you will pass the Risk Assessment. The key steps involve making sure that no painted surfaces are chipping or flaking, that any construction debris is removed from the site, and that you have thoroughly wet-cleaned all surfaces and vacuumed with a High Efficiency or other high-quality vacuum cleaner. For more information download Lead Risk Assessments (PDF/40k) flyer.

What must I do to address lead paint hazards if they are identified?
Your risk assessment inspection report will contain site specific recommendations.  In general, lead hazard reduction will require:

  • Stabilizing all painted surfaces with a primer and top coat
  • Growing grass or ground cover on all bare soil
  • Cleaning and sealing all horizontal surfaces

For more information, download Lead Risk Assessments (PDF/40k) flyer.

Where can I get help figuring out how much financing I need to make my repairs and preparing a loan application?
The Small Rental Property program has a team of Financial Advisors that can help you with these types of questions. To make an appointment to speak to a Financial Advisor, either request such assistance from your Road Home Lending Team contact, or call The Road Home at 1.888.ROAD.2.LA (1.888.762.3252), press 1 to reach a Rental program expert, and request assistance from a Financial Advisor.


New Program Developments

I have a unit that is completely repaired and that I would like to rent, but I haven’t received my final inspection or my incentive award yet. Does the Rental program allow me to lease it?
The Rental program can now, on a case-by-case basis, authorize property owners whose incentive loan awards are in process to rent vacant, fully repaired units to certified income eligible tenants before closing. The owner must request Rental program authorization. To request authorization, call The Road Home at 1.888.ROAD.2.LA (1.888.762.3252) and press the Rental Program prompt #1 to speak with a Rental program expert.

If I already received an award from the Homeowner Assistance program, but I have separate rental units on my property, am I eligible to apply to Small Rental Property program for those rental units?
Property owners who received an award from the Homeowner Assistance program for their home are eligible to apply for a rental award for separate structures on the same tax parcel. The other structures must contain affordable rental units and must meet all other Small Rental Property program requirements. Units that share a roof with the owner’s home are not eligible for Rental program assistance. (Refer to the General Program Information section above for more information on eligibility.)

Can a property owned by a non-profit organization that applied for assistance in the set-aside undergo a change in ownership after application and remain eligible for the Rental program?
Yes. Previously, a property was not permitted to undergo a change of ownership and keep the benefit of a Rental program award unless the ownership changed after closing. However, nonprofits participating in the set aside may now undergo a change in ownership prior to closing and still remain eligible. The new ownership entity must be an IRS registered 501(c)(3) nonprofit organization registered to do business in the State of Louisiana.

What is the penalty for a property owner who permanently displaces their tenants?
If an owner evicts a tenant in a manner that qualifies the tenant for permanent displacement benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA), the Small Rental Property program will deduct the permanent relocation costs from the owner’s award while allowing the owner to continue in the Rental program.