LIHTC Applications FAQ 2025

• Answer: If the housing authority in question is not also incorporated as a New Mexico nonprofit corporation, the New Mexico Secretary of State would not have an ability to provide a certificate of good standing.  Therefore, none would be required.

• Answer: Each month, the IRS provides various prescribed rates for federal income tax purposes. These rates, known as Applicable Federal Rates (AFRs), are regularly published as revenue rulings. You can find them published on the IRS’ website here:  https://www.irs.gov/applicable-federal-rates 

Question 3: With regards to a rehabilitation project that has never received tax credits, does it suffice to provide county assessor documentation showing when the property was built to address the 20 year requirement with respect to age of the project?

• Answer: Yes, the 2025 QAP allows certificates of occupancy or property tax records indicating the date the last building received its certificate of occupancy to provide evidence of the 20-year requirement for a project that has never received LIHTC.

Question 4: We have a couple of questions about the senior service requirements for congregate meals in the QAP.

The QAP states: "Providing one prepared meal on a daily basis, available to all tenants at little or no cost to tenants"

Our questions are as follows:

-What is considered "little" cost for meals to MFA to qualify for points?

-Do meals need to be prepared onsite or can they be brought to site from a different prep location?

-Do meals need to be provided on the weekends in addition to the weekdays? If so, do weekend meals need to be prepared fresh or could they be prepared ahead of time and placed in a grab and go sort of arrangement in a community space?

• Answer: The 2025 QAP provides points for “providing one prepared meal on a daily basis, available to all tenants at little or no cost to tenants.”  Applicants may earn two points for congregate meals and one point for a meal service.

  “Little” cost would be a cost that is at or below the amount charged to seniors by the closest senior center funded by the Area Agency on Aging that provides congregate meals.  If the senior center charges a higher rate to seniors who are aged 55-59, then residents who are 55-59 years old may be charged the rate that the senior center charges for people in that age group.  Documentation must be provided with the Application.

  Meals may be prepared onsite or at an off-site location that meets all applicable health and safety standards.

  Meals need to be provided “daily”, which includes weekends.  Congregate meals shall be prepared fresh.  Meal Service meals may be prepared in advance and stored in an appropriate on-site location for delivery to tenants on the weekend.  Delivery to homebound tenants shall be to their apartment.  Delivery to ambulatory tenants may be delivered by offering tenants a window of time to pick up their meal at the on-site location.   Applicants requesting points for providing prepared meals must thoroughly explain how the service will be implemented on site with documentation from the service provider evidencing that this service will be available and actively linked to the Project.

  Applicants requesting points for providing prepared meals must thoroughly explain how the service will be implemented on site with documentation from the service provider evidencing that this service will be available and actively linked to the Project.

Question 5: With respect to local government soft loans meeting the Leveraging Resources scoring criterion, if Permanent Affordability is elected, can a balloon payment be required at the end of 20 years or some other specific duration, as is typical for soft loans such as HOME loans and for other true debt?

• Answer: No. Section III.E.11 of the 2025 QAP includes the following overall requirement for all funding claimed under the Leveraging Resources scoring criterion.  “The following contributions are eligible if they do not include any form of hard debt and they are irrevocably and permanently contributed to the project. Soft debt may not include any required payments during the Affordability Period (see definition in Glossary) and may not include a higher interest rate than the Applicable Federal Rate in effect when the loan is closed.”

  To earn points, government soft loans may not require payment during the Affordability Period, which is defined in the QAP Glossary as the “Total of the Initial Compliance Period plus the Extended Use Period (30-year minimum plus any additional time required and documented in the LURA.”  The Affordability Period in the LURA for a Project electing Permanent Affordability will be the maximum allowable period allowed under New Mexico law.  Therefore, repayment of the government soft loan will need to be deferred until after the Affordability Period has expired.

• Answer: Housing New Mexico may not construe New Mexico law to provide legal advice. Under scoring criterion 7 – Projects Committed to a Longer Extended Use Period a Project will be eligible for 8 points if the Project commits to permanent affordability.

• Answer: Section III.E.11 states “submit a letter from the government Entity awarding the funds that includes the amount and terms of the funding along with evidence that the award has been approved by the applicable government (such as city council meeting minutes) contingent only upon receipt of a reservation of LIHTC.” If the local government is tying the cash grant to a line item in the budget, such as GRT, the letter may specify that “at least” a specific amount will be granted to the project, regardless of the amount of GRT that is eventually owed, but not “up to” a specific amount.

• Answer: No. Section III.E.11 states “submit a letter from the government Entity awarding the funds that includes the amount and terms of the funding along with evidence that the award has been approved by the applicable government (such as city council meeting minutes) contingent only upon receipt of a reservation of LIHTC.” Unless the executive of the department awarding funds has been delegated the authority to approve an award by the city council, in which case a copy proof of delegation will be required with the Application.

• Answer: The 2025 9% LIHTC application is available for download under the 2025 Tax Credit Round link here: https://housingnm.org/developers/lihtc/current-and-prior-tax-credit-rounds

• Answer: Pursuant to Section III.C.2 (Zoning), the QAP “requires that multifamily projects not be prohibited by the existing zoning of the proposed site and that there is no pending litigation, pending variance, or unexpired appeal process relating to the zoning of the proposed site.”  In other words, the project, as proposed, needs to be zoned for its intended use without any further need for a variance or other process.  If the proposed density of the Project, as proposed in the Application exceeds the approved density, the rezoning to allow for the density proposed in the Application will need to be completed before the Application is submitted, as the zoning letter will need to provide evidence that the Project can be built as proposed.

• Answer: Yes, if each of the parcels and any portions of parcel(s) to be combined meet the Zoning requirements at 2025 QAP Section III.C.2, the Applicant may provide the legal description of each parcel evidencing site control pursuant to 2025 QAP Section III.C.1 at Tab 10b of the Application.  If only a portion of a parcel will be developed, provide a legal description of that portion.  The title report (and “As-Is” Appraisal Report, if applicable to the Application) must reflect the same legal description as the parcel(s) and/or portion thereof that are to be developed in connection with the Project.

• Answer: Housing New Mexico loan fees for 2025 9% LIHTC projects will be due in late March 2025, once the project receives a preliminary reservation. When there is no 9% LIHTC in the project, the $250 application fee is due with the loan application.

• Answer: Section IV.3 states “the 2025 Housing New Mexico/MFA Universal Rental Development Application and Schedules in excel format and one fully tabbed and bookmarked PDF file that includes all materials listed on the Attachments Checklist at Tab1a must be uploaded to Housing New Mexico/MFA’s file sharing site.”
  
  The following section IV.4.b reiterates this in more detail:
  
  “Complete Initial Applications must include the 2025 Housing New Mexico/MFA Universal Rental Development Application and Schedules, including all attachments and exhibits that are applicable to the Project – both those listed in the attachments checklist found at Tab 1a of the Application form and any other materials requested in the 2025 QAP that apply to the Project. The 2025 Housing New Mexico/MFA Universal Rental Development Application Form and Schedules must be submitted in excel format.  All additional materials (those described in Tab 1a and others indicated in the 2025 QAP) must be contained in one fully tabbed and bookmarked PDF file with protected personal information such as Social Security numbers and board member home addresses redacted. Where required in the Application, the market study, architectural plans and specifications, capital needs assessment and appraisal shall be uploaded as stand-alone documents rather than included in the Application PDF. The PDF files must be “bookmarked” with each applicable tab (“Tab”) and named accordingly (e.g., Tab 1, Tab 1a, Tab 2, etc.).  Each bookmark must include all of the documents required for the respective tab (including those in the 2025 Housing New Mexico/MFA Universal Rental Development Application and Schedules), as identified in the Attachments Checklist and named accordingly (e.g., Tab 1f – Rehabilitation Scope of Work, Tab 1g – One-page summary of Developer affordable housing experience.” All documents in the PDF must be submitted in numerical order.  The entire Application Package (the 2025 Housing New Mexico/MFA Universal Rental Development Application, Schedules and the PDF files) must be uploaded to Housing New Mexico/MFA’s file sharing site.”
  
  In other words, yes, you need to submit the PDFs and the excel spreadsheets.  Part 1 is not missing Tab 9.  Materials for which there is a form in Part 1 of the 2025 Housing New Mexico/MFA Universal Rental Development Application are indicated on the Checklist at Tab 1a by coloring in the tab on the left with either dark teal or dark rust.  Tabs for which there is no form, but there are materials required, have a white background.

• Answer: Scattered-site Projects are permitted; please see Section II.I on page 9 of the 2025 QAP for information. The Project must meet all 2025 QAP requirements, so the zoning letter(s) must identify each site/lot (including the common use site areas, interior community spaces and business offices described in the 2025 Mandatory Design Standards for Multifamily Housing). The zoning letter(s) must also describe the applicable zoning for each site/lot and provide evidence that the proposed use of each site/lot is permitted under current zoning.

• Answer: The 2025 QAP does not limit the number of Applications that a developer or sponsor may submit.  However, QAP Section IV.E.3 limits the number awards as follows: “Limitation on tax credit awards to a single Project or Principal. Subject to the exceptions contained herein, no 9% LIHTC Project shall receive a tax credit Reservation in excess of $1,700,000.  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.  All Projects receiving a 9% LIHTC Reservation must be at least ¼ mile (1,320 feet) straight-line distance away from the property line of all other Projects proposed by the same Principal or its Affiliate receiving a 9% LIHTC Reservation in the same round.”

• Answer: Yes, the Schedule A on page 2 of HUD Form 2530 provides the schedule of experience that can be attached to the compliance affidavit.

• Answer: All documents are electronically submitted. Original wet ink signatures are not to be submitted with the application in hard copy format. Section IV.A.4.a of the 2025 QAP requires that “All Application documents that require signatures must be include and bear scanned blue ink or third-party verified digital signatures from all General Partners.”

• Answer: Pursuant to Section IV.D.6, the intent of the policy is to equitably distribute units among the various income tiers.  Applicants need to be mindful of financial feasibility when determining the percentage of units at each income level for the Application.
  
  When there are insufficient units to provide the same percentage of units across income tiers, the units should be distributed as closely as possible to the distribution of income levels.  For example, if the project with the income tiers you propose in your question (20% at 30% AMI, 20% at 50% AMI and 60% at 60% AMI) only includes three 4-bedroom units in the project, then one 4-Bedroom unit would be allocated to each of the three income tiers: one 4-bedroom unit at 30% AMI, one 4-bedroom unit at 50% AMI, and one 4-bedroom unit at 60% AMI.  On the other hand, if there were six 4-bedroom units, the units could be distributed as follows: one 4-bedroom unit at 30% AMI, one 4-bedroom unit at 50% AMI, and four 4-bedroom units at 60% AMI because 20% of 6 equals 1.2 (which could be rounded down) and 60% of 6 is 3.6 (which could be rounded up).
  
  Applicants should exercise caution when rounding. While in this case rounding up or down is acceptable, there are many thresholds in the QAP and in HUD regulations that do not.  For example, where at least three accessible units are required, 2.5 can’t be rounded up to meet the threshold.

• Answer:  The 2025 QAP does not address floodplains.  Housing New Mexico follows federal guidance regarding environmental issues, such as floodplains.

  Federal subsidy can potentially be awarded to a project located in an existing FEMA floodplain, but with significant conditions and requirements. The project must comply with HUD's new Federal Flood Risk Management Standard (FFRMS) as outlined in the Final Rule published on April 23, 2024, effective May 23, 2024 [see Docket No. FR-6272-F-02 which modifies 24 CFR Parts 50, 55, 58 and 200].

  Federal subsidy can potentially be awarded to a project located in an existing FEMA floodplain, but with significant conditions and requirements. The project must comply with HUD's new Federal Flood Risk Management Standard (FFRMS) as outlined in the Final Rule published on April 23, 2024, effective May 23, 2024.

  Please bear in mind the following:

  1. The FFRMS expands the floodplain of concern both vertically and horizontally beyond the traditional 100-year floodplain.
  2. The project must undergo HUD's 8-step decision-making process for floodplain management, as required by Executive Order 11988 and 24 CFR Part 55.
  3. For projects seeking to remove the site from the floodplain through a Letter of Map Revision (LOMR) process:
     1. The community official must certify that the land and structures being removed from the special flood hazard area will be reasonably safe from flooding.
     2. The project must meet all local permitting requirements, including floodplain management requirements.
     3. Flood insurance will be required until the LOMR process is complete, and the site is officially removed from the floodplain.

  Regarding specific funding sources:

  1. For HOME funds: Mitigation (such as raising the elevation to the FFRMS level) can be performed during construction, with federal funds awarded conditionally.

  2. For National Housing Trust Fund (NHTF) and Section 811 funds: The site must meet the FFRMS standard before any funds can be disbursed, as these programs do not permit post-award mitigation.

  3. For FHA-insured single-family homes in a 100-year floodplain, the new rule requires elevation 2 feet above base flood elevation.

  4. FHA-insured and Office of Housing multifamily programs have an optional extended compliance date through January 1, 2025, with specific conditions.

  This process involves significant regulatory compliance, potential delays, and additional costs that must be carefully considered and budgeted for in the project planning stage.

• Answer: Housing New Mexico is not able to award National Housing Trust Funds or Section 811 vouchers until the Federal Flood Risk Management Standard (FFRMS) is met. Essentially, it means that either the FFRMS must be met before an application is submitted, or the National Housing Trust Funds would not be available to the project, since Housing New Mexico would not be able to award funds before the project closes on its financing, and sources need to balance with uses when the LIHTC Application is submitted. Project Owners are welcome to apply for Section 811 vouchers to the project once the FFRMS is met; however, until the FFRMS is met, the Project would be underwritten at LIHTC rents.

• Answer: Yes. The NMHTF NOFA, dated September 20, 2023, states that “Beneficiary households residing in units financed with NMHTF monies must initially have incomes at or below 60% of AMI adjusted for household size as determined by HUD” and “Additionally, MFA requires that 60% of all rental units be for households earning no more than 120% of AMI.” Therefore, the residents in the 45 units at 50% AMI and below would be qualified beneficiary households.

• Answer: Cash flow proformas, during each of the first 15 years, must reflect the ability to repay all must-pay debt with an all-in minimum debt service coverage ratio of 1.20:1. Conversely, Housing New Mexico/MFA may reduce the Tax Credit award and/or other loans and/or subsidies, increase the interest rate on Housing New Mexico/MFA subordinate loans or shorten loan amortization if a Project has a DSCR on all must-pay debt in excess of 1.40:1. If the seller note is must-pay debt with a hard payment, that payment is included in the DSCR for underwriting purposes. However, that seller note would not be eligible for points for Leveraging Resources.

• Answer: Please refer to HUD’s CPD Notice 98-2A, as it may be amended, for information regarding this calculation.

• Answer: National Housing Trust Funds are available as a cash flow loan. However, in many cases the investor prefers that there be a hard payment to evidence that the loan is true debt. If the Application is requesting a cash flow loan, as indicated in the note on Sources of Funds Schedule A-1, enter $0 in the Payment Amount in column G and enter CF in column H as the Frequency. If the Application is requesting a hard debt loan, $500 would be shown as a payment in column G.

• Answer: Roswell is not included in the list of Urban Areas in the 2025 QAP for scoring purposes in the 2025 9% LIHTC round. However, the city of Roswell is excluded as per the NMHTF NOFA, so it wouldn’t receive rural points or the rate reduction when evaluating the project’s request for NMHTF: Scoring Criterion #9: “Projects located outside of the boundaries of Bernalillo County, the City of Rio Rancho, the City of Las Cruces, the City of Santa Fe, the City of Farmington or the City of Roswell.”

• Answer: All sources on Schedule A-1 and uses in the development budget on Schedule A must balance. Financing from sources other than Housing New Mexico (e.g., Federal Home Loan Bank AHP, local government grants/loans) that have been applied for, but not yet awarded, should not be listed as sources on Schedule A-1. Developers may use deferred developer fee as a placeholder for those funds, until they are approved.

• Answer: The CHAP (Commitment to Enter into a Housing Assistance Payment Contract) would be acceptable evidence that the Project is part of HUD’s RAD program.  If the CHAP includes rent and utility allowance information, that would document the rents and utility allowances.  Alternatively, a copy of the list of 2024 RAD Rents adjusted for the 2025 OCAF in excel with the gross rents highlighted for easy reference may be provided. This list of gross rents may be found here:    https://www.hud.gov/RAD/library/notices

  If the Project Owner will not be paying for all utilities, the Applicant may provide one of the five types of utility allowances available under Treasury Regulations 1.42-10 that is acceptable to HUD.

  The Rental Assistance Demonstration program (RAD) is not explicitly distinguished from other rental subsidies in the 2025 QAP.  However, Section III.E.4 (Sustaining Affordability) provides the following guidance:

  “Projects with existing federal rental subsidies (CoC, RD, HUD HAP) who propose post-rehabilitation rents in the Initial Application must document the anticipated rents with a Rent Comparability Study submitted with the Initial Application. Projects not requesting post-rehabilitation rents in the Initial Application may use the current OCAF-based rents or published payment standards based on current FMRs.

  Anticipated federal rental subsidies (CoC, RD, NAHASDA etc.) must be similarly documented as fully secured to the Project itself, including the number of project-based vouchers allocated to the Project, in order to score under this criterion.

  For example, anticipated federal rental assistance contracts from housing authorities must show they are adequately secured through the presentation of specific items:

  1. A copy of the PHA administrative plan which describes the selection procedures for owner submission of PBV and for PHA selection of PBV proposals

  2. A copy of the published public notice of the PBV proposal selected

  3. If the proposal selected is for PHA-owned units, a copy of the HUD field office or HUD-approved independent Entity’s determination that the PHA-owned units were appropriately selected

  (If the proposal is selected based on a previous competitive award, Housing New Mexico/MFA would require documentation that the proposal meets the criteria for selection without additional competition.)”

• Answer: Applicants should consult their CPA for advice regarding demolition costs allowable in eligible basis. 

  The cost of demolition for buildings that are demolished to clear land for new construction are required to be added to the capital account for the land (see IRC §280B), in which case the cost, if not included in the land contract, could be included in other Acquisition Costs on line 13 of the Schedule A Development Cost Budget inserted at Tab 3a. 

  However, in certain cases, the IRS does not require that demolition be capitalized to the land (see Rev. Proc. 95-27, 1995-1 CB 704), in which case the cost of demolition could be entered on line 16 of the Development Cost Budget and included when calculating the limits to General Requirements, Overhead and Profit allowable in eligible basis.