LIHTC Applications FAQ

Question 1:

For USDA RD projects that have operating costs above $5800 per unit, would the USDA RD approved annual budget suffice as documentation justifying the higher expenses?

MFA Response:

A USDA RD approved annual budget on its own is not sufficient justification for MFA to approve higher operating expenses. Applicants must also include additional information supporting and explaining the line items in the budget. 

Question 1:

Can an existing USDA RD 515 family property with 6 two bedrooms (25%), 16 three bedrooms (67%), and 2 (8%) four bedrooms qualify for points under scoring criteria 10 Households w Children since it does not meet the 30% two bedroom requirement? 

MFA’s Response:

MFA is not able to pre-score applications.  However, 2023 QAP Section III.E.10 states “[f]or rehabilitation Projects, at least: 30% of the total Units must have at least two bedrooms” [emphasis added]. Three- and four-bedroom Units have at least two bedrooms.

Question 2:

Will resumes and MOU's be required from service providers at time of application for Scoring Criterion 8. Households w Special Housing Needs?

MFA’s Response:

Yes, under Part II Scoring Points Available in Section III.E.8, the 2023 QAP states that “For services provided by a qualified service provider, Application must include an MOU between the Project Owner and the service provider(s) describing their expertise with providing services, a detailed description of planned services and how they will be delivered, and the staff capacity for providing ongoing case management.  Qualified service providers shall have a minimum of three years of experience providing a service or assistance to persons with Special Housing Needs.  This MOU must be updated to include a detailed description of the roles and responsibilities of the Project Owner, the Management Agent, and the Qualified Service Provider prior to the 50% completion meeting.”  Resumes from service providers are needed to demonstrate that the qualified service provider has the requisite experience and staff capacity. “For services provided by an affiliate of the developer, Application must include a narrative describing the applicant’s expertise with providing services, a detailed description of planned services and how they will be delivered, and the qualifications of staff providing direct services and their qualifications to provide ongoing case management.  The affiliate of the developer providing services shall have a minimum of three years of experience providing a service or assistance to persons with Special Housing Needs.” Again, resumes would be the means to demonstrate that staff is qualified to provide the services.

Question 3:

Section III.E.11 (page 42) – Leveraging resources:

In order for a Government entity to make a donation to a development seeking LIHTC, under the Affordable Housing Act, must all General Partners in an application be determined by the MFA to be a Qualified Grantees, or may only the General Partner receiving the majority of the developer fee be determined by the MFA to be a Qualified Grantee? Specifically, where there is a 51% non-profit general partner and a 49% for-profit general partner, must both be Qualified Grantees in order to receive a donation of land for a project or may only the 49% for-profit general partner be a Qualified Grantee? The majority developer entity will be a for-profit affiliate of the for-profit general partner entity.

MFA’s Response:

The FAQs are available to ask questions regarding the 2023 QAP. You may contact Julie Halbig, MFA's Director of Compliance and Initiatives, with any questions you have regarding the Affordable Housing Act.  Her department reviews all donations for compliance with the Affordable Housing Act.  She can be reached at jhalbig@housingnm.org.

Question 4:

Leveraging resources:

If a Government wishes to donate labor and/or materials to a project, can the value of this labor and/or materials be counted towards leverage points, under the condition that a letter of commitment is provided and that this letter includes the method of calculating the value of donated labor and/or materials and documentation of their cost?

MFA’s Response:

No. The 2023 QAP limits the type of leverage provided for scoring purposes under Scoring Criterion 11 to:

• Cash or soft loans not requiring payment during the Affordability Period,
• Construction permit fee waivers, and/or
• Land and/or buildings.

Question 5:

Can you please provide detail on what you will require for site control and city approvals (formal resolution adoption, etc...) for donation of land from a city government.

MFA’s Response:

For purposes of the site control threshold, the 2023 QAP Section III.C.1 requires the following.  Meeting the site control threshold does not meet the requirement for points if a contract is not included in the Application (see Section III.E.11 below).

1.            “Site control.

a.            Site control for all of the property needed for the Project must be evidenced by:

i.              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 or Developer or Project Owner by deed or lease that demonstrates Applicant or Developer or Project Owner will possess a Qualified Leasehold Interest upon execution of the lease, (collectively termed a “transfer commitment”). If a transfer commitment is submitted, the commitment must provide for an initial term lasting at least until June 30 of the year in which the allocation is made (“initial term.”) This initial term must not be conditioned upon any extensions requiring seller consent, additional payments, financing approval, tax credit award or other such requirements. Similarly, the transfer commitment must not require any additional actions on behalf of Applicant during the initial term which could allow the seller/lessor to terminate the transfer commitment if the action is not fulfilled by Applicant. If the transfer commitment requires an escrow payment or other deposit due and payable after signing, evidence that payment was received must be included in the Initial Application; or

ii.             A recorded deed or recorded lease demonstrating that Applicant possesses a Qualified Leasehold Interest.

b.            Site control evidence and the Application materials must show exactly the same names, legal description and Acquisition Costs.  (Exception: In the case of To Be Formed partnerships, the relationship between the parties must be shown.)  All signatures, exhibits and amendments must be included to be considered complete.”

However, if the Applicant is requesting points for Leveraging Resources (see 2023 QAP Section III.E.11) a contract is required, which may be in addition to the “written governmental commitment” to meet the site control threshold.

“Land and/or buildings: submit a copy of the contract contributing the land and/or building(s) between the governmental entity and the developer or the proposed project owner (if duly formed) along with an “As-is” appraisal evidencing the value of the land and/or buildings dated no earlier than six months prior to the Application date that was completed by an MAI appraiser licensed in New Mexico.  The value in the appraisal that will be acceptable for points must assume that any existing use restrictions will remain in place and include the value of any leasehold interest, if applicable.  Contributions may be in the form of:

donation of an entire parcel of land and any improvements thereon;

lease of an entire parcel of land through the Extended Use Period for a nominal amount (i.e., $1 per year).“

Question 6:

Should not the Households for Children priority score as least as much as Senior Housing priority set aside?

MFA Response:

No, it is not a typo, this is part of MFA’s policy to encourage Senior Housing development across the state. Applicants can qualify for up to 10 points under Scoring Criterion 9 Projects Reserved for Seniors Housing Priority and they can qualify for up to 8 points under Scoring Criterion 10 Projects Reserved for Households with Children Housing Priority. This difference in possible scores between the two scoring criteria was first implemented in the 2022 QAP. 

Question 7:

For scattered site projects, in order to be eligible for the proximity to NM MainStreet points do all the sites have to be within  0.5 mile of NM Main Street designated area; and to be eligible for brownfield site points do all sites have to be brownfield sites?

MFA Response:

Yes, 2023 QAP Section III.E.14.b provides points if “the proposed Project is located within 0.5 mile of a New Mexico designated MainStreet area or a State-Designated New Mexico Arts and Cultural District.”[emphasis added] Since the QAP refers to the Project rather than a site, each of the scattered sites must be within 0.5 mile of the applicable New Mexico designated MainStreet or State-Designated New Mexico Arts and Cultural District.

No, 2023 QAP Section III.E.17 provides points for “Projects that include the demolition of Blighted building(s) or the remediation and reuse of a Brownfield site.”  For Projects claiming points for a Blighted building, the “Blighted building(s) must account for at least 10% of the sum of each Building’s Gross Square Feet. For scattered site projects, the total Gross Square Footage of the Blighted Buildings must equal or exceed 10% of the proposed total new construction Gross Square Footage.” However, there is no such limitation on the square footage of the brownfield site. Thus, not all sites in a scattered site Project need to be brownfield sites.

Question 8:

Will the City of Socorro on call/curb to curb transportation service that runs Monday thru Friday 8am to 12noon & 1pm to 5pm within the city limits for .50 cents each way for adults and .25 cents each way for students, seniors, and disabled persons qualify for 2 points under the Access for Public Transportation scoring criteria?  Thank you.

MFA Response:

Section III.E.2 of the 2023 QAP provides an example of an acceptable form of alternative transportation: Projects on tribal land with established “on call” transportation programs that provide the users a choice of local destinations, regardless of their residency in the Project, shall be considered “public transportation.”

As long as the “on call” transportation service is in operation as of the Application Deadline, is publicly available and not restricted to any particular group or residential status, properly documented in the application, and any fees charged for the service are reasonable and on par with public bus transportation rates, the transportation service can be considered “public transportation” and would qualify for points under Scoring Criterion 2.

Question 9:

Projects seeking to meet the Rural/Tribal Locational Efficiency designation must provide a map indicating the proposed location of the project.  What exactly do we show on this map to meet this criteria?

MFA Response:

The map must show the location of the Project with the nearby roads and cross-streets and the city, town or census designated place where the Project is located.  The Project may not be located in any of the Urban Areas defined in the Glossary located in Section XI of the 2023 QAP.

Question 10:

For the Housing w Children Housing Priority scoring criteria, can the summer lunch program or after school snack program services be located off-site at the nearest school?

MFA Response:

No. Section III.E. of the 2023 QAP states: Enrichment services must be optional to the residents, offered on-site and be actively linked to the Project, not simply available to the community-at-large.”

Question 11:

Requesting MFA approval for "Other - Enrichment Service Commitments" under the Seniors Housing Priority Scoring Detail Sheet for the following services:

- On-site semi-annual eligibility screenings and/or application assistance for Medicaid or Medicare (1 point).

- On-site quarterly technology training (1 point).  Examples of technology training include tutorials on setting up smart phones, tablet instruction, social media training, computer training, internet browsing, taking and sharing photos, downloading apps or technology set-up assistance (connecting modems, etc.).

MFA Response:

The following services are approved for one point each.

- On-site semi-annual eligibility screenings and/or application assistance for Medicaid or Medicare (1 point).

- On-site quarterly technology training (1 point).  Examples of technology training include tutorials on setting up smart phones, tablet instruction, social media training, computer training, internet browsing, taking and sharing photos, downloading apps or technology set-up assistance (connecting modems, etc.).

Question 12:

We would like to request that MFA consider adding this as an "other" qualified scoring point category for services to be offered on-site:  Benefit Enrollment Assistance.  This is assisting individuals/families with enrolling in with LIHEAP, SNAP, or other available resources/programs, etc.   

MFA Response:

This service is approved for one point, if provided on a rolling basis to residents as requested, but no less frequently than quarterly.

Question 13:

For a Households with Special Needs project, can semi-annual CPR training be approved as a service for one (1) point?

MFA Response:

Yes, if the Special Needs population that is targeted is in the “Households or individuals experiencing homelessness” category rather than a population with an impairment that limits their ability to perform CPR (see major life activities as it is defined in the Glossary to include walking, talking, hearing, seeing, breathing, learning, performing manual tasks, and caring for oneself.)

Question 14:

For a Households with Children Housing project, can a Food Pantry service that is on-site, or contiguous and accessible to the property and of adequate size with reasonably sufficient quantities of food, perishable and non-perishable be approved for one (1) point?

MFA Response:

Yes.  This is a service that is already included for the Housing for Special Needs Housing Priority that would also be acceptable for Households with Children and Housing for Seniors Housing Priority in the 2023 round.

Question 15:

With respect to a Households with Children Housing priority application, can a half-court basketball court with bleachers meet the recreational design requirement for children ages 5-12 and children over age 12?

MFA Response:

No.  While the 2023 Mandatory Design Standards for Multifamily Housing states that “activities/play areas for different age groups may be combined within a common play area as appropriate,” it refers to a common play area that can be used simultaneously by both age groups, such as a playground with equipment designed for younger children and older children.  In this case, only one age group will be able to use the court at a time, which is not the case for the combined playground. The Standard Basketball hoop is 10' from the ground for children 12 and older. This height varies from 8' to 10' depending on the age for 7-to-12-year old's, with no direction for one serving anyone younger than 7. The basketball court could potentially be used by adults as well, limiting the time the 5 to 12 age group could use the basketball court."

Question 16:

With respect to leverage, can a soft loan from the non-profit general partner to the project not requiring payment during the Affordability Period be evidenced by a commitment letter?

MFA Response:

Yes, if the soft loan is deferred developer fee.  The 2023 QAP permits two types of leverage from a General Partner: deferred developer fee, and donated land and/or buildings.  If the soft loan referred to in the question is not deferred developer fee that can be repaid in 15 years, then it is not permitted to be counted as leverage under 2023 QAP Section III.E.11.

Question 17:

Do National Housing Trust Fund monies still qualify for Leveraging points?

MFA Response:

Yes, if there is no required payment during the Affordability Period. 2023 QAP Section III.E.11 permits three types of leverage from a Government (federal, state or local government). Cash or soft loans not requiring payment during the Affordability Period is one of the three options. MFA’s National Housing Trust Fund loans qualify because they do not require a hard payment during the Period of Affordability.

Question 18:

Scoring: For Projects applying for Additional Supplemental Tax Credits due to increases in hard Construction Costs in which Section III.G. of the QAP waives the requirement that these Projects must be awarded in their Supplement Applications that same points for the Efficient Use of Credits Project Selection Criteria as in their Initial Applications, then how will these Supplemental Applications be evaluated on points against the Initial Applications for the 2023 round?   Will their Initial Applications’ points for Efficient Use of Credits Project Selection Criteria be used?

MFA Response:

No. 2023 QAP Section III.G states that “the Project will compete on the same basis as that of the subsequent round Projects.” When scoring the 2023 round, all Applications will be scored based on the 2023 round criteria.  Previous scores will be disregarded.  MFA will calculate the score based on the total tax credits per low-income square foot and the total number of tax credits per Unit requested for the Project – including both the credits awarded in a previous round and the supplemental credits.   For example, if a 2021 round project received $16,073 LIHTC per Unit in 2021 and the 2023 Application for Supplemental Credits requests an additional $4,715 credits (totaling $20,788 per Unit), the $20,788 per Unit in LIHTC and the total tax credits per low-income square foot for the Project (including both the 2021 tax credits and the requested 2023 tax credits) will be used to score the Application for Additional Supplemental Tax Credits in the 2023 round.

Question 19:

Applications/Scoring: We intend to submit three applications for the 2023 9% round.  If all three applications score well for possible 9% credit allocations as determined by MFA staff review, are we allowed by the QAP to unilaterally decide which application to pull for consideration to receive a 9% allocation? And if we are allowed to do so, what is the latest date we can inform MFA staff of our decision?

MFA Response:

No, 2023 QAP Section IV.5  limits communications between MFA and the Applicant, so there is no opportunity to contact the Applicant to request their preference. Assuming all three Applications meet threshold review requirements and score high enough to receive an award (subject to the two project limit) 2023 QAP Section IV.F.2 entitled “Selection of Projects for Awards” directs staff to rank and order the projects according to scoring procedures established in Sections II.C and III.E with consideration to the Allocation Set-asides described in Section III.D. 

Question 1:

Do re-applications for additional credits count as 1 deal? Meaning, if we are limited to only 2 allocation awards in the round, and submit 2 re-applications, have we reached our max for potential awards?

MFA’s Response:

Yes, applications for supplemental credits receive a separate Reservation and thus a separate award, so it is not possible to be awarded supplemental credits for two Projects from prior years plus a new project award within the same round.

2023 QAP Section III.G entitled Additional Supplemental Tax Credits for Cost Increases states that “Full Applications will be required for competition within an allocation round and the Project will compete on the same basis as that of the subsequent round Projects.”  Thus, the request for supplemental credits is a new Application that competes in the round and the same limitations apply that would apply to any other Project competing in the round. 

Question 2:

For a re-application of additional credits, is the full deposit of $12,000 due? 

MFA’s Response:

Yes, 2023 QAP Section III.G states that full Applications will be required, so the Direct Cost Deposit of $12,000 indicated at 2023 QAP Section IV.B is due at submission of the tax credit Initial Application.  MFA reviews the plans submitted with the Application, as it is possible that there are changes to the plans.  The QAP indicates that the deposit is an estimate only and the final cost may vary.  Therefore, any portion of the Direct Cost Deposit that is over and above what is necessary would be refunded. 

Question 3:

For a re-application of additional credits, is a new market study required or a refresh of any kind needed?

MFA’s Response:

2023 QAP Section III.G states that full Applications will be required, which includes the market study at 2023 QAP Section III.C.4 that is required as a Minimum Project Threshold.  The Market Study Parameters for 2023 indicate that the Market Study must be dated no earlier than six months prior to the Application Deadline, thus an existing Market Study that was submitted with a prior Application must be updated.  “If the Market Study as submitted is not sufficient, there may be an additional Market Study ordered by MFA.  The cost of this MFA-ordered Market Study will be covered by the Applicant through the design deposit submitted at Application, with any overage billed to owner.  It is MFA’s sole discretion whether or not the Market Study is sufficient.”

Question 4:

If applying for scattered site, do you want to review CNA and market study as a combined (1) report, or 2 individual type reports?

MFA’s Response:

Scattered site Projects for which all sites are in the same primary market area may submit one market study for the Project. Otherwise, submit separate market studies for each site that are each compliant with the QAP (including capture rate requirements).  A separate Capital Needs Assessment for each site must be submitted with the Application.

Question 5:

Per Mandatory Design Standards for Multifamily Housing, Rehabilitation, Part C Building Design & Construction, what is considered the façade? Does this include the roof? Would the roof count towards one of the 3 different materials required for the exterior building façade design? Would the roof also count towards the multi-colored façade?

MFA’s Response:

Yes, the roof counts towards the three different materials and the multi-colored façade if it is visible from the street. The 2023 Design Standards define Building Façade as “any elevation of a building facing a public way or space” that is “inclusive of all building elements compiled to create a visual impression.”

Question 6:

Can an applicant evidence site control of a property by providing a deed and organization documents for the LLC ownership entity of record, where they are the sole member of the LLC?

MFA Response:

Yes, 2023 QAP Section III.C.1.a.ii indicates that a copy of the recorded deed demonstrates site control.  If the LLC will be the ownership entity and the applicant is its sole member or if the proposed ownership entity that will receive the tax credits is not duly formed, the organizational documents can be used to demonstrate that the applicant controls the LLC. If the proposed ownership entity is formed, a fully executed and legally enforceable purchase contract or purchase option described in Section III.C.1.a.i should be included.

Question 7:

Will you accept a letter from the county assessor providing for a real estate tax waiver throughout the term of the permanent financing with respect to evidence of tax abatement?

MFA Response:

Yes, a letter from the county assessor indicating that the owner entity proposed in the application has applied for a property tax abatement and qualifies for the abatement for the duration of its ownership of the property could be used by MFA when underwriting the project.

Question 8:

Will a 100 square foot insulated modular building constructed to code meet the maintenance room MFA design requirement?

MFA Response:

Modular buildings that are permanently affixed to a foundation and meet all design requirements in  MFA’s 2023 Mandatory Design Standards for Multifamily Housing are acceptable.

Question 9:

If we have 2 locations in a scattered site, 1 meets the 20 year requirement, the other does not, is a CNA required at initial application for both, or just the one at initial, and a CNA later supplied at time of Carryover for the other? 

MFA Response:

2023 QAP Section II.J on page 11 stipulates when the CNA is due for a Project.  The CNA for the site that is less than 20 years old is due with the 9% Application.  While it would be preferable to also receive a CNA for the site that is more than 20 years old, it is not required.

Question 10:

Does MFA accept transfer language in the PSA [Purchase and Sale Agreement] from single entity to a member of the to be formed GP of the LLLP? Sample language below:

"Buyer must receive written permission from seller to transfer purchase agreement to another party. The only exceptions being the assignment to either a Buyer affiliated Special Purpose Entity, with the purpose of building a Low-Income Housing Tax Credit funded affordable housing development."

MFA Response:

MFA will not accept language that merely states that it is possible to assign a purchase agreement. The Application must demonstrate that the Applicant, Developer or Project Owner has site control as of the Application Deadline.  2023 QAP Section III.C.1.a.i requires 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 or Developer or Project Owner by deed or lease that demonstrates Applicant or Developer or Project Owner will possess a Qualified Leasehold Interest upon execution of the lease.”  If the party listed as the Buyer in the purchase agreement is not the Applicant, Developer or Project Owner, and the purchase agreement includes language allowing the assignment of the purchase agreement to another entity, then both the original purchase agreement and the fully executed assignment agreement assigning the purchase agreement to the Applicant, Developer or Project Owner must be included in the Application.

Question 11:

Can a purchase and sale contract have a first due diligence period that ends June 30, 2023 with an extension beginning July 1, 2023 with an additional payment to the seller?  Sample language here:

"Buyer to receive "Due Diligence Period #1" up to June 30, 2023. If Buyer requires additional due diligence period buyer will make additional $10,000.00 non-refundable deposit with Fidelity National Title. 2nd due diligence period to end September 30, 2023."

MFA Response:

Yes. The 2023 QAP Section III.C.1.a.i requires that the transfer commitment provide for an initial term lasting at least until June 30 of the year in which the allocation is made (“initial term”).  It goes on to say that the “initial term must not be conditioned upon any extensions requiring seller consent, additional payments, financing approval, tax credit award or other such requirements.” As long as the initial term through June 30, 2023 does not have the prohibited conditions, it is permitted to include additional escrow deposits to extend the contract beyond June 30, 2023.

Question 12:

With respect to Checklist item 18c, will MFA require evidence of USDA RD approval by the local and regional office of property transfer at initial tax credit application for a rehabilitation project?  This approval is not required by USDA RD at initial tax credit application and can be obtained upon receipt of a reservation within 45 days.  In addition, providing the transfer approval at initial tax credit application requires additional expense such as obtaining a CNA and other items when we are not assured of a reservation.

MFA Response:

MFA requires preliminary approval by the local and regional office of a transfer at the initial tax credit application for a rehabilitation project. The Evidence of USDA-RD local and Regional office Approval of Property Transfer that is contemplated at Initial Application is a letter from the Branch Chief that confirms that USDA:

Received notice that the Applicant has informed Rural Housing Service of the intention to transfer;

Understands the Applicant intents to apply for LIHTC to acquire and rehabilitate the property;

Understands the Applicant intents to submit a transfer and assumption application to RHS for consideration;

Believes that the project appears to be feasible based on the information provided, subject to the submission and review of a complete USDA application;

And includes the:

outstanding balance of the existing RHS loan,

current interest rate and any applicable reduced interest rate that would apply to the transaction,

proposed loan term, and

amortization period.

Question 13:

With a potential LIHTC application for Additional Credits, with an existing market study performed in January of 2021, and updates provided by Novogradac in January and July of 2022.  The last update with an effective date of July 20, 2022, and only addressed to the equity investor who requested the market study.  Are we required to update/modify the entire study or just have the market study updated to indicate the purpose is for MFA (prepared for)?

MFA Response:

The entire market study must be updated, as the data is stale. The 2023 MFA Market Study Parameters require that the market study be dated no earlier than six months prior to the Application Deadline for 9% Projects and the 184-day period between July 20, 2022 and January 20, 2023 exceeds the 180-day period typically defined as six months and the 182.5 days that is 50% of a 365-day year.

Question 14:

In the 2023 QAP Section III.C Minimum Project Threshold Requirements includes Pre-Application Requirements at Section III.C.7.  Among the Pre-Application Requirements at Section III.C.7.c is the MFA QAP training.  It states that “[a] representative of the development team (Board member, officer, director, commissioner or staff) must have attended the most recent MFA QAP training prior to submitting the Application.” The QAP does not say that the representative must be from the Applicant, Developer, General Partner or Project Owner. Development team is defined in multiple places in the QAP to include “Developer, Project Owner, General Partner, contractor, management company, consultant(s), architect, attorney, and accountant, etc.” So a project is eligible to compete in the 9% round (assuming all other requirements are met) as long as a development team member participated in the training, correct?

MFA Response:

No, that is not quite correct. Defined terms are capitalized in the QAP and “development team” is not capitalized anywhere in the 2023 QAP.  Therefore, the QAP describes the development team in the context of the paragraph where that term is used, and in many places that is the entire development team, and in others such as 2023 QAP Section III.E.21.vi.b, it does not include all members who could be thought of as members of a development team. In that paragraph of the QAP, the Applicant, Developer, General Partner or Project Owner are not named and they are not included in the list of those eligible for points under that paragraph.

Section III.C.7 specifies that the representative of the development team must be a Board Member, officer, director, commissioner or staff.  It is implied that it is the Board Member, officer, director, commissioner or staff of the Applicant because the training is regarding how the Application is to be prepared.  In addition, the following sentence “if the development team includes a qualified, nonprofit organization, NMHA, TDHE or THA, a member of that organization must have attended as well to claim points under Project Selection Criteria 1.” [emphasis added] If a member of the development team, such as a project consultant, who is acting as contract staff to prepare a project Application, were to attend the training, their attendance would meet the requirement. However, while the management company, architect, attorney, and accountant may be requested to prepare certain exhibits that are inserted into the Application, they don’t prepare the Application. MFA welcomes them to attend the QAP training, but they are not required to attend.

Question 15:

Will a modular maintenance building that is permanently affixed to a foundation and meets all design requirements in MFA’s 2023 Mandatory Design Standards for Multifamily Housing also have to meet a 65 or better HERS rating?

MFA Response:

A modular maintenance building is acceptable if it meets all applicable design standards items as well as the applicable building codes. Properties shall be designed and constructed in a way that provides greater energy efficiency but, only dwelling units are required to meet a specific HERS rating.

Question 16:

Are we required to disclose any lawsuits or litigation affecting a project on the application?

MFA Response:

Yes.  In the tenth declaration of the Applicant’s Omnibus Signature Page and Certification, the Applicant is certifying that “[t]here is no pending or threatened litigation that would impair the Applicant’s ability to perform its obligations if awarded tax credits in conjunction with its Application.” Any lawsuit or litigation affecting a project would presumably bar the Application from consideration.  However, if the Applicant wishes to disclose the lawsuit/litigation and explain why the Applicant believes the lawsuit/litigation will not impair the Applicant from performing its obligations, the Applicant may insert, directly behind the Omnibus Signature Page and Certification, the court documents along with a detailed explanation why, if the Applicant does not prevail in the lawsuit/litigation, the Applicant will still be able to perform all obligations related to a tax credit award without changing the Project, as it is presented in the Application. 

Question 17:

Schedule H, much of the data would remain blank on sold properties, can we put N/A when data is unavailable?

MFA Response:

For properties that were sold, information should be entered as of the last day of ownership. So, for example, the most recent compliance monitoring would be the most recent monitoring during the period of ownership.

Question 18:

Schedule H, are we to include properties that are in pre-development/construction phase, or only completed developments?

MFA Response:

Please include all developments that have been placed in service. Projects in the Applicant’s pipeline that are not complete do not have to be included.

Question 19:

Schedule H, is date completed the final Certificate of Occupancy or temporary Certificate of Occupancy?

MFA Response:

The “Date Completed” under the “Date Most Recent Compliance Monitoring was Completed and Closed” refers to the most recent compliance monitoring date, not the certificate of occupancy. The Initial Date of Ownership (year only) and all calculations from that date should refer to when the property was First placed in service for purposes of claiming tax credits.

Question 20:

Schedule H, the definition of “principal” (page 99 of QAP) sounds like the equity partner (99.99%) of the deal would be a shareholder and we would need them to sign /produce a Schedule H.  Our equity partner is likely to refuse to provide this level of detail on their massive portfolio, which is widespread outside of NM.  Please give clarification on what is required here.

MFA Response:

Schedule H is completed by the Applicant, including executive staff, general partner entity, developer entity, applicant board members and others admitted to the formed Owner Entity who hold 25% or more financial interest as of the date the Application is submitted.  The equity partner is not required to complete Schedule H.  At the time the Application is submitted, the equity partner would not yet have entered into the partnership, so as of the date the Application is submitted, the equity partner would not have a financial interest in the project.  For supplemental credit requests, the Schedule H information submitted with the initial application just needs to be updated in the new Schedule H format.

Question 21:

We are contemplating submitting an application for supplemental tax credits pursuant to section III.G. of the QAP for the first phase of our project, which received an initial reservation of 9% credits earlier this year. We are also contemplating submitting an initial application for 9% credits for the second phase of our project, which will be built adjacent to the first phase. Based on the provisions of section III.G. of the QAP, as well as an FAQ published on MFA’s website, we understand that these would be treated as two separate applications in the current round, and would count toward the maximum two awards that can be received by a single applicant.

However, section IV.E.3. of the QAP states the following: “Two 9% LIHTC Projects to be located on adjacent sites proposed by the same Applicant in the same LIHTC Application round will be treated as a single Project.”  Would this provision apply if we submitted an application for supplemental credits for the first phase of the project along with an application for an initial reservation of credits for the second phase?

MFA Response:

Yes, two Applications for developments on adjacent sites count toward the maximum two reservations that can be awarded to a single applicant.  All provisions in the 2023 QAP, including Section IV.E.3 “Limitation on tax credit awards to a single Project or Principal” apply to all Applications submitted in the 2023 round. Section IV.E.3 stipulates:

“Subject to the exceptions contained herein, no 9% LIHTC Project shall receive a tax credit Reservation in excess of $1,622,805. No Applicant, any General Partner or affiliate of an Applicant or person or entity receiving or identified as eligible to receive any part of a developer fee for a Project may receive more than two tax credit Reservations in any given competitive LIHTC Application round. Two 9% LIHTC Projects to be located on adjacent sites proposed by the same Applicant in the same LIHTC Application round will be treated as a single Project.”

Therefore an Application for supplemental tax credits for a first phase plus an Application for a second phase on a site adjacent to the first phase when they are both submitted in the same competitive round are limited in the amount of tax credits that can be awarded in that round because the 2023 QAP states they will be treated as a single Project. Thus the supplemental tax credits for phase 1 plus the tax credits for phase 2 cannot exceed $1,622,805 combined.

Question 22:

If applying for additional credits, does the project follow the Design Standards of the initial award/carryover year, or does it follow the supplemental round (2023)?

MFA Response:

If a Project that has previously been awarded Tax Credits competes in the 2023 9% round for Supplemental Credits due to cost increases, that project must abide by the MFA 2023 Mandatory Design Standards for Multifamily Housing, if awarded Supplemental Credits.

Question 23:

On an additional request for credits where points were awarded for brownfield initially (2022 round), is an updated Phase II report required?  The phase II report is dated 2022 and no further investigation was recommended, and no changes have been made to the site.  

MFA Response:

An updated Phase II report is not required where the phase II report is dated 2022, no further investigation was recommended, and no changes have been made to the site.

Question 24:

If two developments are fully separated by a different property that is 20 feet wide and owned by a non-related third party, would these two developments be viewed as non-adjacent pursuant to the current QAP? 

MFA Response:

There are two references to adjacent parcels/sites in the 2023 QAP:

Section II.U. Hybrid 9%/4% Developments: Applicants proposing to build on adjacent parcels (or by splitting a parcel of land) may submit the 4% LIHTC Application concurrent with the 9% LIHTC Application or after the reservation of 9% LIHTC has been approved.

And Section IV.E.3. Limitation on tax credit awards to a single Project or Principal: Two 9% LIHTC Projects to be located on adjacent sites proposed by the same Applicant in the same LIHTC Application round will be treated as a single Project.

However, the 2023 QAP does not define the term “adjacent”.  Thus, definitions found in a dictionary could apply.  Examples include “next to or adjoining something else”, “(of angles) having a common vertex and a common side” or “being in close proximity” which may or may not imply contact but always implies absence of anything of the same kind in between – e.g., a house with an adjacent garage. In light of this definition, a site owned by a non-related third party between the two developments would create a situation where there was not a “common side,” and if the space between was not a housing development, it would not be considered the “same kind in between” and therefore would not be considered adjacent.

Question 25:

Are covered entry walkways that are attached to the building that are covered by the building’s roof considered part of the building's gross sf?

MFA Response:

Yes. The definition of Gross Square Feet is “the area that includes all enclosed space as measured from the exterior face of the building walls and means everything under the roof, including storage and patios. Covered parking and structured parking should not be included in Gross Square Feet.” [emphasis added] In turn, “the sum of the Gross Square Feet on each floor of a building” are added together to total the Building’s Gross Square Feet.

Question 1:

I wanted to ask if you can ask for and receive a discretionary boost if the site location does not fall into a QCT or DDA area?

MFA’s Response:

2023 QAP Section IV.E.5 allows for a state-designated basis boost (up to 30% of the initial calculation), if deemed necessary for Project feasibility as determined by MFA.  The state-designated basis boost is available to 9% LIHTC Projects that receive points under Scoring Criteria 8-10 described in Sections III.E.8, III.E.9, or III.E.10 of the 2023 QAP. The state-designated basis boost cannot be applied to Projects financed by tax-exempt bonds.

Question 2:

Are fees for the surveyor and geotechnical testing/reporting included in the Architect and Engineering fees capped at 3.3% of Total Development Costs for eligible basis purposes?

MFA Response:

The fees for the surveyor are included, but the geotechnical testing is an “other” professional service.  The 2023 MFA Underwriting Supplement states: “The architects’ fees, including design and supervision fees, and engineering fees, must be capped at 3.3 percent of Total Development Cost.  Architects’ fee and engineering fees shall be deducted from Total Development Cost when calculating this fee cap.”  The line items in the Schedule A development budget that comprise the amount that is limited to 3.3% of Total Development Costs are: Architect (Design), Architect (Supervision) and Engineer/Survey.  Additional professional services such as Green Modeling/HERS rater, Phase 1, Phase 2 and geotechnical studies may be included in the schedule of “other” Professional Services/Fees.