This LIHTC Applications FAQ page is the method for submitting questions related to application requirements and scoring criteria for the 2018 competitive low income housing tax credit allocation round. Staff will make a good faith effort to post responses to questions within 3 business days of receipt. Note that staff may edit questions for clarity before posting them to this page. If you believe that your question was misrepresented and your question was not answered correctly, please submit a follow-up question or clarification of your question. Questions will not be accepted after 5PM, January 24, 2018.
NOTICE: Site control must be in the name of the Project Owner, if formed, or the General Partner or a managing member of the General Partner. The QAP anticipates that in many cases the legal entity that will ultimately be the Project Owner (the Limited Partnership) will not have been formed at the time that the Initial Application is submitted. The QAP, therefore, allows for site control in the name of a General Partner or managing member of a General Partner.
Updates to Application Package
1/17/18 Added Special Housing Needs documents (Tab 25)
1/17/18 Added Fair Housing Act Certification for Senior Housing Facilities (Tab 26)
1/17/18 Amended Checklist to remove Scoring Detail/Commitment for Households with Special Needs – it is now included in the Special Housing Needs Certification and not a separate document
1/17/18 Updated Other Scoring Points worksheet (Tab 36)
1/18/18 The Identity of Interest dropdown availability on page 6 of the Universal Rental Development Application has been corrected.
1/18/18 Schedules A, A-1, and C-1 have been unlocked as the previous versions were locked.
Cost and Fee Limits
Q1: USDA-RD 515 projects require a lump-sum contract. RD doesn't lock in the Builder's Overhead, General Requirements, and Profit until there is a signed contract. When does MFA lock in the amount of Overhead, General Requirements, and Profit for a RD lump-sum contract?
A1: The maximum builder's fees, as well as developer fees, are locked in at Initial Application. For LIHTC purposes, any amount of fees that exceed the lesser of the limits established at Initial Application or the percentage limitations will be excluded from the Project's Eligible Basis when calculating the tax credit allocation.
Q2: Can we capitalize replacement reserves for the first 15 years? We understand this is a non-eligible basis project cost.
A2: Replacement reserves for the first 15 years may be capitalized in the development budget assuming that there is a source of funds that can be used to establish the reserve account. Keep in mind that establishing reserve accounts may not be an eligible expense for some MFA funding sources and that if the capitalization of the reserve account results in projected excess cash flow, MFA may reduce subsidy for the Project. The appropriate accounting treatment of capitalized reserve accounts should be determined by a qualified CPA or tax attorney.
Q3: What are the cash flow requirements for projects without hard debt? Will this be in the underwriting supplement?
A3: Determinations regarding the cash flow requirements for projects with no hard debt will be made a case-by-case basis. Generally speaking, MFA has two obligations to consider when analyzing the cash flow of a project. First, MFA must ensure that the projected income of the project is sufficient to cover all operating expenses and all required (hard) debt payments with a reasonable cushion. Second, MFA must reasonably ensure that a project has only enough subsidy to be financially viable. Therefore, if a proposed project has no debt (hard or cash flow contingent) but financial projections indicate that the project could support a reasonable mortgage payment, MFA may reduce the tax credits allocated to the project and require the owners to secure a commercial loan or other funding to make the project financially whole. Alternately, if a project has no debt (hard or cash flow contingent) and the financial projects indicate that the project will have minimal or negative cash flow during the compliance period, MFA may reject the application as being not financially feasible. Because determinations regarding the cash flow requirements for projects with no hard debt will be made a case-by-case basis, it will not be covered in the underwriting supplement.
Q4: How should a cash flow only loan be shown on Schedule C-1 (Cash Flow Projection)? Should cash flow only loans show any amount in the Payment Column (Column G) in Schedule A-1 (Sources of Funds)?
A4: Payments on cash flow loans do not need to be shown on the Cash Flow Projection or on Schedule A-1.
Q5: How does the 15 years of prepaid compliance fees work? Is it as simple as (for instance) a 50 unit property has to pay $45/unit/year for 15 years (50 units x $45/unit/year x 15 years = $33,750)? Or do we have to somehow plan for increases in compliance monitoring fees in the future and account for these increases in the prepaid calculation?
A5: Yes, the calculation is as simple as you have described. There is no need to plan for increases in compliance fees if you are pre-paying for these at Final Allocation Application.
Q6: Is it acceptable to prepay for 15 years the resident services annual budget line item? For instance if we are agreeing to budget $4,000 annually for resident services, can we prepay 15 years of this line item into a $60,000 development cost line item and just draw from it in $4,000 annual increments for the next 15 years?
A6: No, resident (enrichment) services must appear in Schedule C and must be an identified expense therein. In addition, this operating cost must be included in your cash flow analysis and include a 3 percent inflation factor.
Q7: If we use the New Mexico Sustainable Building Tax Credits as a source of funds, will you require a letter of interest from the buyer?
A7: MFA will not accept the NM Sustainable Building Tax Credits as a source of funds unless you have a commitment letter from the State of NM which provides that said credits are available for your particular project.
Q8: In Schedule B with regards to apartment unit square footages, is it okay to use a weighted average where say a 2 bedroom unit floor plan comes in multiples sizes?
A8: Yes, use a weighted average on Schedule B in projects containing multiple size floor plans. Please provide MFA with a separate sheet showing the detail - the various unit square footages and corresponding rents. Please do not alter Schedule B.
Q9: How do MFA's TDC limits work. Given that we won't know the requests of the other applicants until after applications are submitted, if the project is, say, $2,000 above, will MFA just cap the project at the 130 percent of the weighted average or will it deny the application for being over the limits?
A9: Please see Section IV.C.2 of the 2017 QAP for further discussion. The application will not be rejected on this basis alone, but costs will be capped.
Q1: For Criterion 1, where a local non-profits net worth/net assets are below $250,000 (or below $1M), does the partnering entity with the net worth/net assets in excess of (or a combined net worth) $250k (or $1M) also have to be a non-profit entity to qualify as a partnering entity to receive points?
A1: Nonprofits, NMHAs and TDHEs with net worth/net assets below $1,000,000 (or below $250,000) may partner with another entity to increase the General Partner’s combined net worth above this threshold. A for-profit partner entity’s reviewed financial statements may be used to achieve the net worth/net assets thresholds.
Q2: Under Criterion #18, new construction projects which include the remediation and reuse of a brownfield site are eligible for points. Using the checklist, to qualify for these points, the applicant must provide a Phase II Environmental Site Assessment and a remediation budget. How recent must the Phase II Environmental Site Assessment be? Is a report that is several years old sufficient?
A2: The Phase II Environmental Site Assessment should be dated within 6 months of the application date.
Q3: In order for a project to be considered for the nonprofit set aside and points, the nonprofit must materially participate in the development and operation of the project throughout the compliance period. Which compliance period does this refer to? The IRS required compliance period or that which the applicant commits to as shown on the application? If it's the IRS required compliance period, is it 15 or 30 years?
A3: If a project is designated as part of the nonprofit set aside, the nonprofit must materially participate in the development and operation of the project throughout the Compliance Period as that term is defined in Section 42 of the IRS Code and the Qualified Allocation Plan (QAP). With regard to the scoring criterion, the QAP states that the Qualified Nonprofit Organization, NMHA, or TDHE must own at least 51% of the General Partner interest and be receiving a minimum of 10 percent of the developer fee as identified in the Project Application. The QAP does not provide for an expiration requirement that the Qualified Nonprofit Organization, NMHA, or TDHE own at least 51% of the General Partner interest.
Q4: I have someone who wants to submit a package, but couldn't make the QAP training. Is there anything we can do for them? Can they take Elizabeth Moreland's online class?
A4: In relation to scoring for “Nonprofit, New Mexico Housing Authority (NMHA), or Tribally Designated Housing Entity (TDHE) Participation,” online compliance courses are not an acceptable substitute to the MFA QAP training. Completion of training programs such as the site-based Housing Credit Certified Professional (HCCP) training, or equivalent training programs, may be acceptable. Actual acceptable substitutes, however, will be approved on a case-by-case basis by MFA’s Housing Tax Credit Program Manager based on a review of agenda or curriculum for the proposed course.
Q5: If a non-profit has audited financials for their fiscal year-end (typically June, 2015), will they be required to obtain accountant reviews of their calendar year-end financial statements?
A5: Fiscal year-end audited financials are sufficient.
Q6: If the non-profit shows assets in excess of $1,000,000 do the other general partners have to provide audited or accountant-reviewed calendar year-end financials?
A6: No, if the fiscal year-end audited financials for the non-profit show net assets in excess of $1,000,000, the for-profit GP does not need to provide reviewed financials.
Q7: When calculating the efficient use of credits, low income square footage means the sum of each Building’s Gross Square Feet, so if a project has structured parking (on a subterranean level) that is part of the project’s eligible basis, would this square footage be included in this calculation? It seems as though this should be treated the same as garages and should be included, although this definition in the QAP is silent as to parking.
A7: For the purpose of calculating efficient use of credits, garages and structured parking will be treated the same as surface parking. It should not be included in the Building’s Gross Square Feet when calculating efficient use of credits. In mixed use or mixed income projects, the cost of the parking should be included in eligible basis proportional to the space specifically designated for low income resident use and provided to residents at no charge.
Q8: The Efficient Use of Tax Credits scoring criterion has tax credits per low income unit and tax credits per low income square foot benchmarks. Must the tax credits requested be below these benchmarks to be eligible for points or can it be equal to and be eligible points? For example, if we are requesting $15.50 tax credits per low income square foot and $16,000 tax credits per low income unit, is our project eligible for 5 points?
A8: For Efficient Use of Tax Credits scoring the tax credits per low income unit and tax credits per low income square foot must be less than the benchmarks to be eligible for the points. For a project to be eligible for 5 points under this criterion, the tax credit request must be equal to or below $15,999 per low income unit and $15.49 per low income square foot.
Q9: Can an applicant request less tax credits than the project is otherwise eligible for in order to meet the benchmarks and obtain points for Efficient Use of Tax Credits?
A9: Yes, an applicant can request less tax credits than the project is otherwise eligible for in order to meet the benchmarks and obtain points for Efficient Use of Tax Credits. As stated in the QAP, however, all projects will be underwritten to ensure financial feasibility and applications which fail to demonstrated financial feasibility may be rejected. Also, projects awarded points for Efficient Use of Credits may not apply for additional credits if projects cost increase or if other anticipated funding sources are not obtained.
Q10: Should commercial space square footage be included in the sum of each Building’s Gross Square Feet for the purpose of calculating the Efficient Use of Credits?
A10: As indicated on the Efficient Use of Credits Worksheet, commercial space should be excluded from the sum of each Building’s Gross Square Feet for the purpose of calculating the Efficient Use of Credits.
Q11: When a city is contributing property and waiving permit/utility connection fees how should this be reflected on schedule A and schedule A-1?
A11: If the property, for example, is worth $300k and the fee waivers are worth $20k, the cost of the building of $300k and the cost of the fees of $20k should be shown on the Schedule A and then the same amounts on the schedule A-1 as a source of funds with the city listed as the contributor.
Q12: Can the cost of donated property or waived fees be included in eligible basis?
A12: Since the property is donated and the fees are waived they do not represent actual costs to the project and cannot be included in eligible basis.
Q13: When calculating the maximum allowable developer fee should applicants use the total development cost including donated property and waived fees?
A13: No, since the donated property and waived fees are not actual costs, they will not be included in total development cost when calculating the maximum allowable developer fee.
Q14: Would a finding of asbestos in an existing building make the project eligible for points under the Blighted Buildings and Brownfield Site Reuse criterion as a Brownfield site?
A14: A finding of asbestos, or lead-based paint, in an existing building would not make the project eligible for points under the Blighted Buildings and Brownfield Site Reuse criterion as a Brownfield site. The hazardous substance, pollutant, or contaminant must be attributable to the site (e.g. land) in order for the property to be considered a Brownfield site by MFA.
Q15: One of the buildings in the project we are working on contains a foot-print of 4,200 gross square feet. Because of its height, the building will accommodate 2 floors of 4,200 square feet. Can we count the 8,400 square feet as adapted space for the 20% adaptive reuse calculation.
A15: As long as you do not have to modify the building envelope to accommodate the 2nd floor, you can count the gross square footage of each floor.
Q16: Please verify that for purposes of determining efficient use of credits, that the tax credit request amount (Schedule F) would be used to calculate the per unit and per square foot amount.
A16: Schedule F actually calculates the maximum tax credit request. Applicants may, however, request less tax credits than the project is otherwise eligible for in order to obtain points for Efficient Use of Credits, project selection criteria #20. Consequently, MFA will use the amount of tax credits requested as listed on page 1 of the application form when calculating scoring for Efficient Use of Credits.
Q17: Is there a template available for the certification that the non-profit is not affiliated with, or controlled by a for profit? If not can you please clarify the minimum required information, signatories and whether it needs to be notarized?
A17: The certification can be as simple as the following statement signed by an authorized representative: “I hereby certify that [your organizations name] is not affiliated with, or controlled by a for profit entity.” The certification does not need to be notarized.
Q18: Is there a template for the certification that the non-profit owns 51% of the General Partnership? If not can you please clarify the minimum required information to be contained in that certification, signatories and whether it needs to be notarized?
A18: The certification can be as simple as the following statement signed by an authorized representative of each General Partner: “I hereby certify that [the name of the non-profit] will own not less than 51% of the General Partnership.” The certification does not need to be notarized.
Q19: I have several different plans for our community and I am unsure as to how to label them. One is a housing plan and one is a long term community plan. I am having a hard time deciphering the specific definition of a concerted community revitalization plan. Could you clarify what this means?
A19: “Concerted Community Revitalization Plan” means a Metropolitan Redevelopment Plan as defined in NMSA 1978 Section 3-60A-4 prepared and enacted by a local, county or tribal government at least six months prior to the application deadline. For Projects located on sovereign tribal lands, “Concerted Community Revitalization Plan” means a written plan similar in content and affect to a Metropolitan Redevelopment Plan as defined in NMSA 1978 Section 3-60A-4, prepared and enacted by a tribal government at least six months prior to the application deadline, which identifies barriers to community vitality and promotes specific concerted revitalization activities within an area having distinct geographic boundaries.
Q20: Are manager's units included in total units for the purposes of determining 20% set aside and other applicable set asides based on total units?
A20: Manager’s units are included in total units for the purposes of determining 20% set aside and other applicable set asides based on total units.
Q21: For sustaining affordability points, please confirm that "a copy of the public notice of the PBV proposal selected" only applies to projects which are allocated PBVs through an RFP process administered by a Housing Authority. Said another way, if a project is awarded a competitive source of financing from a federal, state or local source and subsequently the local Housing Authority commits PBVs to the project, a public notice of the PBV proposal selected is not applicable.
A21: 24 CFR Part 983.51(d) requires public notice of the PBV proposal selected regardless of the selection process used.
Q22: We are working on a project within a jurisdiction that has a Downtown Master Plan. The project site is within 1/2 mile of the designated Main Street district as identified in the plan, however, the district is not listed as a designated New Mexico MainStreet area. Can we provide a copy of the plan and radius map to qualify for the points under criterion 15?
A22: In order for a proposed project to be eligible for points for being in proximity to a designated New Mexico Mainstreet area, the area must be designated as either a Certified New Mexico Mainstreet Program or a Start-Up New Mexico Mainstreet Program by New Mexico Mainstreet.
Q23: Criterion 18 (Blighted Buildings) - For a site which has several dilapidated smaller structures on it none of which are suitable for or substantial enough in size to adaptively reuse as a multifamily housing project, is a Capital Needs Assessment still required to qualify for points under the blighted building category? Can documentation from the municipality evidencing the blighted nature of the site supported by a determination from the municipality’s redevelopment plan be provided in place of the Capital Needs Assessment? In this case the CNA would not provide any additional value since the buildings would never be reused as a multifamily housing development.
A23: A Capital Needs Assessment is required.
Q24: It mentions in the QAP that for the individuals with children point scoring category that a service coordinator is required to be on site for 2 days/week for minimum of 10 hours. What do we do if the services being provided don’t require weekly administration (i.e. the services are performed every other month or quarterly)?
A24: Criterion 11 is clear on this question and states the requirements to receive additional points. No additional points will be awarded if a service coordinator is not on site a minimum of two days per week for a cumulative minimum of 10 hours per week.
Q25: Under project selection criterion #12 (leveraging resources), if we were to receive funding from NMMFA in the form of State Risk Share, HOME, NM Housing Trust Fund, Primero funds, Preservation Revolving Loan Funds, or Ventana fund money, would those funds be eligible for points in this category?
A25: No, these are loan funds and not a contribution from a state or local governmental entity.
Q26: Concerning the Locational Efficiency Supplement, which is document no. 21 of the 2017 QAP Application documents, where can I find definitions of the terms used therein (Rural/Tribal/Small Towns and Suburban/Mid-Size Towns).
A26: The Supplement provides Projects seeking to use Rural/Tribal/Small Towns Locational Efficiency criteria must provide a map indicating the location of the proposed project and 1) USDA RHS eligibility, 2) Tribal Trust Land boundary, or 3) colonias boundary. Initial applications that do not include a map demonstrating eligibility for Rural/Tribal/Small Towns classification will be scored use the Suburban/Mid-Size Towns Locational Efficiency criteria. Please refer to the following website for a discussion of Rural areas: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do. A Tribal classification would be land within a Tribal Trust Land boundary. A small town classification would be a town within a colonias boundary or falling within a Rural area. A Suburban/Mid-Size Town would be those that do not fall within Rural/Tribal/Small Towns classifications.
Q27: Scoring Criteria 4 – Sustaining Affordability, item 2 discusses existing projects that are “currently subsidized”. Are affordable housing projects subsidized by tax credits (as discussed in section H) considered subsidized for the purposes of this scoring criteria?
A27: I believe the section in the 2018QAP you are referring to is Section III.H, entitled “New Allocations to Projects Previously Subsidized with Tax Credits”, and the answer to your inquiry is yes.
Q28: Can a seller provide leveraging to a project in the form of cash or selling a property for less than appraised value?
A28: MFA will want to confirm the transaction is arms-length and between separate third parties. To confirm this, MFA will want to review the following for each entity: organizational chart, a list of Board of Directors, Articles of Incorporation and By-Laws, and confirmation whether the entities are for-profit or non-profit. MFA may request additional information on a project-by-project basis. Additionally, MFA will require an appraisal from an MAI certified appraiser licensed in New Mexico which sets forth the value of the land and personal property (buildings) (each stated separately and also a combined value) with any existing land use restrictions taken into account. The restrictions must be based upon the actual restrictions and not an artificial number, such as 80%. MFA also requests a current Title Commitment showing all encumbrances on the land and personal property, including any long term leases or sub-leases.
Additionally, MFA will require a fully executed and legally binding purchase agreement to confirm the sales price. The purchase agreement must contemplate a full transfer of title via Warranty or Special Warranty Deed such that the project applicant is vested with fee title. Furthermore, the transferor can have no contingent future interest in the property, such as a right of reversion, possibility of reverter, right of entry, or power of termination. Also, there can be no remainder rights or executory interest on the part of any other party/entity.
Q29: In a scattered site development, if one of the properties has a blighted building and the other does not, are the points still available?
A29: As set forth in the 2018 QAP, page 30, blighted building(s) must account for at least 10 percent of the sum of each buildings gross square feet. To further clarify, the total square footage of the blighted buildings must equal 10 percent of the proposed total new construction square footage.
Q30: Scoring criteria #1 states “Local nonprofits, NMHAs and TDHEs…”. Is a Tribal Housing Authority (THA) also eligible for these points?
A30: Yes, TDHEs or THAs are both eligible to qualify for points under scoring criteria number one “Nonprofit, New Mexico Housing Authority (NMHA) or local Tribally Designated Housing Entity (TDHE).
Q31: If one property in a scattered site development contributes to an MFA plan and the other does not, are the points still available?
A31: No, all of the scattered sites comprising the project will need to be located in a QCT and/or located in an area covered by a Concerted Community Revitalization Plan (“Plan”) and the development of the proposed project, all sites, contribute to the Plan by engaging in a housing activity promoted in the Plan.
Q32: Is the average construction cost/unit of $45,000 for substantial rehab points inclusive of materials, labor, profit, overhead, general requirements, & NM gross receipts tax?
A32: To calculate the average construction cost/unit for purposes of classifying as a substantial or moderate rehab, please use hard construction costs only (those found on Schedule D). Do not include profit, overhead, general requirements, or NM gross receipts tax.
Q33: In the case of my LIHTC project submission, the non-profit property owner will be the seller and general partner in the LLLP tax credit ownership entity. Can the non-profit lend sales proceeds to the project in the form of a cashflow note to obtain Leverage points? In the case this is possible, does this have to be documented by a board resolution or will a letter from the executive director of the non-profit dealing the terms of the note suffice?
A33: The non-profit may lend sales proceeds to the project in the form of a cashflow only loan and be eligible for points under criteria 12 “Leveraging Resources”. This will need to be documented by a board resolution which includes the terms of the loan.
Q1: Can you provide the actual product name, manufacturer and specifications of the "Brown Classification Folder" you are requiring and where to purchase it?
A1: The preferred brown classification folder is the Universal® UNV10280 Pressboard Classification Folder, Legal, Six-Section, Red. Other acceptable brown classification folders include the [IN]PLACE Moisture Resistant 6-Fastener Classification Folders with 2 Dividers, Legal, Red and Staples® 100 percent Recycled Classification Folders, Legal, 2 Partitions, Red. If you perform a web search using any of the above product descriptions you should be able to locate the most convenient point of purchase for you.
Q2: In reference to the brown classification folder, is there an order or sequence in which the contents of the application should be organized within the folder?
A2: Please organize the material from left to right starting with Tab 1. Fill each section of the classification folder with as many tabs as reasonable before continuing to the next. It is ok if the last section of the folder is empty. Conversely, if the application will not reasonably fit into a single classification folder, please place the remaining tabs in a second folder.
Q3: a) For Schedule H and Compliance Affidavit submittals, is it correct that only the President or CEO of the General Partner (s) is required to submit two Schedule Hs/Affidavits? One as General Partner, CEO or President and one as an individual. This is assuming that the CEO and President is also not a Principal in another entity with other federally financing. 2) Is Types of Financing to be listed on Schedule H federal financing only?
A3: a) The President or CEO of the General Partner(s) is no longer automatically required to submit two Schedule Hs/Affidavits. Only one Schedule H is required for an entity provided that none of the Principals of that entity have any interests in federally subsidized Projects other than those listed on the entity’s Schedule H. If any Principal has an interest in a federally subsidized Project, they must complete a Schedule H disclosing those interests. All Principals must provide a Compliance Affidavit. b) Only federal financing needs to be listed on Schedule H.
Q4: If the LLLP has already been established, should the initial tax credit application be under the LLLP or non-profit GP of the LLLP?
A4: The initial tax credit application should be under the LLLP if the LLLP has already been established.
Q5: I somehow misplaced my Certificate of Completion for the QAP Training and it is a required document in the LIHTC application. How can I get a duplicate copy?
A5: Please contact Stacy Havens at email@example.com for a duplicate.
Q6: On a project that consists of SRO, efficiency, 1-2-3 bedroom units with more than one income/rent tier, do the income/rent tiers have to be distributed throughout, including the SRO units? Can we maintain all the SRO units at the 30% AMI?
A6: Income/rent tiers must be distributed throughout all unit types proportionally. Projects may not maintain all SRO units at the 30% AMI tier.
Q7: I see from the application checklist that the contractor resume does not have to be submitted until carryover. Schedule D requires a contractor signature. Do I need to have a contractor signature on Schedule D at the time of application even though the resume is not required?
A7: If a contractor has not been selected, then the resume is not required and schedule D does not need to be signed by a contractor for the initial application.
Q8: If the LLLP has not been established what entity should be listed as the legal name of the project owner on Schedule J?
A8: The legal name should be listed as TBD if the LLLP has not been established and the signatories should sign as General Partner(s).
Q9: Can you clarify if non-profit board members need to sign a compliance affidavit and complete a schedule H and also that only executive director needs to complete a compliance affidavit and schedule H on behalf of the nonprofit?
A9: Board members need to sign compliance affidavits but they do not need to sign a Schedule H unless they have interests in restricted properties that do not appear on the nonprofit’s Schedule H. Assuming board members do not have interests in restricted properties other than non-profit’s, only the executive director needs to sign schedule H on behalf of the organization. The executive director also needs to sign Schedule H.
Q10: Schedule I has an information requirement of "On-site Manager". What is MFA's definition of "On-site Manager"? Does that mean a manager that resides on the premises, or does it mean the manager has an office on the premises? Please clarify...
A10: For Schedule I, on-site manager means a manager that resides at the property.
Q11: Can the site plan and landscaping plan be combined on one sheet?
A11: The site plan and landscaping plan may be combined on one sheet provided you can get all of the information on one sheet and still have it clearly legible.
Q12: The Affordable Housing Plan enacted by the municipality in which our project is located is over 200 pages. Do we need to submit the entire plan with our application?
A12: Complete copies of the Affordable Housing Plans, Concerted Community Revitalization Plans, Appraisals, Capital Needs Assessments, Phase I Environmental Reports, or other similar plans or 3rd party reports must be included in the applications when required but they may be provided as a PDF electronically rather than hard copy. Applicants choosing to provide PDF copies of materials electronically are responsible for ensuring that the materials are complete and viewable with standard Adobe Reader software. If MFA is unable to review materials provided electonically, the application will be reviewed and/or scored as if the material was not provided.
Q13: What alternate document would be acceptable to show lack of encumbrances on Native American Trust Land?
A13: Lack on encumbrances on Native American Trust Land should be shown with a certified or uncertified Title Status Report from the Bureau of Indian Affairs.
Q14: For the purpose of the Compliance Affidavit, are Principals considered all board members and executive staff?
A14: For the purpose of the Compliance Affidavit, Principals are considered all board members and executive staff of a General Partner as well as any person or entity receiving a portion of the developer fee. Each of these individuals should complete and provide a Compliance Affidavit.
Q15: Can you clarify whether interior or exterior dimensions for square feet calculations are used for Schedule B and Schedule F?
A15: Schedule B should use net square feet (interior dimensions) while schedule F should use gross square feet (exterior dimensions).
Q16: Square foot calculations: The Gross Square Feet (as defined in the QAP as exterior dimensions) is used for page three of the application in the Efficient Use of Tax Credits. a) How should schedule B and F be reconciled with the Application Page three and the Efficient Use of Tax Credits EUC, if schedule B and F are interior dimensions? b) Relatedly, how is schedule B reconciled with other Schedule F and the application if dimensions are interior dimensions of units (heated sq ft in floor plan) and not exterior and not inclusive of common hallways, etc.
Q16: Schedule F is based on exterior dimensions (gross square feet) of the Units. Schedule F should reconcile with square feet of Low Income Units and Market Rate Units listed on page three of the application. The sum of Each Building's Gross Square Feet listed on the Efficient Use of Credits Worksheet must reconcile with the total square feet (minus commercial space) indicated on page three of the application form. Since Schedule B is the only form that uses net square feet (interior dimensions) it will not reconcile with the other forms.
Q17: You've clarified that Board members that do not have interests in other restricted properties do not have to submit separate Schedule H's. Are you referring to personal interests in other restricted properties? Would Board members sitting on multiple Boards be required to submit Schedule H's for properties owned by the secondary entity?
A17: A Board member that serves on multiple Boards has an interest in the properties owned by each of the organizations so the Schedule H for that Board member should list all of the properties owned by each of the organizations.
Q18: Does or can MFA cc the Letter to the local government official to that official's administrator or deputy staff if that information is provided in the application?
A18: MFA will only provide notice to the local government official.
Q19: To be eligible to apply under the non-profit set-aside, must the non-profit control 100 percent of the general partner, or would a non-profit that controls 51% of the general partner be eligible to apply under the non-profit set-aside?
A19: A nonprofit that controls 51 percent of a general partnership is eligible to apply under the non-profit set aside.
Q20: It mentions in the QAP under the non-profit set-aside that “qualified non-profit organizations may also apply for tax credits in excess of these set-asides.” Does this mean that if there was $500,000 available in the non-profit set-aside and the non-profit applicant needed an award of $800,000 to make their project viable that due to their high request they would not be able to apply in the non-profit set-aside, or that they could apply under the non-profit set-aside and if awarded $500,000 would come out of the non-profit set-aside and the remaining $300,000 would come out of the general pool?
A20: The latter portion of your question is correct.
Q21: On page 9 of the QAP (ten-year rule), it mentions that the 10 year rule shall not apply to federally-assisted buildings. If our project falls under this exception, is there anything in the application that we should submit to confirm that we fall under this exception? For instance if we are a Section 8 project that is federally-assisted, should we just include a statement to this effect and a copy of the Section 8 contract? Or do we need to include something like a letter from an attorney confirming we are exempt from the 10 year rule?
A21: Either is acceptable.
Q22: Is it acceptable for the LIHTC ownership entity and general partner to be a LLC (or must the ownership entity be organized as a limited partnership with a general partner)?
A22: Yes, it is acceptable for the LIHTC ownership entity and general partner to be an LLC.
Q23: Does a nonprofit's mission to foster affordable housing have to be documented in their article of incorporation or can it just be by a board signed resolution?
A23: The non-profit's mission to foster affordable housing should appear in either their articles of incorporation, by-laws or any other document which constitutes an "Organizing Document" as defined by the IRS. On the IRS website (https://www.irs.gov/Charities-&-Non-Profits/Organizing-Documents-), there is a definition of "Organizing Documents" and it includes the trust instrument, corporate charter, articles of incorporation, articles of association or other written instrument by which the organization is created under state law. A board signed resolution would not fall within the definition of an Organizing Document.
Q24: How does a governmental entity that is willing to donate a parcel of property for a potential project demonstrate site control prior to actually handing over the deed?
A24: See Section III.C.1 of the 2018 QAP. This section provides, in part, that site control for all of the property needed for the Project must be evidenced by: 1) a fully executed and legally enforceable purchase contract or purchase option, and/or a written governmental commitment to transfer or convey the property to the Applicant by deed or lease that demonstrates the Applicant will possess a qualified leasehold Interest upon execution of the lease, or 2) a recorded deed or recorded lease demonstrating that the Applicant possesses a qualified leasehold interest. See also Criterion 12 for a related discussion on leveraging resources and the need for an "as-is" appraisal.
Q26: In the QAP there is a reference to Universal Design. There doesn't seem to be any reference to UD in the 2018 Mandatory Design Guidelines. What standard should be referenced?
A26: The QAP defines Universal Design to mean any component of a house or apartment that increases the usability for people of all ages, size and abilities and enhances the ability of all residents to live independently for as long as possible. While the 2018 Mandatory Design Standards do not make specific reference to "Universal Design", it is a concept that is recognized by HUD. For example, the HUD website (see HUDUSER.gov) contains a publication entitled "Residential Remodeling and Universal Design" which serves to provide guidance on making homes more comfortable and accessible. All proposed tax credit projects must comply with our Mandatory Design Guidelines; however, pursuant to Criterion no. 10, Projects Reserved for Senior Households, in order to receive points under this Criterion, community buildings and all units must incorporate Universal Design.
Q27: Zoning. Section III.C.2 of the QAP states that the evidence of zoning must indicate, " . . . that multifamily Projects not be prohibited by the existing zoning of the proposed site and there is no pending litigation or unexpired appeal process relating to the zoning of the proposed site." It is my understanding that all zoning modifications and variances required to construct a Project do not need to be in place at the time of application - as long as multifamily is not prohibited by current zoning. Is it then correct that the statement about pending litigation or unexpired appeal period only apply when there is a zoning change required to complete the project such as when a site was zoned commercial and is being changed to a zoning classification that permits multifamily?
A27: Yes, that is correct.
Q28: Rehabilitation Projects versus Adaptive Reuse. The 2018 QAP does not have a definition of rehabilitation. The QAP definition of “Adaptive Reuse Projects” is as follows: "Adaptive Reuse Projects means Projects which will involve the conversion of an existing building, or buildings, which was not initially constructed for residential use to multifamily residential use." The "residential" occupancy classification used in the International Building Code includes convents, monasteries, dormitories, hotels, and transient boarding houses. Does MFA consider such uses "residential" for the purpose of distinguishing between Adaptive Reuse Projects and Rehabilitation Projects?
A28: Yes, MFA considers the uses described above as "residential" for these purposes.
Q29: The checklist contains several criteria that are not applicable to our submission. Behind those non-applicable criteria are (in many cases) multiple tabs. Will you require that we submit each tab with a "Not Applicable" sheet behind it, or may we remove the non-applicable tabs and simply submit a "Not Applicable" sheet for the relevant criterion?
A293: Yes, you may remove the non-applicable tabs and submit a "Not Applicable" sheet for the relevant criterion.
Q30: If an individual is serving as a placeholder limited partner of the project ownership entity, do we need to include the personal SSN in place of the EIN in Section VII of the Rental Development Application, or can we redact this information for privacy reasons?
A30: Yes, you may redact the personal SSN.
Q31: Clarification question & answer #10 under Miscellaneous states that board members do not need to sign Schedule H's if they have no interests in other restricted properties but do need to sign compliance affidavits. However, the compliance affidavit form references an attached Schedule H that shows the Principal's financial interests. Will we just put "none" in the Schedule H in this scenario and attach it to the Compliance affidavit? Also based on the checklist, MFA currently has the Schedule H's in Tab 10a and the Compliance Affidavits in Tab 10b. Since the compliance affidavits reference the attached Schedule H's, will we put the Schedule H's in Tab 10b as well?
A31: Yes, please note “none” in Schedule H and attach to the Compliance affidavit. You need only include Schedule H in tab 10a; you do not need to attach it again in tab 10b.
Q32: Were you going to provide information/direction concerning relocation expenses?
A32: Pursuant to IRC Section 42, Part IX Appendix, hard relocation costs are to be expensed as ordinary and necessary business expense under IRC Section 162. This is applicable to both permanent and temporary relocation costs. Any consulting costs associated with relocation are considered eligible however they are accounted for with the Developer Fee and any other Consulting Fees associated with the Project. The 2018 Schedule A reflects this ruling and has separate line items for Hard Relocation Costs and Relocation Consulting. Please reference IRC Section 42, Part IX Appendix for more information.
Q33: USDA Rural Development Set-Aside - Can you confirm that this set-aside only applies to new construction Projects that use USDA-RD "Direct" 514/515/516 loan programs where the Project is also receiving a rental subsidy from USDA-RD? For example, a new construction USDA-RD 538 loan would not qualify for the set-aside as it is not a "Direct" USDA-RD loan program and there are no rental subsidy associated with a USDA-RD 538 loan.
A33: You are correct. Per the 2017 QAP, Section III D. 2, “Ten percent of the Annual Credit Ceiling will be set aside for new construction projects with direct USDA Rural Development financing (USDA-RD 514/515/516 and MPR programs…). As USDA-RD 538 is not a direct loan from the USDA to the project borrower, this does not qualify under the USDA Rural Development Set-Aside.
Q34: In the case of my project, we will be using our for-profit/co-general partner's audited financials based on the calendar year to meet the net worth/net assets requirement. So, their latest audited financials are for 2016... 2017 will not be available until later this year. Will it suffice to provide the 2016 audited financials for this application requirement? In addition, will this also suffice for the requirement for all general partner's to provide audited financials?
A34: To satisfy submissions of Audited Financial Statements, MFA requires the most recent fiscal year available to be submitted. In the event the most recent year available is not the most recent fiscal year, MFA will require submission of the most recent available Audited Financial Statements, unaudited Financial Statements for the most recent fiscal year, and YTD Financial Statements dated within 3 months of the application.
Q35: Were you going to provide information/direction concerning relocation expenses?
A35: Pursuant to IRC Section 42, Part IX Appendix, hard relocation costs are to be expensed as ordinary and necessary business expense under IRC Section 162. This is applicable to both permanent and temporary relocation costs. Any consulting costs associated with relocation are considered eligible however they are accounted for with the Developer Fee and any other Consulting Fees associated with the Project. The 2018 Schedule A reflects this ruling and has separate line items for Hard Relocation Costs and Relocation Consulting. Please reference IRC Section 42, Part IX Appendix for more information.
Q36: I am planning a scattered site development and the QAP states each site must have community space adequate for the provision of services. What does “community space” mean?
A36: Community space is construed broadly and includes any common space for the residents (community room, playground, pool, etc.). See page 7 of the 2018 QAP for further discussion on when this applies.
Q1: How can I submit questions for MFA loans now that the applications are linked with the LIHTC applications and there is a quiet period?
A1: For all general MFA Loan or MFA Loan Application questions, please submit those through the LIHTC FAQ process. If you have a specific question relating to a project, you may contact MFA Loan staff directly any time prior to the application deadline. Once the application deadline has passed, the quiet period begins pursuant to Section IV.A.5. of the 2018 QAP.
Q2: At the training, it was mentioned a new loan application process was being implemented this year. Can you provide more detail?
A2: Beginning in 2018, applicants wishing to apply for any MFA or Ventana Fund loan for their LIHTC project will indicate such in their LIHTC application. The application form has been updated to allow developers to select which loan(s) they wish to apply for and provide the amounts and desired terms on Schedule A-1 (Sources of Funds). The Attachments Checklist has also been updated to include additional items each funding source will need at the time of application. Those items will be included in the LIHTC application, located in the same submission folder, and tabbed per the Attachments Checklist. Once preliminary tax credit reservation letters have been sent any project proposed to receive a tax credit allocation will be contacted by the loan staff at MFA to continue processing their loan application. At that time, any application fees due to MFA for MFA or Ventana Fund loan programs will be requested. No loan application fees need to be submitted to MFA unless the developer has been contacted by MFA staff.
For example, Developer A wishes to apply for a HOME loan from MFA for their LIHTC project. Developer A will check the HOME box on the LIHTC application form and complete the details of the loans on Schedule A-1. Developer A will ensure all additional HOME loan items identified on the Attachments Checklist are included in their LIHTC application in the appropriate tabs. Developer A receives a preliminary tax credit award letter and is contacted by MFA staff to provide any further required documentation, including the application fee.