MISSOURI HOUSING DEVELOPMENT COMMISSION PLANNING SESSION & REGULAR COMMISSION MEETING FRIDAY, APRIL 29, :00 A.M.

Transcription

1 MISSOURI HOUSING DEVELOPMENT COMMISSION PLANNING SESSION & REGULAR COMMISSION MEETING FRIDAY, APRIL 29, :00 A.M STONEY S. PROVIDENCE CREEK INN ROAD 2601 S. SALON PROVIDENCE A COLUMBIA, MO SALON C

2 PLANNING SESSION AND REGULAR MEETING OF THE MISSOURI HOUSING DEVELOPMENT COMMISSION FRIDAY, APRIL 29, 2016 AT 9:00 A.M. Notice is hereby given that the Missouri Housing Development Commission will conduct its Planning Session and Regular Meeting on Friday, April 29, 2016: Stoney Creek Inn & Conference Center Salon C 2601 S. Providence Columbia, MO The agenda of this meeting is attached to this notice. The news media may obtain copies of this notice by contacting: Lynn Sigler Missouri Housing Development Commission 920 Main, Suite 1400 Kansas City, MO (816) lsigler@mhdc.com MHDC will make reasonable accommodations for persons with disabilities at the public site. To request an accommodation, please contact Lynn Sigler at (816) or lsigler@mhdc.com.

3 PLANNING SESSION AND REGULAR MEETING OF THE MISSOURI HOUSING DEVELOPMENT COMMISSION FRIDAY, APRIL 29, 2016 AT 9:00 A.M. AGENDA STONEY CREEK INN, 2601 S. PROVIDENCE, COLUMBIA, MO EGMEETING Planning Session 9:00 A.M.* Strategic Financial Plan 9:50 A.M* Single Family Next Step Program 10:20 A.M.* 2017 Missouri Housing Trust Funds (MHTF) Draft Allocation Plan and NOFA 10:35 A.M.* 2015 Homeless Study presentation - UMSL 11:00 A.M.* 2017 Draft Qualified Allocation Plan 11:20 A.M.* Break *Time allocation shown for these items on the agenda is approximate and may vary.

4 1) Strategic Financial Plan

5

6 STRATEGIC FINANCIAL PLAN 2016 TO 2020 April 29, 2016

7 Strategic Plan 2 Projects MHDC financial results over five years Based on FY 2015 audited fund balances Updated annually to take into account actual results and new information Each year staff and advisors develop Base Case of future activities over next five years Realistic, conservative estimates of future activities Base case serves as starting point for discussions of fiscal health, possible alternatives and future outcomes

8 Total Assets 3 Assets and Liabilities in Millions $2,250 $2,000 $1,750 $1,500 Projection $1,250 $1,000 $750 $500 $250 $ Fund Balance Liabilities Beginning in FY2015, liabilities include MHDC s share of state pension plan liability in accordance with new GASB 68 accounting rule. Years did not include any estimated pension liabilities.

9 Components of Assets and Liabilities 4 FY 2015 in Millions General Fund 28.8% Multi-Family 16.9% Assets Single Family 54.3% General Fund, 3.7% Multi-Family, 24.6% Liabilities Single Family, 71.7% Assets Liabilities Single Family $ % Single Family $ % Multi-Family $ % Multi-Family $ % General Fund $ % General Fund $ % $ 1, % $ %

10 Components of Fund Balance 5 FY 2015 in Millions SF / MF Revolving Funds** 12.1% Rental & Operating Assistance 12.2% Missouri Housing Fund* 28.9% Other SF / MF Loans 4.2% SF Bond Indentures 23.3% MF Bond Indentures 3.2% SF Cash Assistance 4.3% Liquidity and Capital Requirements (S&P) 3.3% FHA Risk Share Reserve 3.7% Net Funds Available for Contingencies 4.8% Fund Balance SF Bond Indentures $ % Missouri Housing Fund* % SF / MF Revolving Funds** % Rental & Operating Assistance % Other SF / MF Loans % MF Bond Indentures % SF Cash Assistance % Operating Fund Liquidity: Liquidity and Capital Requirements (S&P) % FHA Risk Share Reserve % Net Funds Available for Contingencies % $ % * Includes $17.9MM of outstanding unfunded loan commitments, $15MM of approved fund balance MF lending in FY 2016, and $15MM requested for FY ** Consists of $20MM from SF Revolving Homeownership Fund as well as $40MM from MF Revolving Construction Fund.

11 Financial Metrics 6 Measures FY FY 2015 Credit Rating MHDC: SF: MF:** AA+ AA+ AA MHDC: SF: MF: AA+ AA+ AA+ Return on Assets 1.0% 0.9% Return on Equity 4.1% 2.6% Operating Fund Liquidity 13.7% ($66.6MM)*** 11.8% ($58.6MM) Asset Growth* -11.0% -1.4% * Financing single family production through MBS sales did not support asset growth. ** In 2014, S&P raised the MF Indenture rating from AA to AA+. ***Reflects FY 2014 liquidity balance.

12 Key Conclusions 7 RETURNS Low investment revenues due to continued low interest rate environment Transition in 2014 and 2015 to issuance of bonds to fund single family mortgage loans from primarily MBS sales ASSETS Bonds produce income stream for period of years while MBS generate returns only at the time of sale Decrease in assets due to continued prepayments on outstanding loans Issuance of bonds recently has dramatically slowed decrease in assets Slight asset growth projected for FY2016 Recent expansion of construction and fund balance lending for multifamily projects generates earnings for MHDC mission Operating Fund Liquidity reduction attributable to expanded lending for multi-family projects, issuance of bonds and increased pension liabilities through MOSERS

13 8 Base Case Key Assumptions in Millions FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Single Family Loans $195 $200 $200 $225 $225 SF Loans MBS Sales $0 $50 $200 $112.5 $112.5 SF Loans Bond Financed $195 $150 $0 $112.5 $112.5 SF Prepayments (PSA%) 250% 250% 250% 250% 250% Multi-family Risk Share Loans $0 $10 $15 $15 $15 Long-term Rates (10 yr.) 2.00% 2.50% 3.00% 3.50% 4.00% Short-term Rates (1 yr.) 0.25% 0.75% 1.25% 1.75% 2.00%

14 Single Family Millions Multi Family General Fund 9 Key Outcomes Assets and Liabilities FY 2015, 2017, 2020 $1,600 $1,400 Assets $1,200 $1,000 Liabilities $800 $600 Fund Balance $400 $200 $

15 Millions 10 Key Outcomes Fund Balances FY 2015, 2017, 2020 Net Funds Available for Contingencies $500 Liquidity & Capital Requirements (S&P) $400 $300 FHA Risk Share Reserve FHA Risk Share Reserve SF / MF Revolving SF MF Revolving Funds Funds SF Cash Assistance SF Cash Assistance Other SF & MF Loans Other SF MF Loans Rental & Operating Rental Assistance Operating Assistance $200 MF Bond Indenture $100 Missouri Missouri Housing Hsg Fund (Fund Fund Balance Lending) MF Bond Indenture SF Bond SF Bond Indenture Indenture $0

16 Key Outcomes Financial Metrics 11 Measures FY 2015 FY Credit Rating MHDC: SF: MF: AA+ AA+ AA+ no changes anticipated Return on Assets 0.9% 0.9% Return on Equity 2.6% 2.3% Operating Fund Liquidity 11.8% ($58.6MM) 8.1% ($43.9MM)* Asset Growth -1.4% 0.4% *Represents FY 2020 liquidity balance. The decrease reflects MHDC s investment in MF fund balance lending.

17 Key Outcomes: FY Fund balance growth is maintained - showing strong financial health Operating fund liquidity remains at a healthy level Asset base stabilized through funding of more loans with bond issues, which replenishes asset base Returns decline modestly due to: Continued low investment rates on general fund balances Recent loan production funded through the issuance of bonds, which generate earnings over time, and require initial investment of funds

18 Alternative Scenarios 13 Goal of Strategic Plan - to project sustainability of current and proposed programs and anticipate potential impacts of future events, including: Program demand Interest rates Loan funding sources Base Case - reflects reasonable estimate of future events Alternative Scenarios - provides insight into changes to: Program demand Interest rates Single family funding sources

19 Alternative Scenarios 14 Rising Production; Rising Interest Rates FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 SF Loans (000 s) $195 $225 $250 $300 $300 SF Bond Production (000's) $195 $150 $125 $225 $225 SF MBS Sale (000's) $0 $75 $125 $75 $75 SF Prepayments (PSA%) 250% 225% 200% 200% 200% Short-term Rates (1 yr.) 0.25% 1.0% 1.5% 2.0% 2.5% Reflects an improving economy with higher rates and single family demand Low Production FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 SF Loans (000 s) $195 $150 $125 $125 $125 SF Bond Production (000's) $195 $112.5 $0 $62.5 $62.5 SF MBS Sale (000's) $0 $37.5 $125 $62.5 $62.5 SF Prepayments (PSA%) 250% 275% 300% 300% 300% Short-term Rates (1 yr.) 0.25% 0.5% 0.5% 1.0% 1.5% Reflects a continued stagnant economy with low rates and tepid demand

20 Asset and Fund Balance Comparison Fund Balance Assets $700 $2,500 $650 $2,250 $600 $550 $500 Base Case $2,000 $1,750 Base Case $450 $1,500 $400 $1,250 $350 $1,000 Well positioned to support both rising production or very low production scenarios with minimal impact to fund balance. SF funding methods and production levels have a greater impact on size of balance sheet than fund balance growth.

21 Millions 16 Fund Balance Composition FY 2020 Net Funds Available for Contingencies $500 Liquidity & Capital Requirements $400 FHA Risk Share Reserve FHA Risk Share Reserve SF / MF Revolving Funds SF / MF Revolving Funds SF Cash Assistance Other SF & MF Loans SF Cash Assistance Rental & Operating Assistance $300 Missouri Housing Fund $200 $100 MF Bond Indenture MF Bond Indenture SF Bond Indenture SF Bond Indenture $0 Base Case Rising Production Low Production *The Rising Production scenario resulted in negative Net Funds Available for Contingencies. To properly reflect the Total Fund Balance, the negative amount is applied to the Liquidity and Capital Requirements amount.

22 Long-Term Financial Metrics Base Case vs. Alternative Scenarios 17 Measures Credit Rating MHDC: AA+ SF: AA+ MF: AA+ Base Case: FY 2020 Rising Production: FY 2020 no changes anticipated Low Production: FY 2020 Return on Assets 0.9% 0.7% 0.8% Return on Equity 2.3% 2.0% 2.0% Operating Fund Liquidity 8.1% $43.9MM 6.5% $35.2MM 7.4% $39.7MM Asset Growth* 0.4% 5.2% -2.1% *Financing single family production through MBS sales does not support asset growth. ** Return on Assets, Return on Equity, and Asset Growth are compounded annual growth rates.

23 Single Family Households 18 Served 3,500 3,000 Projected Production 2,500 Past Production 2,000 1,500 1, Past Production Base Case Rising Production Low Production

24 FHA Risk-Share Units Financed With Bonds Past Production 300 Projected Production Past Production: FHA Risk-Share Future Production: FHA Risk-Share * Doesn t include units supported by 9% housing tax credits.

25 MHDC Rating Strengths 20 Extremely high-quality, low risk asset base Strong equity base (fund balances) Most bonds not guaranteed by MHDC No exposure to variable rate debt Investments primarily U.S. government agency securities and highly rated money market funds Experienced management team Sound state economy

26 Comparing MHDC to its Peers 21 Description MHDC ( ) AA+ HFA s All HFA s Average Return on Assets 0.8% 0.6% 0.6% Loss Reserves/Loans 3.4% 2.6% 3.0% Non-Perform/Loans 0.2% 3.5% 3.9% Total Equity/Assets 41.4% 28.6% 20.8% Total Loans/Assets 70.7% 68.9% 71.1% Rating information based on S&P report dated April 19, 2016.

27 22 Plan Implementation Single Family Continue to support low and moderate-income family homeownership through cash assistance and low rate loan products Fund loans with cost effective alternatives: Tax-exempt bonds to support below market rate loans Bonds preserve and grow MHDC asset base and provide future revenue stream Resources for excess collateral and yield limited Maintain Mortgage Credit Certificate program to maximize benefits to first-time homebuyers Sales of mortgage backed securities through TBA program Cost-effective hedge and competitive loan rates through TBA program Explore expansion of single family program to non-first time homebuyers.

28 23 Plan Implementation Existing Assets Refinance outstanding bonds whenever feasible to realize economic benefits to MHDC FY 2016 (YTD): Multi-family refunding resulted in over 0.50% interest rate reduction to project borrowers and generated savings to MHDC Refunding $29 million in SF 2006 series bonds preserved assets, generates ongoing income, and provided subsidy for new money bonds Apply available assets in SF Indenture to overcollateralize new bond issues thus: Reduces cost of funds, and Reduces mortgage rate to homebuyers Continue pledge of existing assets to provide collateral for FHLB warehouse program when needed Maintain conservative investment strategy with U.S. agency and treasury securities

29 24 Plan Implementation Multifamily Continue to offer Risk-Share program for qualified preservation or new construction projects Maintain fund balance lending known as Missouri Housing Fund at $15 million in FY 2017 $12 million assumed in FY 2018 FY 2020, subject to available liquidity. Maintain construction lending program to support projects with long-term funding

30 Summary 25 MHDC in sound financial condition AA+ rating Forecasts show solid results in different scenarios Single family program continues to support home ownership and state economy Multi-family programs support construction of new projects and rehabilitation of existing facilities

31 2) Single Family Next Step Program

32 Next Step Program Enabling Homebuyers in the next step of homeownership

33 Program Objectives The Next Step Program allows Missouri citizens the opportunity to continue their quest for homeownership. Next Step will enable non-first time homebuyers who lack sufficient equity or funds for downpayment to purchase their new home. The Next Step Program will provide incentives for home buyers to move into Opportunity Areas throughout Missouri. 2

34 Program Need Our lenders tell us some homeowners lack equity and need downpayment assistance to purchase their next home. Some homeowners become renters as a result. The Next Step Program benefits Missouri borrowers in several ways: Bridges the gap between lack of equity and downpayment needed to purchase their next home. Allow first time buyers who fall outside the income limits for the First Place Program to achieve homeownership. Encourage qualified borrowers to move into Opportunity Areas with downpayment and closing cost assistance. 3

35 Funding Next Step Funding for this program will be provided by the sale of the MBS in the TBA market or by the sale of taxable bonds. Mortgage interest rates will be set based on the TBA market. The interest rates will be adjusted on a daily basis as needed. The TBA program administrator will bear the risks related to interest rate hedging and mortgage loan delivery. 4

36 Opportunity Areas Opportunity Areas will be determined by census tracts. Opportunity Area census tracts were determined by the following criteria: Metro Areas 70% or higher have some college education poverty rate is 5% or lower Census tract median income is $50K - $120K Rural Areas 50% or higher have some college education poverty rate is 10% or lower Census tract median income is $40K -120K 5

37 Eligibility Qualifications Household income limits will be the same as the targeted area limits for the First Place Homeownership Program. Non-First Time home buyers will be eligible. Down payment assistance will be: Opportunity Areas = 3.5% Other areas = 3% Mortgage Credit Certificate (MCC) program can be used with this program if the borrower meets the MCC requirements. 6

38 Comparison to the First Place Program First Place Program CAP Next Step Program Opportunity Areas Next Step Program Statewide (Other Areas) Funding Sources Tax Exempt and Taxable Bonds TBA/Taxable Bonds TBA/Taxable Bonds Property Purchase only Purchase only Purchase only Gross Assistance to Borrower 4.0% 3.5% 3.0% Origination Fee 1.0% 0.5% 0.5% Net Assistance to Borrower 3.0% 3.0% 2.5% Interest Rate 4.25%* 4.375%* 4.5%* Income Limits Yes Targeted Limits Targeted Limits Sale Price Limits Yes Targeted Limits Targeted Limits First Time Homebuyer Requirement Yes No No Mortgage Credit Certificates (MCCs) Eligibility No Yes/must meet MCC requirements Yes/must meet MCC requirements Minimum Credit Score Maximum Debt to Income (DTI) 45% 45% 45% Compensation to the Lenders Origination Fee 1% 0.50% 0.50% Application/Processing Fee $750 $750 $750 Other fees Limited Common & Customary Common & Customary Total 2.5% + $750 2% + $750 2% + $750 * subject to change based on market conditions 7

39 MARKETING Marketing of the program in informational materials will be provided in several ways: MHDC s network of over 70 lenders The network of real estate agents throughout the state MHDC s website Municipalities through out the state Public officials and their constituents 8

40 3) 2017 Missouri Housing Trust Fund (MHTF) Draft Allocation Plan and NOFA

41

42 MHTF-110 Missouri Housing Trust Fund FY 2017 Allocation Plan General Information: The Missouri Housing Development Commission (MHDC) is charged with the responsibility of administering the Missouri Housing Trust Fund. The state Legislature created the Missouri Housing Trust Fund in 1994, pursuant to RSMo Monies in the fund shall be used solely for the purposes established by RSMo Missouri Housing Trust Fund monies shall be used to provide housing and housing services to individuals and families with incomes at or below 50 percent of the area median income. Fifty-percent of the funds must be used for individuals and families at or below 25 percent of the area median income. Establishment of Funds: The Missouri Housing Trust Fund is supported by a recording fee of $3 for each real estate document filed in the state of Missouri. Therefore, the amount of funds that can be allocated by MHDC is dependent upon the level of real estate recording activity. Allocation of Funds Grant Type Allocation: MHDC has identified the following grant types as categories to meet the needs of Missourians: 1. Rental Assistance: available to organizations that provide rent assistance to individuals in permanent housing 2. Emergency Assistance: available for organizations that provide assistance to recipients at immediate risk of becoming homeless 3. Operating Funds: available for organizations that provide housing or housing services for the purpose of paying salaries and benefits necessary for operation of the organization 4. Home Repair or Modifications: available to organizations that provide housing services for the payment of certain repairs or modifications of homeowner-occupied single-family homes 5. Construction / Rehabilitation: available for organizations that provide housing for the purpose of payment of costs of new construction or modification or rehabilitation of existing facilities; it is the requirement of these funds to abide by Missouri Prevailing Wage requirements It is the purpose of the Missouri Housing Trust Fund to serve the greatest housing and housing service needs in the state with attention given to the lowest-income residents in the areas where those needs exist. These established grant types allow the Missouri Housing Trust Fund s limited resources to be dedicated to services that best serve the population in greatest need. Cap on Funds Requested: Applicants may not request funds in excess of $150,000 per grant type with a maximum of $300,000 per entity, per grant cycle. Page 1 of 2

43 MHTF-110 Nonprofit Allocation: As mandated by the Missouri Housing Trust Fund legislation, 30 percent of the Missouri Housing Trust Fund allocation will be set aside for proposals sponsored by nonprofit organizations. Geographical Allocation: Allocation Area: St. Louis Metropolitan Area: Franklin, Jefferson, Lincoln, St. Charles, St. Louis City, St. Louis and Warren Counties Kansas City Metropolitan Area: Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte and Ray Counties North Region: Adair, Andrew, Atchison, Buchanan, Carroll, Chariton, Clark, Daviess, DeKalb, Gentry, Grundy, Harrison, Holt, Knox, Lewis, Linn, Livingston, Macon, Marion, Mercer, Monroe, Nodaway, Pike, Putnam, Ralls, Randolph, Schuyler, Scotland, Shelby, Sullivan and Worth Counties Central Region: Audrain, Bates, Benton, Bollinger, Boone, Callaway, Camden, Cape Girardeau, Cole, Cooper, Crawford, Gasconade, Henry, Howard, Iron, Johnson, Madison, Maries, Miller, Moniteau, Montgomery, Morgan, Osage, Perry, Pettis, Phelps, Pulaski, Saline, St. Clair, St. Francois, Ste. Genevieve and Washington Counties South Region: Barry, Barton, Butler, Carter, Cedar, Christian, Dade, Dallas, Dent, Douglas, Dunklin, Greene, Hickory, Howell, Jasper, Laclede, Lawrence, McDonald, Mississippi, New Madrid, Newton, Oregon, Ozark, Pemiscot, Polk, Reynolds, Ripley, Scott, Shannon, Stoddard, Stone, Taney, Texas, Vernon, Wayne, Webster and Wright Counties Distribution Percentage: 23% 15% 16% 20% 26% Recommendations for geographic distribution are solely based on 2015 estimated population as reported by U.S. Census Bureau, poverty population, housing cost burden as reported by U.S. Census Bureau, and Point-in-Time Count data as reported by each Missouri Continuum of Care. Page 2 of 2

44 MHTF-106 Missouri Housing Trust Fund FY 2017 Notice of Funding Availability (NOFA) NOFA Date: 6/13/16 Purpose: The Missouri Housing Development Commission (MHDC) hereby notifies interested organizations of the availability of funds to provide housing assistance to very low-income Missourians. The funds will be allocated in accordance with the Allocation Plan (MHTF-110). The funds are as indicated below: $3, 000,000 from the Missouri Housing Trust Fund (estimated) Deadline: Applications for funding will be accepted by MHDC until 5:00 p.m. CDT on August 26, All applications received after the deadline will be rejected and returned to the sender. Decisions regarding funding of proposals are scheduled to be made by the Commission in December Requirements: Applicants must be a nonprofit or for-profit corporation or partnership entity formed pursuant to applicable Missouri law, must be an entity in good standing with the state of Missouri and provide housing or housing services. Missouri Housing Trust Fund monies will not be awarded to individuals. All intended recipients assisted by the Missouri Housing Trust Fund must have incomes at or below 50 percent of the area median income for the geographic area adjusted for family size, and 50 percent of the recipients must have incomes at or below 25 percent of the area median income for the geographic area adjusted for family size. All proposals must be submitted on the current year s application form that is posted on the MHDC website ( and in compliance with the Application Guidance (MHTF-115). Submission: Both a hard copy and an electronic copy are required to be submitted. Please send required hard copy applications to: Missouri Housing Development Commission Community Initiatives Department 920 Main, Suite 1400 Kansas City, MO Please send required electronic applications to: ci.applications@mhdc.com Contact Information: If there are any questions, please contact: Joselyn Pfliegier, Community Initiatives Coordinator Phone: (816) jpfliegier@mhdc.com Effective Date: 6/13/16

45 4) 2015 Homeless Study presentation UMSL

46 Statewide Homelessness Study 2015 Status and Trends

47 Missouri Homeless Study 2015 The Report Missouri Statewide Data Continuum of Care Data

48 Missouri one of 34 states with a decrease in homelessness Accomplishments and Challenges decrease in all subpopulations but chronic individuals disproportionate Place Photo Here, Otherwise Delete Box Place Photo Here, Otherwise Delete Box minority homelessness increase in homeless students increase in permanent supportive housing Sheltered Unsheltered Individual Persons in Families Missouri 83.5% 16.4% 56.0% 43.9% United States 69.3% 30.7% 62.6% 37.4% Overall % Sheltered -3.00% Unsheltered % Individuals -7.40% Persons in Families % Family Households % Chronic Individuals 5.80% Veterans %

49 Missouri Homeless 2015 Persons Emergency Shelter Sheltered Unsheltered Total Transitional Housing Without children 1, ,510 With at least one adult and one child 1,558 1, ,876 With only children ,466 2,003 1,074 6,543

50 Shifting Geography of Homelessness In Missouri Total Homeless Sheltered Unsheltered Individuals Persons in Families CoC Large Metro subtotal Small Metro subtotal 44.2% 49.8% 44.9% 54.2% 41.8% 27.3% 49.7% 52.8% 39.3% 46.1% 35.1% 27.6% 36.4% 24.8% 30.7% 30.8% 25.1% 23.6% 44.1% 33.0% BOS subtotal 20.6% 23.0% 18.6% 21% 27.5% 31% 25.2% 24.0% 16.5% 21.0%

51 Subpopulation Detail Subpopulation Sheltered Unsheltered Total Chronic Substance Abuse 1, ,023 1,119 Severely Mentally Ill 1, ,461 1,120 Survivors of Domestic Violence 1, , Chronically Homeless ,025 Veterans Unaccompanied Youth (under 18) Persons with HIV/AIDS

52 Subpopulation Detail Percentage points by which proportion of women exceeded proportion of men, by CoC Percentage points by which proportion of men exceeded proportion of women, by CoC ADULTS IN FAMILIES - INDIVIDUALS [ADULTS LIVING WITHOUT CHILDREN] ST. LOUIS CITY 78.3% 84.0% 80.5% 78.9% ST. JOSEPH 54.9% 61.1% 67.9% 65.9% STL COUNTY 69.5% 75.9% 76.9% 75.1% JOPLIN 53.0% no data 52.1% 36.2% JOPLIN 63.0% 72.4% 54.8% 53.4% KANSAS CITY 49.7% 57.9% 64.4% 74.7% BALANCE OF STATE 58.4% 59.6% 53.5% 55.2% BALANCE OF STATE 39.2% 43.4% 37.5% 0.0% ST. CHARLES 53.2% 51.9% 60.0% 47.5% ST. LOUIS CITY 25.5% 13.5% 19.8% 5.8% KANSAS CITY 49.4% 53.1% 54.0% 57.0% SPRINGFIELD 28.2% 16.0% 12.7% 39.6% ST. JOSEPH 45.5% 57.5% 46.7% 49.0% ST. LOUIS COUNTY 32.1% 58.5% 32.3% 22.1% SPRINGFIELD 41.9% 30.6% 24.6% 28.7% ST. CHARLES 60.4% 29.9% 18.6% 39.4%

53 What s the Real Number? AHAR vs PITC ANNUAL HOMELESS ASSESSMENT REPORT (AHAR) DATA POINT-IN-TIME COUNT DATA Kansas City St. Louis City BoS St. Louis County Springfield St. Joseph St. Charles County Joplin ,175 4,132 4,581 8,474 7,530 Kansas City 1,587 1,938 2,789 2,479 2,329 1,931 1,446 5,353 5,368 4,499 4,942 5,269 BoS 1,694 1,912 1,967 2,114 2,030 1,528 1,477 1,131 2,850 3,182 2,924 1,359 St. Louis City 1,306 1,305 1,344 1,506 1,423 1,258 1,312 1,813 1,404 1,414 1,547 1,251 St. Charles County 830 1,089 1,003 1, ,565 1,589 1, ,118 St. Louis County Springfield Joplin , ,435 1, St. Joseph ,118 17,538 16,450 21,112 18,171 6,959 8,122 8,989 10,132 8,581 7,186 6,482

54 Homeless Enrolled Students Five Year Trend 3 districts = 25% 10 districts = 45% Total Homeless Enrolled Students Doubled Up Sheltered Unsheltered Hotels/Motels ,680 24,606 2, , ,525 21,340 2, , ,465 19,187 2, , ,046 15,763 2, , ,623 13,358 2,

55 Housing Inventory Overview Total HUD Allocations, 2014 HIC Type Permanent Supportive Housing Transitional Housing Safe Haven Percent of Total $24,157,302 82% $4,159,157 14% $135,780 <1% Total $28,452,239 Missouri Housing Inventory Count HIC Type Change Emergency Shelter Transitional Housing Permanent Supportive Housing Safe Haven 3, % 3, % 3, % % 3, % 3, % 5, % % +4% -7% +77% +107% Total 10,586 12, %

56 Funding Leverage CoC NAME TIMEFRAME FUNDING DEVELOPMENT CHANGE TO HOMELESSNESS RATES Kansas City CoC % increase in program funding 103% increase in the number of homeless individuals and 45% increase in Permanent Supportive Housing program funding persons in families receiving Permanent Supportive Housing services % decline in unsheltered chronically homeless individuals and persons in families 19.9% decrease in PITC totals % increase in Housing First money St. Louis County % increase in Permanent Supportive CoC Housing program funding % increase in homeless individuals and persons in families receiving Permanent Supportive Housing services Springfield CoC Received over $220,000 for Permanent Supportive Housing % increase in the number of individuals and persons in families receiving Permanent Supportive Housing services

57 Context: Rental Squeeze Persons in Poverty % Persons in Poverty Owner Paying 30%+ Renter Paying 30%+ Median Rent Average Gross Rent , % 43.6% $754 $ , % 44.7% $734 $ , % 46.4% $706 $ , % 45.4% $708 $ , % 45.8% $682 $ , % 43.1% $668 $ , % 41.1% $657 $ , % 42.9% $618 $ , % 42.3% $607 $594

58 Context: Rental Squeeze GROSS RENT, 2014 $807 per month/$9,672 INCOME TYPES 2014 ESTIMATES Gross Rent Pct of Income Median Household Income $60, % Retirement Income [mean] $21, % Federal Poverty Level, Family OF 3 $20, % Social Security Income [mean] $17, % Supplemental Security Income (SSI) [mean] $9, %

59 Missouri Homeless Study 2015 Thank you Missouri Housing Development Commission staff Continua of Care staff Governor s Committee to End Homelessness members

60 5) 2017 Draft Qualified Allocation Plan

61

62 FY2017 Draft Qualified Allocation Plan Bullet Point Summary of Changes April 29, 2016 What follows is a bullet point summary of proposed changes to the FY2017 Draft Qualified Allocation Plan and Developer s Guide. It is being provided to assist you in your review. Cover Page Effective date changed to May 27, 2016 I. General Information E. Deadline and Application Fee 2017 QAP Changes Changed due date currently at September 6, 2016 II. Standards A. Participant Standards 6. Added and moved remaining numbers down Pursuant to the Fair Housing Act (42 U.S.C et seq.), discrimination on the basis of race, color, national origin, sex, disability or familial status is strictly prohibited. In addition to prohibiting discrimination, the Fair Housing Act also imposes an obligation to affirmatively further the goals of the Fair Housing Act. MHDC is fully committed to affirmatively furthering fair housing by taking meaningful actions to promote fair housing choice, overcome patterns of segregation, and eliminate disparities in access to opportunity, and consequently, MHDC will consider the extent to which a certain development affirmatively furthers fair housing when deciding which developments should be recommended for funding. 7. Added and edited the order of populations to be consistent with MHDC Standards of Conduct In addition to the requirements set forth in Paragraph 6 above, and, and in addition to any requirements set forth in federal or state law, and actual or perceived sexual orientation, gender identity, marital status, or familial status. B. Development Standards 9. Added The minimum standard for energy audits is ASHRAE Level Added extensive environmental abatement as a MBE/WBE eligible hard cost and environmental study as an eligible soft cost. 18. Added A development may include multiple buildings if it has similarly constructed units, is located on the same or contiguous tracts of land, is owned by the

63 same federal taxpayer and is financed pursuant to a common plan of financing. A development with multiple buildings that is proposing a mixed income structure must have low income units in each building of the development. Scattered site buildings on noncontiguous tracts of land may also qualify if the development meets all of the other requirements described above and the development is 100 percent rent and income restricted, however, costs associated with the development of a separate community building may not be eligible for Tax Credits unless the building contains a residential rental unit. C. Underwriting Standards 5. Added up to for eligible basis 6. Added the sentences: A detailed definition of Identity of Interest is located in the Developer s Guide. and In cases where there is a consultant or co General Partner, the applicant must fill out Developer/Co Developer/Consultant Fee Structure Exhibit detailing the responsibilities of each party. 7. Added and moved other numbers down Appraisal. If the subject property is an operating Section 8 property MHDC appraisal guidelines will require the as is value to be based on market rents and expenses per HUD Multifamily Accelerated Processing (MAP) underwriting guidelines. Any value created by Section 8 rents that exceed market rents ( overage or overhang ) will not be considered. III. Reservation Process A. Housing Priorities Added Up to for eligible basis where applicable 2. Special Needs Housing Added The referral process must include soliciting and accepting referrals from service agencies that serve all types of special needs populations. Applicants should also detail how the marketing will reach all special needs populations: Removed all documentation requirements except support agreement; added Rental assistance commitment letters (if applicable), and changed marketing plan to Special Needs Marketing Plan Exhibit. All documents that were removed will be accounted for within the FIN Service Enriched Housing Added to enhance tenant housing stability and independence and removed and a greater number of services Family Properties (f) Changed language to life skills and employment services

64 (g) Added to family and senior site activities cooking classes Senior Properties (f) Added Periodic to health screenings (h) Removed American Red Cross I m OK program Required documentation removed services budget and past experience, and added service coordinator job description. All documents that were removed will be accounted for within the FIN Transit Oriented Development changed the order of criteria 12. Opportunity Areas removed high Added the following language: Family developments that meet these criteria will receive a preference in funding. Family developments proposed in opportunity areas are required to include an affirmative marketing plan that proactively reaches out to families currently living in census tracts where the poverty rate exceeds 40%. The plan must include a Special Marketing Reserve to assist in initial relocation expenses for families with children. Note that the minimum unit size for a family development in an opportunity area is two bedroom. Developments that apply under this priority must also apply under the Service Enriched Priority. MHDC will, on a case by case basis with reasonable and well documented justification, allow flexibility for meeting all four criteria for qualification. Please refer to the Market Study Guidelines which specifies how data on each of these criteria is to be collected. B. Selection Criteria 5. Feasibility (e) added National Housing Trust Fund affordability period. C. Application Review 2. Primary Documentation Review (a) added Executed FIN 100. A completed and executed FIN 100 with appropriate certifications and elections made. 3. Secondary Documentation Review removed All Secondary (g) Added For rehabilitation proposals, the green building requirement is highly encouraged but optional; however, rehabilitation developments that will achieve and maintain a green building standard should also provide such documentation. (j) Removed HOME utility schedule model language IV. Allocation Process A. Carryover Allocation changed the language to say The Carryover Allocation Agreement will be issued simultaneously with the Firm Commitment, according to the deadlines

65 established in the Conditional Reservation and no later than the month of December in the year of reservation. Changed the language Should the development or owner fail to comply with all such conditions and deadlines, MHDC staff may, in its sole discretion, rescind the Carryover Allocation and use the recaptured credits for other developments. D. (1) Changed the language for the fixed 9% The applicable percentage for New Construction and Rehabilitation credits is permanently fixed at 9% (except for Bond Developments). For Acquisition credits, the applicable credit percentage can be locked at either (i) the month in which such building is placed in service, or (ii) at the election of the taxpayer at the time of a Carryover Allocation. In general, we have changed elderly to senior and where document refers to Senior underwriter, we changed to Chief underwriter. Also changed references from 2016 to End of proposed changes to the FY2017 Qualified Allocation Plan

66 MISSOURI HOUSING DEVELOPMENT COMMISSION QUALIFIED ALLOCATION PLAN FOR MHDC MULTIFAMILY PROGRAMS This plan was approved and adopted by the Missouri Housing Development Commission Board of Commissioners On June 26, 2015May 27, 2016

67 Qualified Allocation Plan Table of Contents I. GENERAL INFORMATION... 1 A. Purpose... 1 B. Developer s Guide... 1 C. Credit Types and Availability... 1 D. Notice of Funding Availability... 2 E. Deadline and Application Fee... 2 II. STANDARDS... 3 A. Participant Standards... 3 B. Development Standards... 4 C. Underwriting Standards III. RESERVATION PROCESS A. Housing Priorities B. Selection Criteria C. Application Review D. Conditional Reservation IV. ALLOCATION PROCESS A. Carryover Allocation B. Final Allocation C. Transfer of Reservations and Allocations D. Owner Elections E. Land Use Restriction Agreement F. Bond Developments V. COMPLIANCE MONITORING VI. OTHER INFORMATION A. Program Fees B. Status Reporting C. Development Changes D. Administration of the Plan E. Amendments to the Plan F. MHDC Discretionary Authority G. Other Conditions

68 MHDC Qualified Allocation Plan I. GENERAL INFORMATION A. Purpose The Missouri Housing Development Commission ( MHDC ) has been designated by the Governor of the state of Missouri as the Housing Credit Agency for the State. This designation gives MHDC the responsibility of administering the Federal Low Income Housing Tax Credit Program ( Federal LIHTC ) established by the Tax Reform Act of 1986 and codified as Section 42 of the Internal Revenue Code, as amended (the Code ), and the State Low Income Housing Tax Credit Program ( State LIHTC ) under Section et seq. of Chapter 135 of the Missouri Revised Statutes, as amended (the State Tax Relief Act ). The responsibilities of a Housing Credit Agency are defined in Section 42(m) of the Code. One of the statutory duties of MHDC as the Housing Credit Agency is to prepare a Qualified Allocation Plan (the Plan ). The purpose of the Plan is to set forth the process that MHDC will use to administer the Federal LIHTC, State LIHTC, and other MHDC multifamily funding. MHDC s goal is to use the Federal LIHTC and State LIHTC as a financial incentive for the creation and maintenance of quality market-appropriate affordable housing that strengthens the communities and lives of Missourians. B. Developer s Guide MHDC has created the Developer s Guide for MHDC Multifamily Programs ( Developer s Guide ) to serve as a detailed resource regarding the principles and procedures governing all MHDC rental production programs including, but not limited to, the Federal LIHTC and State LIHTC. The Developer s Guide is a supplement to this Plan. Throughout the course of this Plan, the Developer s Guide is referenced as a source to gain more information regarding specific topics. C. Credit Types and Availability There are two types of State LIHTC and Federal LIHTC available in Missouri, the 9% Credit and the 4% Credit. 9% Credit For purposes of this Plan and the Developer s Guide, the cumulative amount of both State and Federal 9% Credits MHDC can allocate for any calendar year shall be known as the Annual 9% Credit Authority. Developments applying for an allocation under the Annual 9% Credit Authority receive what is commonly known as the 9% Credit. The 9% Credit includes any 70% present value credit and any 30% present value credit for qualified existing buildings which also will use the 70% present value credit. The total amount of Federal 9% Credit available in any one year is specified by the Code in 42(h)(3)(C), and is known as the State Housing Credit Ceiling. The State Housing Credit Ceiling is generally equal to the sum of the following: a. Per Capita Credits. Calculated based on the state population and the per capita rate set by the IRS. b. Carry Forward Credits. Should MHDC be unable to allocate all allotted 9% Credits in any one year, the unused credits will be carried forward for allocation in the succeeding year. c. Returned Credits. Credits that are returned from developments that received an allocation in previous years may be made available for allocation in the year the credits are returned or the succeeding year if returned after September 30. d. National Pool Credits. If MHDC is able to allocate the entire amount of Federal 9% Credits available in any one year, Missouri may receive additional credits from the pool of credits returned by other states ( National Pool ), if available. The State LIHTC was established by the State Tax Relief Act and provides that any development eligible for a Federal LIHTC allocation is eligible for a State LIHTC allocation. The amount of State LIHTC 1

69 MHDC Qualified Allocation Plan authorized for a development cannot exceed the Federal LIHTC amount and the amount of State LIHTC available in proportion to the Federal LIHTC available may be reduced by the state legislature, making any allocation subject to change in the authorizing statute. For any given development, MHDC, in its sole discretion, may choose not to allocate any State LIHTC or State LIHTC in an amount up to the imposed statutory limit, as it deems necessary for the financial feasibility of the development. The anticipated amount of the Annual 9% Credit Authority for Missouri will be announced in the NOFA to precede the application round. 4% Credit Under 42(h)(4) of the Code, developments financed with tax-exempt private activity bond volume cap ( Bond Developments ) may be eligible to receive the 4% Credit. The 4% Credit includes the 30% present value credit for federally subsidized buildings that feature eligible basis financed by any obligation, the interest on which is exempt from federal tax and any 30% present value credit for the qualified existing buildings of Bond Developments. While the NOFA does not establish a ceiling or annual authority for the Federal 4% Credit, the amount of State 4% Credits available for Bond Developments is currently capped at $6 million per fiscal year. Consistent with the 9% Credit, the amount of State 4% Credits may be reduced by the state legislature, making any allocation subject to change in the authorizing statute. MHDC, in its sole discretion, may choose to allocate no State 4% Credits or State 4% Credits in an amount up to the imposed statutory limit, as it deems necessary for the financial feasibility of the development. D. Notice of Funding Availability A Notice of Funding Availability (the NOFA ) will be published immediately following the Commissioners formal approval of the Plan and the proposed NOFA. The NOFA will describe the types and amounts of funding available and the due date for applications. Once approved, the NOFA will be posted to the website: To be considered for a 9% Credit or 4% Credit allocation, an application must be submitted in accordance with this Plan, the NOFA, and the Developer s Guide. MHDC shall have the right to consider any application for 4% Credits for a potential allocation of 9% Credits if the application meets the requirements and competes successfully with other 9% Credit applications. Similarly, MHDC may consider any application for 9% Credits for a potential allocation of 4% Credits. MHDC will set forth the protocol and timing for the submission of applications in the Developer s Guide, as it may be amended from time-to-time. MHDC accepts applications for its main NOFA cycle once per allocation year followed by a second NOFA round for 4% Credit applications prior to the end of the fiscal year, at the discretion of MHDC. MHDC reserves the right to establish subsequent NOFAs and application rounds as it determines necessary. Approval for 9% Credit and 4% Credit reservations will be made at a regularly scheduled Commission meeting. The date of such Commission meeting will be posted on the MHDC website and is subject to change. A Conditional Reservation Agreement describing the amount(s) of funding approved and the MHDC requirements that accompany such funding approval will be issued shortly after formal Commission approval. E. Deadline and Application Fee 1. Deadline. The Application deadline for Round 1 is September 456, and is subject to change should the NOFA need to be revised or modified. Round 2, if available, will be announced at a later date by issuance of a new NOFA. Applications must be completed and all physical application materials must be received in MHDC s Kansas City office (920 Main Street, Suite 1400, Kansas City, Missouri 64105) according to the deadline established in the applicable NOFA. Any applications received after the deadline will be returned to the applicant without consideration. This includes late 2

70 MHDC Qualified Allocation Plan arrivals for any reason including, but not limited to, courier or delivery error. Early submission is strongly encouraged. 2. Application Fee. All applicants for MHDC financing under this Plan and NOFA must submit an application fee with each application. The application fee is non-refundable and if any application fee is returned for any reason, the application will be rejected. The applicable fees are: a. Nonprofit Priority Application Fee. Proposals that qualify for the Nonprofit Priority (as detailed in Section III below) and request consideration under that priority owe a $750 application fee. This does not include Bond Developments, which must pay the standard application fee. b. Standard Application Fee. All applications that do not qualify for the Nonprofit Priority owe a $2,000 application fee. Exception: Applicants submitting proposals under the Property Disposition Priority (as detailed in Section III below) for a property listed publicly by MHDC as real estate owned and available for public bid are not required to submit an application fee. II. STANDARDS A. Participant Standards All participants must be in good standing with MHDC. In addition to satisfactory previous performance, participants must be aware that: 1. All identities of interest between members of the development team must be documented to MHDC s satisfaction. This includes, but is not limited to, identities of interest between a property/land seller and purchaser and identities of interest between any two or more development team members such as developer, general partner(s), syndicator(s), investor(s), lender(s), architect(s), general contractor, subcontractor(s), attorney(s), management agent, etc. 2. Any individual or entity awarded Federal LIHTC or State LIHTC which does not buy and sell LIHTC from unrelated awardees cannot resell their ownership interest (or any Federal LIHTC and/or State LIHTC flowing therefrom) for an amount greater than their contribution to the development, unless the full gain from the sale directly benefits the development, as reflected in the sources and uses. Any individual or entity which violates this provision may, in the sole discretion of MHDC, be barred from further participation in any MHDC rental production programs. 3. When available and feasible, best efforts must be employed to use local vendors, suppliers, contractors, and laborers. 4. MHDC has established an MBE/WBE Initiative (as detailed in the Developer s Guide) which encourages involvement of businesses certified as a Minority Business Enterprise (MBE) and/or Woman Business Enterprise (WBE) under a business certification program by a municipality, the state of Missouri, or other certifying agency, as deemed appropriate by MHDC in consultation with the State of Missouri Office of Equal Opportunity. 5. All participants must agree to abide by the MHDC Workforce Eligibility Policy, as the same may be amended from time-to-time. 6. Pursuant to the Fair Housing Act (42 U.S.C et seq.), discrimination on the basis of race, color, national origin, sex, disability or familial status is strictly prohibited. In addition to prohibiting discrimination, the Fair Housing Act also imposes an obligation to affirmatively further the goals of the Fair Housing Act. MHDC is fully committed to affirmatively furthering fair housing by taking meaningful actions to promote fair housing choice, overcome patterns of segregation, and eliminate disparities in access to opportunity, and consequently, MHDC will consider the extent to which a certain development affirmatively furthers fair housing when deciding which developments should be recommended for funding. Formatted: Font color: Auto Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, + Start at: 1 + Alignment: Left + Aligned at: 0.25" + Tab after: 0.5" + Indent at: 0.5" 3

71 MHDC Qualified Allocation Plan 7. In addition to the requirements set forth in Paragraph 6, above, and also in addition to any other requirements set forth in federal, state, or local law, tthe Commission requires occupancy of housing financed or assisted by MHDC be open to all persons, regardless of race, color, religion, national origin, ancestry, sex, age, disability, actual or perceived sexual orientation, gender identity, marital status, or familial status. Also, contractors and subcontractors engaged in the construction or rehabilitation of such housing shall provide equal opportunity for employment without discrimination as to race, color, religion, national origin, ancestry, sex, age, disability, actual or perceived sexual orientation, gender identity, marital status, or familial status., sex, familial status, disability, or national origin, actual or perceived sexual orientation, gender identity, or marital status. Also, contractors and subcontractors engaged in the construction or rehabilitation of such housing shall provide equal opportunity for employment without discrimination as to race, color, religion, sex, familial status, disability, or national origin, actual or perceived sexual orientation, gender identity, or marital status The applicant must provide evidence that local public officials, as detailed in the Developer s Guide, have been informed that the applicant is submitting an application to MHDC Pursuant to MHDC s adopted Standards of Conduct, criteria has been established upon which individuals and/or entities may be suspended or debarred from future participation in MHDC sponsored programs (4 CSR , as may be amended from time-to-time). B. Development Standards All MHDC-financed developments (defined as a development receiving one or more of the following: Federal LIHTC, State LIHTC, an MHDC loan, or an MHDC grant) are required to: 1. Comply with the MHDC Design/Construction Compliance Guidelines (MHDC Form 1200), as may be amended from time-to-time. 2. Comply with all applicable local, state and federal ordinances and laws including, but not limited to: a. Local zoning ordinances. The subject site must be zoning multifamily and/or have a highest and best use as multifamily. The site cannot be zoned commercial, office, retail or industrial. b. The construction code utilized by the local government unit where the development is located. In the absence of locally adopted codes, the International Building Code (2012), the International Plumbing Code (2012), the International Mechanical Code (2012), the National Electrical Code (2011), and/or the International Residential Code (2012) must be used. c. The Fair Housing Act of 1968, as amended. In addition, proposals receiving federal, state, county, or municipal funding may be required to comply with the Architectural Barriers Act of 1968, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act, all as amended. d. If applicable, the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 ( URA ) and/or Missouri Revised Statute e. If applicable, The Lead Paint Poisoning Prevention Act, HUD Guidelines for the Evaluation and Control of Lead Based Paint in Housing, and the MHDC Lead Based Paint Policy. 3. All developments with twelve (12) or more units are required to have a minimum of 5% of the units (rounded up to the nearest whole number) designed in compliance with one of the nationally recognized standards for accessibility to wheelchair users and an additional 2% of the units (rounded up to the nearest whole number) usable by those with hearing or visual impairments. 4. All new construction projects, regardless of number of units, shall be designed and constructed in accordance with the principles of universal design, as detailed in MHDC Form 1200, Design/Construction Compliance Guidelines. This requirement is in addition to the requirement for accessibility of persons with mobility, hearing and/or visual impairments as outlined in item #3 above. 4

72 MHDC Qualified Allocation Plan 5. Rehabilitation developments with special needs set-aside units must meet item #3 above and must increase the number of units incorporating the principles of universal design to a percentage equal to or greater than the special needs set-aside percentage The requirements set forth in #3 above for accessibility, hearing, and visual impairments can be included in the units incorporating universal design. 6. Provide facilities, amenities, and equipment appropriate for the population being served by the development. 7. Be designed to meet the established construction budget and utilize construction materials that extend the longevity of the building including materials, products, and equipment which are more durable than standard construction materials. Products must clearly reflect upgrades from standard construction grades and be economical to maintain. 8. If the development involves new construction, utilize sustainable building techniques and materials to meet the current standards of one of the certification levels of the following green building rating systems: Enterprise Green Communities, any of the LEED rating systems, or the National Green Building Standard (ICC 700 or NGBS ). In addition, to meet the sustainable housing requirement, the applicant must: a. Demonstrate at the time of application, Firm Submission (as defined in the Developer s Guide), and construction completion that the development will meet or has met the design and construction requirements for any certification level offered by the three accepted rating systems. The development is not required to receive formal certification, but must be designed and built in such a manner that it could receive formal certification. Green building criteria utilized must be clearly documented for MHDC staff s review and confirmation. b. Have at least one development team member who is an accredited green building professional with proven experience in sustainable design and/or construction. The team member must be a LEED AP, LEED Green Associate or a Certified Green Professional. If the development is not being formally certified, the development team member must document the pledged green building standards with pictures, provide a signed and scored scoring tool, and a brief narrative during the construction process. 9. If a development contains more than twelve (12) units and involves rehabilitation, applicants are required to conduct pre-development testing and energy audits of existing buildings to identify energy savings opportunities. The minimum standard for energy audits is ASHRAE Level 1. The analysis can be a stand-alone document, or incorporated in either the Physical or Capital Needs Assessment reports provided it is in a separate section by itself, and must be prepared by an assessor/rater certified through the Building Performance Institute (BPI), Residential Energy Services Network Home Energy Ratings Systems (RESNET), or ENERGY STAR. The energy audit will be submitted with the initial application for the project. 10. Pay at least federal prevailing wage to all laborers and mechanics employed in the construction of the development, as determined and posted by the United States Department of Labor for the locality of the development and current within ten (10) days of construction closing. Developments consisting of buildings with four (4) or fewer floors must use the Davis-Bacon residential construction category and developments consisting of buildings with five (5) or more floors must use the Davis-Bacon building construction category. 11. Have contracts that are both reasonable and competitively priced for both hard and soft costs. 12. Adhere to the contractor fee limitations described in Section C (6)(b) below. 13. Commit to contract with Section 3 businesses as may be dictated by regulations tied to federal funding sources and as more thoroughly set out in the Developer s Guide. A Section 3 Plan (as defined in the Developer s Guide) signed by the owner/developer and the general contractor must be reviewed and approved by MHDC staff prior to Firm Commitment issuance. 14. MBE/WBE Participation Standard is set at a minimum of 10% for MBEs and 5% for WBEs for both hard and soft costs. This applies to developments with more than six (6) units. The Participation 5

73 MHDC Qualified Allocation Plan Standard may be satisfied by MBE/WBE businesses providing competitively-priced services/materials in the following categories: Hard costs for the actual physical cost of construction, which include, but are not limited to, general contracting, grading, extensive environmental abatement, excavation, concrete, paving, framing, electrical, carpentry, roofing, masonry, plumbing, painting, asbestos removal, trucking and landscaping. Soft costs, which include, but are not limited to, planning, architectural, relocation, legal, accounting, environmental, study, engineering, surveying, consulting fees, title company, disbursing company, market study, appraisal and soils report. The calculation of participation rates shall include all line items for which services or materials are provided to the development; provided however, that developer fees may be, but are not required to be, included in the calculation of participation rates. Development costs that do not include actual services or materials, such as public sector financing fees, reserves, land acquisition, building acquisition, construction interest, construction period taxes, tax credit allocation fees, tax credit monitoring fees, and bond issuance cost, shall not be included in the calculation. Calculations are based on work actually performed by the contractor. When the MBE/WBE is not performing the work but is the named contractor, credit will be given for twenty percent (20%) of the contract amount. A utilization plan, committing in detail, how the applicant intends to meet the Participation Standard MUST be signed by the owner/developer(s) and included in the application. MBE/WBE entities providing soft cost services must be identified at the time of application. Evidence of MBE/WBE proposals and certifications for hard costs will be required as part of the firm submission requirements or no later than five (5) days prior to construction loan closing. In the event there is also an award of HOME funds, there may be additional requirements (e.g., Section 3) that must be met to be in compliance with federal regulations. 15. HUD published a Final Rule in the Federal Register on July 24, 2013 to amend the HOME Program regulations. These amendments to the HOME regulations represent the most significant changes to the HOME Program in seventeen (17) years. The Final Rule will be enforced on all MHDC projects funded with HOME funds as required by law. Information on the new HOME Rule can be found at: Please refer to MHDC s HOME Program Guide for additional information. 16. For mixed-income developments, when feasible and practicable, MHDC requires the affordable units be distributed proportionately throughout each building and each floor of each building of the development and throughout the bedroom/bath mix and type. Both market rate and affordable units must have the same design regarding unit amenities and square footage. Amenities include, but are not limited to, fireplaces, covered parking, in-unit washer/dryers, etc. 17. If receiving federal historic credits and/or state historic credits, developments must waive the right to opt out of the Declaration of Land Use Restriction Covenants for Low-Income Housing Tax Credits ( LIHTC LURA ) to be recorded and choose to extend the Compliance Period for an additional fifteen (15) years. Formatted: Space After: 0 pt, Tab stops: Not at 0.5" Formatted: Space After: 0 pt, Tab stops: Not at 0.5" A development may include multiple buildings if it has similarly constructed units, is located on the same or contiguous tracts of land, is owned by the same federal taxpayer and is financed pursuant to a common plan of financing. A development with multiple buildings that is proposing a mixed income structure must have low-income units in each building of the development. Scattered site buildings on noncontiguous tracts of land may also qualify if the development meets all of the other requirements described above and the development is 100 percent rent and income restricted, however, costs associated with the development of a separate community building may not be eligible for Tax Credits unless the building contains a residential rental unit. 6

74 MHDC Qualified Allocation Plan C. Underwriting Standards MHDC has adopted the following underwriting standards for all developments seeking a Federal LIHTC or State LIHTC allocation under this Plan. Meeting these standards does not constitute a representation regarding the feasibility or viability of the development and does not guarantee or imply an allocation will be made. Applicants should refer to and rely upon the Developer s Guide while completing an application under the NOFA as it provides a more detailed description of the underwriting standards and expectations of MHDC. MHDC will not award Federal LIHTCs and/or State LIHTCs based solely on the lowest development costs. The mission of MHDC is to provide high-quality affordable housing with long-term viability that contributes to the community. MHDC staff reserves the right to adjust assumptions according to market conditions at the time of application. 1. Rents. The proposed rents must be reasonable for the population being served and appropriate for the market in which the development is located. Rents must meet the requirements of the various financing sources in the application and, at a minimum, must meet the requirements of the Code to be eligible for a tax credit allocation under this Plan. Tax credit rents should be at least 15% less than market rents. In rare instances, area market rate rents may be depressed due to deteriorating conditions. Therefore, area market rate rents could be less than tax credit rents. If a development includes both tax credit and market rate units, the market rate unit rents must be at least 15% higher than tax credit rents. This does not apply to special needs housing properties. 2. Development Cost Minimums. For rehabilitation developments seeking 9% Credit, the total construction costs must equal or exceed 40% of the total replacement costs. Bond Developments located in rural areas (non-msa) must have total construction costs of at least 15% of the total replacement costs. Bond Developments located in urban areas (MSA) must have total construction costs of at least 20% of the total replacement costs. 3. Development Cost Maximums. The maximum total development cost for a development cannot exceed the current Maximum Development Cost Limits published on the MHDC website. Maximum Development Cost Limits are determined using the HUD method of calculating the 221(d)(3) total replacement cost limits. MHDC reserves the right, on rare occasions, to allow exceptions to the cost limit on a case-by-case basis if unique development characteristics that meet or exceed the standards and goals of this Plan are incorporated into the proposal. 4. Construction Cost Analysis. MHDC may hire an independent third party to provide an up-front construction analysis for all approved developments in excess of six (6) units. This analysis would be performed after Firm Submission documents (plans and specs) have been submitted. If it is determined the costs submitted are either excessive or deficient, MHDC may adjust the amount of Federal LIHTC, State LIHTC, and/or loan funds allocated to the development prior to closing. This review will also include a replacement reserve analysis for all proposed rehab, preservation, or conversions (except for RD properties). 5. Increase in Eligible Basis. Developments located in a Qualified Census Tract or in a Difficult Development Area, as defined below, may be eligible to increase eligible basis by up to 30%. a. Qualified Census Tract. Developments located in areas designated by HUD as Qualified Census Tracts.,. b. Difficult Development Areas. Developments located in areas designated by HUD to be difficult to develop. c. State Designated Difficult Development Areas. Pursuant to 42(d)(5)(B)(v) of the Code, MHDC may establish criteria to designate additional properties approved for 9% Credits to be treated as located in a difficult development area For purposes of this Plan, to qualify for such an increase, properties must meet at least one (1) of the following criteria: i. Be determined to meet the qualifications of the Preservation Priority; 7

75 MHDC Qualified Allocation Plan ii. Be determined to meet the qualifications of the Special Needs Priority and demonstrate the property owner will incur direct costs in addition to costs covered by third parties in the provision of services to enhance the residential stability and independence of special needs residents; iii. Be determined to meet the qualifications of the Service Enriched Priority; iv. Be a family development located in a county whose median income is below the 2015 statewide median income, as established and published by HUD, and propose to set aside 20% of the total units to be occupied by households earning between 60% and 80% of the area median income (workforce units), calculated using the appropriate income limits; or v. Be part of a larger mixed-use economic development area. For a development to qualify as part of a mixed-use economic development area, it must: 1. Be part of a mixed-use economic development area that includes different housing types for different household income levels, new retail/office/light industrial space that creates new permanent jobs, and new public space or activity centers designed for users of the area; or 2. Be part of a Transit Oriented Development ( TOD ) plan. The TOD plan must be centered around and integrated with a transit stop and the proposal must be located within 1,750 feet of a transit stop. The TOD plan must be mixed-use, mixed-income, pedestrian friendly, and of appropriate density for a TOD. MHDC will decide, in its sole discretion, what evidence and what types of development will qualify for an increase in eligible basis for mixed-use economic development areas. An important factor is that the MHDC development is not the only development, and the MHDC development will enhance the overall plan, rather than be the overall plan. It is expected the plan, of which the MHDC development is a part of, contemplates the development of multiple buildings over an area of reasonable size. This will not apply to a singular structure, regardless of location. Further details regarding difficult development area requirements can be found in the Developer s Guide. 6. Developer and Contractor Fee Limits. Developer and contractor fees are limited as follows: a. Developer Fee. For the purposes of the developer fee limit, Developer Fee is defined as the sum of the developer fee and consultant fees including, but not limited to, the following types of consultants: development and/or credit, application, historic, MBE/WBE, and Section 3 consultants. Development costs paid for by a previous owner are not considered when calculating developer fee, even if the cost of the previous work is included in the sales/purchase contract. i. New Construction Developments are limited to the lesser of: (a) 15% of total replacement costs for the first $4,000,000 of total replacement costs and 10% for any additional amount of total replacement costs, or (b) the per-unit calculation from the chart below. Only 25% of the developer fee (excluding deferred amounts) may be payable at closing, with an additional 25% permitted at 50% completion. MHDC reserves the right to further restrict the amount of developer fee payable during construction. ii. Acquisition-Rehabilitation and Historic Preservation Developments are limited to the lesser of: (a) the sum of 8% of acquisition costs for the first $2,000,000 of acquisition costs, 6% of any additional acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs, or (b) the per-unit calculation from the chart below. 8

76 MHDC Qualified Allocation Plan iii. Acquisition-Rehabilitation Developments where an Identity of Interest Relationship Exists between the Seller and the Buyer of Real Estate is limited to the lesser of: (a) the sum of 3% of acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs, or (b) the per-unit calculation from the chart below. NOTE: This does not apply to entities or individuals who meet either one of the following criteria: (1) the developer has owned the property for less than four (4) years; or (2) the developer has submitted an unsuccessful LIHTC rehabilitation application for the property within four (4) years of acquisition and has not owned the property for more than six (6) years. A detailed definition of Identity of Interest is located in the Developer s Guide. iii.iv. Per-Unit Developer Fee Maximum for i, ii, and iii above: For units 1-40 For units * For units * For units 151+* $20,000 per unit $17,500 per unit $15,000 per unit $12,500 per unit * Please see Section III.B.b. Development Size, for further information on developments which contain more than 50 affordable units. The Conditional Reservation Agreement approved developer fee cannot be increased for any reason without Commission approval. In cases where there is a consultant or co-general Partner, the applicant must fill out Developer/Co- Developer/Consultant Fee Structure Exhibit detailing the responsibilities of each party. b. Contractor Fees. Contractor fees are limited for general requirements, overhead, and builder s profit and cannot exceed 14% of the total construction costs less the sum of general requirements, overhead, and builder s profit. Bonding costs and permit costs shall not be included in the calculation of contractor fee limits for general requirements, overhead, and builder s profit. This limitation on contractor fees should be incorporated into the construction contract. A cost certification is required from the contractor and the limit imposed by this Plan cannot be exceeded. Builder s Profit maximum 6% of construction costs; Builder s Overhead 2% of construction costs; and General Requirements 6% of construction costs. All general requirement items in the Fin-115 must be included in the calculation of the maximum amount for general requirements, regardless of the party who pays for the items. 7. Appraisal. If the subject property is an operating Section 8 property MHDC appraisal guidelines will require the as-is value to be based on market rents and expenses per HUD Multifamily Accelerated Processing (MAP) underwriting guidelines. Any value created by Section 8 rents that exceed market rents ( overage or overhang ) will not be considered. 8. Tax Credit Amount. The Code and the State Tax Relief Act require MHDC allocate to a development no more than the Federal LIHTC and State LIHTC amounts (respectively) which MHDC determines necessary to ensure the financial feasibility of the development and its viability as a qualified low-income housing development throughout the Compliance Period (as defined in the Code). MHDC retains the right, in its sole discretion, to reserve a lesser amount of Federal LIHTC and/or State LIHTC than the amount(s) requested on the application, to reserve less Federal LIHTC and/or State LIHTC than would result by using an applicable fraction of 100%, and/or to deny approval of any Federal LIHTC and/or State LIHTC amount. MHDC will evaluate each proposed development utilizing the selection criteria found in this Plan and the Developer s Guide. MHDC staff will underwrite each application using the monthly applicable percentage for 9% developments unless federal legislation is passed prior to Commission approval of applications which allows the applicable percentage to be a minimum of 9%. 9

77 MHDC Qualified Allocation Plan The determination of the Federal LIHTC and State LIHTC amounts necessary will be conducted at the following processing stages: a. The time of application; b. The time of Conditional Reservation Agreement issuance; c. The time the approved Firm Commitment and Carryover Allocation are issued and/or a Letter of Determination (also known as a 42(m) Letter ) is issued, if applicable; and d. The time the development is placed in service (after all project costs are finalized and a third party cost certification has been completed) and requests issuance of IRS Form(s) Maximum Credit Amount. The maximum amount of annual federal 9% Credit that can be allocated to any individual development is $700,000 ( Maximum Credit Amount ). However, in MHDC s sole discretion, for any development determined to be eligible for a basis boost (see Section II.C.5 above), the maximum annual federal 9% Credit is up to $910,000 (after the basis boost). MHDC, in its sole discretion, can make exceptions on a case-by-case basis when justified by development size and feasibility. The annual state 9% Credit shall be limited to an amount necessary for the feasibility of the development, but in no event can it exceed $700,000 without Commission approval. Bond Developments receiving 4% Credit allocations will not be limited, beyond what is dictated by the Code, in the amount of Federal LIHTC allocated. Bond Developments are subject to a $700,000 cap in annual State LIHTC and subject to a fiscal year cap total authorization of $6,000,000. The Commission, in its sole discretion, can make exceptions on a case-by-case basis when justified by development size and feasibility. The State LIHTC is not an as of right credit and approval is subject to Commission action. MHDC has the right to lower the maximum amount of annual State LIHTC for purposes of application review and approval as a result of statutory changes or limitations placed on the State LIHTC by the Commission or the state legislature. 10. Additional Credit. Owners can apply for an increase in Federal LIHTC and/or State LIHTC amounts in subsequent years if a development s eligible basis has increased. Additional credits may be awarded if: a. The development meets the requirements of the most recent Plan; b. There are additional Federal LIHTCs and/or State LIHTCs available; c. MHDC is satisfied the additional amount is necessary for the financial feasibility and viability of the development; and d. The increased amount of Federal LIHTC and/or State LIHTC does not exceed MHDC s Maximum Credit Amount. 11. Subsidy Layering Review. Section 911 of the Housing and Community Development Act of 1992 and Section 102 of the Department of Housing and Urban Development Reform Act of 1989 have placed limitations on combining the 9% Credit and 4% Credit with certain HUD and other federal programs. The limitations currently apply to a number of programs under the jurisdiction of the HUD Office of Housing including, but not limited to, Section 221(d)(3), 221(d)(4), 223(f) and 542(c) mortgage insurance, Flexible Subsidy, and project-based Section 8 rental assistance programs (collectively, HUD Housing Assistance ). As part of a Memorandum of Understanding ( Subsidy Layering MOU ), dated May 8, 2000, between HUD and MHDC, developments using the Federal LIHTC with HUD Housing Assistance are subject to a subsidy layering review by MHDC. The Subsidy Layering MOU requires HUD and MHDC to share information on the developer s disclosure of sources and uses of funds for all developments financed with both the Federal LIHTC and 10

78 MHDC Qualified Allocation Plan HUD Housing Assistance. This review is designed to ensure such developments do not receive excessive federal assistance. 12. Use of HOME. Funding from the HOME Investment Partnership Act ( HOME ) is a resource that may be available to assist in the development of affordable housing. For a development with HOME funding to qualify for the 9% Credit and remain in basis, the HOME funds must be structured as a loan. If structured as a grant, the amount of such grant will be deducted from eligible basis. 13. Development Financing Commitments/Letters of Intent (LOI). MHDC requires a preliminary commitment letter at the time of application for all non-mhdc sources of financing. Updated commitment letters are required at Firm Submission for approved applications. Applications must clearly state whether or not they are requesting a participation loan. Applicants requesting an MHDC Fund Balance participation loan should include a letter of intent from their preferred lending institution(s) which states: a. That the lender is willing to take a co-first lien position with MHDC; b. The amount that the lender is willing to loan; and c. An acknowledgement by the lender that any participation loan is subject to the terms and conditions of a Participation Loan Agreement with MHDC. Otherwise, MHDC reserves the right to determine appropriate loan financing for the project. If an application includes multiple non-mhdc commitments/lois, the applicant must specify which commitment should take precedence over the other(s). All financing commitments, including Federal LIHTC and State LIHTC equity, must be included with the application and reflected within the FIN-100. III. RESERVATION PROCESS A. Housing Priorities The following housing priorities have been established by MHDC to encourage the development of certain types of housing in certain locations. A more detailed description of the priorities and the requirements for consideration under the priorities is available in the Developer s Guide. An application seeking a priority under one or more of the priorities listed below must still satisfy all other selection criteria and successfully compete against other applications. 1. Nonprofit Involvement Set-aside. Pursuant to the Code, at least 10% of the 9% Credit available must be allocated to developments that involve a qualified nonprofit organization ( Nonprofit Priority ). Section 42(h)(5)(C) of the Code defines a qualified nonprofit organization as: a. A 501(c)(3) or (c)(4) nonprofit organization; b. Having an express purpose of fostering low-income housing; c. One that will own an interest in the development and materially participate in the development and operation of the development throughout the Compliance Period. Material participation is defined in 469(h) of the Code as involved in the operations of the activity on a basis which is regular, continuous, and substantial ; and d. Is not affiliated with, nor controlled by, a for-profit organization. Developments wanting to be considered for this priority must fully complete the applicable sections of the application and provide the following with the application: i. Nonprofit Organization s Certificate of Incorporation; ii. Articles of Incorporation and By-Laws; 11

79 MHDC Qualified Allocation Plan iii. Missouri Certificate of Good Standing; iv. IRS letter evidencing nonprofit status; and v. MHDC Nonprofit Questionnaire which describes the organization s role in detail, including how material participation pursuant to 469(h) of the Code will be met and what share of profits, losses, and fees go to the nonprofit organization. 2. Special Needs Priority (eligible for up to 30% boost in eligible basis). Developments providing housing opportunities for persons with special needs are strongly encouraged. Developments committing to a special needs set-aside of no less than 10% of total units, up to a maximum of 100% of total units, will receive a preference in funding ( Special Needs Priority ). A person with special needs is a person who is: (a) physically, emotionally or mentally impaired or suffers from mental illness; (b) developmentally disabled; (c) homeless, including survivors of domestic violence and sex trafficking; or (d) a youth aging out of foster care. A development with a special needs set-aside cannot give preference to potential residents based upon having a particular disability or condition to the exclusion of persons with other disabilities or conditions. Applicants must submit documentation demonstrating they have obtained commitments from a Lead Referral Agency which will refer special needs households qualified to lease targeted units and from local service agencies which will provide a network of services capable of assisting each type of special needs population defined above. A Lead Referral Agency is a service provider agency that will provide tenants and services to the community through the later of (i) the completion of the Compliance Period, or (ii) the completion of the affordability period connected to any MHDC loan on the development. The Lead Referral Agency should demonstrate the ability to serve the targeted special needs population. MHDC will endeavor to set aside 33% of Federal LIHTC and State LIHTC, 4% Credit and 9% Credit for developments containing units qualifying under the Special Needs Priority outside the geographic set-aside, subject to the quality of the special needs applications received and their ability to meet selection criteria and underwriting requirements described in this Plan. Applications submitted with special needs units must include $1,000 per special needs unit as a payment to the Special Needs Housing Reserve Fund which has been established by MHDC. This reserve will be funded by each development at construction completion when other reserve funds are normally funded. These funds will be held by MHDC and used, as necessary, to temporarily assist special needs properties that have experienced unforeseen operational issues (for example, the loss of rental assistance). Deposits to the Special Needs Housing Reserve Fund are intended for use for all special needs developments, commencing with 2014 approvals, and are intended to replace the need for each property to establish a separate special needs reserve. Guidelines for the application and use of reserve funds are posted on MHDC s website (Rental Production, General Forms and Other Resources). Developments wanting to be considered for the Special Needs Priority must fully complete the applicable sections of the application and provideprovide the following supplemental documentation with their application. The referral process must include soliciting and accepting referrals from service agencies that serve all types of special needs populations. Applicants should also detail how the marketing will reach all special needs populations.: i. A draft referral and support agreement with the Lead Referral Agency; i. Special Needs Marketing Plan Exhibit; andand ii. A description of Lead Referral Agency s experience, its ability to provide access to support services, and its capacity to maintain relationships with the managing agent and community service providers throughout the Compliance Period. The description should include the agency s mission and years of experience working with the identified population; iii.ii. A marketing plan demonstrating how the development will be affirmatively marketed to persons with special needs, the screening criteria to be used, and the willingness of all parties to negotiate 12

80 MHDC Qualified Allocation Plan reasonable accommodations to facilitate the admittance of persons with disabilities into the development; iv. Documentation of supportive services appropriate to each type of special needs population; v. An affordability plan addressing the type(s) of rental assistance or rent structure that may be utilized to make special needs units affordable to special needs households with extremely low income; and vi. A detailed services budget describing how services will be implemented for the special needs population being targeted (Form SNH-103). iii. Rental assistance commitment letters (if applicable). 3. Service-Enriched Housing (eligible for up to 30% boost in eligible basis). Service-Enriched Housing enhances the connection between affordable housing and supportive services. MHDC recognizes the advantages of supportive housing to individuals, communities and on public resources. To encourage more comprehensive housing environments for vulnerable populations, proposals offering significant services tailored to the tenant population will receive a preference in funding ( Service Enriched Priority ). Developments which offer substantial services to enhance tenant housing stability and independence and a greater number of services increase the competiveness of their application. Proposed services should take into account the unique characteristics of residents and help them to identify, access, and manage available resources. Other benefits of a well-planned and properly funded program may include reduced resident turnover, improved property appearance, and greater cooperation between residents and management. To be considered under the Service Enriched Priority, a development must target a specific population. Examples include, but are not limited to: a. Senior ElderlyElderly Senior households; b. Individuals with children; c. Formerly homeless individuals and families; d. Individuals with physical and/or developmental disabilities; e. Individuals diagnosed with mental illness; and f. Children of Tenants. The applicant should demonstrate it has experience with the population in question. If the applicant does not have experience with the specified population, it should have a commitment(s) from a service provider(s) who does have the necessary experience. Any commitments should run until the later of (i) the completion of the Compliance Period, or (ii) the completion of the affordability period connected to any MHDC loan on the development. Below are examples of services for both family and senior developments. Family properties: a. Regularly-held resident meetings; b. After-school programs for children; c. Financial literacy courses for adults; d. Parents as Teachers program offered through the local school district; e. Credit and/or budget counseling; f. Life skills and employment servicesor job application training; g. Nutrition and cooking classes; h. Domestic violence survivor support and counseling; i. Computer lab or computer check-out program; j. Food pantry; k. Daycare services; l. College preparation counseling; m. Clothes closet; and 13

81 MHDC Qualified Allocation Plan n. Library; o. Back to school programs; p. Youth sports activities; q. Teen support groups; and n. Good neighbor and tenant rights classes.. r. Senior properties: a. Regularly-held resident meetings; b. Transportation to shopping and medical appointments; c. Nutrition and cooking classes; d. Enrichment classes such as seminars on health issues, prescription drugs, Medicare, the internet; e. Coordination with an agency that provides assistance with paying bills and balancing checkbooks; f. Monthly or aannual hperiodic health screenings; g. Assistance preparing a Vial of Life; h. American Red Cross I M OK program; i.h. Exercise program such as the Arthritis Foundation Exercise Program; j.i. Monthly community activities (i.e., pot luck dinners, holiday events, bingo); k.j. Access to fitness equipment; l.k. Food pantry or access to a mobile food pantry if available; m.l. Housekeeping; and n.m. Computer lab or check-out program. Developments wanting to be considered under the Service Enriched Priority must fully complete the applicable sections of the application and provide the following with their application: i. A detailed supportive services plan explaining the type of services to be provided, who will provide them, how they will be provided, and how they will be funded. The plan should include, but is not limited to, a description of how the development will meet the needs of the tenants, including access to supportive services, transportation, and proximity to community amenities. MHDC prefers the services be onsite or near the proposed development; ii. A project-specific services budget which includes a breakdown of both sources and uses (Form SNH-103); iii.ii. Letters of intent from service providers anticipated to participate in the development s services program; and iv. A detailed description of the service provider s experience, including if the service provider previously received a Federal LIHTC and/or State LIHTC allocation for a Serviced Enriched property. iii. Service coordinator job description 4. Preservation (eligible for 30% boost in eligible basis). The preservation of existing affordable housing will receive a preference in funding ( Preservation Priority ). To qualify for the Preservation Priority, a development must meet at least one (1) of the following criteria and, if receiving federal historic credits and/or state historic credits, must waive the right to opt out of the Declaration of Land Use Restriction Covenants for Low-Income Housing Tax Credits ( LIHTC LURA ) to be recorded against the development for an additional fifteen (15) years beyond the Compliance Period: a. Have and continue to use, if possible, project-based rental assistance and/or operating subsidy; b. Have a loan made prior to 1985 from any of the following loan programs: HUD 202/811, 221(d)(3) or (d)(4), 236, or USDA RD 515; c. Participate in HUD s Mark-to-Market restructuring program; or Formatted: Font: 10 pt Formatted: Indent: Left: 0.63", Numbered + Level: 1 + Numbering Style: a, b, c, + Start at: 1 + Alignment: Left + Aligned at: 1.13" + Indent at: 1.38" 14

82 MHDC Qualified Allocation Plan d. Have a previous allocation of low-income housing tax credits in which the first year of the Credit Period (as defined in 42(f)(1) of the Code) was 1999 or earlier, and be in or have completed the final year of the Compliance Period for all buildings in the development. Developments wanting to be considered for this priorityto be considered under the Preservation Priority, the following must be included with the application: i. Copies of all loan notes and regulatory agreements encumbering the property; ii. A copy of any project-based income or operating subsidy agreements and rent schedules; iii. Audited financial statements for the development covering the three (3) most recent years; iv. If the development has HUD or MHDC financing or is encumbered by a LIHTC LURA or an MHDC Regulatory Agreement ( Regulatory Agreement ), then a letter from HUD or MHDC indicating the need for preservation is required (please see v. below if the proposed preservation development has an RD loan); v. If the proposed development includes USDA-RD financing, the application must include a letter addressed to MHDC from the RD State Office indicating (1) RD support for the application, and (2) the applicant has met with either the RD State Office or Area Specialists prior to preparing/submitting the application to MHDC. The purpose of the meeting is to review the entire structure of the proposal with RD including, but not limited to, a discussion of the proposed scope of work, Capital Needs Assessment ( CNA ), financing structure, rents charged, operating budget, the potential amount of additional RD required Replacement Reserves, and any other unique feature or complexities pertaining to the development application. It is recommended applicants supply RD with a copy of the as-is CNA prior to this meeting; and vi. A physical needs assessment or, for RD applications, an as-is CNA that meets USDA-RD requirements. 5. MBE/WBE. This priority is only available to developments with more than six (6) units. A preference in funding ( MBE/WBE Priority ) will be given to an application that reflects: a) An MBE/WBE Developer, a Developer group that includes an MBE/WBE, and/or a Developer Mentor/Protégé relationship; or b) MBE/WBE participation percentages significantly greater than the MBE/WBE Participation Standard of 10% for MBE and 5% for WBE for both hard and soft costs (as further detailed in the Developer s Guide). The Mentor/Protégé Relationship shall be designed to support, promote, and develop the knowledge, skill and ability of the MBE/WBE protégé in a manner intended to assist in the growth and development of the MBE/WBE as a developer. Applicants seeking the MBE/WBE Priority pursuant to a) above must provide a comprehensive Utilization Plan (as defined in the Developer s Guide) signed by the owner/developer detailing the role of, and functions to be performed by, the MBE/WBE. The roles and functions of the MBE/WBE must be those typically performed by the owner/developer. Applicants must also submit proof of MBE/WBE certification with the application. Applicants seeking the MBE/WBE Priority pursuant to b) above must provide a comprehensive Utilization Plan signed by the owner/developer detailing how the applicant intends to significantly exceed the MBE/WBE Participation Standard. Applicants seeking the MBE/WBE Priority must include a history of MBE/WBE participation with the application. 15

83 MHDC Qualified Allocation Plan 6. Property Disposition. Applicants may compete for the purchase of real estate owned by MHDC ( Property Disposition Priority ). The application must propose an acquisition/rehabilitation transaction that will be evaluated on its merits according to the selection criteria and its ability to demonstrate potential long-term success as an affordable housing property. Developments wanting to be considered for this priorityto qualify for the Property Disposition Priority, the development must be listed publicly by MHDC as real estate owned and available for competitive bid and the following must be included with the application: i. A signed option contract representing the applicant s offer to purchase the MHDC-held property on the MHDC option contract form. The MHDC form will be made available on the MHDC website in conjunction with any MHDC-owned real property that is publicly posted. ii. Any other certifications or documents required by MHDC and made available on the MHDC website in conjunction with the listing of any MHDC-owned real property. 7. Compliance Period and Affordability. MHDC encourages developments providing quality housing with low affordable rents for an extended period of time. As a result, a preference in funding will be given to applications that agree in advance to waive the right to opt out of the LIHTC LURA at the end of the Compliance Period and maintain the development as affordable housing for a minimum of thirty (30) years ( Extended Use Priority ). This priority is not available to developments with historic credits or single-family homes % AMI. A preference in funding will be given to applications that set aside at least 25% of total units to households earning less than or equal to 50% of area median income ( 50% AMI Priority ). Rents for households earning less than or equal to 50% of area median income must be at least 15% less than rents actually charged to households earning up to 60% of area median income. This priority is not available to developments with project-based rental assistance. 9. Workforce Housing (eligible for 30% boost in eligible basis). Developments in counties with a median income less than the 2015 statewide median income (as established and published by HUD) are eligible for the basis increase, provided that 20% of the total units in the development are set aside for households earning between 60% and 80% (workforce units) of the area median income. Rents in the 60%-80% units should be different than tax credit rents in the development. The intent is to capture the households that are just over the tax credit income limits but still have a need for quality affordable housing. The published income limits for each development s county still apply and must be used for determining resident eligibility. 10. Transit Oriented Development (TOD) (eligible for 30% boost in eligible basis). The following criteria will be considered in the determination of a development s ability to meet the definition of a TOD: a. The development must be located within 1,750 feet of a transit stop. b. The master development plan must include a balanced mix of uses, providing residents the ability to live, work, and shop in the same neighborhood. The development must include a mix of transportation choices, including biking and walking. c. Transit service at the stop must be frequent (every minutes). d. The transit service must offer increased mobility choices and good transit connections. d.e. The master development plan must include a balanced mix of uses, providing residents the ability to live, work, and shop in the same neighborhood. e.f. The master development must include significant retail development. 16

84 MHDC Qualified Allocation Plan f.g. The master development must include a mix of housing choices (rental and for-sale, affordable and market-rate). The development must include a mix of transportation choices, including biking and walking. 11. Redevelopment Plan. Applications that are a part of a redevelopment plan which has been approved/adopted by a local government will receive a preference in funding. The application must include a letter from the local authorizing official that the proposed development is a part of the redevelopment plan. 12. High-Opportunity Areas. MHDC encourages affordable housing developments in high-opportunity areas by targeting communities that meet the following criteria: access to high-performing school systems, transportation and employment; as well as being located in a census tract with a 15% or lower poverty rate. Family ddevelopments that meet these criteria will receive a preference in funding. Family developments proposed in opportunity areas are required to include an affirmative marketing plan that proactively reaches out to families currently living in census tracts where the poverty rate exceeds 40%. in the most concentrated and segregated neighborhoods in the metropolitan areas. The plan must include a Special Marketing Reserve to assist in initial relocation expenses for families with children. Note that the minimum unit size for a family development in an opportunity area is twobedroom. Developments that apply under this priority must also apply under the Service Enriched Priority. MHDC will, on a case by case basis with reasonable and well documented justification, allow flexibility for meeting all four criteria for qualification. Please refer to the Market Study Guidelines which specifies how data on each of these criteria is to be collected. Below are examples of services for MHDC would like to see in this type of family development: a. Regularly-held resident meetings b. After-school programs for children c. Financial literacy courses for adults d. Credit and/or budget counseling e. Life skills and employment services f. Computer lab or computer check-out program g. Daycare services h. College preparation counseling i. Library j. Back to school programs k. Youth sports activities l. Teen support groups m. Good neighbor and tenant rights classes B. Selection Criteria All submitted applications which successfully make it to the competitive review stage will be evaluated by MHDC staff using the selection criteria described below. The selection criteria incorporate both the federal preferences and selection criteria as described in 42(m)(1)(B)(ii) and 42(m)(1)(C) of the Code. The selection criteria must include: Project location; Housing needs characteristics; Project characteristics, including whether the project involves the use of existing housing as part of a community revitalization plan; Projects intended for eventual tenant ownership; Tenant populations with special housing needs; Sponsor characteristics; Tenant populations of individuals with children; Public housing waiting lists; Energy efficiency; and 17

85 MHDC Qualified Allocation Plan Historic character. States must give preference among selected developments to: Those serving the lowest income tenants; Those serving qualified tenants for the longest period of time; and Projects located in Qualified Census Tracts, the development of which contributes to a concerted community revitalization plan. States may include such other criteria as they deem appropriate and, except for the specified preference items, there are no requirements as to the relative weight of the various factors. Formatted: Space Before: 6 pt, After: 0 pt Formatted: Space After: 0 pt Additional LIHTC responsibilities of MHDC include: Assurance that the amount of tax credits allocated does not exceed the amount necessary for the financial feasibility of the project and its viability as a qualified low income housing project throughout the Credit Period ; Evaluation of all projects for consistency with this Plan and for credit need, including projects using tax exempt bond financing; Execution of an agreement for an extended low income housing commitment for every project. This agreement must be recorded as a restrictive covenant binding on all successor owners, and must allow low income individuals the right to enforce the commitment in state court; and Monitoring of compliance with the provisions of 42 of the Code and notifying the Internal Revenue Service of any noncompliance. 1. Geographic Region. An attempt will be made to allocate the 9% Credit (both federal and state) across the state on a population proportionate basis, with the state divided into the following areas: a. St. Louis Region - 33%: Franklin, Jefferson, St. Charles, St. Louis City and St. Louis counties. b. Kansas City Region - 19%: Cass, Clay, Jackson, Platte and Ray counties. c. Out State Region - 48%: All other counties. 2. Development Characteristics. It is important the development s characteristics are appropriate for the intended tenant population. The following characteristics will be reviewed closely: a. Tenant Population It is important MHDC fund developments offering quality affordable housing to the populations that need it in the locations where it is needed. Items given consideration with regard to the intended tenants include: i. Tenant populations with special housing needs, such as persons with physical and/or developmental disabilities, homeless individuals and families, the elderly senior, and other underserved and/or at risk populations; ii. Individuals with mental illness; iii. Individuals on public housing waiting lists; iv. Individuals with children; v. Youth aging out of foster care; vi. Developments serving the lowest income tenants; and vii. The quantity, quality, and suitability of services provided or offered to the tenants. b. Development Size 18

86 MHDC Qualified Allocation Plan All applications submitted for consideration are limited to fifty (50) affordable units in a proposal. Exceptions may include, but are not limited to, applications proposing a: i. Mixed-income development; ii. Development to replace existing public housing and/or subsidized housing iii. Development where at least 25% of the units are set aside as Special Needs housing units; iv. Development that includes serviced enriched housing features; v. Development that preserves existing affordable housing; vi. Development that is part of a municipal redevelopment plan; or vii. Senior housing development. c. Type The type of development being proposed is an important characteristic and affects how the other selection criteria are applied. Developments will be evaluated on how they contribute to the goal of this Plan and the mission of MHDC. Developments fall into at least one of the following types: i. New construction; ii. Historic rehabilitation/adaptive reuse; iii. Acquisition/rehabilitation of existing housing; or iv. Developments intended for eventual tenant ownership. Regardless of type, developments that obligate themselves to serve qualified tenants for the longest period of time are given extra consideration. d. Site Each site will be reviewed by MHDC staff to determine the overall suitability of the site for affordable housing and for the intended population. Site reviews will consider: i. Marketability, or the likelihood that the site and improvements will be accepted by the target population; ii. Presence of environmental issues and concerns; iii. Neighborhood characteristics and land uses; and iv. Proximity to appropriate amenities and services. e. Design The design of each development will be examined closely to assess its appropriateness for the site, the market, and the population being served. The following will be taken into account when evaluating the application: i. Access into and out of the site and parking; ii. Placement of buildings on the site; iii. Development amenities; iv. Type and quality of materials; v. Energy efficiency and overall sustainability; vi. Condition and suitability of structures being reused; vii. Scope of work for rehabilitation or renovation; viii. Population appropriate design features (for example, universal design features, interior and exterior common spaces, storage space, accessibility, adaptability, safety features, etc.); and 19

87 MHDC Qualified Allocation Plan ix. Exterior Design aesthetics that blend well with the surrounding area. 3. Market Characteristics. It is important the development s characteristics are appropriate for the market in which it is located. Please refer to the Market Study Guidelines for further guidance. The following will be analyzed for each proposal: a. Development Location Where a development is located affects almost all of the other selection criteria. Important considerations for location include, but are not limited to: i. New construction and conversion proposals must meet the following criteria: o The proposed development shall not be located where the total of publically subsidized housing units (as defined in the Market Study Guidelines) equal more than 20% of all units in the census tract where the development will be located. o If the proposed development is located in the Kansas City or St. Louis Region, it shall not be located within a one (1) mile radius of any development that: (a) has been approved for State LIHTC, Federal LIHTC, HOME, or Fund Balance funding through MHDC within the previous two (2) fiscal-year funding cycles; and (b) is less than 90% leased-up at the time of application submission. Exceptions to the previous two criteria may include, but are not limited to, applications proposing a: o Mixed-income development; o Development to replace existing public housing and/or subsidized housing o Development where at least 25% of the units are set aside as Special Needs housing units; o Development that includes serviced enriched housing features; o Development that preserves existing affordable housing; o Development that is part of a municipal redevelopment plan; or o Senior housing development. ii. Location in a qualified census tract that will contribute to a concerted community revitalization plan; iii. Whether existing housing is used as part of a community revitalization plan; iv. Location in a community with demonstrated new employment opportunities and a proven need for workforce housing; v. Infill of existing stable neighborhoods; and vi. Commission-designated targeted areas. b. Housing Needs Developments must address the affordable housing needs of the state, region, and locality where they will be located. Important considerations regarding market need include: i. Number and growth of the population and intended tenant population in the market area; ii. Presence, condition, occupancy, and comparability of other affordable housing developments in the market area; iii. Presence, condition, occupancy, and comparability of market rate housing in the market area; iv. Capture rate for the proposed development; and v. Housing needs of the special needs population in the market area. No application proposing the delivery of new units will be approved if it is deemed by MHDC to adversely impact any existing MHDC development(s), exist in a questionable market, or create excessive concentration of multifamily units. 20

88 MHDC Qualified Allocation Plan 4. Development Team Characteristics. A development team s experience with affordable housing, MHDC, and the type of development being proposed is important. The following development team members will be evaluated: Developer(s), General Partner(s), Management Agent, Syndicator(s)/Investor(s), Contractor, Architect, Sustainable Design Team, Consultant(s), Lead Referral Agency (for special needs housing), and the service provider (for service-enriched housing). Evaluations will assess the experience, performance, financial strength and capacity to complete the proposed development in a timely and efficient manner. Items considered will include, but are not limited to: i. Number of affordable developments completed; ii. Occupancy of developments owned and/or managed; iii. Number of developments in the planning and development stages; iv. Performance, quality, and condition of previously completed developments v. Previous and outstanding compliance issues; and vi. Performance regarding MHDC deadlines for previous funding awards. The proposed general partner, developer, and general contractor will be assessed for their capacity to successfully manage the pre-development, closing, construction, and lease-up of the proposed development in addition to previously approved developments currently in those stages of development. Development team members not in good standing with MHDC or its programs will not be approved for funding. 5. Feasibility. Applications will be evaluated to determine feasibility and viability throughout the Compliance Period using the assumptions provided by the applicant. MHDC will evaluate: a. Sources All developments must demonstrate sufficient sources are available to assure feasibility. For non- MHDC sources, a commitment letter from the proposed provider indicating the amount and terms of financing must be included with the application. The type of financing and the source of all financing will be taken into consideration. b. Uses Development costs must be reasonable and competitive for the type of development and location being proposed. Sources and uses must balance. c. Income Rents must be appropriate for the market and affordable for the intended population. Other sources of income must be documented to determine feasibility or the size of MHDC debt, if any. d. Expenses Operating expenses must be adequate, reasonable, competitive, and appropriate for the market and type of development being proposed. e. Long-Term Viability Operating projections must indicate the development is viable for the greater of (i) the entire Compliance Period, (ii) the term of any MHDC financing, or (iii) HOME affordability period (if applicable)., or National Housing Trust Fund affordability period (if applicable). f. Timing The timing of due diligence, financing commitments, and regulatory approvals will be considered when assessing an applicant s ability to proceed. Consideration will be given to applicants demonstrating they can proceed in a timeframe consistent with the requirements of the Code or, for tax-exempt bond-financed applications and/or applications utilizing historic tax credits, the allocation process established by the Missouri Department of Economic Development. 21

89 MHDC Qualified Allocation Plan g. Investment Potential Applications will be evaluated for their potential to attract investors for the Federal LIHTC and State LIHTC, if applicable, based on the potential amount of Federal LIHTC, State LIHTC, if applicable, the size of the proposed development, the market, the experience and strength of the development team and financial feasibility. The strength and previous performance of all investors will be taken into consideration during the feasibility review. MHDC will not allocate a credit amount exceeding the amount necessary to assure development feasibility. 6. Community Impact. MHDC seeks to allocate funding to developments that appropriately and efficiently improve their communities. Impact will be influenced by: a. Elected Official and Community Support. Community support should highlight the importance of the development to the community and the impact it will have. b. Catalytic Effect. Developments that will successfully encourage further development or redevelopment in the community are encouraged, as are developments that are part of a larger community redevelopment effort or part of a concerted community revitalization plan. c. Community Needs. How a development will address the needs of the population and community it intends to serve is important. The existing stock of affordable housing and demographic trends in the area will influence the needs of the community and ability of the development to meet those needs. C. Application Review Unless an application is rejected during one of the preceding stages, it will undergo each of the five staff review stages described below. If an application is rejected during the Initial, Primary Documentation, or Secondary Documentation Review, a written explanation of the reason for the rejection will be provided to the applicant. An application checklist, application forms, and program guides can be found at (through the Rental Production link). See the Developer s Guide for additional information regarding the application review process. 1. Initial Review. The Initial Review will be conducted to determine if the applicant and its application meet the following requirements: a. Organized Application. Each application must be submitted in a three-ring binder and organized with tabs according to the MHDC FIN-125. Applications that are not organized will be eliminated from further consideration. A complete application consists of (1) an electronic application (a link will be provided on MHDC s website); (2) one tabbed, three-ring binder with all required exhibits and original signatures, where required; (3) digital media containing electronic exhibits; and (4) the appropriate application fee. The MHDC FIN-125 will identify exhibits to be submitted in the threering binder and exhibits to be submitted digitally. Three-ring binder and digital media exhibit names must match the FIN-125 exhibit names. Acceptable forms of digital media include, but are not limited to, a CD-R, DVD, or a USB flash drive. MHDC staff has the right, in its sole discretion, to waive an exhibit requirement on a case-by-case basis upon the review of a formal waiver request submitted by an applicant prior to the applicable NOFA deadline. b. Good Standing with MHDC. Any member of the development team that is the owner or general partner of a LIHTC development currently in non-compliance due to site audits or a failure to comply with the owner s reporting requirements will be denied participation in the NOFA. In addition, any development team member not in compliance or good standing with any other MHDC program will similarly be denied participation. Should MHDC learn any principal involved with a proposed development has serious and/or repeated non-performance or non-compliance issues in Missouri or any other state before or after the time of application, the application will be rejected. Prior performance considered may include, but is not limited to, progress made with a previous Conditional Reservation Agreement, Firm Submission, execution of Firm Commitment, closing, 22

90 MHDC Qualified Allocation Plan cost certification, development compliance, payment of fees and/or violation of the MHDC Workforce Eligibility Policy. c. Consistent with Code Requirements. The proposal must meet all requirements set forth in the Code and all relevant Treasury Department regulations, notices, and rulings. d. Consistent with Fair Housing Requirements. The submitted proposal must meet all requirements of The Fair Housing Act of 1968, as amended. e. Consistent with Internal Revenue Service Memorandum of Understanding. MHDC and the IRS have executed a Memorandum of Understanding ( IRS MOU ) to improve the administration of the Federal LIHTC. Under the terms of this IRS MOU, all developers must complete IRS Form 8821 (Rev. 9-98), Tax Information Authorization, as a condition of consideration for an allocation of 9% Credit or 4% Credit. An executed IRS Form 8821 for the developer, and all key principals of the developer and general partnership must be included as part of the application. f. Consistent with Tax Credit Accountability Act. Under the provisions of the Tax Credit Accountability Act (R.S.Mo ), all developers/applicants must complete all necessary forms and reporting requirements during the reservation process, the allocation process, and for a period of three (3) years following the issuance of State LIHTC by MHDC. All developers must complete MDOR Form 8821 (Rev ), Missouri Department of Revenue Authorization For Release of Confidential Information, as a consideration for the allocation of the State LIHTC. MHDC will obtain tax clearance for the developer/applicant from the Missouri Department of Revenue at the time of application. Should the developer, general partner, or any key principal be found to have outstanding tax liens or delinquent taxes, for federal or state taxes, the related application will be rejected. 2. Primary Documentation Review. All primary documents must be complete, fully-executed, and submitted by the application deadline. An exact list of documents can be found on the MHDC FIN-125. A missing primary document, documents in draft form, or documents missing signatures will result in an application being rejected. Below is a list of the primary document categories ( Primary Documents ), some of which require multiple documents. The required Primary Document categories are: a. Executed FIN-100Application Certification Page. A completed and executed FIN-100 with appropriate certifications and elections made.an Application Certification Page signed in the appropriate places. b. Digital Media. Digital media with the required electronic documents as noted on the MHDC FIN c. Application Fee. A check for the appropriate application fee. A check returned for any reason will result in that application being rejected. d. Development Narrative and Development Questionnaire. A narrative meeting the requirements set forth in the Developer s Guide and a Development Questionnaire demonstrating how the proposal meets the selection criteria. e. Site Review Information. MHDC requires multiple site information documents to conduct the site review described below. f. Applicant Site Control. Applicants should refer to the Developer s Guide for more information regarding site control and a thorough description of the required site control documents. g. Market Study. A market study meeting MHDC requirements and dated within six (6) months of the application due date. The market study must be prepared by an experienced market analyst shown on MHDC s approved provider list (not an affiliated company). See the Market Study Guidelines and Market Study Standards for Rental Housing Developments (MHDC Form 1300) for further guidance. h. Financing Commitments. Commitments for all non-mhdc financing sources, including commitments for all tax credit equity to be utilized. 23

91 MHDC Qualified Allocation Plan 3. Secondary Documentation Review. All ssecondary documentation must be submitted by the application deadline for an application to receive consideration. The FIN-125 contains an exact list and explanation of the required documentation. If six (6) or more secondary review documents are missing or are incomplete at the time the application is submitted, the application will be rejected. If five (5) or fewer secondary documents are missing or are incomplete at the time the application is submitted, the applicant will be notified in writing of deficient items and a date by which deficiencies must be cured ( Cure Date ). If the requested documents are not received by the Cure Date, the application will be rejected. Below is a list of the secondary documentation categories ( Secondary Documents ), some of which require multiple documents. The Secondary Document categories are: a. Seller Site Control. The seller site control documents, as described in the Developer s Guide. b. Public Official Contact Verification or Support Letters. Proper evidence that the appropriate officials have been contacted. In the case of the chief elected official, state senator, and state representative for the development location, a response letter from the official regarding the development is encouraged. Other letters or resolutions of support are not required, but are welcome. c. Statutorily Required Documents. Various state and federal statutes and regulations require certain documents be submitted by the developer/applicant at the time of application. d. Housing Priority Documentation. Additional documentation required pursuant to the priority the applicant is applying under, if applicable. e. Zoning. Evidence of proper zoning. f. Architectural Information. Documents regarding the design, cost, and historic designation of the building. g. Sustainable Housing Information. New construction applications must provide documentation demonstrating how the development will achieve and maintain the green building standard identified in the Development Characteristics Worksheet. For rehabilitation proposals, the green building requirement is highly encouraged but optional; however, rehabilitation developments Rehabilitation proposals that will achieve and maintain a green building standard should also provide such documentation. h. Relocation and Existing Multifamily Operations Data. For proposals with existing tenants (commercial or residential) who may be either temporarily or permanently relocated as a result of the proposed development, provide the applicable relocation documents. i. Homeownership Information. For developments interested in providing tenants homeownership opportunities after the end of the Compliance Period, provide a homeownership proposal and a waiver of the right to opt out of the LIHTC LURA for an additional fifteen (15) years after the end of the Compliance Period. j. PHA Approved Utility Allowance Schedule. Developments using HOME funding must use the HUD Utility Schedule Model when determining the utility allowance. The HUD Utility Schedule Model is located at: For all other developments, pprovide a copy of the PHA-approved utility allowances for the location and type of development proposed in effect at the time of application. k. Developer-General Partner Information. Information regarding the developer and any general partner(s) who are not affiliates of the developer. l. Management Agent Information. Information regarding the proposed management agent. m. MBE/WBE Utilization Plan. A Utilization Plan signed by the owner/developer detailing how the applicant intends to meet or exceed the MBE/WBE Participation Standard. 4. Site Review. During the application review process, MHDC staff will conduct a review of each proposed site ( MHDC Site Review ). Each proposed site location must have a sign posted identifying it as a proposed MHDC development. The MHDC Site Review will consist of a staff site visit and a determination regarding the feasibility, marketability, appropriateness of the site(s) for the intended 24

92 MHDC Qualified Allocation Plan population, and assessment of any perceived environmental issues. The results of MHDC Site Review play an important role in the Competitive Review. For rehabilitation and conversion applications, MHDC staff expects to be able to enter the buildings. 5. Competitive Review. Once an application has gone through the Initial, Primary Documentation, Secondary Documentation, and Site Review stages and is considered complete to MHDC staff s satisfaction, it will undergo a Competitive Review ( Competitive Review ). The Competitive Review uses the established priorities and selection criteria to determine funding recommendations. All factors are considered and those applications deemed, at the sole discretion of MHDC staff, to best meet the goals of MHDC will be recommended to the Commission for formal approval. 6. Notifications. The Code requires MHDC, as the Housing Credit Agency, to notify the chief executive officer of the local jurisdiction where each proposed development is located. If an application satisfies the Initial Review and Primary Documentation Review requirements, a notification will be sent to the chief executive officer of the local jurisdiction, the state senator and state representative for the district of the proposed development, and the executive director of the local public housing authority. Those notified will be given an opportunity to comment on the proposed development and MHDC will consider the comments received and may contact the local jurisdiction for additional information. MHDC will also publish a notice in a regional newspaper requesting public comment on the development. Public hearings will be held in various locations throughout the state to afford the public an opportunity to comment on developments proposed in a given region. D. Conditional Reservation Applications receiving Commission approval will be awarded a conditional reservation shortly after Commission approval ( Conditional Reservation ). A Conditional Reservation will describe the type, amount(s), terms, and requirements applicable to the development in question. Conditional Reservations will be subject to the requirements MHDC staff determines necessary or appropriate to assure the development will meet the goals of this Plan in a timely manner. All developments receiving a Conditional Reservation must submit a Firm Submission package no later than the date established in the Conditional Reservation. For at least one (1) year after the last building is placed in service, monthly rents cannot exceed the MHDCapproved rents reflected in the Firm Commitment and as determined at Final Allocation. Any increase in annual rents must be approved by MHDC staff. A Conditional Reservation is subject to rescission should the development fail to comply in a timely manner with the conditions thereof. This includes, but is not limited to, failure to provide evidence satisfactory to MHDC staff of financial feasibility or sufficient progress toward Firm Submission, closing, and placement in service. IV. ALLOCATION PROCESS A. Carryover Allocation For developments with 9% Credit reservations, the Code allows an allocation of Federal LIHTC to a qualified building(s) that will not be placed in service in that year ( Carryover Allocation ), provided that: 1. The building(s) is/are placed in service no later than December 31 of the second calendar year following the year of allocation; and 2. The taxpayer s basis in the building(s) is more than 10% of the reasonably expected basis as of the date that is one (1) year after the Carryover Allocation (Code 42(h)(1)(E)(ii)) ( 10% Test ). The reasonably 25

93 MHDC Qualified Allocation Plan expected basis is the expected basis of the building(s) as calculated on December 31 of the second calendar year following the year the Carryover Allocation is made. To successfully complete the 10% Test, no later than thirteen (13) months after the effective date of the Carryover Allocation, the owner must submit all of the documentation required in the Carryover Allocation, take ownership of the property, and admit the investor as the limited partner or member of the ownership entity. The Carryover Allocation Agreement will be issued simultaneously with the Firm Commitment, according to the deadlines established in the Conditional Reservation and no later than the month of December in the year of allocationreservation. The Carryover Allocation defines the amount of Federal LIHTC and State LIHTC allocated to the development, the low-income unit set-asides, the percentages of median income to be served, the special housing needs units committed to, if any, and any other such requirements as MHDC may choose to include. A detailed description of the Carryover Allocation is included in the Developer s Guide. MHDC reserves the right to request additional documents or certifications it deems necessary or useful in the determination that the development remains eligible for a Carryover Allocation. The credit amount defined in the Carryover Allocation may be reduced, if warranted. MHDC retains the right to recapture a Carryover Allocation prior to the end of the two-year Carryover Allocation period allowed under the Code. Each Carryover Allocation will contain conditions precedent and deadlines which must be satisfied to secure a Final Allocation of Federal LIHTC and State LIHTC, if applicable. Should the development or owner fail to comply with all such conditions and deadlines, MHDC staff may, in its sole discretion, rescind the Carryover Allocation and use the recaptured credits for other developments. B. Final Allocation Any Development with a Carryover Allocation that does not place in service by the end of the second year following the allocation year is subject to having its allocation of Federal LIHTC and/or State LIHTC recaptured. The placed-in-service date for new construction is the date on which the building is certified as being suitable for occupancy in accordance with state or local law. The placed-in-service date for rehabilitation is the close of the 24-month period over which the expenditures are aggregated and the rehabilitation process is certified as being complete. See Internal Revenue Notice for more information about placed in service dates. MHDC will make a final allocation of Federal LIHTC and/or State LIHTC ( Final Allocation ) after MHDC approval of all Final Allocation requirements (which includes, but is not limited to, approval of the cost certification) and conversion or permanent closing has occurred, if applicable. The Final Allocation amount is based on MHDC staff s final determination of the qualified basis for the building(s) based on an accountant s certification of final costs provided by the owner and a final determination of the Federal LIHTC and State LIHTC amounts. The Final Allocation may be less than the amount reserved or allocated previously. Owners can submit a request for a Final Allocation at any time during the year but in no event should a request for Final Allocation be submitted later than two (2) months after the last building in the development is placed in service. The owner must meet all Final Allocation requirements of the Carryover Allocation to receive a Final Allocation. MHDC reserves the right to request additional documents or certifications it deems necessary or useful in determining if the development is eligible for a Final Allocation. MHDC will not issue IRS Form 8609(s) and Missouri Eligibility Statement(s), if applicable, until the following conditions have been met (no exceptions will be made): 1. Each building in the development is a qualified low-income building as defined by the Code. No 8609(s) and/or Missouri Eligibility Statement(s) will be issued for any portion of an incomplete development. 2. The owner and the development are in compliance with the terms of the LIHTC LURA. 3. The owner has provided a complete final application package (for the entire completed development) in the format required by MHDC staff. The developer fee and the contractor s fee allowed in the cost 26

94 MHDC Qualified Allocation Plan certification are limited to the amounts in the Firm Commitment. The developer fee is the lesser of the recalculation at cost certification following the formula in Section II(C)(6) above or the amount approved in the Firm Commitment. 4. The owner has provided a complete copy of the executed limited partnership agreement or operating agreement and all executed amended and restated partnership agreement(s) or operating agreements with all exhibits and schedules. 5. The owner has paid the tax credit fee and the compliance monitoring fee. 6. The owner representative and the management agent have successfully completed a compliance training session conducted or approved by MHDC staff and submitted proof of attendance in the form of compliance training certificates. 7. MHDC has completed its final inspection of the development. 8. MHDC has made its final determination of the credit amount and its final determination pursuant to 42(m)(2) of the Code. 9. All requirements included on the applicable MHDC checklist have been received and approved by MHDC. Owners must file with MHDC executed copies of the 8609(s) and Missouri Eligibility Statement(s) for the first year in which credits are claimed, as indicated in the Compliance Manual (available at C. Transfer of Reservations and Allocations Without MHDC s prior consent, Conditional Reservations, Carryover Allocations and/or State LIHTC allocations are non-transferable except to an entity in which the transferring holder of the Conditional Reservation or Carryover Allocation is the general partner or controlling principal. Because all representations made with respect to the applicant, its experience, and previous participation are material to the evaluation made by MHDC, it is not expected that MHDC s consent will be granted for transfers to an unrelated entity unless a new application is submitted and receives Commission approval. D. Owner Elections 1. Applicable Credit Percentage. The applicable percentage for New Construction and Rehabilitation credits is permanently fixed at 9% (except for Bond Developments). For Acquisition credits, the applicable credit percentage can be locked at either (i) the month in which such building is placed in service, or (ii) at the election of the taxpayer at the time of a Carryover Allocation. The Carryover Allocation provides a space for such election. For Bond Developments, the applicable credit percentage is established at either (i) the month in which the building is placed in service, or (ii) at the election of the taxpayer, the month in which the bonds are issued. If the latter is desired, the Election Statement (form provided by MHDC upon request) must be signed by the owner, notarized, and submitted to MHDC staff before the close of the fifth calendar day following the month in which the bonds are issued. 2. Gross Rent Floor. Section 42(g)(2)(A) of the Code provides a low-income unit is rent restricted if the gross rent for such unit does not exceed 30% of the imputed income limitations applicable to the unit. Under Revenue Procedure 94-57, the effective date of the income limitation used to establish the gross rent floor is the date MHDC initially allocates a housing credit dollar amount to the development. This is typically the date of a Carryover Allocation, but if no Carryover Allocation is made, the date of Final Allocation will be used unless the owner designates a building s placed-in-service date as the effective date for the gross rent floor. Such designation must be made in the initial application. The Carryover Allocation specifies which designation was made by the applicant. The effective date used for the determination of the gross rent floor for developments not seeking a Carryover Allocation will be the date of Final Allocation. 27

95 MHDC Qualified Allocation Plan For Bond Developments, the effective date of the income limitation used to establish the gross rent floor is the date MHDC issues the 42(m) Letter for the development, unless the Owner designates a building s placed-in-service date as the effective date for the gross rent floor. Such designation must be made by advising MHDC staff in writing prior to the placed-in-service date. The gross rent floor election does not replace the MHDC requirement that the initial monthly rents for at least one (1) year after the last building is placed in service cannot exceed the MHDC Firm Commitment approved rents. Any increases in the annual rents must be approved by MHDC staff. 3. Credit Period. Section 42(f)(1) of the Code defines the Credit Period for Federal LIHTC as the ten (10) taxable years beginning with (i) the taxable year in which the building is placed in service, or (ii) at the election of the taxpayer, the succeeding taxable year. The State LIHTC mirrors the Federal LIHTC requirements. If a qualified development is comprised of more than one (1) building, the development shall be deemed to be placed in service in the taxable year during which the last building of the development is placed in service. MHDC staff should be notified as each building is placed in service and provided a copy of the permanent and temporary, if any, certificate(s) of occupancy for the building. E. Land Use Restriction Agreement Section 42(h)(6) of the Code requires LIHTC developments be subject to an extended low-income housing commitment. MHDC complies with this requirement with the execution and recording of a LIHTC LURA. The LIHTC LURA sets forth the low-income unit set-asides, the percentages of median income to be served, the special housing needs units committed to, if any, and any other such requirements MHDC may include as covenants running with the land for a minimum of thirty (30) years (or additional years if the development owner has committed to a longer use period). MHDC staff will use the information submitted with the application, Firm Submission, the signed Firm Commitment, and items submitted in connection with the construction closing to prepare the LIHTC LURA. The LIHTC LURA will be prepared and sent to the development owner to review and will be signed by MHDC staff and the owner at the construction loan closing. If the construction loan closing is not occurring at MHDC, MHDC will deliver the LIHTC LURA to the closing for execution by the owner. The LIHTC LURA cannot be altered in any manner without the consent of MHDC staff. The title company will record the LIHTC LURA with any other closing documents to be recorded. The LIHTC LURA must be recorded prior to the filing of any deed of trust or other first lien encumbrance on the development. Section 42(h)(6)(E)(ii) of the Code requires that even in the event of foreclosure, deed in lieu of foreclosure, or unwillingness to maintain the low-income status of the development, for a period of three (3) years, the following are not permitted: (i) the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit, or (ii) an increase in gross rent for any low-income unit. The priority recording of the LIHTC LURA ensures all lien holders will honor these requirements of the Code. The original recorded LIHTC LURA must be returned to MHDC staff. F. Bond Developments Under 42(h)(4) of the Code, Bond Developments may be entitled to the 4% Credit. The development must have received an allocation of private activity bond cap pursuant to 146 of the Code and principal payments on the bonds must be applied within a reasonable period to redeem the bonds. Tax credits are allowed for that portion of a development s eligible basis financed with the tax-exempt bonds. If 50% or more of a development s aggregate basis is so financed, the development is entitled to 4% Credits for up to the full amount of the qualified basis. Bond Developments are required by the Code to apply through MHDC (as the Housing Credit Agency) for an allocation of 4% Credits and for a determination the development satisfies the requirements of this Plan. Although the application does not have to compete for 4% Credits from the State Housing Credit Ceiling, applicants must submit an application during the posted NOFA period and meet all requirements of the reservation process and this Plan. 28

96 MHDC Qualified Allocation Plan MHDC staff will review the application, determine if the development is eligible and meets the requirements of this Plan, and make an initial determination of the development s tax credit amount. At the close of the NOFA period, the Commission will approve the recommendation and ranking of successful applications for priority in the consideration for a private activity bond allocation by the Missouri Department of Economic Development ( DED ). If the bonds will be issued by a local Industrial Development Authority ( IDA ), MHDC, as the State Housing Agency, must perform an evaluation of the development according to the requirements of 42(m) of the Code. The IDA must submit a request on original letterhead to MHDC staff no later than four (4) business days prior to bond closing asking MHDC to issue the 42(m) Letter. MHDC staff will issue Building Identification Number(s) in the 42(m) Letter. Developments receiving 4% Credits are required to follow the Final Allocation procedures described herein and to enter into a LIHTC LURA with regard to the development. V. COMPLIANCE MONITORING Section 42(m)(1)(B)(iii) of the Code mandates that MHDC, as the State Housing Agency, monitor all placed in service tax credit developments for compliance with the provisions of the Code. Developments approved for tax credits under this Plan must follow the HUD Multifamily Tax Subsidy Project ( MTSP ) income limits in effect for the metropolitan area or county in which the property is located at the time a household leases a tax credit unit. HUD income limits for the Section 8 and HOME programs will prevail, as directed by HUD regulations, for tax credit units that are also Section 8 or HOME-assisted units. The Code also mandates the Internal Revenue Service be notified by MHDC of any instance of noncompliance. In addition, MHDC staff will monitor developments for compliance with the LIHTC LURA for any additional owner commitments made in the development selection process (e.g., additional low income units or an extended low-income use period). Developers must finalize and receive approval for the unit mix and on-site management requirements prior to requesting a Firm Commitment. All owner representatives and their management agent representatives will be required to successfully complete a compliance training session conducted or approved by MHDC staff prior to the release of 8609(s) or the Missouri Eligibility Statement(s), if applicable. MHDC will make available to owners a Compliance Monitoring Handbook, as may be amended from time-to-time, explaining the LIHTC monitoring process in detail. VI. OTHER INFORMATION A. Program Fees MHDC may charge developments financed under the requirements of this Plan the fees listed below. MHDC reserves the right to charge additional fees as it deems necessary in the course of administering the Federal LIHTC and State LIHTC. Further discussion of applicable fees can be found in the Developer s Guide. 1. Tax Credit Fee. A fee equal to 7% of the approved annual Federal LIHTC amount must be paid with the execution of the Firm Commitment ( Tax Credit Fee ). The amount of the Tax Credit Fee is to be rounded up to the next dollar. The fee is non-refundable and will not be reduced or refunded if the Final Allocation amount is reduced or if the tax credits are returned or recaptured. If the Final Allocation amount is increased, the increased amount is subject to the fee and must be received prior to the issuance of 8609(s) and Missouri Eligibility Statement(s), if applicable. The Tax Credit Fee cannot be included in eligible basis. 2. Appraisal Fee. MHDC will require an appraisal to confirm the market value of land and improvements. If the proposed purchase price is not supported by the MHDC appraisal, the purchase price may be reduced to the appraised value. MHDC staff shall order the appraisal and assess a fee of $6,500 which must be paid with the execution of the Conditional Reservation ( Appraisal Fee ). The Appraisal Fee is non-refundable. 3. Construction Cost Analysis Fee. MHDC will order and assess a fee of $5,000 for an independent third party report to provide an upfront construction cost analysis for all approved developments in excess of 29

97 MHDC Qualified Allocation Plan six (6) units ( Cost Analysis Fee ). The Cost Analysis Fee would be due with the Firm Submission If a third party analysis is also required by the lender or investor on the property, MHDC will endeavor to work with that party to avoid duplicate costs. 4. Construction Inspection Fee. A fee will be assessed to compensate either MHDC or a third-party inspector hired by MHDC staff for construction inspections ( Construction Inspection Fee ). The amount of the Construction Inspection Fee will be based on the estimated length of the construction period. See the Developer s Guide for guidance on estimated fees for budgeting purposes. 5. LIHTC LURA Recording Fee. The owner will be responsible for the fee charged for recording the LIHTC LURA with the county in which the development is located. If MHDC records the LURA, the fee is $ Compliance Monitoring Fee. A compliance monitoring fee will be assessed to cover the costs of the IRS-required compliance monitoring program ( Compliance Monitoring Fee ). The fee is $10 per lowincome unit (including employee use units) and workforce housing unit (occupied by households between 60% and 80% of the area median income) multiplied by thirty (30) years (the extended-use period). The Compliance Monitoring Fee must be paid once the last building in the development is placed in service. 8609(s) and Missouri Eligibility Statement(s), if applicable, will not be issued until MHDC receives the Compliance Monitoring Fee. The Compliance Monitoring Fee cannot be included in eligible basis. 7. Document Revision Fee. A fee of $100 per form will be charged for revisions to an 8609 or Missouri Eligibility Statement or LIHTC LURA for (i) any corrections requested that were the result of incorrect information provided to MHDC staff by the owner, and (ii) any corrections requested more than ten (10) days after owner s receipt of the 8609, Missouri Eligibility Statement, or LIHTC LURA, as applicable. B. Status Reporting Approved developments will be required to provide monthly progress reports in a format prescribed by MHDC staff. Information requested will be development specific and may include, but is not limited to, zoning and other local development approvals, firm debt, equity and/or gap financing, and construction progress toward development completion. Owners of developments that will not be placed in service in the year the reservation is made may also be required to provide information regarding the owner s ability to meet Code and MHDC requirements to maintain its Carryover Allocation. C. Development Changes A reservation of Federal LIHTC, State LIHTC and/or MHDC funds is based on information provided in the development application. Until a development is placed in service, any material changes (for example, changes in the site, scope, costs, ownership or design, etc.); from what was submitted in the application will require written notification to, and approval by, MHDC. Changes of development characteristics which were the basis, in whole or in part, of MHDC s decision to reserve credits and/or provide MHDC funds may result in a revocation of the Conditional Reservation or a reduction in the amount of the tax credit award and/or MHDC funds. D. Administration of the Plan MHDC reserves the right to resolve all conflicts, inconsistencies or ambiguities, if any, in this Plan or which may arise in administering, operating, or managing the Federal LIHTC and State LIHTC and the right, in its sole discretion, to modify or waive, on a case-by-case basis, any provision of this Plan not required by the Code. All such resolutions or any such modifications or waivers are subject to written approval by MHDC s Executive Director and are available for review, as requested, by the general public. 30

98 MHDC Qualified Allocation Plan E. Amendments to the Plan MHDC reserves the right to amend this Plan from time-to-time for any reason including, without limitation: 1. To reflect any changes, additions, deletions, interpretations, or other matters necessary to comply with the Code or regulations promulgated thereunder; 2. To cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in this Plan; 3. To insert provisions clarifying matters or questions arising under this Plan as are necessary or desirable and are not contrary to or inconsistent with this Plan or the Code; 4. As to State LIHTC matters, to comply with the State Tax Relief Act; and 5. To facilitate the award of tax credits that would not otherwise be awarded. All such amendments shall be fully effective and incorporated herein upon the Commission s adoption of such amendments. This Plan may be amended as to substantive matters at any time following public notice, public hearing, and approval by the Commission. F. MHDC Discretionary Authority MHDC reserves the right, in its sole discretion, to: 1. Carry forward a portion of the current year s 9% Credit for allocation in the next calendar year; 2. Under certain conditions, issue a Conditional Reservation for a portion of the next year s 9% Credit; 3. Under certain conditions, issue a binding commitment for some portion of the next year s 9% Credit; 4. Limit the number of developments in a specific market or geographic area; 5. Award a Conditional Reservation based on the amount of tax credits requested relative to the amount of funding available. This could result in awarding tax credits for a development that will fully utilize the amount available, while denying credit to a development which requested more credit than is available, without regard to location or ranking; 6. Fund fewer than the number of units proposed in an application; and 7. Assert discretionary authority concerning all aspects of an application during the underwriting process. Section 42(m)(1)(A)(iv) of the Code requires MHDC to make available to the general public a written explanation for any exceptions made to the requirements of this Plan. G. Other Conditions In making reservations or allocations, MHDC relies on information provided by or on behalf of the applicant. MHDC s review of documents submitted in connection with the tax credit allocation process is for its own purposes. In making reservations or allocations, MHDC makes no representations to the applicant or other party as to compliance of the development with the Code, Treasury Regulations, or any other laws or regulations governing Federal LIHTCs or State LIHTCs. No member, director, officer, agent, or employee of MHDC shall be personally liable on account of any matters arising out of, or in relation to, the Federal LIHTC and State LIHTC. MISREPRESENTATIONS OF ANY KIND WILL BE GROUNDS FOR DENIAL OR LOSS OF THE TAX CREDITS AND MAY AFFECT FUTURE PARTICIPATION IN THE TAX CREDIT PROGRAM IN MISSOURI. 31

99 MISSOURI HOUSING DEVELOPMENT COMMISSION 2017 QUALIFIED ALLOCATION PLAN FOR MHDC MULTIFAMILY PROGRAMS This plan was approved and adopted by the Missouri Housing Development Commission Board of Commissioners On May 27, 2016

100 2017 Qualified Allocation Plan Table of Contents I. GENERAL INFORMATION... 1 A. Purpose... 1 B. Developer s Guide... 1 C. Credit Types and Availability... 1 D. Notice of Funding Availability... 2 E. Deadline and Application Fee... 2 II. STANDARDS... 3 A. Participant Standards... 3 B. Development Standards... 4 C. Underwriting Standards... 6 III. RESERVATION PROCESS A. Housing Priorities B. Selection Criteria C. Application Review D. Conditional Reservation IV. ALLOCATION PROCESS A. Carryover Allocation B. Final Allocation C. Transfer of Reservations and Allocations D. Owner Elections E. Land Use Restriction Agreement F. Bond Developments V. COMPLIANCE MONITORING VI. OTHER INFORMATION A. Program Fees B. Status Reporting C. Development Changes D. Administration of the Plan E. Amendments to the Plan F. MHDC Discretionary Authority G. Other Conditions... 30

101 MHDC 2017 Qualified Allocation Plan I. GENERAL INFORMATION A. Purpose The Missouri Housing Development Commission ( MHDC ) has been designated by the Governor of the state of Missouri as the Housing Credit Agency for the State. This designation gives MHDC the responsibility of administering the Federal Low Income Housing Tax Credit Program ( Federal LIHTC ) established by the Tax Reform Act of 1986 and codified as Section 42 of the Internal Revenue Code, as amended (the Code ), and the State Low Income Housing Tax Credit Program ( State LIHTC ) under Section et seq. of Chapter 135 of the Missouri Revised Statutes, as amended (the State Tax Relief Act ). The responsibilities of a Housing Credit Agency are defined in Section 42(m) of the Code. One of the statutory duties of MHDC as the Housing Credit Agency is to prepare a Qualified Allocation Plan (the Plan ). The purpose of the Plan is to set forth the process that MHDC will use to administer the Federal LIHTC, State LIHTC, and other MHDC multifamily funding. MHDC s goal is to use the Federal LIHTC and State LIHTC as a financial incentive for the creation and maintenance of quality market-appropriate affordable housing that strengthens the communities and lives of Missourians. B. Developer s Guide MHDC has created the Developer s Guide for MHDC Multifamily Programs ( Developer s Guide ) to serve as a detailed resource regarding the principles and procedures governing all MHDC rental production programs including, but not limited to, the Federal LIHTC and State LIHTC. The Developer s Guide is a supplement to this Plan. Throughout the course of this Plan, the Developer s Guide is referenced as a source to gain more information regarding specific topics. C. Credit Types and Availability There are two types of State LIHTC and Federal LIHTC available in Missouri, the 9% Credit and the 4% Credit. 9% Credit For purposes of this Plan and the Developer s Guide, the cumulative amount of both State and Federal 9% Credits MHDC can allocate for any calendar year shall be known as the Annual 9% Credit Authority. Developments applying for an allocation under the Annual 9% Credit Authority receive what is commonly known as the 9% Credit. The 9% Credit includes any 70% present value credit and any 30% present value credit for qualified existing buildings which also will use the 70% present value credit. The total amount of Federal 9% Credit available in any one year is specified by the Code in 42(h)(3)(C), and is known as the State Housing Credit Ceiling. The State Housing Credit Ceiling is generally equal to the sum of the following: a. Per Capita Credits. Calculated based on the state population and the per capita rate set by the IRS. b. Carry Forward Credits. Should MHDC be unable to allocate all allotted 9% Credits in any one year, the unused credits will be carried forward for allocation in the succeeding year. c. Returned Credits. Credits that are returned from developments that received an allocation in previous years may be made available for allocation in the year the credits are returned or the succeeding year if returned after September 30. d. National Pool Credits. If MHDC is able to allocate the entire amount of Federal 9% Credits available in any one year, Missouri may receive additional credits from the pool of credits returned by other states ( National Pool ), if available. The State LIHTC was established by the State Tax Relief Act and provides that any development eligible for a Federal LIHTC allocation is eligible for a State LIHTC allocation. The amount of State LIHTC 1

102 MHDC 2017 Qualified Allocation Plan authorized for a development cannot exceed the Federal LIHTC amount and the amount of State LIHTC available in proportion to the Federal LIHTC available may be reduced by the state legislature, making any allocation subject to change in the authorizing statute. For any given development, MHDC, in its sole discretion, may choose not to allocate any State LIHTC or State LIHTC in an amount up to the imposed statutory limit, as it deems necessary for the financial feasibility of the development. The anticipated amount of the Annual 9% Credit Authority for Missouri will be announced in the NOFA to precede the application round. 4% Credit Under 42(h)(4) of the Code, developments financed with tax-exempt private activity bond volume cap ( Bond Developments ) may be eligible to receive the 4% Credit. The 4% Credit includes the 30% present value credit for federally subsidized buildings that feature eligible basis financed by any obligation, the interest on which is exempt from federal tax and any 30% present value credit for the qualified existing buildings of Bond Developments. While the NOFA does not establish a ceiling or annual authority for the Federal 4% Credit, the amount of State 4% Credits available for Bond Developments is currently capped at $6 million per fiscal year. Consistent with the 9% Credit, the amount of State 4% Credits may be reduced by the state legislature, making any allocation subject to change in the authorizing statute. MHDC, in its sole discretion, may choose to allocate no State 4% Credits or State 4% Credits in an amount up to the imposed statutory limit, as it deems necessary for the financial feasibility of the development. D. Notice of Funding Availability A Notice of Funding Availability (the NOFA ) will be published immediately following the Commissioners formal approval of the 2017 Plan and the proposed 2017 NOFA. The NOFA will describe the types and amounts of funding available and the due date for applications. Once approved, the NOFA will be posted to the website: To be considered for a 9% Credit or 4% Credit allocation, an application must be submitted in accordance with this Plan, the NOFA, and the Developer s Guide. MHDC shall have the right to consider any application for 4% Credits for a potential allocation of 9% Credits if the application meets the requirements and competes successfully with other 9% Credit applications. Similarly, MHDC may consider any application for 9% Credits for a potential allocation of 4% Credits. MHDC will set forth the protocol and timing for the submission of applications in the Developer s Guide, as it may be amended from time-to-time. MHDC accepts applications for its main NOFA cycle once per allocation year followed by a second NOFA round for 4% Credit applications prior to the end of the fiscal year, at the discretion of MHDC. MHDC reserves the right to establish subsequent NOFAs and application rounds as it determines necessary. Approval for 9% Credit and 4% Credit reservations will be made at a regularly scheduled Commission meeting. The date of such Commission meeting will be posted on the MHDC website and is subject to change. A Conditional Reservation Agreement describing the amount(s) of funding approved and the MHDC requirements that accompany such funding approval will be issued shortly after formal Commission approval. E. Deadline and Application Fee 1. Deadline. The Application deadline for 2017 Round 1 is September 6, 2016 and is subject to change should the NOFA need to be revised or modified. Round 2, if available, will be announced at a later date by issuance of a new NOFA. Applications must be completed and all physical application materials must be received in MHDC s Kansas City office (920 Main Street, Suite 1400, Kansas City, Missouri 64105) according to the deadline established in the applicable NOFA. Any applications received after the deadline will be returned to the applicant without consideration. This includes late arrivals for any reason including, but not limited to, courier or delivery error. Early submission is strongly encouraged. 2

103 MHDC 2017 Qualified Allocation Plan 2. Application Fee. All applicants for MHDC financing under this Plan and NOFA must submit an application fee with each application. The application fee is non-refundable and if any application fee is returned for any reason, the application will be rejected. The applicable fees are: a. Nonprofit Priority Application Fee. Proposals that qualify for the Nonprofit Priority (as detailed in Section III below) and request consideration under that priority owe a $750 application fee. This does not include Bond Developments, which must pay the standard application fee. b. Standard Application Fee. All applications that do not qualify for the Nonprofit Priority owe a $2,000 application fee. Exception: Applicants submitting proposals under the Property Disposition Priority (as detailed in Section III below) for a property listed publicly by MHDC as real estate owned and available for public bid are not required to submit an application fee. II. STANDARDS A. Participant Standards All participants must be in good standing with MHDC. In addition to satisfactory previous performance, participants must be aware that: 1. All identities of interest between members of the development team must be documented to MHDC s satisfaction. This includes, but is not limited to, identities of interest between a property/land seller and purchaser and identities of interest between any two or more development team members such as developer, general partner(s), syndicator(s), investor(s), lender(s), architect(s), general contractor, subcontractor(s), attorney(s), management agent, etc. 2. Any individual or entity awarded Federal LIHTC or State LIHTC which does not buy and sell LIHTC from unrelated awardees cannot resell their ownership interest (or any Federal LIHTC and/or State LIHTC flowing therefrom) for an amount greater than their contribution to the development, unless the full gain from the sale directly benefits the development, as reflected in the sources and uses. Any individual or entity which violates this provision may, in the sole discretion of MHDC, be barred from further participation in any MHDC rental production programs. 3. When available and feasible, best efforts must be employed to use local vendors, suppliers, contractors, and laborers. 4. MHDC has established an MBE/WBE Initiative (as detailed in the Developer s Guide) which encourages involvement of businesses certified as a Minority Business Enterprise (MBE) and/or Woman Business Enterprise (WBE) under a business certification program by a municipality, the state of Missouri, or other certifying agency, as deemed appropriate by MHDC in consultation with the State of Missouri Office of Equal Opportunity. 5. All participants must agree to abide by the MHDC Workforce Eligibility Policy, as the same may be amended from time-to-time. 6. Pursuant to the Fair Housing Act (42 U.S.C et seq.), discrimination on the basis of race, color, national origin, sex, disability or familial status is strictly prohibited. In addition to prohibiting discrimination, the Fair Housing Act also imposes an obligation to affirmatively further the goals of the Fair Housing Act. MHDC is fully committed to affirmatively furthering fair housing by taking meaningful actions to promote fair housing choice, overcome patterns of segregation, and eliminate disparities in access to opportunity, and consequently, MHDC will consider the extent to which a certain development affirmatively furthers fair housing when deciding which developments should be recommended for funding. 7. In addition to the requirements set forth in Paragraph 6, above, and also in addition to any other requirements set forth in federal, state, or local law, the Commission requires occupancy of housing financed or assisted by MHDC be open to all persons, regardless of race, color, religion, national origin, ancestry, sex, age, disability, actual or perceived sexual orientation, gender identity, marital status, or 3

104 MHDC 2017 Qualified Allocation Plan familial status. Also, contractors and subcontractors engaged in the construction or rehabilitation of such housing shall provide equal opportunity for employment without discrimination as to race, color, religion, national origin, ancestry, sex, age, disability, actual or perceived sexual orientation, gender identity, marital status, or familial status. 8. The applicant must provide evidence that local public officials, as detailed in the Developer s Guide, have been informed that the applicant is submitting an application to MHDC. 9. Pursuant to MHDC s adopted Standards of Conduct, criteria has been established upon which individuals and/or entities may be suspended or debarred from future participation in MHDC sponsored programs (4 CSR , as may be amended from time-to-time). B. Development Standards All MHDC-financed developments (defined as a development receiving one or more of the following: Federal LIHTC, State LIHTC, an MHDC loan, or an MHDC grant) are required to: 1. Comply with the MHDC Design/Construction Compliance Guidelines (MHDC Form 1200), as may be amended from time-to-time. 2. Comply with all applicable local, state and federal ordinances and laws including, but not limited to: a. Local zoning ordinances. b. The construction code utilized by the local government unit where the development is located. In the absence of locally adopted codes, the International Building Code (2012), the International Plumbing Code (2012), the International Mechanical Code (2012), the National Electrical Code (2011), and/or the International Residential Code (2012) must be used. c. The Fair Housing Act of 1968, as amended. In addition, proposals receiving federal, state, county, or municipal funding may be required to comply with the Architectural Barriers Act of 1968, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act, all as amended. d. If applicable, the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 ( URA ) and/or Missouri Revised Statute e. If applicable, The Lead Paint Poisoning Prevention Act, HUD Guidelines for the Evaluation and Control of Lead Based Paint in Housing, and the MHDC Lead Based Paint Policy. 3. All developments with twelve (12) or more units are required to have a minimum of 5% of the units (rounded up to the nearest whole number) designed in compliance with one of the nationally recognized standards for accessibility to wheelchair users and an additional 2% of the units (rounded up to the nearest whole number) usable by those with hearing or visual impairments. 4. All new construction projects, regardless of number of units, shall be designed and constructed in accordance with the principles of universal design, as detailed in MHDC Form 1200, Design/Construction Compliance Guidelines. This requirement is in addition to the requirement for accessibility of persons with mobility, hearing and/or visual impairments as outlined in item #3 above. 5. Rehabilitation developments with special needs set-aside units must meet item #3 above and must increase the number of units incorporating the principles of universal design to a percentage equal to or greater than the special needs set-aside percentage The requirements set forth in #3 above for accessibility, hearing, and visual impairments can be included in the units incorporating universal design. 6. Provide facilities, amenities, and equipment appropriate for the population being served by the development. 7. Be designed to meet the established construction budget and utilize construction materials that extend the longevity of the building including materials, products, and equipment which are more durable than standard construction materials. Products must clearly reflect upgrades from standard construction grades and be economical to maintain. 4

105 MHDC 2017 Qualified Allocation Plan 8. If the development involves new construction, utilize sustainable building techniques and materials to meet the current standards of one of the certification levels of the following green building rating systems: Enterprise Green Communities, any of the LEED rating systems, or the National Green Building Standard (ICC 700 or NGBS ). In addition, to meet the sustainable housing requirement, the applicant must: a. Demonstrate at the time of application, Firm Submission (as defined in the Developer s Guide), and construction completion that the development will meet or has met the design and construction requirements for any certification level offered by the three accepted rating systems. The development is not required to receive formal certification, but must be designed and built in such a manner that it could receive formal certification. Green building criteria utilized must be clearly documented for MHDC staff s review and confirmation. b. Have at least one development team member who is an accredited green building professional with proven experience in sustainable design and/or construction. The team member must be a LEED AP, LEED Green Associate or a Certified Green Professional. If the development is not being formally certified, the development team member must document the pledged green building standards with pictures, provide a signed and scored scoring tool, and a brief narrative during the construction process. 9. If a development contains more than twelve (12) units and involves rehabilitation, applicants are required to conduct pre-development testing and energy audits of existing buildings to identify energy savings opportunities. The minimum standard for energy audits is ASHRAE Level 1. The analysis can be a stand-alone document, or incorporated in either the Physical or Capital Needs Assessment reports provided it is in a separate section by itself, and must be prepared by an assessor/rater certified through the Building Performance Institute (BPI), Residential Energy Services Network Home Energy Ratings Systems (RESNET), or ENERGY STAR. The energy audit will be submitted with the initial application for the project. 10. Pay at least federal prevailing wage to all laborers and mechanics employed in the construction of the development, as determined and posted by the United States Department of Labor for the locality of the development and current within ten (10) days of construction closing. Developments consisting of buildings with four (4) or fewer floors must use the Davis-Bacon residential construction category and developments consisting of buildings with five (5) or more floors must use the Davis-Bacon building construction category. 11. Have contracts that are both reasonable and competitively priced for both hard and soft costs. 12. Adhere to the contractor fee limitations described in Section C (6)(b) below. 13. Commit to contract with Section 3 businesses as may be dictated by regulations tied to federal funding sources and as more thoroughly set out in the Developer s Guide. A Section 3 Plan (as defined in the Developer s Guide) signed by the owner/developer and the general contractor must be reviewed and approved by MHDC staff prior to Firm Commitment issuance. 14. MBE/WBE Participation Standard is set at a minimum of 10% for MBEs and 5% for WBEs for both hard and soft costs. This applies to developments with more than six (6) units. The Participation Standard may be satisfied by MBE/WBE businesses providing competitively-priced services/materials in the following categories: Hard costs for the actual physical cost of construction, which include, but are not limited to, general contracting, grading, extensive environmental abatement, excavation, concrete, paving, framing, electrical, carpentry, roofing, masonry, plumbing, painting, asbestos removal, trucking and landscaping. Soft costs, which include, but are not limited to, planning, architectural, relocation, legal, accounting, environmental study, engineering, surveying, consulting fees, title company, disbursing company, market study, appraisal and soils report. 5

106 MHDC 2017 Qualified Allocation Plan The calculation of participation rates shall include all line items for which services or materials are provided to the development; provided however, that developer fees may be, but are not required to be, included in the calculation of participation rates. Development costs that do not include actual services or materials, such as public sector financing fees, reserves, land acquisition, building acquisition, construction interest, construction period taxes, tax credit allocation fees, tax credit monitoring fees, and bond issuance cost, shall not be included in the calculation. Calculations are based on work actually performed by the contractor. When the MBE/WBE is not performing the work but is the named contractor, credit will be given for twenty percent (20%) of the contract amount. A utilization plan, committing in detail, how the applicant intends to meet the Participation Standard MUST be signed by the owner/developer(s) and included in the application. MBE/WBE entities providing soft cost services must be identified at the time of application. Evidence of MBE/WBE proposals and certifications for hard costs will be required as part of the firm submission requirements or no later than five (5) days prior to construction loan closing. In the event there is also an award of HOME funds, there may be additional requirements (e.g., Section 3) that must be met to be in compliance with federal regulations. 15. HUD published a Final Rule in the Federal Register on July 24, 2013 to amend the HOME Program regulations. These amendments to the HOME regulations represent the most significant changes to the HOME Program in seventeen (17) years. The Final Rule will be enforced on all MHDC projects funded with HOME funds as required by law. Information on the new HOME Rule can be found at: Please refer to MHDC s HOME Program Guide for additional information. 16. For mixed-income developments, when feasible and practicable, MHDC requires the affordable units be distributed proportionately throughout each building and each floor of each building of the development and throughout the bedroom/bath mix and type. Both market rate and affordable units must have the same design regarding unit amenities and square footage. Amenities include, but are not limited to, fireplaces, covered parking, in-unit washer/dryers, etc. 17. If receiving federal historic credits and/or state historic credits, developments must waive the right to opt out of the Declaration of Land Use Restriction Covenants for Low-Income Housing Tax Credits ( LIHTC LURA ) to be recorded and choose to extend the Compliance Period for an additional fifteen (15) years. 18. A development may include multiple buildings if it has similarly constructed units, is located on the same or contiguous tracts of land, is owned by the same federal taxpayer and is financed pursuant to a common plan of financing. A development with multiple buildings that is proposing a mixed income structure must have low-income units in each building of the development. Scattered site buildings on noncontiguous tracts of land may also qualify if the development meets all of the other requirements described above and the development is 100 percent rent and income restricted, however, costs associated with the development of a separate community building may not be eligible for Tax Credits unless the building contains a residential rental unit. C. Underwriting Standards MHDC has adopted the following underwriting standards for all developments seeking a Federal LIHTC or State LIHTC allocation under this Plan. Meeting these standards does not constitute a representation regarding the feasibility or viability of the development and does not guarantee or imply an allocation will be made. Applicants should refer to and rely upon the Developer s Guide while completing an application under the NOFA as it provides a more detailed description of the underwriting standards and expectations of MHDC. MHDC will not award Federal LIHTCs and/or State LIHTCs based solely on the lowest development costs. The mission of MHDC is to provide high-quality affordable housing with long-term viability that contributes to the community. MHDC staff reserves the right to adjust assumptions according to market conditions at the time of application. 6

107 MHDC 2017 Qualified Allocation Plan 1. Rents. The proposed rents must be reasonable for the population being served and appropriate for the market in which the development is located. Rents must meet the requirements of the various financing sources in the application and, at a minimum, must meet the requirements of the Code to be eligible for a tax credit allocation under this Plan. Tax credit rents should be at least 15% less than market rents. In rare instances, area market rate rents may be depressed due to deteriorating conditions. Therefore, area market rate rents could be less than tax credit rents. If a development includes both tax credit and market rate units, the market rate unit rents must be at least 15% higher than tax credit rents. This does not apply to special needs housing properties. 2. Development Cost Minimums. For rehabilitation developments seeking 9% Credit, the total construction costs must equal or exceed 40% of the total replacement costs. Bond Developments located in rural areas (non-msa) must have total construction costs of at least 15% of the total replacement costs. Bond Developments located in urban areas (MSA) must have total construction costs of at least 20% of the total replacement costs. 3. Development Cost Maximums. The maximum total development cost for a development cannot exceed the current Maximum Development Cost Limits published on the MHDC website. Maximum Development Cost Limits are determined using the HUD method of calculating the 221(d)(3) total replacement cost limits. MHDC reserves the right, on rare occasions, to allow exceptions to the cost limit on a case-by-case basis if unique development characteristics that meet or exceed the standards and goals of this Plan are incorporated into the proposal. 4. Construction Cost Analysis. MHDC may hire an independent third party to provide an up-front construction analysis for all approved developments in excess of six (6) units. This analysis would be performed after Firm Submission documents (plans and specs) have been submitted. If it is determined the costs submitted are either excessive or deficient, MHDC may adjust the amount of Federal LIHTC, State LIHTC, and/or loan funds allocated to the development prior to closing. This review will also include a replacement reserve analysis for all proposed rehab, preservation, or conversions (except for RD properties). 5. Increase in Eligible Basis. Developments located in a Qualified Census Tract or in a Difficult Development Area, as defined below, may be eligible to increase eligible basis by up to 30%. a. Qualified Census Tract. Developments located in areas designated by HUD as Qualified Census Tracts. b. Difficult Development Areas. Developments located in areas designated by HUD to be difficult to develop. c. State Designated Difficult Development Areas. Pursuant to 42(d)(5)(B)(v) of the Code, MHDC may establish criteria to designate additional properties approved for 9% Credits to be treated as located in a difficult development area For purposes of this Plan, to qualify for such an increase, properties must meet at least one (1) of the following criteria: i. Be determined to meet the qualifications of the Preservation Priority; ii. Be determined to meet the qualifications of the Special Needs Priority and demonstrate the property owner will incur direct costs in addition to costs covered by third parties in the provision of services to enhance the residential stability and independence of special needs residents; iii. Be determined to meet the qualifications of the Service Enriched Priority; iv. Be a family development located in a county whose median income is below the 2015 statewide median income, as established and published by HUD, and propose to set aside 20% of the total units to be occupied by households earning between 60% and 80% of the area median income (workforce units), calculated using the appropriate income limits; or v. Be part of a larger mixed-use economic development area. For a development to qualify as part of a mixed-use economic development area, it must: 7

108 MHDC 2017 Qualified Allocation Plan 1. Be part of a mixed-use economic development area that includes different housing types for different household income levels, new retail/office/light industrial space that creates new permanent jobs, and new public space or activity centers designed for users of the area; or 2. Be part of a Transit Oriented Development ( TOD ) plan. The TOD plan must be centered around and integrated with a transit stop and the proposal must be located within 1,750 feet of a transit stop. The TOD plan must be mixed-use, mixed-income, pedestrian friendly, and of appropriate density for a TOD. MHDC will decide, in its sole discretion, what evidence and what types of development will qualify for an increase in eligible basis for mixed-use economic development areas. An important factor is that the MHDC development is not the only development, and the MHDC development will enhance the overall plan, rather than be the overall plan. It is expected the plan, of which the MHDC development is a part of, contemplates the development of multiple buildings over an area of reasonable size. This will not apply to a singular structure, regardless of location. Further details regarding difficult development area requirements can be found in the Developer s Guide. 6. Developer and Contractor Fee Limits. Developer and contractor fees are limited as follows: a. Developer Fee. For the purposes of the developer fee limit, Developer Fee is defined as the sum of the developer fee and consultant fees including, but not limited to, the following types of consultants: development and/or credit, application, historic, MBE/WBE, and Section 3 consultants. Development costs paid for by a previous owner are not considered when calculating developer fee, even if the cost of the previous work is included in the sales/purchase contract. i. New Construction Developments are limited to the lesser of: (a) 15% of total replacement costs for the first $4,000,000 of total replacement costs and 10% for any additional amount of total replacement costs, or (b) the per-unit calculation from the chart below. Only 25% of the developer fee (excluding deferred amounts) may be payable at closing, with an additional 25% permitted at 50% completion. MHDC reserves the right to further restrict the amount of developer fee payable during construction. ii. Acquisition-Rehabilitation and Historic Preservation Developments are limited to the lesser of: (a) the sum of 8% of acquisition costs for the first $2,000,000 of acquisition costs, 6% of any additional acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs, or (b) the per-unit calculation from the chart below. iii. Acquisition-Rehabilitation Developments where an Identity of Interest Relationship Exists between the Seller and the Buyer of Real Estate is limited to the lesser of: (a) the sum of 3% of acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs, or (b) the per-unit calculation from the chart below. NOTE: This does not apply to entities or individuals who meet either one of the following criteria: (1) the developer has owned the property for less than four (4) years; or (2) the developer has submitted an unsuccessful LIHTC rehabilitation application for the property within four (4) years of acquisition and has not owned the property for more than six (6) years. A detailed definition of Identity of Interest is located in the Developer s Guide. iv. Per-Unit Developer Fee Maximum for i, ii, and iii above: For units 1-40 $20,000 per unit 8

109 MHDC 2017 Qualified Allocation Plan For units * For units * For units 151+* $17,500 per unit $15,000 per unit $12,500 per unit * Please see Section III.B.b. Development Size, for further information on developments which contain more than 50 affordable units. The Conditional Reservation Agreement approved developer fee cannot be increased for any reason without Commission approval. In cases where there is a consultant or co-general Partner, the applicant must fill out Developer/Co- Developer/Consultant Fee Structure Exhibit detailing the responsibilities of each party. b. Contractor Fees. Contractor fees are limited for general requirements, overhead, and builder s profit and cannot exceed 14% of the total construction costs less the sum of general requirements, overhead, and builder s profit. Bonding costs and permit costs shall not be included in the calculation of contractor fee limits for general requirements, overhead, and builder s profit. This limitation on contractor fees should be incorporated into the construction contract. A cost certification is required from the contractor and the limit imposed by this Plan cannot be exceeded. Builder s Profit maximum 6% of construction costs; Builder s Overhead 2% of construction costs; and General Requirements 6% of construction costs. All general requirement items in the Fin-115 must be included in the calculation of the maximum amount for general requirements, regardless of the party who pays for the items. 7. Appraisal. If the subject property is an operating Section 8 property MHDC appraisal guidelines will require the as-is value to be based on market rents and expenses per HUD Multifamily Accelerated Processing (MAP) underwriting guidelines. Any value created by Section 8 rents that exceed market rents ( overage or overhang ) will not be considered. 8. Tax Credit Amount. The Code and the State Tax Relief Act require MHDC allocate to a development no more than the Federal LIHTC and State LIHTC amounts (respectively) which MHDC determines necessary to ensure the financial feasibility of the development and its viability as a qualified low-income housing development throughout the Compliance Period (as defined in the Code). MHDC retains the right, in its sole discretion, to reserve a lesser amount of Federal LIHTC and/or State LIHTC than the amount(s) requested on the application, to reserve less Federal LIHTC and/or State LIHTC than would result by using an applicable fraction of 100%, and/or to deny approval of any Federal LIHTC and/or State LIHTC amount. MHDC will evaluate each proposed development utilizing the selection criteria found in this Plan and the Developer s Guide. MHDC staff will underwrite each application using the monthly applicable percentage for 9% developments unless federal legislation is passed prior to Commission approval of applications which allows the applicable percentage to be a minimum of 9%. The determination of the Federal LIHTC and State LIHTC amounts necessary will be conducted at the following processing stages: a. The time of application; b. The time of Conditional Reservation Agreement issuance; c. The time the approved Firm Commitment and Carryover Allocation are issued and/or a Letter of Determination (also known as a 42(m) Letter ) is issued, if applicable; and d. The time the development is placed in service (after all project costs are finalized and a third party cost certification has been completed) and requests issuance of IRS Form(s) Maximum Credit Amount. The maximum amount of annual federal 9% Credit that can be allocated to any individual development is $700,000 ( Maximum Credit Amount ). However, in MHDC s sole 9

110 MHDC 2017 Qualified Allocation Plan discretion, for any development determined to be eligible for a basis boost (see Section II.C.5 above), the maximum annual federal 9% Credit is up to $910,000 (after the basis boost). MHDC, in its sole discretion, can make exceptions on a case-by-case basis when justified by development size and feasibility. The annual state 9% Credit shall be limited to an amount necessary for the feasibility of the development, but in no event can it exceed $700,000 without Commission approval. Bond Developments receiving 4% Credit allocations will not be limited, beyond what is dictated by the Code, in the amount of Federal LIHTC allocated. Bond Developments are subject to a $700,000 cap in annual State LIHTC and subject to a fiscal year cap total authorization of $6,000,000. The Commission, in its sole discretion, can make exceptions on a case-by-case basis when justified by development size and feasibility. The State LIHTC is not an as of right credit and approval is subject to Commission action. MHDC has the right to lower the maximum amount of annual State LIHTC for purposes of application review and approval as a result of statutory changes or limitations placed on the State LIHTC by the Commission or the state legislature. 10. Additional Credit. Owners can apply for an increase in Federal LIHTC and/or State LIHTC amounts in subsequent years if a development s eligible basis has increased. Additional credits may be awarded if: a. The development meets the requirements of the most recent Plan; b. There are additional Federal LIHTCs and/or State LIHTCs available; c. MHDC is satisfied the additional amount is necessary for the financial feasibility and viability of the development; and d. The increased amount of Federal LIHTC and/or State LIHTC does not exceed MHDC s Maximum Credit Amount. 11. Subsidy Layering Review. Section 911 of the Housing and Community Development Act of 1992 and Section 102 of the Department of Housing and Urban Development Reform Act of 1989 have placed limitations on combining the 9% Credit and 4% Credit with certain HUD and other federal programs. The limitations currently apply to a number of programs under the jurisdiction of the HUD Office of Housing including, but not limited to, Section 221(d)(3), 221(d)(4), 223(f) and 542(c) mortgage insurance, Flexible Subsidy, and project-based Section 8 rental assistance programs (collectively, HUD Housing Assistance ). As part of a Memorandum of Understanding ( Subsidy Layering MOU ), dated May 8, 2000, between HUD and MHDC, developments using the Federal LIHTC with HUD Housing Assistance are subject to a subsidy layering review by MHDC. The Subsidy Layering MOU requires HUD and MHDC to share information on the developer s disclosure of sources and uses of funds for all developments financed with both the Federal LIHTC and HUD Housing Assistance. This review is designed to ensure such developments do not receive excessive federal assistance. 12. Use of HOME. Funding from the HOME Investment Partnership Act ( HOME ) is a resource that may be available to assist in the development of affordable housing. For a development with HOME funding to qualify for the 9% Credit and remain in basis, the HOME funds must be structured as a loan. If structured as a grant, the amount of such grant will be deducted from eligible basis. 13. Development Financing Commitments/Letters of Intent (LOI). MHDC requires a preliminary commitment letter at the time of application for all non-mhdc sources of financing. Updated commitment letters are required at Firm Submission for approved applications. Applications must clearly state whether or not they are requesting a participation loan. Applicants requesting an MHDC Fund Balance participation loan should include a letter of intent from their preferred lending institution(s) which states: a. That the lender is willing to take a co-first lien position with MHDC; 10

111 MHDC 2017 Qualified Allocation Plan b. The amount that the lender is willing to loan; and c. An acknowledgement by the lender that any participation loan is subject to the terms and conditions of a Participation Loan Agreement with MHDC. Otherwise, MHDC reserves the right to determine appropriate loan financing for the project. If an application includes multiple non-mhdc commitments/lois, the applicant must specify which commitment should take precedence over the other(s). All financing commitments, including Federal LIHTC and State LIHTC equity, must be included with the application and reflected within the FIN-100. III. RESERVATION PROCESS A. Housing Priorities The following housing priorities have been established by MHDC to encourage the development of certain types of housing in certain locations. A more detailed description of the priorities and the requirements for consideration under the priorities is available in the Developer s Guide. An application seeking a priority under one or more of the priorities listed below must still satisfy all other selection criteria and successfully compete against other applications. 1. Nonprofit Involvement Set-aside. Pursuant to the Code, at least 10% of the 9% Credit available must be allocated to developments that involve a qualified nonprofit organization ( Nonprofit Priority ). Section 42(h)(5)(C) of the Code defines a qualified nonprofit organization as: a. A 501(c)(3) or (c)(4) nonprofit organization; b. Having an express purpose of fostering low-income housing; c. One that will own an interest in the development and materially participate in the development and operation of the development throughout the Compliance Period. Material participation is defined in 469(h) of the Code as involved in the operations of the activity on a basis which is regular, continuous, and substantial ; and d. Is not affiliated with, nor controlled by, a for-profit organization. Developments wanting to be considered for this priority must fully complete the applicable sections of the application and provide the following with the application: i. Nonprofit Organization s Certificate of Incorporation; ii. Articles of Incorporation and By-Laws; iii. Missouri Certificate of Good Standing; iv. IRS letter evidencing nonprofit status; and v. MHDC Nonprofit Questionnaire which describes the organization s role in detail, including how material participation pursuant to 469(h) of the Code will be met and what share of profits, losses, and fees go to the nonprofit organization. 2. Special Needs Priority (eligible for up to 30% boost in eligible basis). Developments providing housing opportunities for persons with special needs are strongly encouraged. Developments committing to a special needs set-aside of no less than 10% of total units, up to a maximum of 100% of total units, will receive a preference in funding ( Special Needs Priority ). A person with special needs is a person who is: (a) physically, emotionally or mentally impaired or suffers from mental illness; (b) developmentally disabled; (c) homeless, including survivors of domestic violence and sex trafficking; or (d) a youth aging out of foster care. 11

112 MHDC 2017 Qualified Allocation Plan A development with a special needs set-aside cannot give preference to potential residents based upon having a particular disability or condition to the exclusion of persons with other disabilities or conditions. Applicants must submit documentation demonstrating they have obtained commitments from a Lead Referral Agency which will refer special needs households qualified to lease targeted units and from local service agencies which will provide a network of services capable of assisting each type of special needs population defined above. A Lead Referral Agency is a service provider agency that will provide tenants and services to the community through the later of (i) the completion of the Compliance Period, or (ii) the completion of the affordability period connected to any MHDC loan on the development. The Lead Referral Agency should demonstrate the ability to serve the targeted special needs population. MHDC will endeavor to set aside 33% of Federal LIHTC and State LIHTC, 4% Credit and 9% Credit for developments containing units qualifying under the Special Needs Priority outside the geographic set-aside, subject to the quality of the special needs applications received and their ability to meet selection criteria and underwriting requirements described in this Plan. Applications submitted with special needs units must include $1,000 per special needs unit as a payment to the Special Needs Housing Reserve Fund which has been established by MHDC. This reserve will be funded by each development at construction completion when other reserve funds are normally funded. These funds will be held by MHDC and used, as necessary, to temporarily assist special needs properties that have experienced unforeseen operational issues (for example, the loss of rental assistance). Deposits to the Special Needs Housing Reserve Fund are intended for use for all special needs developments, commencing with 2014 approvals, and are intended to replace the need for each property to establish a separate special needs reserve. Guidelines for the application and use of reserve funds are posted on MHDC s website (Rental Production, General Forms and Other Resources). Developments wanting to be considered for the Special Needs Priority must fully complete the applicable sections of the application and provide the following supplemental documentation with their application. The referral process must include soliciting and accepting referrals from service agencies that serve all types of special needs populations. Applicants should also detail how the marketing will reach all special needs populations.: i. A draft referral and support agreement with the Lead Referral Agency; ii. Special Needs Marketing Plan Exhibit; and iii. Rental assistance commitment letters (if applicable). 3. Service-Enriched Housing (eligible for up to 30% boost in eligible basis). Service-Enriched Housing enhances the connection between affordable housing and supportive services. MHDC recognizes the advantages of supportive housing to individuals, communities and on public resources. To encourage more comprehensive housing environments for vulnerable populations, proposals offering significant services tailored to the tenant population will receive a preference in funding ( Service Enriched Priority ). Developments which offer substantial services to enhance tenant housing stability and independence increase the competiveness of their application. Proposed services should take into account the unique characteristics of residents and help them to identify, access, and manage available resources. Other benefits of a well-planned and properly funded program may include reduced resident turnover, improved property appearance, and greater cooperation between residents and management. To be considered under the Service Enriched Priority, a development must target a specific population. Examples include, but are not limited to: a. Senior households; b. Individuals with children; c. Formerly homeless individuals and families; d. Individuals with physical and/or developmental disabilities; e. Individuals diagnosed with mental illness; and 12

113 MHDC 2017 Qualified Allocation Plan f. Children of Tenants. The applicant should demonstrate it has experience with the population in question. If the applicant does not have experience with the specified population, it should have a commitment(s) from a service provider(s) who does have the necessary experience. Any commitments should run until the later of (i) the completion of the Compliance Period, or (ii) the completion of the affordability period connected to any MHDC loan on the development. Below are examples of services for both family and senior developments. Family properties: a. Regularly-held resident meetings; b. After-school programs for children; c. Financial literacy courses for adults; d. Parents as Teachers program offered through the local school district; e. Credit and/or budget counseling; f. Life skills and employment services; g. Nutrition and cooking classes; h. Domestic violence survivor support and counseling; i. Computer lab or computer check-out program; j. Food pantry; k. Daycare services; l. College preparation counseling; m. Clothes closet; n. Library; o. Back to school programs; p. Youth sports activities; q. Teen support groups; and r. Good neighbor and tenant rights classes. Senior properties: a. Regularly-held resident meetings; b. Transportation to shopping and medical appointments; c. Nutrition and cooking classes; d. Enrichment classes such as seminars on health issues, prescription drugs, Medicare, the internet; e. Coordination with an agency that provides assistance with paying bills and balancing checkbooks; f. Periodic health screenings; g. Assistance preparing a Vial of Life; h. Exercise program such as the Arthritis Foundation Exercise Program; i. Monthly community activities (i.e., pot luck dinners, holiday events, bingo); j. Access to fitness equipment; k. Food pantry or access to a mobile food pantry if available; l. Housekeeping; and m. Computer lab or check-out program. Developments wanting to be considered under the Service Enriched Priority must fully complete the applicable sections of the application and provide the following with their application: i. A detailed supportive services plan explaining the type of services to be provided, who will provide them, how they will be provided, and how they will be funded. The plan should include, but is not limited to, a description of how the development will meet the needs of the tenants, including access to supportive services, transportation, and proximity to community amenities. MHDC prefers the services be onsite or near the proposed development; 13

114 MHDC 2017 Qualified Allocation Plan ii. Letters of intent from service providers anticipated to participate in the development s services program; and iii. Service coordinator job description 4. Preservation (eligible for 30% boost in eligible basis). The preservation of existing affordable housing will receive a preference in funding ( Preservation Priority ). To qualify for the Preservation Priority, a development must meet at least one (1) of the following criteria and, if receiving federal historic credits and/or state historic credits, must waive the right to opt out of the Declaration of Land Use Restriction Covenants for Low-Income Housing Tax Credits ( LIHTC LURA ) to be recorded against the development for an additional fifteen (15) years beyond the Compliance Period: a. Have and continue to use, if possible, project-based rental assistance and/or operating subsidy; b. Have a loan made prior to 1985 from any of the following loan programs: HUD 202/811, 221(d)(3) or (d)(4), 236, or USDA RD 515; c. Participate in HUD s Mark-to-Market restructuring program; or d. Have a previous allocation of low-income housing tax credits in which the first year of the Credit Period (as defined in 42(f)(1) of the Code) was 1999 or earlier, and be in or have completed the final year of the Compliance Period for all buildings in the development. Developments wanting to be considered for this priority, the following must be included with the application: i. Copies of all loan notes and regulatory agreements encumbering the property; ii. A copy of any project-based income or operating subsidy agreements and rent schedules; iii. Audited financial statements for the development covering the three (3) most recent years; iv. If the development has HUD or MHDC financing or is encumbered by a LIHTC LURA or an MHDC Regulatory Agreement ( Regulatory Agreement ), then a letter from HUD or MHDC indicating the need for preservation is required (please see v. below if the proposed preservation development has an RD loan); v. If the proposed development includes USDA-RD financing, the application must include a letter addressed to MHDC from the RD State Office indicating (1) RD support for the application, and (2) the applicant has met with either the RD State Office or Area Specialists prior to preparing/submitting the application to MHDC. The purpose of the meeting is to review the entire structure of the proposal with RD including, but not limited to, a discussion of the proposed scope of work, Capital Needs Assessment ( CNA ), financing structure, rents charged, operating budget, the potential amount of additional RD required Replacement Reserves, and any other unique feature or complexities pertaining to the development application. It is recommended applicants supply RD with a copy of the as-is CNA prior to this meeting; and vi. A physical needs assessment or, for RD applications, an as-is CNA that meets USDA-RD requirements. 5. MBE/WBE. This priority is only available to developments with more than six (6) units. A preference in funding ( MBE/WBE Priority ) will be given to an application that reflects: a) An MBE/WBE Developer, a Developer group that includes an MBE/WBE, and/or a Developer Mentor/Protégé relationship; or b) MBE/WBE participation percentages significantly greater than the MBE/WBE Participation Standard of 10% for MBE and 5% for WBE for both hard and soft costs (as further detailed in the Developer s Guide). 14

115 MHDC 2017 Qualified Allocation Plan The Mentor/Protégé Relationship shall be designed to support, promote, and develop the knowledge, skill and ability of the MBE/WBE protégé in a manner intended to assist in the growth and development of the MBE/WBE as a developer. Applicants seeking the MBE/WBE Priority pursuant to a) above must provide a comprehensive Utilization Plan (as defined in the Developer s Guide) signed by the owner/developer detailing the role of, and functions to be performed by, the MBE/WBE. The roles and functions of the MBE/WBE must be those typically performed by the owner/developer. Applicants must also submit proof of MBE/WBE certification with the application. Applicants seeking the MBE/WBE Priority pursuant to b) above must provide a comprehensive Utilization Plan signed by the owner/developer detailing how the applicant intends to significantly exceed the MBE/WBE Participation Standard. Applicants seeking the MBE/WBE Priority must include a history of MBE/WBE participation with the application. 6. Property Disposition. Applicants may compete for the purchase of real estate owned by MHDC ( Property Disposition Priority ). The application must propose an acquisition/rehabilitation transaction that will be evaluated on its merits according to the selection criteria and its ability to demonstrate potential long-term success as an affordable housing property. Developments wanting to be considered for this priority, the development must be listed publicly by MHDC as real estate owned and available for competitive bid and the following must be included with the application: i. A signed option contract representing the applicant s offer to purchase the MHDC-held property on the MHDC option contract form. The MHDC form will be made available on the MHDC website in conjunction with any MHDC-owned real property that is publicly posted. ii. Any other certifications or documents required by MHDC and made available on the MHDC website in conjunction with the listing of any MHDC-owned real property. 7. Compliance Period and Affordability. MHDC encourages developments providing quality housing with low affordable rents for an extended period of time. As a result, a preference in funding will be given to applications that agree in advance to waive the right to opt out of the LIHTC LURA at the end of the Compliance Period and maintain the development as affordable housing for a minimum of thirty (30) years ( Extended Use Priority ). This priority is not available to developments with historic credits or single-family homes % AMI. A preference in funding will be given to applications that set aside at least 25% of total units to households earning less than or equal to 50% of area median income ( 50% AMI Priority ). Rents for households earning less than or equal to 50% of area median income must be at least 15% less than rents actually charged to households earning up to 60% of area median income. This priority is not available to developments with project-based rental assistance. 9. Workforce Housing (eligible for 30% boost in eligible basis). Developments in counties with a median income less than the 2015 statewide median income (as established and published by HUD) are eligible for the basis increase, provided that 20% of the total units in the development are set aside for households earning between 60% and 80% (workforce units) of the area median income. Rents in the 60%-80% units should be different than tax credit rents in the development. The intent is to capture the households that are just over the tax credit income limits but still have a need for quality affordable housing. The published income limits for each development s county still apply and must be used for determining resident eligibility. 15

116 MHDC 2017 Qualified Allocation Plan 10. Transit Oriented Development (TOD) (eligible for 30% boost in eligible basis). The following criteria will be considered in the determination of a development s ability to meet the definition of a TOD: a. The development must be located within 1,750 feet of a transit stop. b. The development must include a mix of transportation choices, including biking and walking. c. Transit service at the stop must be frequent (every minutes). d. The transit service must offer increased mobility choices and good transit connections. e. The master development plan must include a balanced mix of uses, providing residents the ability to live, work, and shop in the same neighborhood. f. The master development must include significant retail development. g. The master development must include a mix of housing choices (rental and for-sale, affordable and market-rate). 11. Redevelopment Plan. Applications that are a part of a redevelopment plan which has been approved/adopted by a local government will receive a preference in funding. The application must include a letter from the local authorizing official that the proposed development is a part of the redevelopment plan. 12. Opportunity Areas. MHDC encourages affordable housing developments in opportunity areas by targeting communities that meet the following criteria: access to high-performing school systems, transportation and employment; as well as being located in a census tract with a 15% or lower poverty rate. Family developments that meet these criteria will receive a preference in funding. Family developments proposed in opportunity areas are required to include an affirmative marketing plan that proactively reaches out to families currently living in census tracts where the poverty rate exceeds 40%. The plan must include a Special Marketing Reserve to assist in initial relocation expenses for families with children. Note that the minimum unit size for a family development in an opportunity area is twobedroom. Developments that apply under this priority must also apply under the Service Enriched Priority. MHDC will, on a case by case basis with reasonable and well documented justification, allow flexibility for meeting all four criteria for qualification. Please refer to the Market Study Guidelines which specifies how data on each of these criteria is to be collected. Below are examples of services for this type of family development: a. Regularly-held resident meetings b. After-school programs for children c. Financial literacy courses for adults d. Credit and/or budget counseling e. Life skills and employment services f. Computer lab or computer check-out program g. Daycare services h. College preparation counseling i. Library j. Back to school programs k. Youth sports activities l. Teen support groups m. Good neighbor and tenant rights classes B. Selection Criteria All submitted applications which successfully make it to the competitive review stage will be evaluated by MHDC staff using the selection criteria described below. The selection criteria incorporate both the federal preferences and selection criteria as described in 42(m)(1)(B)(ii) and 42(m)(1)(C) of the Code. The selection criteria must include: 16

117 MHDC 2017 Qualified Allocation Plan Project location; Housing needs characteristics; Project characteristics, including whether the project involves the use of existing housing as part of a community revitalization plan; Projects intended for eventual tenant ownership; Tenant populations with special housing needs; Sponsor characteristics; Tenant populations of individuals with children; Public housing waiting lists; Energy efficiency; and Historic character. States must give preference among selected developments to: Those serving the lowest income tenants; Those serving qualified tenants for the longest period of time; and Projects located in Qualified Census Tracts, the development of which contributes to a concerted community revitalization plan. States may include such other criteria as they deem appropriate and, except for the specified preference items, there are no requirements as to the relative weight of the various factors. Additional LIHTC responsibilities of MHDC include: Assurance that the amount of tax credits allocated does not exceed the amount necessary for the financial feasibility of the project and its viability as a qualified low income housing project throughout the Credit Period ; Evaluation of all projects for consistency with this Plan and for credit need, including projects using tax exempt bond financing; Execution of an agreement for an extended low income housing commitment for every project. This agreement must be recorded as a restrictive covenant binding on all successor owners, and must allow low income individuals the right to enforce the commitment in state court; and Monitoring of compliance with the provisions of 42 of the Code and notifying the Internal Revenue Service of any noncompliance. 1. Geographic Region. An attempt will be made to allocate the 9% Credit (both federal and state) across the state on a population proportionate basis, with the state divided into the following areas: a. St. Louis Region - 33%: Franklin, Jefferson, St. Charles, St. Louis City and St. Louis counties. b. Kansas City Region - 19%: Cass, Clay, Jackson, Platte and Ray counties. c. Out State Region - 48%: All other counties. 2. Development Characteristics. It is important the development s characteristics are appropriate for the intended tenant population. The following characteristics will be reviewed closely: a. Tenant Population It is important MHDC fund developments offering quality affordable housing to the populations that need it in the locations where it is needed. Items given consideration with regard to the intended tenants include: i. Tenant populations with special housing needs, such as persons with physical and/or developmental disabilities, homeless individuals and families, the senior, and other underserved and/or at risk populations; ii. Individuals with mental illness; 17

118 MHDC 2017 Qualified Allocation Plan iii. Individuals on public housing waiting lists; iv. Individuals with children; v. Youth aging out of foster care; vi. Developments serving the lowest income tenants; and vii. The quantity, quality, and suitability of services provided or offered to the tenants. b. Development Size All applications submitted for consideration are limited to fifty (50) affordable units in a proposal. Exceptions may include, but are not limited to, applications proposing a: i. Mixed-income development; ii. Development to replace existing public housing and/or subsidized housing iii. Development where at least 25% of the units are set aside as Special Needs housing units; iv. Development that includes serviced enriched housing features; v. Development that preserves existing affordable housing; vi. Development that is part of a municipal redevelopment plan; or vii. Senior housing development. c. Type The type of development being proposed is an important characteristic and affects how the other selection criteria are applied. Developments will be evaluated on how they contribute to the goal of this Plan and the mission of MHDC. Developments fall into at least one of the following types: i. New construction; ii. Historic rehabilitation/adaptive reuse; iii. Acquisition/rehabilitation of existing housing; or iv. Developments intended for eventual tenant ownership. Regardless of type, developments that obligate themselves to serve qualified tenants for the longest period of time are given extra consideration. d. Site Each site will be reviewed by MHDC staff to determine the overall suitability of the site for affordable housing and for the intended population. Site reviews will consider: i. Marketability, or the likelihood that the site and improvements will be accepted by the target population; ii. Presence of environmental issues and concerns; iii. Neighborhood characteristics and land uses; and iv. Proximity to appropriate amenities and services. e. Design The design of each development will be examined closely to assess its appropriateness for the site, the market, and the population being served. The following will be taken into account when evaluating the application: i. Access into and out of the site and parking; ii. Placement of buildings on the site; iii. Development amenities; 18

119 MHDC 2017 Qualified Allocation Plan iv. Type and quality of materials; v. Energy efficiency and overall sustainability; vi. Condition and suitability of structures being reused; vii. Scope of work for rehabilitation or renovation; viii. Population appropriate design features (for example, universal design features, interior and exterior common spaces, storage space, accessibility, adaptability, safety features, etc.); and ix. Exterior Design aesthetics that blend well with the surrounding area. 3. Market Characteristics. It is important the development s characteristics are appropriate for the market in which it is located. Please refer to the Market Study Guidelines for further guidance. The following will be analyzed for each proposal: a. Development Location Where a development is located affects almost all of the other selection criteria. Important considerations for location include, but are not limited to: i. New construction and conversion proposals must meet the following criteria: o The proposed development shall not be located where the total of publically subsidized housing units (as defined in the Market Study Guidelines) equal more than 20% of all units in the census tract where the development will be located. o If the proposed development is located in the Kansas City or St. Louis Region, it shall not be located within a one (1) mile radius of any development that: (a) has been approved for State LIHTC, Federal LIHTC, HOME, or Fund Balance funding through MHDC within the previous two (2) fiscal-year funding cycles; and (b) is less than 90% leased-up at the time of application submission. Exceptions to the previous two criteria may include, but are not limited to, applications proposing a: o Mixed-income development; o Development to replace existing public housing and/or subsidized housing o Development where at least 25% of the units are set aside as Special Needs housing units; o Development that includes serviced enriched housing features; o Development that preserves existing affordable housing; o Development that is part of a municipal redevelopment plan; or o Senior housing development. ii. Location in a qualified census tract that will contribute to a concerted community revitalization plan; iii. Whether existing housing is used as part of a community revitalization plan; iv. Location in a community with demonstrated new employment opportunities and a proven need for workforce housing; v. Infill of existing stable neighborhoods; and vi. Commission-designated targeted areas. b. Housing Needs Developments must address the affordable housing needs of the state, region, and locality where they will be located. Important considerations regarding market need include: i. Number and growth of the population and intended tenant population in the market area; 19

120 MHDC 2017 Qualified Allocation Plan ii. Presence, condition, occupancy, and comparability of other affordable housing developments in the market area; iii. Presence, condition, occupancy, and comparability of market rate housing in the market area; iv. Capture rate for the proposed development; and v. Housing needs of the special needs population in the market area. No application proposing the delivery of new units will be approved if it is deemed by MHDC to adversely impact any existing MHDC development(s), exist in a questionable market, or create excessive concentration of multifamily units. 4. Development Team Characteristics. A development team s experience with affordable housing, MHDC, and the type of development being proposed is important. The following development team members will be evaluated: Developer(s), General Partner(s), Management Agent, Syndicator(s)/Investor(s), Contractor, Architect, Sustainable Design Team, Consultant(s), Lead Referral Agency (for special needs housing), and the service provider (for service-enriched housing). Evaluations will assess the experience, performance, financial strength and capacity to complete the proposed development in a timely and efficient manner. Items considered will include, but are not limited to: i. Number of affordable developments completed; ii. Occupancy of developments owned and/or managed; iii. Number of developments in the planning and development stages; iv. Performance, quality, and condition of previously completed developments v. Previous and outstanding compliance issues; and vi. Performance regarding MHDC deadlines for previous funding awards. The proposed general partner, developer, and general contractor will be assessed for their capacity to successfully manage the pre-development, closing, construction, and lease-up of the proposed development in addition to previously approved developments currently in those stages of development. Development team members not in good standing with MHDC or its programs will not be approved for funding. 5. Feasibility. Applications will be evaluated to determine feasibility and viability throughout the Compliance Period using the assumptions provided by the applicant. MHDC will evaluate: a. Sources All developments must demonstrate sufficient sources are available to assure feasibility. For non- MHDC sources, a commitment letter from the proposed provider indicating the amount and terms of financing must be included with the application. The type of financing and the source of all financing will be taken into consideration. b. Uses Development costs must be reasonable and competitive for the type of development and location being proposed. Sources and uses must balance. c. Income Rents must be appropriate for the market and affordable for the intended population. Other sources of income must be documented to determine feasibility or the size of MHDC debt, if any. d. Expenses Operating expenses must be adequate, reasonable, competitive, and appropriate for the market and type of development being proposed. e. Long-Term Viability 20

121 MHDC 2017 Qualified Allocation Plan Operating projections must indicate the development is viable for the greater of (i) the entire Compliance Period, (ii) the term of any MHDC financing, (iii) HOME affordability period (if applicable), or National Housing Trust Fund affordability period (if applicable). f. Timing The timing of due diligence, financing commitments, and regulatory approvals will be considered when assessing an applicant s ability to proceed. Consideration will be given to applicants demonstrating they can proceed in a timeframe consistent with the requirements of the Code or, for tax-exempt bond-financed applications and/or applications utilizing historic tax credits, the allocation process established by the Missouri Department of Economic Development. g. Investment Potential Applications will be evaluated for their potential to attract investors for the Federal LIHTC and State LIHTC, if applicable, based on the potential amount of Federal LIHTC, State LIHTC, if applicable, the size of the proposed development, the market, the experience and strength of the development team and financial feasibility. The strength and previous performance of all investors will be taken into consideration during the feasibility review. MHDC will not allocate a credit amount exceeding the amount necessary to assure development feasibility. 6. Community Impact. MHDC seeks to allocate funding to developments that appropriately and efficiently improve their communities. Impact will be influenced by: a. Elected Official and Community Support. Community support should highlight the importance of the development to the community and the impact it will have. b. Catalytic Effect. Developments that will successfully encourage further development or redevelopment in the community are encouraged, as are developments that are part of a larger community redevelopment effort or part of a concerted community revitalization plan. c. Community Needs. How a development will address the needs of the population and community it intends to serve is important. The existing stock of affordable housing and demographic trends in the area will influence the needs of the community and ability of the development to meet those needs. C. Application Review Unless an application is rejected during one of the preceding stages, it will undergo each of the five staff review stages described below. If an application is rejected during the Initial, Primary Documentation, or Secondary Documentation Review, a written explanation of the reason for the rejection will be provided to the applicant. An application checklist, application forms, and program guides can be found at (through the Rental Production link). See the Developer s Guide for additional information regarding the application review process. 1. Initial Review. The Initial Review will be conducted to determine if the applicant and its application meet the following requirements: a. Organized Application. Each application must be submitted in a three-ring binder and organized with tabs according to the MHDC FIN-125. Applications that are not organized will be eliminated from further consideration. A complete application consists of (1) an electronic application (a link will be provided on MHDC s website); (2) one tabbed, three-ring binder with all required exhibits and original signatures, where required; (3) digital media containing electronic exhibits; and (4) the appropriate application fee. The MHDC FIN-125 will identify exhibits to be submitted in the threering binder and exhibits to be submitted digitally. Three-ring binder and digital media exhibit names must match the FIN-125 exhibit names. Acceptable forms of digital media include, but are not limited to, a CD-R, DVD, or a USB flash drive. MHDC staff has the right, in its sole discretion, to 21

122 MHDC 2017 Qualified Allocation Plan waive an exhibit requirement on a case-by-case basis upon the review of a formal waiver request submitted by an applicant prior to the applicable NOFA deadline. b. Good Standing with MHDC. Any member of the development team that is the owner or general partner of a LIHTC development currently in non-compliance due to site audits or a failure to comply with the owner s reporting requirements will be denied participation in the NOFA. In addition, any development team member not in compliance or good standing with any other MHDC program will similarly be denied participation. Should MHDC learn any principal involved with a proposed development has serious and/or repeated non-performance or non-compliance issues in Missouri or any other state before or after the time of application, the application will be rejected. Prior performance considered may include, but is not limited to, progress made with a previous Conditional Reservation Agreement, Firm Submission, execution of Firm Commitment, closing, cost certification, development compliance, payment of fees and/or violation of the MHDC Workforce Eligibility Policy. c. Consistent with Code Requirements. The proposal must meet all requirements set forth in the Code and all relevant Treasury Department regulations, notices, and rulings. d. Consistent with Fair Housing Requirements. The submitted proposal must meet all requirements of The Fair Housing Act of 1968, as amended. e. Consistent with Internal Revenue Service Memorandum of Understanding. MHDC and the IRS have executed a Memorandum of Understanding ( IRS MOU ) to improve the administration of the Federal LIHTC. Under the terms of this IRS MOU, all developers must complete IRS Form 8821 (Rev. 9-98), Tax Information Authorization, as a condition of consideration for an allocation of 9% Credit or 4% Credit. An executed IRS Form 8821 for the developer, and all key principals of the developer and general partnership must be included as part of the application. f. Consistent with Tax Credit Accountability Act. Under the provisions of the Tax Credit Accountability Act (R.S.Mo ), all developers/applicants must complete all necessary forms and reporting requirements during the reservation process, the allocation process, and for a period of three (3) years following the issuance of State LIHTC by MHDC. All developers must complete MDOR Form 8821 (Rev ), Missouri Department of Revenue Authorization For Release of Confidential Information, as a consideration for the allocation of the State LIHTC. MHDC will obtain tax clearance for the developer/applicant from the Missouri Department of Revenue at the time of application. Should the developer, general partner, or any key principal be found to have outstanding tax liens or delinquent taxes, for federal or state taxes, the related application will be rejected. 2. Primary Documentation Review. All primary documents must be complete, fully-executed, and submitted by the application deadline. An exact list of documents can be found on the MHDC FIN-125. A missing primary document, documents in draft form, or documents missing signatures will result in an application being rejected. Below is a list of the primary document categories ( Primary Documents ), some of which require multiple documents. The required Primary Document categories are: a. Executed FIN-100. A completed and executed FIN-100 with appropriate certifications and elections made.. b. Digital Media. Digital media with the required electronic documents as noted on the MHDC FIN c. Application Fee. A check for the appropriate application fee. A check returned for any reason will result in that application being rejected. d. Development Narrative and Development Questionnaire. A narrative meeting the requirements set forth in the Developer s Guide and a Development Questionnaire demonstrating how the proposal meets the selection criteria. e. Site Review Information. MHDC requires multiple site information documents to conduct the site review described below. 22

123 MHDC 2017 Qualified Allocation Plan f. Applicant Site Control. Applicants should refer to the Developer s Guide for more information regarding site control and a thorough description of the required site control documents. g. Market Study. A market study meeting MHDC requirements and dated within six (6) months of the application due date. The market study must be prepared by an experienced market analyst shown on MHDC s approved provider list (not an affiliated company). See the Market Study Guidelines and Market Study Standards for Rental Housing Developments (MHDC Form 1300) for further guidance. h. Financing Commitments. Commitments for all non-mhdc financing sources, including commitments for all tax credit equity to be utilized. 3. Secondary Documentation Review. Secondary documentation must be submitted by the application deadline for an application to receive consideration. The FIN-125 contains an exact list and explanation of the required documentation. If six (6) or more secondary review documents are missing or are incomplete at the time the application is submitted, the application will be rejected. If five (5) or fewer secondary documents are missing or are incomplete at the time the application is submitted, the applicant will be notified in writing of deficient items and a date by which deficiencies must be cured ( Cure Date ). If the requested documents are not received by the Cure Date, the application will be rejected. Below is a list of the secondary documentation categories ( Secondary Documents ), some of which require multiple documents. The Secondary Document categories are: a. Seller Site Control. The seller site control documents, as described in the Developer s Guide. b. Public Official Contact Verification or Support Letters. Proper evidence that the appropriate officials have been contacted. In the case of the chief elected official, state senator, and state representative for the development location, a response letter from the official regarding the development is encouraged. Other letters or resolutions of support are not required, but are welcome. c. Statutorily Required Documents. Various state and federal statutes and regulations require certain documents be submitted by the developer/applicant at the time of application. d. Housing Priority Documentation. Additional documentation required pursuant to the priority the applicant is applying under, if applicable. e. Zoning. Evidence of proper zoning. f. Architectural Information. Documents regarding the design, cost, and historic designation of the building. g. Sustainable Housing Information. New construction applications must provide documentation demonstrating how the development will achieve and maintain the green building standard identified in the Development Characteristics Worksheet. For rehabilitation proposals, the green building requirement is highly encouraged but optional; however, rehabilitation developments that will achieve and maintain a green building standard should also provide such documentation. h. Relocation and Existing Multifamily Operations Data. For proposals with existing tenants (commercial or residential) who may be either temporarily or permanently relocated as a result of the proposed development, provide the applicable relocation documents. i. Homeownership Information. For developments interested in providing tenants homeownership opportunities after the end of the Compliance Period, provide a homeownership proposal and a waiver of the right to opt out of the LIHTC LURA for an additional fifteen (15) years after the end of the Compliance Period. j. PHA Approved Utility Allowance Schedule. Provide a copy of the PHA-approved utility allowances for the location and type of development proposed in effect at the time of application. k. Developer-General Partner Information. Information regarding the developer and any general partner(s) who are not affiliates of the developer. l. Management Agent Information. Information regarding the proposed management agent. 23

124 MHDC 2017 Qualified Allocation Plan m. MBE/WBE Utilization Plan. A Utilization Plan signed by the owner/developer detailing how the applicant intends to meet or exceed the MBE/WBE Participation Standard. 4. Site Review. During the application review process, MHDC staff will conduct a review of each proposed site ( MHDC Site Review ). Each proposed site location must have a sign posted identifying it as a proposed MHDC development. The MHDC Site Review will consist of a staff site visit and a determination regarding the feasibility, marketability, appropriateness of the site(s) for the intended population, and assessment of any perceived environmental issues. The results of MHDC Site Review play an important role in the Competitive Review. For rehabilitation and conversion applications, MHDC staff expects to be able to enter the buildings. 5. Competitive Review. Once an application has gone through the Initial, Primary Documentation, Secondary Documentation, and Site Review stages and is considered complete to MHDC staff s satisfaction, it will undergo a Competitive Review ( Competitive Review ). The Competitive Review uses the established priorities and selection criteria to determine funding recommendations. All factors are considered and those applications deemed, at the sole discretion of MHDC staff, to best meet the goals of MHDC will be recommended to the Commission for formal approval. 6. Notifications. The Code requires MHDC, as the Housing Credit Agency, to notify the chief executive officer of the local jurisdiction where each proposed development is located. If an application satisfies the Initial Review and Primary Documentation Review requirements, a notification will be sent to the chief executive officer of the local jurisdiction, the state senator and state representative for the district of the proposed development, and the executive director of the local public housing authority. Those notified will be given an opportunity to comment on the proposed development and MHDC will consider the comments received and may contact the local jurisdiction for additional information. MHDC will also publish a notice in a regional newspaper requesting public comment on the development. Public hearings will be held in various locations throughout the state to afford the public an opportunity to comment on developments proposed in a given region. D. Conditional Reservation Applications receiving Commission approval will be awarded a conditional reservation shortly after Commission approval ( Conditional Reservation ). A Conditional Reservation will describe the type, amount(s), terms, and requirements applicable to the development in question. Conditional Reservations will be subject to the requirements MHDC staff determines necessary or appropriate to assure the development will meet the goals of this Plan in a timely manner. All developments receiving a Conditional Reservation must submit a Firm Submission package no later than the date established in the Conditional Reservation. For at least one (1) year after the last building is placed in service, monthly rents cannot exceed the MHDCapproved rents reflected in the Firm Commitment and as determined at Final Allocation. Any increase in annual rents must be approved by MHDC staff. A Conditional Reservation is subject to rescission should the development fail to comply in a timely manner with the conditions thereof. This includes, but is not limited to, failure to provide evidence satisfactory to MHDC staff of financial feasibility or sufficient progress toward Firm Submission, closing, and placement in service. IV. ALLOCATION PROCESS A. Carryover Allocation For developments with 9% Credit reservations, the Code allows an allocation of Federal LIHTC to a qualified building(s) that will not be placed in service in that year ( Carryover Allocation ), provided that: 24

125 MHDC 2017 Qualified Allocation Plan 1. The building(s) is/are placed in service no later than December 31 of the second calendar year following the year of allocation; and 2. The taxpayer s basis in the building(s) is more than 10% of the reasonably expected basis as of the date that is one (1) year after the Carryover Allocation (Code 42(h)(1)(E)(ii)) ( 10% Test ). The reasonably expected basis is the expected basis of the building(s) as calculated on December 31 of the second calendar year following the year the Carryover Allocation is made. To successfully complete the 10% Test, no later than thirteen (13) months after the effective date of the Carryover Allocation, the owner must submit all of the documentation required in the Carryover Allocation, take ownership of the property, and admit the investor as the limited partner or member of the ownership entity. The Carryover Allocation Agreement will be issued simultaneously with the Firm Commitment, according to the deadlines established in the Conditional Reservation and no later than the month of December in the year of reservation. The Carryover Allocation defines the amount of Federal LIHTC and State LIHTC allocated to the development, the low-income unit set-asides, the percentages of median income to be served, the special housing needs units committed to, if any, and any other such requirements as MHDC may choose to include. A detailed description of the Carryover Allocation is included in the Developer s Guide. MHDC reserves the right to request additional documents or certifications it deems necessary or useful in the determination that the development remains eligible for a Carryover Allocation. The credit amount defined in the Carryover Allocation may be reduced, if warranted. MHDC retains the right to recapture a Carryover Allocation prior to the end of the two-year Carryover Allocation period allowed under the Code. Each Carryover Allocation will contain conditions precedent and deadlines which must be satisfied to secure a Final Allocation of Federal LIHTC and State LIHTC, if applicable. Should the development or owner fail to comply with all such conditions and deadlines, MHDC staff may, in its sole discretion, rescind the Carryover Allocation and use the recaptured credits for other developments. B. Final Allocation Any Development with a Carryover Allocation that does not place in service by the end of the second year following the allocation year is subject to having its allocation of Federal LIHTC and/or State LIHTC recaptured. The placed-in-service date for new construction is the date on which the building is certified as being suitable for occupancy in accordance with state or local law. The placed-in-service date for rehabilitation is the close of the 24-month period over which the expenditures are aggregated and the rehabilitation process is certified as being complete. See Internal Revenue Notice for more information about placed in service dates. MHDC will make a final allocation of Federal LIHTC and/or State LIHTC ( Final Allocation ) after MHDC approval of all Final Allocation requirements (which includes, but is not limited to, approval of the cost certification) and conversion or permanent closing has occurred, if applicable. The Final Allocation amount is based on MHDC staff s final determination of the qualified basis for the building(s) based on an accountant s certification of final costs provided by the owner and a final determination of the Federal LIHTC and State LIHTC amounts. The Final Allocation may be less than the amount reserved or allocated previously. Owners can submit a request for a Final Allocation at any time during the year but in no event should a request for Final Allocation be submitted later than two (2) months after the last building in the development is placed in service. The owner must meet all Final Allocation requirements of the Carryover Allocation to receive a Final Allocation. MHDC reserves the right to request additional documents or certifications it deems necessary or useful in determining if the development is eligible for a Final Allocation. MHDC will not issue IRS Form 8609(s) and Missouri Eligibility Statement(s), if applicable, until the following conditions have been met (no exceptions will be made): 25

126 MHDC 2017 Qualified Allocation Plan 1. Each building in the development is a qualified low-income building as defined by the Code. No 8609(s) and/or Missouri Eligibility Statement(s) will be issued for any portion of an incomplete development. 2. The owner and the development are in compliance with the terms of the LIHTC LURA. 3. The owner has provided a complete final application package (for the entire completed development) in the format required by MHDC staff. The developer fee and the contractor s fee allowed in the cost certification are limited to the amounts in the Firm Commitment. The developer fee is the lesser of the recalculation at cost certification following the formula in Section II(C)(6) above or the amount approved in the Firm Commitment. 4. The owner has provided a complete copy of the executed limited partnership agreement or operating agreement and all executed amended and restated partnership agreement(s) or operating agreements with all exhibits and schedules. 5. The owner has paid the tax credit fee and the compliance monitoring fee. 6. The owner representative and the management agent have successfully completed a compliance training session conducted or approved by MHDC staff and submitted proof of attendance in the form of compliance training certificates. 7. MHDC has completed its final inspection of the development. 8. MHDC has made its final determination of the credit amount and its final determination pursuant to 42(m)(2) of the Code. 9. All requirements included on the applicable MHDC checklist have been received and approved by MHDC. Owners must file with MHDC executed copies of the 8609(s) and Missouri Eligibility Statement(s) for the first year in which credits are claimed, as indicated in the Compliance Manual (available at C. Transfer of Reservations and Allocations Without MHDC s prior consent, Conditional Reservations, Carryover Allocations and/or State LIHTC allocations are non-transferable except to an entity in which the transferring holder of the Conditional Reservation or Carryover Allocation is the general partner or controlling principal. Because all representations made with respect to the applicant, its experience, and previous participation are material to the evaluation made by MHDC, it is not expected that MHDC s consent will be granted for transfers to an unrelated entity unless a new application is submitted and receives Commission approval. D. Owner Elections 1. Applicable Credit Percentage. The applicable percentage for New Construction and Rehabilitation credits is permanently fixed at 9% (except for Bond Developments). For Acquisition credits, the applicable credit percentage can be locked at either (i) the month in which such building is placed in service, or (ii) at the election of the taxpayer at the time of a Carryover Allocation. The Carryover Allocation provides a space for such election. For Bond Developments, the applicable credit percentage is established at either (i) the month in which the building is placed in service, or (ii) at the election of the taxpayer, the month in which the bonds are issued. If the latter is desired, the Election Statement (form provided by MHDC upon request) must be signed by the owner, notarized, and submitted to MHDC staff before the close of the fifth calendar day following the month in which the bonds are issued. 2. Gross Rent Floor. Section 42(g)(2)(A) of the Code provides a low-income unit is rent restricted if the gross rent for such unit does not exceed 30% of the imputed income limitations applicable to the unit. Under Revenue Procedure 94-57, the effective date of the income limitation used to establish the gross rent floor is the date MHDC initially allocates a housing credit dollar amount to the development. This is typically the date of a Carryover Allocation, but if no Carryover Allocation is made, the date of Final 26

127 MHDC 2017 Qualified Allocation Plan Allocation will be used unless the owner designates a building s placed-in-service date as the effective date for the gross rent floor. Such designation must be made in the initial application. The Carryover Allocation specifies which designation was made by the applicant. The effective date used for the determination of the gross rent floor for developments not seeking a Carryover Allocation will be the date of Final Allocation. For Bond Developments, the effective date of the income limitation used to establish the gross rent floor is the date MHDC issues the 42(m) Letter for the development, unless the Owner designates a building s placed-in-service date as the effective date for the gross rent floor. Such designation must be made by advising MHDC staff in writing prior to the placed-in-service date. The gross rent floor election does not replace the MHDC requirement that the initial monthly rents for at least one (1) year after the last building is placed in service cannot exceed the MHDC Firm Commitment approved rents. Any increases in the annual rents must be approved by MHDC staff. 3. Credit Period. Section 42(f)(1) of the Code defines the Credit Period for Federal LIHTC as the ten (10) taxable years beginning with (i) the taxable year in which the building is placed in service, or (ii) at the election of the taxpayer, the succeeding taxable year. The State LIHTC mirrors the Federal LIHTC requirements. If a qualified development is comprised of more than one (1) building, the development shall be deemed to be placed in service in the taxable year during which the last building of the development is placed in service. MHDC staff should be notified as each building is placed in service and provided a copy of the permanent and temporary, if any, certificate(s) of occupancy for the building. E. Land Use Restriction Agreement Section 42(h)(6) of the Code requires LIHTC developments be subject to an extended low-income housing commitment. MHDC complies with this requirement with the execution and recording of a LIHTC LURA. The LIHTC LURA sets forth the low-income unit set-asides, the percentages of median income to be served, the special housing needs units committed to, if any, and any other such requirements MHDC may include as covenants running with the land for a minimum of thirty (30) years (or additional years if the development owner has committed to a longer use period). MHDC staff will use the information submitted with the application, Firm Submission, the signed Firm Commitment, and items submitted in connection with the construction closing to prepare the LIHTC LURA. The LIHTC LURA will be prepared and sent to the development owner to review and will be signed by MHDC staff and the owner at the construction loan closing. If the construction loan closing is not occurring at MHDC, MHDC will deliver the LIHTC LURA to the closing for execution by the owner. The LIHTC LURA cannot be altered in any manner without the consent of MHDC staff. The title company will record the LIHTC LURA with any other closing documents to be recorded. The LIHTC LURA must be recorded prior to the filing of any deed of trust or other first lien encumbrance on the development. Section 42(h)(6)(E)(ii) of the Code requires that even in the event of foreclosure, deed in lieu of foreclosure, or unwillingness to maintain the low-income status of the development, for a period of three (3) years, the following are not permitted: (i) the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit, or (ii) an increase in gross rent for any low-income unit. The priority recording of the LIHTC LURA ensures all lien holders will honor these requirements of the Code. The original recorded LIHTC LURA must be returned to MHDC staff. F. Bond Developments Under 42(h)(4) of the Code, Bond Developments may be entitled to the 4% Credit. The development must have received an allocation of private activity bond cap pursuant to 146 of the Code and principal payments on the bonds must be applied within a reasonable period to redeem the bonds. Tax credits are allowed for that portion of a development s eligible basis financed with the tax-exempt bonds. If 50% or more of a development s aggregate basis is so financed, the development is entitled to 4% Credits for up to the full amount of the qualified basis. 27

128 MHDC 2017 Qualified Allocation Plan Bond Developments are required by the Code to apply through MHDC (as the Housing Credit Agency) for an allocation of 4% Credits and for a determination the development satisfies the requirements of this Plan. Although the application does not have to compete for 4% Credits from the State Housing Credit Ceiling, applicants must submit an application during the posted NOFA period and meet all requirements of the reservation process and this Plan. MHDC staff will review the application, determine if the development is eligible and meets the requirements of this Plan, and make an initial determination of the development s tax credit amount. At the close of the NOFA period, the Commission will approve the recommendation and ranking of successful applications for priority in the consideration for a private activity bond allocation by the Missouri Department of Economic Development ( DED ). If the bonds will be issued by a local Industrial Development Authority ( IDA ), MHDC, as the State Housing Agency, must perform an evaluation of the development according to the requirements of 42(m) of the Code. The IDA must submit a request on original letterhead to MHDC staff no later than four (4) business days prior to bond closing asking MHDC to issue the 42(m) Letter. MHDC staff will issue Building Identification Number(s) in the 42(m) Letter. Developments receiving 4% Credits are required to follow the Final Allocation procedures described herein and to enter into a LIHTC LURA with regard to the development. V. COMPLIANCE MONITORING Section 42(m)(1)(B)(iii) of the Code mandates that MHDC, as the State Housing Agency, monitor all placed in service tax credit developments for compliance with the provisions of the Code. Developments approved for tax credits under this Plan must follow the HUD Multifamily Tax Subsidy Project ( MTSP ) income limits in effect for the metropolitan area or county in which the property is located at the time a household leases a tax credit unit. HUD income limits for the Section 8 and HOME programs will prevail, as directed by HUD regulations, for tax credit units that are also Section 8 or HOME-assisted units. The Code also mandates the Internal Revenue Service be notified by MHDC of any instance of noncompliance. In addition, MHDC staff will monitor developments for compliance with the LIHTC LURA for any additional owner commitments made in the development selection process (e.g., additional low income units or an extended low-income use period). Developers must finalize and receive approval for the unit mix and on-site management requirements prior to requesting a Firm Commitment. All owner representatives and their management agent representatives will be required to successfully complete a compliance training session conducted or approved by MHDC staff prior to the release of 8609(s) or the Missouri Eligibility Statement(s), if applicable. MHDC will make available to owners a Compliance Monitoring Handbook, as may be amended from time-to-time, explaining the LIHTC monitoring process in detail. VI. OTHER INFORMATION A. Program Fees MHDC may charge developments financed under the requirements of this Plan the fees listed below. MHDC reserves the right to charge additional fees as it deems necessary in the course of administering the Federal LIHTC and State LIHTC. Further discussion of applicable fees can be found in the Developer s Guide. 1. Tax Credit Fee. A fee equal to 7% of the approved annual Federal LIHTC amount must be paid with the execution of the Firm Commitment ( Tax Credit Fee ). The amount of the Tax Credit Fee is to be rounded up to the next dollar. The fee is non-refundable and will not be reduced or refunded if the Final Allocation amount is reduced or if the tax credits are returned or recaptured. If the Final Allocation amount is increased, the increased amount is subject to the fee and must be received prior to the issuance of 8609(s) and Missouri Eligibility Statement(s), if applicable. The Tax Credit Fee cannot be included in eligible basis. 2. Appraisal Fee. MHDC will require an appraisal to confirm the market value of land and improvements. If the proposed purchase price is not supported by the MHDC appraisal, the purchase price may be 28

129 MHDC 2017 Qualified Allocation Plan reduced to the appraised value. MHDC staff shall order the appraisal and assess a fee of $6,500 which must be paid with the execution of the Conditional Reservation ( Appraisal Fee ). The Appraisal Fee is non-refundable. 3. Construction Cost Analysis Fee. MHDC will order and assess a fee of $5,000 for an independent third party report to provide an upfront construction cost analysis for all approved developments in excess of six (6) units ( Cost Analysis Fee ). The Cost Analysis Fee would be due with the Firm Submission If a third party analysis is also required by the lender or investor on the property, MHDC will endeavor to work with that party to avoid duplicate costs. 4. Construction Inspection Fee. A fee will be assessed to compensate either MHDC or a third-party inspector hired by MHDC staff for construction inspections ( Construction Inspection Fee ). The amount of the Construction Inspection Fee will be based on the estimated length of the construction period. See the Developer s Guide for guidance on estimated fees for budgeting purposes. 5. LIHTC LURA Recording Fee. The owner will be responsible for the fee charged for recording the LIHTC LURA with the county in which the development is located. If MHDC records the LURA, the fee is $ Compliance Monitoring Fee. A compliance monitoring fee will be assessed to cover the costs of the IRS-required compliance monitoring program ( Compliance Monitoring Fee ). The fee is $10 per lowincome unit (including employee use units) and workforce housing unit (occupied by households between 60% and 80% of the area median income) multiplied by thirty (30) years (the extended-use period). The Compliance Monitoring Fee must be paid once the last building in the development is placed in service. 8609(s) and Missouri Eligibility Statement(s), if applicable, will not be issued until MHDC receives the Compliance Monitoring Fee. The Compliance Monitoring Fee cannot be included in eligible basis. 7. Document Revision Fee. A fee of $100 per form will be charged for revisions to an 8609 or Missouri Eligibility Statement or LIHTC LURA for (i) any corrections requested that were the result of incorrect information provided to MHDC staff by the owner, and (ii) any corrections requested more than ten (10) days after owner s receipt of the 8609, Missouri Eligibility Statement, or LIHTC LURA, as applicable. B. Status Reporting Approved developments will be required to provide monthly progress reports in a format prescribed by MHDC staff. Information requested will be development specific and may include, but is not limited to, zoning and other local development approvals, firm debt, equity and/or gap financing, and construction progress toward development completion. Owners of developments that will not be placed in service in the year the reservation is made may also be required to provide information regarding the owner s ability to meet Code and MHDC requirements to maintain its Carryover Allocation. C. Development Changes A reservation of Federal LIHTC, State LIHTC and/or MHDC funds is based on information provided in the development application. Until a development is placed in service, any material changes (for example, changes in the site, scope, costs, ownership or design, etc.); from what was submitted in the application will require written notification to, and approval by, MHDC. Changes of development characteristics which were the basis, in whole or in part, of MHDC s decision to reserve credits and/or provide MHDC funds may result in a revocation of the Conditional Reservation or a reduction in the amount of the tax credit award and/or MHDC funds. D. Administration of the Plan MHDC reserves the right to resolve all conflicts, inconsistencies or ambiguities, if any, in this Plan or which may arise in administering, operating, or managing the Federal LIHTC and State LIHTC and the right, in its 29

130 MHDC 2017 Qualified Allocation Plan sole discretion, to modify or waive, on a case-by-case basis, any provision of this Plan not required by the Code. All such resolutions or any such modifications or waivers are subject to written approval by MHDC s Executive Director and are available for review, as requested, by the general public. E. Amendments to the Plan MHDC reserves the right to amend this Plan from time-to-time for any reason including, without limitation: 1. To reflect any changes, additions, deletions, interpretations, or other matters necessary to comply with the Code or regulations promulgated thereunder; 2. To cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in this Plan; 3. To insert provisions clarifying matters or questions arising under this Plan as are necessary or desirable and are not contrary to or inconsistent with this Plan or the Code; 4. As to State LIHTC matters, to comply with the State Tax Relief Act; and 5. To facilitate the award of tax credits that would not otherwise be awarded. All such amendments shall be fully effective and incorporated herein upon the Commission s adoption of such amendments. This Plan may be amended as to substantive matters at any time following public notice, public hearing, and approval by the Commission. F. MHDC Discretionary Authority MHDC reserves the right, in its sole discretion, to: 1. Carry forward a portion of the current year s 9% Credit for allocation in the next calendar year; 2. Under certain conditions, issue a Conditional Reservation for a portion of the next year s 9% Credit; 3. Under certain conditions, issue a binding commitment for some portion of the next year s 9% Credit; 4. Limit the number of developments in a specific market or geographic area; 5. Award a Conditional Reservation based on the amount of tax credits requested relative to the amount of funding available. This could result in awarding tax credits for a development that will fully utilize the amount available, while denying credit to a development which requested more credit than is available, without regard to location or ranking; 6. Fund fewer than the number of units proposed in an application; and 7. Assert discretionary authority concerning all aspects of an application during the underwriting process. Section 42(m)(1)(A)(iv) of the Code requires MHDC to make available to the general public a written explanation for any exceptions made to the requirements of this Plan. G. Other Conditions In making reservations or allocations, MHDC relies on information provided by or on behalf of the applicant. MHDC s review of documents submitted in connection with the tax credit allocation process is for its own purposes. In making reservations or allocations, MHDC makes no representations to the applicant or other party as to compliance of the development with the Code, Treasury Regulations, or any other laws or regulations governing Federal LIHTCs or State LIHTCs. No member, director, officer, agent, or employee of MHDC shall be personally liable on account of any matters arising out of, or in relation to, the Federal LIHTC and State LIHTC. 30

131 MHDC 2017 Qualified Allocation Plan MISREPRESENTATIONS OF ANY KIND WILL BE GROUNDS FOR DENIAL OR LOSS OF THE TAX CREDITS AND MAY AFFECT FUTURE PARTICIPATION IN THE TAX CREDIT PROGRAM IN MISSOURI. 31

132 PLANNING SESSION AND REGULAR MEETING OF THE MISSOURI HOUSING DEVELOPMENT COMMISSION FRIDAY, APRIL 29, 2016 AT 9:00 A.M.** AGENDA STONEY CREEK INN, 2601 S. PROVIDENCE, COLUMBIA, MO 65203EETING 1. Roll Call Regular Meeting 2. Approval of Minutes a. Approval of minutes for the annual meeting of March 18, Report of Chairman 4. Report of Staff a. Financial Report and distribution of initial draft budget for FY2017 b. Request for approval of Single Family Next Step Program c. Request for approval of RFP for Single Family Market Rate Program Administrator d. Request for approval of Bond Resolution No. 1051, Multifamily Housing Refunding Revenue Bonds e. Standards of Conduct Revision f. Bylaw Revision g. Request for approval of the 2017 Missouri Housing Trust Funds (MHTF) Draft Allocation Plan and NOFA h. Request for approval of 2017 Draft QAP for public hearings i. Rental Production recommendations Tax Exempt Bond Round j. Rental Production update k. Asset Management update 5. Such other matters that may come before the Commission 6. Adjourn **The Regular Meeting portion of the agenda will begin immediately after the break scheduled at the end of the Planning Session Agenda.

133 1) Roll

134 Missouri Housing Development Commission Roster Chairman: Governor: Jeremiah W. (Jay) Nixon Governor State Capitol Building P.O. Box 720 Jefferson City, MO Attn: Ted Ardini Brian May State of Missouri Office of the Governor Wainwright Building, Room North 7 th Street St. Louis, MO Lieutenant Governor: Treasurer: Peter Kinder Lieutenant Governor State Capitol Building Room 224 Jefferson City, MO Jeffrey S. Bay (Chairman) Eagle Lane Parkville, MO Vice Chairman: Troy L. Nash (Vice Chairman) Zimmer Real Estate 1220 Washington Street, Suite 100 Kansas City, MO Secretary Treasurer: Commissioner: Greg L. Roberts (Secretary-Treasurer) The Roberts Law Firm 215 Chesterfield Business Parkway, Suite A Chesterfield, MO Bill Miller Bielefeld Court Florissant, MO Clint Zweifel State Treasurer State Capitol Building P.O. Box 210 Jefferson City, MO Attn: Sarah Swoboda Attorney General: Chris Koster Attorney General Supreme Court Building 207 W. High Street P.O. Box 899 Jefferson City, MO Attn: Jim Farnsworth Page 1 of 1 Rev. 02/18/15

135 2) Approval of Minutes a. Approval of minutes for the annual meeting on Friday, March 18, 2016

136 MISSOURI HOUSING DEVELOPMENT COMMISSION Annual Meeting Minutes of Meeting Held on Friday, March 18, 2016 The annual meeting of the Missouri Housing Development Commission was held on Friday, March 18, 2016 at 9:00 a.m. at Missouri Housing Development Commission, 920 Main, Suite 1400, Kansas City, MO Those present were: Commissioners and Persons Present to Vote for Ex- Officio Members Commissioners Absent Staff Members Other Meeting Participants Jeffrey S. Bay, Chairman (via telephone) Peter Kinder, Lieutenant Governor (via telephone) Clint Zweifel, State Treasurer (via telephone) Jim Farnsworth, Assistant Attorney General (via telephone) Troy Nash, Vice Chairman (via telephone) Greg Roberts, Secretary/Treasurer (via telephone) Bill Miller, Commissioner (via telephone) Jay Nixon, Governor Chris Koster, Attorney General Kip Stetzler, Executive Director (via telephone) Greg Canuteson, Senior Deputy Director Tina Beer, Director of Operations Marilyn Lappin, Director of Finance Katie Jeter-Boldt, General Counsel Frank Quagraine, Director of Rental Production Marian Campbell, Director of Asset Management (via telephone) Sara Turk, Fiscal & Accounting Manager Gus Metz, Chief Underwriter Sarah Parsons, Community Initiatives Manager Jenni Miller, Community Initiatives Assistant Manager Lynn Sigler, Operations Manager Brian May, Governor s Office (via telephone) Chairman Bay called the meeting to order and roll call was taken by Ms. Sigler. A quorum was present. Chairman Bay asked Ms. Beer to take up the agenda items.

137 First order of business was to approve the minutes for the Regular Meeting on February 26, A motion was made by Commissioner Roberts and seconded by Commissioner Miller. The motion passed with a vote of 6-0. Commissioner Miller provided a report of the Nominating Committee Meeting. The nominating Committee recommended the following nominees: Chairman Bay as Chairman, Commissioner Nash as Vice Chairman and Commissioner Roberts as Secretary/Treasurer. A motion was made by Commissioner Miller and seconded by Commissioner Nash. The motion passed with a vote of 6-0. Marilyn Lappin presented the Financial Report for January No vote was taken. Marilyn Lappin presented Resolution No for Single Family Mortgage Revenue Bonds. A motion was made by Commissioner Nash and seconded by Commissioner Roberts. Lieutenant Governor Kinder joined the meeting via telephone. The motion passed with a vote of 7-0. Marilyn Lappin presented staff s recommendation for approval of the selection of bond underwriters and selling group members. Staff recommended the senior manager/book running responsibility be rotated between George K. Baum & Company and Stifel, Nicolaus & Company. Staff recommended four firms as co-managers: Bank of America Merrill Lynch, RBC Capital Markets, Stern Brothers and UMB. Staff recommended selection of Drexel Hamilton LLC, Fidelity Capital Markets, and Raymond James & Associates as rotating co-managers/selling group members; thus, including one of these firms as a fifth co-manager on a rotational basis. Finally, staff recommended the following firms as selling group members: FTN Financial Capital Markets, Great Pacific Securities, Piper Jaffray and Robert W. Baird & Co. A motion to accept staff s recommendation was made by Commissioner Miller and seconded by Commissioner Nash. The motion passed with a vote of 7-0. Frank Quagraine presented the Rental Production update. Marian Campbell presented the Asset Management update. A motion was made by Commissioner Miller to adjourn the meeting and it was seconded by Commissioner Roberts. The motion passed unanimously with a vote of ayes. Jeffrey S. Bay, Chairman

138 3) Report of Chairman

139 4) Report of Staff a. Financial Report

140 FINANCIAL REPORT FEBRUARY 2016

141 Financial Reporting Package for the month of February 2016 and the period then ended Index Page: 1 2 Executive Summary for the month 3 Key Financial Information 4 Asset Quality 5 Statement of Net Position 6 Budget for Use of Net Position (Fund Balances) for Fiscal Year 2016 Mortgage Revenue Bond Activity HUD Purchase Loan Program 7 Condensed Statement of Revenues and Expenses for the month (including the effects of fair value reporting) 7a Condensed Statement of Revenues and Expenses for the month, actual compared to budget (excluding the effects of fair value reporting) 8 Condensed Statement of Revenues and Expenses for the period July 1, 2015 to February 29, 2016 (including the effects of fair value reporting) 8a Condensed Statement of Revenues and Expenses for the period July 1, 2015 to February 29, 2016, actual compared to budget (excluding the effects of fair value reporting) 9 Loan Servicing Report

142 Missouri Housing Development Commission Financial Report Executive Summary February 2016 Assets Total assets, as reported, were $1,835,010,000 as compared to $1,754,796,000 at the end of the previous fiscal year. Excluding the effects of fair value reporting, assets totaled $1,778,038,000 at February 29, 2016 as compared to $1,699,457,000 at June 30, MHDC s asset base continues to have a high-quality and low-risk profile. Approximately 43% of total assets are comprised of guaranteed mortgage-backed securities (page 4). MHDC has no subprime loans, no variable rate debt and no interest rate swaps or similar instruments. MHDC s conservative asset base and careful management has MHDC well positioned in the current economic environment. Mortgages and Mortgage-Backed Securities The cost basis of new homeownership mortgage-backed securities purchased total $147.6 million in the fiscal year. Net of scheduled principal payments and loan prepayments, the cost basis of homeownership bond-financed mortgage-backed securities portfolio has increased $41.4 million in the fiscal year. Principal pay-downs and prepayments in the Single Family portfolio are 17% annualized (17% in 2015 and 19% in 2014). In the Multifamily portfolio, principal pay-downs and prepayments are 5% annualized (8% in 2015 and 14% in 2014). Bond Issues and Other Debt During the fiscal year, one Multifamily refunding bond series closed totaling $13.7 million and three Single Family homeownership bond series were sold totaling $205.4 million, including one series that closed on April 13, 2016 (page 6). Bond pay downs have totaled $119.2 million. During this fiscal year, new FHLB advances totaling $141.6 million have financed the MBS warehousing program. Results of Operations: Month of February For the month of February (page 7a), net operating results amounted to an increase of $1,826,000 before including the effects of fair value reporting (see additional information below). Operating Revenues over Expenses is $1,100,000 more than budget. Results of Operations: Year-to-Date Fiscal 2016 Year-to-date for this fiscal year (page 8a), net operating results amounted to an increase of $19,793,000 before including the effects of fair value reporting, (see additional information below). Operating Revenues over Expenses is $9,444,000 more than budget. 1

143 Federal Programs This fiscal year Federal Grant Revenues include $94.7 million in Project Based Section 8 Housing Assistance Payments and $8.5 million in HOME Investment Partnership Program funds. These federal programs provide important resources for achieving the objectives of the Commission. The Commission s efforts to preserve affordable housing, including preservation of the Housing Assistance Payment Contracts, are vital for continuing this economic resource for the state of Missouri. Effects of Fair Value Reporting Investment securities, including U.S. government and agency securities and GNMA, Fannie Mae and FHLMC mortgage-backed securities, are reported at fair value on the balance sheet and changes in fair value are reported as revenue in the operating statement in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. During periods of rising market interest rates relative to the stated rates of MHDC s portfolio, the fair value of investments and mortgage-backed securities will decline. Conversely, when market interest rates fall below those of the stated rates of the portfolio, the fair value of investments and mortgagebacked securities will increase. During February, interest rate fluctuations have resulted in an increase of $730,000 in the fair value of mortgage-backed securities and other investments as reported (page 7). Yearto-date, interest rate fluctuations have resulted in an increase of $1,263,000 in the fair value of mortgage-backed securities and other investments as reported (page 8). Depending on future financial markets, interest rate fluctuations are expected to have a continuing material effect on the financial statements. 2

144 Missouri Housing Development Commission Key Financial Information as of February 29, 2016 Trend Analysis ($ in thousands) /29/2016 Total Assets * 1,810,273 1,633,157 1,626,018 1,705,518 Total Debt * 1,041, , , ,120 Total Equity * 640, , , ,522 Revenues * 83,695 74,193 65,718 64,360 Net Income * 15,313 20,272 15,174 13,875 Total Loans and MBS 1,261,858 1,109,818 1,126,423 1,205,238 FHA Risk-Share Loans 172, , , ,557 Nonperforming Assets 3,013 3,008 3,313 4,331 Loan Loss Reserves 43,322 43,094 42,965 42,719 * NOTES: Asset values exclude conduit debt issues and are adjusted to eliminate the effects of fair value accounting (GASB Statement No. 31). Debt values exclude conduit issues. Equity values are adjusted to exclude the effects of fair value accounting (GASB Statement No. 31) and net deferred outflows and inflows. Total assets increased 4.89% compared to a 0.44% decline in FY2015. Revenue and net income values exclude the effects of fair value accounting (GASB Statement No. 31) and federal grants and assistance (pass-through revenues and disbursements). These values are projected for FY Financial Ratio Analysis 6/30/2014 6/30/2015 FY 16 Budget 2/29/2016 PROFITABILITY (%) Return on Average Assets Return on Average Assets, Excluding Subsidy Programs & Special Initiative Return on Assets Before Loan Loss Provision and Extraordinary Item Return on Assets Before Loan Loss Provision and Extraordinary Item, Excluding Subsidy Programs & Special Initiatives Return on Average Equity Net Interest Margin LEVERAGE (%) Total Equity / Total Assets Total Equity and Reserves / Total Loans and MBS

145 Missouri Housing Development Commission Asset Quality Information and Summary Effects of Fair Value Reporting ($ in thousands) Balance Sheet 6/30/2013 6/30/2014 6/30/2015 2/29/2016 Total Assets as Reported $ 1,945,079 $ 1,758,734 $ 1,754,796 $ 1,835,010 Unrealized Gains/Losses (effect of GASB 31) # (46,452) (50,869) (55,339) (56,972) Total Assets at Cost $ 1,898,627 $ 1,707,865 $ 1,699,457 $ 1,778,038 Mortgage-Backed Securities Portfolio 6/30/2013 6/30/2014 6/30/2015 2/29/2016 Mortgage-Backed Securities at Cost $ 801,535 $ 666,876 $ 685,723 $ 756,656 as % of Total Assets at Cost 42.2% 39.0% 40.3% 42.6% Mortgage-Backed Securities Portfolio Composition: % GNMA 87.6% 89.0% 90.0% 90.8% % Fannie Mae 11.0% 9.8% 9.2% 8.6% % FHLMC 1.4% 1.2% 0.8% 0.6% Loan Portfolio 6/30/2013 6/30/2014 6/30/2015 2/29/2016 Total Loans at Par $ 591,999 $ 560,743 $ 557,104 $ 563,821 Uninsured Loans (Includes Risk-Share, HOME & TCAP) $ 405,233 $ 396,460 $ 401,631 $ 413,549 as % of Total Assets at Cost 21.3% 23.2% 23.6% 23.3% Risk-Share Loans $ 172,272 $ 160,385 $ 148,440 $ 141,557 HOME Loans $ 184,225 $ 194,583 $ 201,652 $ 210,138 TCAP Loans $ 30,284 $ 30,119 $ 29,798 $ 29,493 Non-Performing Assets (Uninsured) $ 3,013 $ 3,008 $ 3,313 $ 4,331 Allowance for Loan Losses $ 43,322 $ 43,094 $ 42,965 $ 42,719 as % of Uninsured/Non-Guaranteed Loans 10.7% 10.9% 10.7% 10.3% Asset Quality Ratios 6/30/2013 6/30/2014 6/30/2015 2/29/2016 Non-Performing Assets / Total Loans, MBS and Real Estate Owned 0.239% 0.271% 0.294% 0.359% Loan Loss Reserves / Total Loans and MBS 3.43% 3.88% 3.81% 3.54% Loan Loss Reserves / Risk-Share Loans and Non-Performing Assets 24.72% 26.37% 28.31% 29.28% # - Effect of GASB Statement No. 31 reflects the changes in fair value of investments and mortgage-backed securities that result from changes in market interest rates. 4

146 Missouri Housing Development Commission STATEMENT OF NET POSITION, unaudited (in thousands) ASSETS Multifamily Single Family Operating Bond-Financed Bond-Financed Combined Totals Funds Program Program February 29, 2016 June 30, 2015 (audited) CASH AND TEMPORARY INVESTMENTS $ 33,780 $ 10,615 $ 84,136 $ 128,531 $ 122,655 INVESTMENTS Investment Agreements - - 1,408 1,408 2,680 U.S. Government and Agency Securities 351,239 8,183 6, , ,824 Total 351,239 8,183 7, , ,504 LOANS RECEIVABLE, net of allowance for loan losses ($42,719) 361, , ,125 1,331,202 1,255,659 OTHER ASSETS Accrued Interest Receivable 3, ,684 6,833 6,349 Prepaid Expenses Fixed Assets, net of accumulated depreciation ($4,346) Accounts Receivable, Other 1, , Total 5, ,684 8,439 7,978 Total Assets 752, , ,361 1,835,010 1,754,796 DEFERRED OUTFLOWS OF RESOURCES Refunding of Debt Pension 1, ,022 1,022 Total Deferred Outflows of Resources 1, ,032 1,032 Total Assets and Deferred Outflows of Resources $ 753,126 $ 229,555 $ 853,361 $ 1,836,042 $ 1,755,828 LIABILITIES Bonds and Notes Payable 53, , , , ,151 Pension 7, ,178 7,178 Interest Payable ,937 7,758 6,929 Escrow Deposits 107, , ,489 Funds Due Others Accounts Payable 7, ,172 1,944 Unearned Revenue 10, ,059 9,928 Total Liabilities 185, , ,172 1,080,516 1,021,943 DEFERRED INFLOWS OF RESOURCES Refunding of Debt - - 2,205 2,205 1,620 Pension 2, ,093 2,093 Total Deferred Inflows of Resources 2,093-2,205 4,298 3,713 NET POSITION Invested in Capital Assets Restricted 313,258 18, , , ,761 Commission Designated (Unrestricted) 176, , ,951 Unrestricted and Undesignated 75, ,547 83,786 Total Net Position 565,394 18, , , ,172 Total Liabilities, Deferred Inflows of Resources and Net Position $ 753,126 $ 229,555 $ 853,361 $ 1,836,042 $ 1,755,828 5

147 FY2016 Fund Balance Budget February 29, 2016 BUDGET DISBURSED Multifamily Housing Production and Preservation Program $ 15,000,000 $ - Single-Family MRB Program Equity Contribution 3,000,000 2,875,000 Supplemental Emergency Solutions Grant 740,732 * 328,418 Rental & Operating Assistance Program 390,000 * 17,750 Housing First Program 497, ,085 Homeless Management Information System (HMIS) 91,984 29,539 Disaster Assistance 1,119,450 * 119,100 Project Homeless Connect 12,000 13,820 Multifamily and Home Improvement Interest Subsidy Program 4,000 2,072 TOTAL FUND BALANCE PROGRAM BUDGET $ 20,856,094 $ 3,686,784 * modified amounts as adopted at the January 11, 2016 and February 8, 2016 Special Commission Meetings. Fund Balance Revolving Funds as of February 29, 2016 Authorized Applied Construction Lending $ 30,000,000 (1) $ 3,355,000 Single Family Homeownership Program 20,000,000 (2) 2,269,000 Homeowner Cash Assistance 21,500,000 (3) - (1) This revolving fund is used to make market-rate multifamily construction loans. (2) This established a $20 million fund to finance GNMA, Fannie Mae or FHLMC mortgage-backed securities (MBS) in conjunction with MHDC's First Place bond program, or direct sale including forward delivery, as a source of continuous lending as approved at the April 17, 2009 Commission meeting. In addition, this fund is utilized to finance MBS in conjunction with first-time and repeat buyers from disaster areas as approved at the May 26, 2011 Commission meeting. (3) This established funding totaling $21,500,000 for cash assistance to fund homeownership closing costs and down payment. This cash assistance is recovered by means of the first loan rate or amortizing seconds. Recovered funds are recycled and reused for this same purpose. Amounts applied to cash assistance funding have been fully recovered to date primarily through the sale of pools of assisted loans. Mortgage Revenue Bond Activity AMOUNT AMOUNT MHDC BOND ISSUES AUTHORIZED ISSUED CONTRIBUTION Single Family: 2015 Series B closed $ 73,090,000 $ 73,090,000 $ 1,575, Series C to close ,000,000 56,000,000 1,300,000 As of February 29, 2016 $ 129,090,000 $ 2,875, Series A closed ,315,000 76,315,000 1,470,000 As of April 30, 2016 $ 205,405,000 $ 4,345,000 Multifamily: 2015 Series 2 Refunding Bonds closed $ 13,654,098 $ 13,654,098 $ - * As of February 29, 2016 $ 13,654,098 $ - * - financing costs funded from available program funds (no additional MHDC contribution required) MBS Warehousing Program as of February 29, 2016 Mortgage-backed securities are purchased with short-term financing provided by the FHLB. After market bonds are issued, these MBS will be transferred to the SF NIBP and the FHLB advances repaid. Mortgage-backed Securities warehoused as of February 29, 2016 $ 49,856,000 FHLB Advances as of February 29, 2016 $ 47,660,000 Pledged general investments $ 55,576,000 Debenture Issued under HUD FHA Risk-Share Program Ashley Park Apts. Risk-Share Claim Maturity Date 1/15/2020 $ 5,895,000 In December 2014 proceeds of the initial FHA Risk Share insurance claim were received and the related bonds redeemed in full. The debenture was executed in February and will be repaid upon the earlier of the final mortgage claim settlement or the debenture maturity date. HUD Purchase Loan Program Since the purchase of 26 loans from HUD during 1996, we have collected principal and interest payment funds, which are available for rehabilitation work and tenant initiatives. These are restricted funds. Program Receipts, since 1996 $ 27,568,000 Grants and Loans, since 1996 (18,464,000) Available for Rehab/Tenant Initiatives as of February 29, 2016 $ 9,104,000 6

148 Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUES AND EXPENSES, unaudited (in thousands) Includes the Effects of Fair Value Reporting For the Month Ending February 29, 2016 Multifamily Single Family Operating Bond-Financed Bond-Financed Funds Program Program Combined Unaudited REVENUES: Interest on Mortgage Loans $ 483 $ 620 $ 2,634 $ 3,737 Interest on Investments Fair Market Value of Investments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance 12, ,802 Total Revenues 14, ,070 18,790 EXPENSES: Interest Expense on Bonds and Notes ,827 2,340 Miscellaneous Bond Debt Expense Compensation Administrative Expenses Provision for Loan Losses Housing Trust Fund Grants Grants & Federal Assistance 12, ,468 Total Expenses 13, ,828 16,131 REVENUES OVER (UNDER) EXPENSES FROM OPERATIONS 1, ,242 2,659 Subsidy Programs and Special Initiatives REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ 998 $ 316 $ 1,242 $ 2,556 7

149 Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUES AND EXPENSES, unaudited (in thousands) Excludes the Effects of Fair Value Reporting For the Month Ending February 29, 2016 Multifamily Operating Bond-Financed Funds Program Program Combined Actual Budget Actual Budget Actual Budget Actual Budget Unaudited REVENUES: Interest on Mortgage Loans $ 483 $ 509 $ 620 $ 648 $ 2,634 $ 2,292 $ 3,737 $ 3,449 Interest on Investments Administrative Fees Financing Fees and Other Housing Trust Fund Receipts Grants & Federal Assistance 12,802 12, ,802 12,386 Total Revenues 14,680 14, ,735 2,337 18,060 17,061 EXPENSES: Interest Expense on Bonds and Notes ,827 1,741 2,340 2,259 Miscellaneous Bond Debt Expense Compensation Administrative Expenses Provision for Loan Losses Housing Trust Fund Grants Grants & Federal Assistance 12,468 12, ,468 12,049 Total Expenses 13,811 13, ,828 1,882 16,131 15,993 REVENUES OVER (UNDER) EXPENSES FROM OPERATIONS ,929 1,068 Subsidy Programs and Special Initiatives REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ 766 $ 127 $ 153 $ 144 $ 907 $ 455 $ 1,826 $ 726 Number of Employees: 117 Number of Employees at Prior Year End: 114 Compensation and Administrative Expenses as percentage of Total Revenues - actual 5.80%; budget 7.03% Single Family Bond-Financed 7a

150 Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUES AND EXPENSES, unaudited (in thousands) Includes the Effects of Fair Value Reporting For the Eight Months Ending February 29, 2016 Multifamily Single Family Operating Bond-Financed Bond-Financed Funds Program Program Combined Unaudited REVENUES: Interest on Mortgage Loans $ 4,245 $ 5,082 $ 20,542 $ 29,869 Interest on Investments 3, ,883 Fair Market Value of Investments 4, (3,436) 1,263 Administrative Fees 3, ,873 Financing Fees and Other 2, ,477 Housing Trust Fund Receipts 3, ,056 Grants & Federal Assistance 105, ,045 Total Revenues 126,644 5,818 18, ,466 EXPENSES: Interest Expense on Bonds and Notes 164 3,858 14,391 18,413 Miscellaneous Bond Debt Expense ,444 1,749 Compensation 6, ,057 Administrative Expenses 2, ,444 Provision for Loan Losses Housing Trust Fund Grants 2, ,248 Grants & Federal Assistance 97, ,644 Total Expenses 108,603 4,117 15, ,555 REVENUES OVER (UNDER) EXPENSES FROM OPERATIONS 18,041 1,701 2,169 21,911 Subsidy Programs and Special Initiatives REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ 17,186 $ 1,701 $ 2,169 $ 21,056 8

151 Missouri Housing Development Commission CONDENSED STATEMENT OF REVENUES AND EXPENSES, unaudited (in thousands) Excludes the Effects of Fair Value Reporting For the Eight Months Ending February 29, 2016 Multifamily Operating Bond-Financed Funds Program Program Combined Actual Budget Actual Budget Actual Budget Actual Budget Unaudited REVENUES: Interest on Mortgage Loans $ 4,245 $ 4,068 $ 5,082 $ 5,186 $ 20,542 $ 18,336 $ 29,869 $ 27,590 Interest on Investments 3,561 3, ,883 4,027 Administrative Fees 3,873 3, ,873 3,864 Financing Fees and Other 2,701 1, ,477 2,490 Housing Trust Fund Receipts 3,056 3, ,056 3,000 Grants & Federal Assistance 105,045 99, ,045 99,092 Total Revenues 122, ,575 5,282 5,360 21,440 19, , ,063 EXPENSES: Interest Expense on Bonds and Notes ,858 3,990 14,391 13,933 18,413 18,079 Miscellaneous Bond Debt Expense ,444 1,133 1,749 1,391 Compensation 6,057 6, ,057 6,344 Administrative Expenses 2,444 3, ,444 3,242 Provision for Loan Losses Housing Trust Fund Grants 2,248 2, ,248 2,000 Grants & Federal Assistance 97,644 96, ,644 96,389 Total Expenses 108, ,662 4,117 4,215 15,835 15, , ,943 REVENUES OVER (UNDER) EXPENSES FROM OPERATIONS 13,878 6,913 1,165 1,145 5,605 4,062 20,648 12,120 Subsidy Programs and Special Initiatives 855 1, ,771 REVENUE FROM OPERATIONS AFTER SUBSIDY PROGRAMS & SPECIAL INITIATIVES $ 13,023 $ 5,142 $ 1,165 $ 1,145 $ 5,605 $ 4,062 $ 19,793 $ 10,349 Compensation and Administrative Expenses as percentage of Total Revenues - actual 5.70%; budget 6.84% Single Family Bond-Financed 8a

152 Loans Units Remarks Multifamily Programs FHA Insured 77 6,767 Includes FHA Insured, Section 8, Market Rate & Risk Share. FNMA FNMA Participation Loans. US Bank 53 - US Bank Participation Loans. Uninsured 223 7,763 Includes Acquisition/Construction/Permanent Financing for Special Needs, Elderly & Family housing using MHDC fund balances. HUD Purchased Loans Includes HUD Purchased Loans, special financing relating to the HUD Purchased Loan Program. HOME Funds ,600 Federal HOME Funds Construction Preservation non-profit and for profit and Federal HOME Funds Emergency Relief. Housing Trust Fund 21 - Includes permanent financing for Family housing. Rural Development Guaranteed 1 40 Includes multifamily permanent financing. Rural Initiative Loans 3 40 Rural Initiative Loan units are based on lots. TCAP Tax Credit Assistance Program. TC Exchange Low-income Housing Tax Credit Exchange Program. Multifamily Program Totals ,015 Single Family Programs GNMA Master Servicer 7,309 7,309 Serviced by Master Servicer, MHDC funded through MRB. FNMA Master Servicer Serviced by Master Servicer, MHDC funded through MRB. FHLMC Master Servicer Serviced by Master Servicer, MHDC funded through MRB. MRB Issues Serviced by Participant/Servicers. MHDC reconciles bank accounts, audits foreclosures and processes assumptions. GNMA MRB Issues Serviced by GNMA Contract Servicers. MHDC processes assumptions, servicing fees and audits foreclosures. Rural Growth Master Servicer 5 5 Resolution 853 Serviced by Master Servicer, MHDC funded through MRB. Cash Assistance Loans (CAL) 6,090 - Serviced by Master Servicer, MHDC funded; convert to grants over 60 months. Tax Credit Advance Loans (TCAL) Serviced by Master Servicer, MHDC funded. HOME Funds/Other Includes MHDC DPA/MRB Issues/Flood Program Funds and Federal HOME Funds/FmHA, Weatherization and Home Improvement, Habitat for Humanity. MHDC performs all servicing functions. Single Family Program Totals 16,000 9,533 TOTALS 16,903 40,548 LOAN SERVICING REPORT As of February 29,

153 4) Report of Staff b. Request for approval of Single Family Next Step Program

154

155 4) Report of Staff c. Request for approval of RFP for Single Family Market Rate Program Administrator

156

157

158 Request for Qualifications and Proposals for Single Family Market Rate Program Administrator MISSOURI HOUSING DEVELOPMENT COMMISSION DRAFT RESPONSE DEADLINE: Tuesday, May 10, 2016 Noon Central Time Submit electronic copy by to:

159 MISSOURI HOUSING DEVELOPMENT COMMISSION Request for Qualifications and Proposals for Single Family Market Rate Program Administrator I. INTRODUCTION The Missouri Housing Development Commission ( MHDC or the Commission ) is a governmental instrumentality of the state of Missouri and a body corporate and politic. In 1969, the 75th General Assembly of Missouri, in the face of a general housing shortage severely affecting low and moderate income persons, established the Commission in order to increase the availability of decent, safe and sanitary housing at prices within the means of low and moderate income persons. The Commission s authority is derived from Chapter 215 of the Revised Statutes of Missouri, as amended and supplemented. Further information about the Commission and its programs is available on the Commission s website at A core mission of the Commission is to provide affordable homeownership opportunities for low- to moderate-income homebuyers. The Commission originates and finances approximately $200 to $250 million of single family loans annually. Purpose of Request for Qualifications and Proposals (RFP) MHDC is seeking the services of a Single Family Market Rate Program Administrator ( Administrator ) to provide a range of services, which include, agreeing to purchase mortgage-backed securities backed by eligible single family mortgage loans ( Mortgage Loans ) at pre-determined prices, managing and hedging the Commission s Mortgage Loan pipeline, monitoring the Mortgage Loan pipeline and fallout, providing training and information to Commission staff on the means to manage, hedge and monitor the Commission s Mortgage Loan pipeline, and sell and arrange delivery of mortgage backed securities (MBS) to investors. The Administrator will agree to provide the range of services for a fixed percentage of the Mortgage Loans. Inherent in the operation of the program, the Administrator will bear the financial risks and costs associated with timely Mortgage Loan deliveries and pipeline fallout. The Administrator should have a background in administering similar or other innovative programs for housing finance agencies. Term of Service It is anticipated that the selected firm will be retained by the Commission for one year with two additional one-year renewal options, for a total of three years. MHDC reserves the right, at its sole discretion, to end the term of service or change the status and role for any firm selected pursuant to this RFP, at any time prior to the expiration of the stated term of service with or without cause. Anticipated Timetable for RFP and Proposals DRAFT Release RFP May 2, 2016 Proposals Due May 10, 2016 Noon Central Evaluation Committee Recommendation May 20, 2016 Selection by Commissioners May 27,

160 II. GUIDELINES AND INSTRUCTIONS Form of Response The Commission desires to consider responses to this RFP in a consistent and easily comparable format. Proposals not organized in the manner set forth in this RFP may be considered, at the Commission s sole discretion, as unresponsive. Please do not refer to other parts of your proposal, to information that may be publicly available elsewhere, or to the submitting entity s website or another website in lieu of answering a specific question. The proposal must be accompanied by a cover letter stating that: (a) the information submitted in and with the proposal is true and accurate, and (b) the person signing the letter is authorized to submit the proposal on behalf of the firm. Interested qualified firms are invited to submit proposals that contain information submitted in the order of Section IV. Please limit your response to this solicitation to a 1 page cover letter and a maximum of 12 pages of text with minimum font size of 11 with additional requested information such as exhibits, sample work, financial statements, insurance coverage, resumes and references submitted in appendix form. Proposal Submission Completed proposals must be submitted to the Commission electronically by the proposal due date. Prospective bidders shall transmit completed proposals to the Commission by to mlappin@mhdc.com in PDF file format along with the spreadsheet listing in Excel file format of the bidding firm s owners pursuant to Section IV.B.2. The Subject line of the should state [insert firm name] Proposal for Single Family Market Rate Program Administrator. Proposal Due Date Tuesday, May 10, 2016 by Noon Central Time Standards of Conduct Please refer to the Commission s Standards of Conduct Policy for information regarding contact with MHDC commissioners or staff in connection with this RFP, necessary disclosures thereunder and other policies regulating the actions of interested parties, employees and commissioners during a competitive matter. The Commission s Standards of Conduct Policy is available on MHDC s website at DRAFT Furthermore, pursuant to the Standards of Conduct, any Response under this RFP shall disclose the name of the individual, entity and/or entities having ownership interests in the Respondent as set forth in Section IV.B.2. Inquiries The Commission will provide responses to inquiries submitted by firms to the Commission s contact person, Marilyn Lappin. All questions must be submitted in writing via to Ms. Lappin at mlappin@mhdc.com and received no later than Wednesday, May 4, 2016, 3:00 p.m. CT. The Subject line of the should be, 2016 Single Family Market Rate Program Administrator Questions. Questions submitted after the deadline will not receive a response. Responses will be provided by May 6, 2016, 5:00 p.m. CT to all interested bidders that have provided an address to Ms. Lappin prior to the above deadline for the submission of questions. 3

161 All inquiries must be submitted by , citing the particular proposal section and paragraph number. Proposers should note that all clarifications and exceptions are to be resolved prior to submission of the proposal. Other than the contact person identified herein and except as provided in Sections IV.B.2 and IV.B.13, prospective proposers shall not approach the Commission s employees, managers or board members after the publication of this RFP until the board of Commissioners complete their selection. Public Records Firms responding to this RFP should be aware that the Proposals are public records in accordance with state law, after the evaluation and selection process is completed. Modifications to Proposals Respondents may not modify or correct its Proposal any time after the Proposal Due Date, except in direct response to a request from the Commission for clarification. Revisions to this RFP In the event that it becomes necessary to revise any part of the RFP, MHDC will provide an addendum to each firm receiving this RFP. Any additional information required to clarify portions of this RFP will be issued in the form of an addendum. Visits and Interviews All firms responding to this RFP must be prepared to schedule a visit to its offices or to another location upon request by the Commission. In addition, firms responding to this RFP may be interviewed by the Commission as a part of the selection process. Expense Relating to Proposals The Commission is not responsible for any expense incurred in preparing and submitting a Proposal or taking any action in connection with the selection process, or for the costs of any services performed in connection with submission of a Proposal. Reservation of Rights The Commission reserves the right to conduct any investigation of the qualifications of any firm that it deems appropriate; negotiate modifications to any of the items proposed in the Proposal; request additional information from any firm; reject any or all Proposals; and waive any irregularities in any Proposal. The Commission retains the right to negotiate the fees and compensation arrangements for its Single Family Market Rate Program Administrator services. The engagement described in this RFP is not exclusive and MHDC expressly retains the right at any time to retain any other firm or firms to provide other Single Family Market Rate Program Administrator services without violating the engagement contemplated by this RFP. At the Commission s sole discretion, the selection of a proposal by the Commission may be cancelled at any time prior to the complete execution of a contract or agreement. If the Commission cancels its selection of a proposal, the Commission may repost this or a similar RFP and re-seek proposals. DRAFT 4

162 III. BACKGROUND INFORMATION A. PROGRAM DESCRIPTION The Commission seeks to engage an Administrator for Mortgage Loans eligible for GNMA, Fannie Mae, and Freddie Mac securitization (the Program ). The Program currently serves the eligible homebuyers with mortgage loans financed by MHDC s first-time homebuyer bond programs. It is anticipated that the homebuyer programs may be expanded to also serve non-first time homebuyers. MHDC has Mortgage Credit Certificates available to eligible borrowers as well. Initially MHDC may engage an administrator primarily for a non-first time homebuyer loan program. MHDC reserves the right to use alternate approaches to fund the Program, including issuing debt, if it is in the best interest of MHDC. GNMA Program MHDC is permitted by the Federal Housing Administration ( FHA ) to provide down payment and closing cost assistance to recipients of Mortgage Loans as described below under Cash Assistance. MHDC believes that competitively priced FHA loans coupled with Cash Assistance add a significant benefit to homebuyers in Missouri. The Mortgage Loans will be underwritten and serviced in conformance with all applicable MHDC and FHA, VA, and RD guides and will be pooled and certificated as GNMA securities. The size of the GNMA Program will depend on the extent of lender participation and is not otherwise limited, except for any funding limitations that may apply to the Commission, FHA, HUD or the GNMA program generally. Conventional Program Because MHDC is a state housing finance agency, Fannie Mae and Freddie Mac offer products that enable the Commission to take advantage of certain pricing and underwriting advantages not offered to conventional lenders. Borrowers under this Program may also receive Cash Assistance offered by MHDC. The Commission may provide Fannie Mae/Freddie Mac-eligible conventional loans to be packaged into Fannie Mae/Freddie Mac securities (the Conventional Program ). Eligible Mortgage Loans include the following: DRAFT 1. Standard Fannie Mae fixed-rate fully-amortizing conventional Mortgage Loans with terms up to 30-years; or 2. Fannie Mae s Home Ready products that are up to 30-years, fixed-rate fullyamortizing Mortgage Loans; or 3. Freddie Mac Home Possible Mortgages that are up to 30-years, fixed-rate fullyamortizing Mortgage Loans. 4. Other 30 year fixed-rate loans approved by Fannie Mae or Freddie Mac. Eligible Mortgage Loans must meet the criteria of a special variance agreement that Fannie Mae/Freddie Mac will incorporate into a mortgage selling and servicing contract with the Master Servicer. The Conventional Program will offer the following benefits: 1. Special pricing and advantageous underwriting guidelines from Fannie Mae/Freddie Mac under terms available to MHDC; 2. Lenders do NOT need to be approved Fannie Mae or Freddie Mac Seller/Servicers; and 3. Lower mortgage insurance coverage requirements. 5

163 Cash Assistance MHDC will provide cash assistance for down payment and closing costs to eligible homebuyers obtaining a Mortgage Loan under the Programs. The assistance is expected to be 3% to 4% of the first mortgages. Assistance amounts can be no greater than amounts determined by MHDC, at its sole discretion. Origination and Servicing Mortgage Loans will be originated by MHDC participating lenders ( Lenders ) and sold to ServiSolutions, a department of the Alabama Housing Finance Authority, or any other master service selected by MHDC (the Master Servicer ) in accordance with the Master Servicer s Mortgage Loan delivery requirements at rates established by the Commission based upon the rates and prices provided by the Administrator. The Master Servicer will pool and securitize the Mortgage Loans into GNMA, Fannie Mae, or Freddie Mac MBS that are sold at the direction of MHDC in conjunction with the Administrator. The Master Servicer will service the Mortgage Loans. See Attachment 1 for a list of current participating Lenders. Program Administration Under the Programs, Mortgage Loan purchase and servicing functions will be in accordance with a mortgage purchase and servicing agreement between MHDC and the Master Servicer (the Program Administration and Servicing Agreement ). The GNMA Program Origination Guidelines and the Conventional Program Origination Guidelines are incorporated by reference to the Program Administration and Servicing Agreement, along with all applicable laws, regulations and rules. B. SCOPE OF SERVICES The Administrator will be required to assist MHDC in establishing the necessary procedures and guidelines to facilitate efficient operation of the Programs. MHDC seeks an Administrator that will: Provide a daily mortgage rate sheet ( Rate Sheet ) for Lenders participating in the Programs, subject to adjustment in consultation with MHDC. Commit to take at forward prices set in the Rate Sheets all respective Mortgage Loans reserved pursuant to the Administrator s Rate Sheet and delivered by Lenders and pooled into MBS securities for timely delivery by the Master Servicer, subject only to offset in the amounts of Lender extension fees, when appropriate. Bear the cost, expense and risk that Mortgage Loans reserved pursuant to the Administrator s Rate Sheet are not delivered for any reason without cost, expense or risk to the Commission, provided that the Commission will agree that any Mortgage Loan reserved pursuant to the Administrator s Rate Sheet timely delivered to it as a part of mortgage-backed security will be delivered to the Administrator. Monitor reservations and MBS deliveries in close coordination with the Master Servicer and MHDC. Commit and adjust hedges and manage extensions, as necessary. Provide training and information to Commission staff on the means to manage, hedge and monitor the Commission s Mortgage Loan pipeline. Arrange the sale and delivery of MBS in coordination with the Master Servicer and MHDC. DRAFT 6

164 Mortgage Loans will be made available on a first-come, first-served basis to MHDC s participating Lenders. No lender participation fee will be required, although delivery extension fees may be instituted, as may be approved by MHDC. Commission staff, working with the Master Servicer, will monitor the ongoing compliance with any set-asides or credit overlays. The Administrator must manage the program with sound practices and as required by the terms and conditions of a Single Family Market Rate Program Administrator Agreement (the "Agreement"). It shall be the sole discretion of MHDC to renew and extend the Agreement at the end of the initial one-year term. The Agreement will be terminable by either party upon 30-day notice. MHDC reserves the right to issue a Request for Proposal for Single Family Market Rate Program Administrator at any time. Termination of the Agreement shall not alter the Administrator s obligation to fulfill the Scope of Services described above for any Mortgage Loans reserved pursuant to the Administrator s Rate Sheet prior to the termination of the Agreement. General Requirements In addition to the specific duties outlined above, the Administrator will also be required to: 1. Assist in informational meetings for participating Lenders. In conjunction with MHDC and the Master Servicer, provide training workshops for participating Lenders and provide program informational materials to each Lender, as applicable. 2. Coordinate with MHDC and the Master Servicer to maintain compliance with loan delivery guidelines and expected level of service. 3. Identify pipeline management issues and notify MHDC as to recommended programmatic changes. 4. Publish mortgage rate sheets as often as necessary based on a pricing structure previously agreed to by MHDC, so that the Administrator will take all interest rate and financial risk inherent in the making of reservations and the future delivery of MBS. MHDC prefers limiting publishing of rate sheets to once per day. DRAFT 5. Monitor reservations, manage hedges, and recommend the process and timing for the pooling, sale and deliveries of MBS. 6. Purchase at prices set in mortgage Rate Sheets all respective Mortgage Loans reserved pursuant to the Administrator s Rate Sheet and delivered by Lenders and pooled into MBS securities for timely delivery by the Master Servicer, subject only to offset in the amounts of Lender extension fees, when appropriate. 7. Bear the cost, expense and risk that Mortgage Loans reserved pursuant to the Administrator s Rate Sheet are not delivered for any reason without cost, expense or risk to the Commission, provided that the Commission will agree that any Mortgage Loan reserved pursuant to the Administrator s Rate Sheet timely delivered to it as a part of mortgage-backed security will be delivered to the Administrator. 8. Submit weekly reports to MHDC detailing pool purchase commitment and deliveries and any additional information that may be required in a format and timeframe prescribed by MHDC. These reports should include information regarding the current status of the pipeline, the amount of Mortgage Loans expected for delivery as mortgage-backed securities on or before 7

165 IV. each settlement or delivery date for forward commitment MBS, any pair-off receipts and expenditures in connection with forward commitment MBS subject to pair-off, current and historic pull-through rate for reserved Mortgage Loans, an accounting of current and historic receipts from sale of mortgage-backed securities, prices paid for the mortgage-backed securities, fees received by the Administrator and all other profits, losses and receipts retained by the Administrator. Administrator compliance with the terms of the agreement and performance will be assessed from submitted reports. 9. Maintain transaction records, and prepare and present detailed monthly status reports to MHDC regarding Program performance including: i. The number and dollar amount of MBS pooled and purchased to date. ii. Additional information or analysis deemed necessary by MHDC. All information shall be submitted in a form and timeframe designated by MHDC. 10. Perform all other duties as set forth in the Single Family Market Rate Program Administrator Agreement. STRUCTURE AND CONTENT OF PROPOSAL A. Cover Letter Include a cover letter (limit to 1 page) stating that: (a) the information submitted in and with the proposal is true and accurate, and (b) the person signing the letter is authorized to submit the proposal on behalf of the Respondent. B. Background and Experience The following information must be submitted with the proposal in the following order to be considered by the Commission: 1. Firm Information. State full name and address of your firm and identify the parent company if you are a subsidiary. Specify the office that will perform, or assist in performing, the work. Indicate whether you operate as a partnership, corporation, or sole proprietorship. Indicate where your company is headquartered and where incorporated as applicable. You must submit evidence of authorization to do business or operate in the State of Missouri. Provide the location(s), extent and capabilities of the firm s offices and employees in Missouri. Discuss any substantive changes in firm organization or ownership within the last three (3) years. Describe any changes anticipated in the next two years in firm organization or ownership. DRAFT 2. Firm Ownership. Pursuant to the Standards of Conduct (see Section II of this RFP), any response under this RFP shall disclose the name of the individual, entity and/or entities having ownership interests in the Respondent. All entities identified in this disclosure shall be reduced to their human being level irrespective of the number of entity layers which may be present for any disclosed entity. Notwithstanding the previous sentence, to the extent any Respondent under this RFP is a publicly traded corporation, such a Respondent may limit this disclosure to all board members, officers (and other key employees) and any shareholders owning or controlling ten percent (10%) or more of the corporation. For purposes of providing firm ownership information, please complete Attachment 2 in spreadsheet format to include a listing of your firm s owners/shareholders. Questions regarding these 8

166 requirements or any other requirements or restrictions imposed by the Standards of Conduct may be directed to the Commission s General Counsel, Katherine (Katie) Jeter-Boldt, by phone at or at kjeterboldt@mhdc.com. 3. Qualifications and Experience. Provide evidence of qualifications and experience in mortgage-backed securities programs, FHA, VA, RD, and conventional mortgages, and singlefamily programs operated by housing finance agencies, including tax-exempt bond programs. 4. HFA Experience. Provide evidence of qualifications and experience operating market rate programs for housing finance agencies or other governmental entities providing similar functions. Include the volume of mortgage loans purchased through your program with HFAs during each of the past three years. 5. References. Provide names, addresses, telephone numbers and addresses of up to three clients we can contact concerning your firm s performance as Administrator for similar mortgage loan programs. List references for which you have acted as Administrator, currently or in the past, including name, address, telephone number and contact person including address. Please provide this information for all housing finance agencies for which you have provided these services. 6. Contact Person and Staffing. Provide names and brief resumes of all key personnel who will be assigned to this project and the primary responsibilities assigned to each person. Provide the name, address and telephone number for the contact person in your firm authorized to negotiate agreement terms and render binding decisions on contract matters. 7. Office Location and Capacity. Provide the location of the office that will administer the program. Indicate the number of and identify the positions of personnel that will be available to answer questions during the term of the contract. 8. Program Participation. If your firm will be, or intends to become, a participating Lender in the Programs, indicate how many branch offices will be participating and an estimate of the volume of Mortgage Loans you will be originating. DRAFT 9. Experience with Master Servicer. Describe your firm s past experience providing a market rate and hedging program with the Commission s Master Servicer. Are there any unique characteristics or considerations of the Master Servicer as it relates to the market rate and hedging program that MHDC should consider? 10. Audit Reports. Submit the audited financial statements for the most recent fiscal year of the firm proposing to act as Administrator, and if the proposing company is a subsidiary and/or has any guarantor arrangements, the most recent audited financial statements of its parent company and any applicable guarantors as well. Include the most recent Service Organization Control Report prepared in accordance with AICPA Statement on Standards for Attestation Engagements (SSAE) No Capital Sufficiency. Describe the assets, liabilities and net asset position of the firm and the nature of any capital arrangements available to the firm. Because MHDC is relying on the Administrator to acquire all respective Mortgage Loans reserved pursuant to the Administrator s Rate Sheet and delivered by Lenders and pooled into MBS securities for timely 9

167 delivery by the Master Servicer, describe the source of financial assurance to the Commission that the proposer can honor its obligations to MHDC. Specify the amount of the firm s capital position, the amount of hedges obligated for its loan pipeline for similar programs, the amount of capital pledged to counterparties for those hedges and the total amount of loans reserved or otherwise obligated within its loan pipeline, all as of May 4, Describe the amount of capital available at any one time to hedge the firm s entire loan pipeline for all its clients. Assuming market prices move down seven points on the hedges for the firm s entire loan pipeline at one time, what is the maximum size of the pipeline your firm can hedge with the available capital as described above? What is the largest pipeline your firm has managed to date? 12. Litigation, Investigations and Regulatory Proceedings. Provide a summary of all inquiries, investigations or civil litigation initiated, in progress or closed by any federal or Missouri agency during the past three years regarding the conduct of your firm, your firm s management or personnel, and that of any guarantor or affiliate, and management and personnel of any guarantor or affiliate. Describe with specificity those actions taken against your firm, any guarantor, or any affiliate or any employees of the firm, any guarantor, or any affiliate resulting in fines, suspensions, censure, or similar resolution. Provide a summary of your firm s selfreporting in accordance with the SEC s Municipalities Continuing Disclosure Cooperation (MCDC) initiative, including any related settlements. Provide a summary of any criminal inquiries, investigations, indictments or convictions against your firm or any employee of your firm (in connection with the employee s work responsibilities for the firm) initiated, in progress or closed during the past four years. Provide a summary of any civil litigation initiated, in progress or closed during the past three years involving the firm or any employee s work responsibilities for the firm. Failure to respond fully to this question or to refer to public filings rather than provide the information directly may result in disqualification. If necessary, responses to this question may be included in as a separate appendix to the proposal. 13. Federal Work Authorization Program. Pursuant to Mo.Rev.Stat , the firm selected pursuant to this RFP shall provide MHDC with an affidavit stating that the firm does not employ any person who is an unauthorized alien in conjunction with the contracted services, and that the firm is enrolled in and participating in a federal work authorization program with respect to the employees working in connection with the contracted services. Prior to execution of any agreement contemplated herein, the firm shall provide evidence of participation in a federal work authorization program. Questions regarding this requirement may be directed to the Commission s General Counsel, Katherine (Katie) Jeter-Boldt, by phone at or at kjeterboldt@mhdc.com. In your proposal, please indicate whether your firm is currently enrolled in and participating in a federal work authorization program such as E-Verify. DRAFT 14. Sample Agreement. Provide a sample of the firm s form of Single Family Market Rate Program Administrator Agreement. 15. Sample Reports. Provide copies or samples of the weekly and monthly reports the firm would provide to MHDC as described in sections III.B.8 and III.B.9. Provide copies of a reconciliation report the firm would provide MHDC each month showing the amounts received by and paid by the Administrator and payments to MHDC. 10

168 16. Special Strengths and/or Minority Representation. Include any additional information that will be helpful to the Commission in making a decision, including any special strengths or capabilities of your firm (which may include administering programs for other state housing finance agencies, special expertise with single family finance, the firm s status as a minority or woman-owned firm, the presence of offices or headquarters in Missouri, the number of employees of the firm within Missouri or any other special services or assistance your firm may provide to MHDC) that you believe may be relevant to or helpful to MHDC in financing or administering its Homeownership Loan Program and homeownership lending initiatives. C. Work Plan and Approach 1. Pooling Process and Hedging. Outline and explain the process from loan reservation to the purchase of the loans and issuance of the MBS. Describe how you would propose to hedge the Commission s Mortgage Loan rates under the Programs. Describe any provisions for extensions. Please provide a detailed example of a mortgage rate chart your firm would provide as of 9:00 a.m. CT on Wednesday, May 4, 2016 for 30-year Mortgage Loans to be included in the Programs with the following assumptions: a. 4% grant assistance to home buyers, b. a 1% origination fee paid by the borrower and retained by the originating lender (resulting in 3% net grant to the home buyer), c. the following SRP fees paid by the Master Servicer (Servicing Fee/SRP for FHA loans: 0.565%/1.90%; 0.44%/1.50%; 0.315%/1.05% and 0.19%/0.55%. For conventional loans: 0.25%/1.25%), d. An additional 1.5% lender fee (2.5% total including origination fee described above) to be paid from the SRP/MBS sale premium e. and the proposed fee for your firm detailed in Part D below, showing: i. the proposed price to be received by MHDC for such Mortgage Loans securitized and delivered pursuant to the mortgage rate chart, including a break down of the disbursement related to that price with respect to the assumptions above, ii. the mortgage rate the home buyer will receive, iii. the timeframe within which any Mortgage Loans securitized and delivered pursuant to the mortgage rate chart must be delivered in order to obtain the pricing, iv. all applicable delivery dates, purchase dates, underwriter certification dates and any other timing restrictions applicable to the Mortgage Loan reservation and delivery process applicable to the borrower, the lender, MHDC or any other party, v. any proposed extension fees and the related extension periods, and vi. all other information needed to determine such price and restrictions applicable to the reservation and Mortgage Loan delivery process. DRAFT Provide a copy of the computer screen or other pricing source confirming the prices upon which the mortgage rate chart for May 4, 2016, is based. Indicate how you will determine and MHDC will evaluate pricing on future dates to assure the premium is as attractive to MHDC as possible, given market changes from the illustrative date. What date each month does the pricing for the daily mortgage rate chart shift one month further into the future? 11

169 2. Risks and Responsibilities. Based on your proposal, please describe in detail all risks and responsibilities from the proposed transactions that will remain with MHDC under the Program. What risks does your firm propose to take? Describe any guarantees your firm will be providing. 3. Technology. Provide a description of your organizational and technological approach to performing your firm s responsibilities as Administrator. Identify the software used by your firm to manage and monitor its total pipeline and the pipeline applicable to MHDC. How does your firm interface with the Emphasys software utilized by MHDC to monitor loan reservations, loan closings, cancellations and other activities related to the Mortgage Loans? Because MHDC may continue to fund First-Time Homebuyer loans through the issuance of tax-exempt bonds do you foresee any difficulties operating both programs simultaneously? 4. Subcontracting. If your organization plans to subcontract any of the services required to be provided as Administrator, please indicate which, if any, will be subcontracted. Also note which services will be subcontracted to minority or women-owned businesses and indicate what percentage of total revenues these comprise. Please identify those firms with which you propose to subcontract and describe the subcontractor s experience with the services being provided. 5. Contingencies. Describe any contingencies in your ability to fully perform all the services set forth for Administrator in this RFP. D. Proposed Fees Provide a proposed itemized cost schedule for the services described in this RFP. 1. Administrator Service Fees. Please provide a fee proposal for your Single Family Market Rate Program Administrator services. Under the fee proposal will the Administrator receive, potentially receive or have the opportunity to receive or otherwise obtain any other revenues, profits or assets through its services to the Commission. Describe in detail. To the extent the Administrator may realize additional revenues from early delivery of Mortgage Loans or securitization into Custom Pools or other structures with above-market value, what portion, if any, of those additional revenues will the firm share with MHDC? DRAFT 2. Legal Expenses. If your institution is selected and will need counsel for the Agreement and any other documents related to the Program or the Agreement, what is the name and location of the firm and how will they be compensated? MHDC will not bear the cost of any legal fees or expenses of the Administrator without prior written agreement. 3. Other Fees. State, describe, and estimate any other fees, reimbursable expenses and any upfront charges your firm will require to act as Administrator. 4. Other Compensation and Potential Conflicts of Interest. Indicate any other forms or amount of compensation or profit the Administrator will or may receive from any other party in conjunction with the services hereunder and the sale of the MBS, including from the Investor, Master Servicer, MHDC or any other party. Indicate any potential actual or perceived conflicts of interest that may occur as a result of your serving as Administrator. 12

170 V. EVLUATION CRITERIA In evaluating proposals submitted by firms pursuant to this RFP, the Commission places high value on the following factors, among others, not necessarily in order of importance: Qualifications and experience of the firm and personnel assigned to develop and manage the Single Family Market Rate Program Administrator services; Financial soundness of the firm, necessary capital resources and ability to meet all eligibility requirements; Experience managing mortgage rate and hedging programs for other housing agencies; The proposed fees for services; Ability to work with the Master Servicer; Presence in Missouri; The firm s inclusion of minority and women participation, including the firm s employees and/or any participation with a minority or woman-owned firm; and The Commission s prior experiences, if any, with the firm and any other factors the Commission believes would be in its best interest to consider. In addition, related investigations and regulatory proceedings and litigation involving the firm will be taken into account, depending upon the nature and significance of the proceedings. There is no additional information requested. Thank you for reviewing this RFP. We look forward to your response. DRAFT 13

171 ATTACHMENT 1 Missouri Housing Development Commission RFP for Single Family Market Rate Program Administrator Arvest Bank BOKF NA, dba Bank of Kansas City Central Bank of Boone County Citizens National Bank of Greater StL Delmar Financial Co. First Bank Mortgage First Federal Bank First Integrity Mortgage Services, Inc. Central Bank of St. Louis Gershman Investment Corp. Great Southern Bank Midland States Bank Simmons First National Corp. Mortgage Investment Services Corp. North American Savings Bank, FSB Paramount Mortgage Co., Inc. Peoples Bank Pulaski Bank Southwest Missouri Bank Central Bank of Sedalia U.S. Bank United Bank of Union Wells Fargo Bank, N.A. Cornerstone Mortgage, Inc. Central Trust Bank Platte Valley Bank of Missouri IberiaBank Mortgage Company Bank of Sullivan Jefferson Bank Bear State Bank, NA HomeBridge Financial Services, Inc. Everett Financial Inc., dba Supreme Lend Bancorpsouth Bank DAS Acquisition Co., dba USA Mortgage Caliber Home Loans List of Participating Lenders Catalyst Lending Inc. Stifel Bank & Trust Gateway Mortgage Group, LLC Stonegate Mortgage Corp. Wintrust Mortgage Landmark National Bank Enterprise Bank and Trust First Collinsville Bank BNC National Bank Prime Lending Flat Branch Mortgage, Inc. First State Bank Mortgage Home Services Lending, LLC MegaStar Financial Corp. Frontier Financial Inc DBA Frontier Mortgage Community Mortgage Envoy Mortgage F&B Acquisition Group, LLC Oak Star Bank Leader One Financial Corp. PHH Home Loans LLC Midwest Bankcentre Nations Reliable Lending, LLC Fairway Independent Mortgage Corp. Bank of Edwardsville New American Funding BMO Harris Bank, N.A. American Portfolio Mortgage Corp. KS StateBank GSF Mortgage Corp. Carrollton Bank Bank of Springfield Community First National Bank Bank of Little Rock Mortgage Corp. Sagamore Home Mortgage DRAFT

172 MHDC - Single Family Market Rate Program Administrator - RFP Firm Information Proposing Firm Owners/Partners/Shareholders * [Firm Name] ATTACHMENT 2 DRAFT * For publicly traded firms, disclosure may be limited to all board members, officers (and other key employees) and any shareholders owning or controlling ten percent (10%) or more of the corporation

173 4) Report of Staff d. Request for approval of Bond Resolution No. 1051, Multifamily Housing Refunding Revenue Bonds

174

175

176 -1 MISSOURI HOUSING DEVELOPMENT COMMISSION RESOLUTION NO Approved April 29, 2016 Authorizing the Issuance of Multifamily Housing Refunding Revenue Bonds 2016 Series 1

177 RESOLUTION NO A RESOLUTION AUTHORIZING AND PROVIDING FOR IMPLEMENTATION OF A MULTIFAMILY HOUSING PROGRAM; AUTHORIZING THE ISSUANCE BY THE MISSOURI HOUSING DEVELOPMENT COMMISSION OF A SERIES OF MULTIFAMILY HOUSING REFUNDING REVENUE BONDS, 2016 SERIES 1, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $14,500,000; APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT, TRUST INDENTURE, SUPPLEMENTAL TRUST INDENTURE AND OTHER DOCUMENTS RELATED THERETO; APPROVING THE FORMS AND AUTHORIZING THE EXECUTION AND DELIVERY OF SAID BONDS; APPROVING THE USE OF AN OFFERING DOCUMENT IN CONNECTION WITH THE SALE OF SAID BONDS; AND AUTHORIZING THE OFFICERS, EMPLOYEES AND REPRESENTATIVES OF THE COMMISSION TO DO AND PERFORM ALL THINGS NECESSARY, APPROPRIATE AND INCIDENTAL THERETO. WHEREAS, there exists within the State of Missouri a recognized shortage of decent, safe and sanitary housing for low income and moderate income persons and families; and WHEREAS, pursuant to Chapter 215, RSMo. 2000, and Appendix B(l) thereto, as amended (collectively, the "Act"), the Missouri Housing Development Commission (the "Commission") is authorized to (a) make or participate in the making of uninsured or insured loans to approved mortgagors (as defined in the Act) to finance the building, rehabilitation or purchase of residential housing designed and planned to be available for rental to low income and moderate income persons or families (as defined in the Act); (b) issue its bonds or other evidences of indebtedness for the purpose of obtaining funds to make such loans, to establish necessary reserve funds and to pay administrative and other costs incurred in connection with the issuance of such bonds; (c) secure such bonds by the pledge of all revenues, mortgages or notes of others, (d) pledge all or any part of the revenues of the Commission to secure the payment or notes or bonds, and (e) refund bonds previously issued by the Commission the proceeds of which were applied to make or participate in the making of uninsured or insured loans to approved mortgagors (as defined in the Act) to finance the building, rehabilitation or purchase of residential housing designed and planned to be available for rental to low income and moderate income persons or families (as defined in the Act); and WHEREAS, the Commission and UMB Bank & Trust, N.A. (the "2000 Trustee") previously entered into the Trust Indenture, dated as of June 1, 2000 (the "2000 Indenture") and the Commission and UMB Bank, N.A. (the "2016 Trustee," together with the 2000 Trustee, the "Existing Trustees") previously entered into the Trust Indenture, dated as of April 1, 2014 (the "2014 Indenture," together with the 2000 Indenture, the "Existing Indentures"), in order to provide for the issuance of revenue bonds under the Act to finance multifamily housing projects for occupancy by low income and moderate income persons and families in the State of Missouri; and WHEREAS, pursuant to the Existing Indentures, as supplemented by Supplemental Trust Indentures between the Commission and the Existing Trustees, the Commission has previously issued multiple series of bonds and notes; and WHEREAS, the Commission hereby deems and determines it necessary, desirable and in the public interest to issue an additional series of revenue bonds under one of the Existing Indentures or a separate trust indenture in substantially the form of the Existing Indentures (the "New Indenture", together with the Existing Indentures, the "Indenture") between the Commission and UMB Bank, N.A. (the "New Trustee," together with the Existing Trustees, the "Trustee") to be designated Multifamily

178 Housing Refunding Revenue Bonds, 2016 Series 1, in an aggregate principal amount of not to exceed $14,500,000 for the purpose of refunding certain prior bonds of the Commission (the "Prior Bonds") that financed the acquisition, construction and rehabilitation of various multifamily housing projects located in the State of Missouri. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE MISSOURI HOUSING DEVELOPMENT COMMISSION AS FOLLOWS: Section 1. Definitions. All words and phrases not otherwise defined herein shall have the respective meanings set forth in the Indenture and the 2016 Series 1 Supplemental Trust Indenture, to be dated as of the first day of the month in which the Series Bonds (as hereinafter defined) are issued thereunder (the "2016 Series 1 Supplemental Indenture"), between the Commission and the applicable Trustee hereinafter authorized and approved, unless a different meaning clearly appears in context. Section 2. Declaration of Purposes. It is hereby declared and determined that the purpose of this Resolution is to provide a means of financing residential rental housing to provide adequate, safe and sanitary housing for low income and moderate income persons and families in accordance with the Act. Section 3. Continuation of a Multifamily Housing Program. The Multifamily Housing Program (the "Program") previously authorized is hereby authorized to be continued and implemented pursuant to the Act, to encourage and assist in financing the acquisition of decent, safe and sanitary residential rental housing facilities for low income and moderate income persons and families. The Program shall be created, implemented and administered in accordance with the Act, this Resolution and the Indenture and the other documents herein authorized. Section 4. Approval of Staff Recommendation. The staff recommendation with respect to the refunding of the Prior Bonds attached hereto as Exhibit A is hereby approved. Section 5. Execution of the New Indenture and the 2016 Series 1 Supplemental Trust Indenture; Designation of Trustee. For the purposes of providing for implementation of the Program, the Chairman, Vice Chairman, Executive Director and Director of Finance are hereby authorized to execute the New Indenture, if applicable, and the 2016 Series 1 Supplemental Trust Indenture. The 2016 Series 1 Supplemental Indenture shall be in substantially the form of the supplemental indentures entered into in connection with the issuance of prior bonds secured under the Indenture, with such changes or amendments thereto as the Chairman, Vice Chairman, Executive Director or Director of Finance shall approve, which approval shall be conclusively evidenced by such officer's execution of said document. UMB Bank & Trust, N.A. or UMB Bank, N.A., as applicable, the banking institution named in the Indenture, is hereby designated to serve in the capacity of Trustee under and pursuant to the terms of the 2016 Series 1 Supplemental Indenture. Section 6. Authorization for Issuance of Series Bonds; Execution of the Series Bonds. For the purpose of providing funds necessary to implement the Program there is hereby authorized to be issued and delivered pursuant to the Act and this Resolution and under and in accordance with the Indenture and the 2016 Series 1 Supplemental Indenture a series of revenue bonds to be designated "Missouri Housing Development Commission Multifamily Housing Refunding Revenue Bonds, 2016 Series 1" in an aggregate principal amount of not to exceed $14,500,000 (the "Series Bonds"). The Series Bonds shall be dated, shall mature on the dates and in the amounts, shall bear interest at the rates (not to exceed an average interest rate of 6.00% per annum) as set forth in the -2-

179 2016 Series 1 Supplemental Indenture and shall be payable on the dates and shall be in the form and shall be subject to redemption and payment prior to their respective maturities, all as set forth and specified in the Indenture and the 2016 Series 1 Supplemental Indenture. The Chairman, Vice-Chairman, the Secretary and the Executive Director are hereby authorized to execute the Series Bonds by their manual or facsimile signatures in the manner specified in the Indenture and to affix or cause to be imprinted thereon the official seal of the Commission. Section 7. Sale of the Series Bonds; Approval of Offering Document. The Series Bonds shall be sold and delivered to the order of the purchaser or purchasers thereof (the "Purchaser") in accordance with the terms and conditions of the Bond Purchase Contract relating to the Series Bonds between the Commission and the Purchaser (the "Purchase Contract"). The Chairman, Vice Chairman, Executive Director and Director of Finance are hereby authorized to execute and deliver, for and on behalf of the Commission, the Purchase Contract in substantially the form of the purchase contracts entered into in connection with the issuance of prior bonds secured under the Indenture, with any changes therein as the Chairman, Vice Chairman, Executive Director or Director of Finance shall approve, such execution being conclusive evidence of such approval. The offering document relating to the Series Bonds (the "Offering Document") and the use and distribution thereof by the Purchaser in connection with the offering and sale of the Series Bonds are hereby approved in substantially the form of the offering documents distributed in connection with the issuance of prior bonds secured under the Indenture. The Chairman, Executive Director and Director of Finance are hereby authorized to execute and deliver the Offering Document, with such changes or amendments thereto as the Chairman, Executive Director or Director of Finance shall approve, which approval shall be conclusively evidenced by such officer's execution of said Offering Document. Section 8. Approval of Continuing Disclosure Agreement. The Chairman, Vice Chairman, Executive Director and Director of Finance are hereby authorized to execute and deliver, for and on behalf of the Commission, the Continuing Disclosure Agreement relating to the Series Bonds (the "Continuing Disclosure Agreement"), between the Commission and the Trustee as dissemination agent in substantially the form of the continuing disclosure agreements entered into in connection with prior bonds secured under the Indenture, with any changes therein as the Chairman, Vice Chairman, Executive Director or Director of Finance shall approve, such execution being conclusive evidence of such approval. Section 9. Further Authority. The Chairman, Vice Chairman, Secretary, Executive Director and Director of Finance are hereby further authorized and directed to execute any and all documents and agreements required to be executed pursuant to the Indenture or the 2016 Series 1 Supplemental Indenture or necessary or convenient for implementation of the Program, including any agreements authorized by the Indenture or the 2016 Series 1 Supplemental Indenture with respect to the investment of moneys held in the funds and accounts under the Indenture or the 2016 Series 1 Supplemental Indenture, agreements with the providers of any interest rate caps or collars or similar qualified hedging products, agreements with the providers of bond insurance with respect to the Series Bonds and compliance agreements and undertakings with respect to the exclusion of interest on the Series Bonds from gross income for federal income tax purposes. The Chairman, the Vice Chairman, the Secretary, the Assistant Secretary, the Executive Director, the Director of Finance and other officers of the Commission, its attorneys and other agents, consultants or employees and the officers and employees of the Trustee are hereby authorized and directed to (i) furnish such information, execute such instruments and take such other action in cooperation with the Purchaser as the Purchaser may reasonably request to qualify the Series Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Purchaser may designate (provided, however, the -3-

180 Commission shall not be required to register as a dealer or broker in any such state or jurisdiction or make any additional representations or warranties in connection with the sale of securities, or to subject itself to service of process in any state or jurisdiction in which it is not already so subject) and (ii) do and perform all acts and things required of them by the provisions of this Resolution, the Purchase Contract, the Indenture and the 2016 Series 1 Supplemental Indenture necessary or incidental for the purpose of implementing and carrying out the Program, the issuance and delivery of the Series Bonds, and for the full, punctual and complete performance of all of the terms, covenants, provisions and agreements set forth herein, in the Series Bonds, the Purchase Contract, the Indenture and the 2016 Series 1 Supplemental Indenture. Section 10. Authority to Combine Bond Issues. In the event that the Executive Director or the Director of Finance of the Commission shall determine that it is necessary and desirable that the Series Bonds be issued simultaneously with additional bonds authorized by the Commission to be issued under the Indenture, the Chairman, Vice Chairman, Executive Director and Director of Finance are hereby authorized to cause the Series Bonds to be issued simultaneously with such additional bonds as a single series of bonds to be issued under the Indenture pursuant to a single supplemental indenture, and in such event the Chairman, Vice Chairman, Executive Director and Director of Finance are hereby authorized and directed to modify the series designation of the Series Bonds and take such other actions and execute and deliver such documents as may be necessary or desirable to accomplish such purpose. Section 11. Authority to Modify Series Designation. The Chairman, Vice Chairman, Secretary, Executive Director and Director of Finance are hereby authorized to cause the series designation of the Series Bonds to be modified such that bonds issued under an Indenture are assigned series designations in accordance with the chronological order of issuance of such bonds. Section 12. Authority. This Resolution is adopted under the authority of the Act. Section 13. Severability. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any remaining provisions of this Resolution. Section 14. Effective Date. This Resolution shall be in full force and effect from and after its adoption by the Commission. -4-

181 PASSED BY THE MISSOURI HOUSING DEVELOPMENT COMMISSION THIS 29TH DAY OF APRIL, MISSOURI HOUSING DEVELOPMENT COMMISSION By: Chairman ATTEST: Secretary -5-

182 4) Report of Staff e. Standards of Conduct Revision

183

184 STANDARDS OF CONDUCT FOR COMMISSIONERS AND EMPLOYEES OF THE MISSOURI HOUSING DEVELOPMENT COMMISSION MHDC POLICY OF SERVICE AND INTEGRITY The Commissioners and the Employees of MHDC hold their respective positions with MHDC as a public trust for the benefit of the people of the State of Missouri. Honesty, integrity, and a spirit of public service are the hallmarks of that trust. Accordingly, in all matters related to MHDC, its Commissioners and Employees shall conduct themselves in a manner that places duty to the people of Missouri, as the intended beneficiaries of MHDC's actions, above their own personal interests. Commissioners and Employees of MHDC shall avoid potential and actual conflicts of interest between their duties to MHDC and their own personal interests. The professional and personal conduct of the Commissioners and Employees must be above reproach and avoid even the appearance of impropriety. The purpose of the Standards of Conduct is to provide Commissioners and Employees with clear guidance on acceptable behavior in connection with his or her MHDC activity. All capitalized terms shall bear the meaning identified in the definitions section attached hereto as Exhibit A. PRIMARY PROVISIONS 1. Commissioners and Employees shall comply with all applicable federal and state laws including, but not limited to, the Sunshine Law, Mo. Rev. Stat and the HOME conflict of interest regulations (24 CFR ). To the extent any provisions in these Standards of Conduct conflict with, or are inconsistent with, any provision of the Sunshine Law, Mo. Rev. Stat , the HOME conflict of interest regulations, or any other federal or state law, as each may be amended or modified from time to time, Commissioners and Employees shall adhere to the most restrictive standard. The Counsel shall determine for any Commissioner or Employee which standard is the most restrictive for any factual scenario that comes to the attention of Counsel. Upon receiving any information regarding a potential violation under the Standards of Conduct, the Counsel is authorized to pursue the matter and determine whether or not the matter rises to a violation of the Standards of Conduct. In pursuing such a matter, the Counsel is empowered to engage outside counsel to investigate any matter where the Counsel deems that the use of an independent counsel would be in the best interest of MHDC. 2. Commissioners shall identify and disclose to the Director, the Chair and Counsel any Conflict within 24 hours of the time at which a reasonable person would have known of the existence of such Conflict. The Director shall make the disclosed Conflict known to all Commissioners prior to the next MHDC meeting or within 24 hours, whichever comes first. If a Commissioner discovers a Conflict at or during a MHDC meeting, the Commissioner shall immediately disclose to the Director and all Commissioners present at such open meeting that a Conflict exists. Any Commissioner who has a Conflict shall recuse themselves from any vote related to the identified Conflict. The recusal Page 1 of 10 Adopted July, 31, 2009 Revised, 2016

185 from a vote shall be made prior to any discussion of the matter which has required the Commissioner to recuse themselves from voting on the matter. 3. MHDC Employees shall identify and disclose to their Division Director all Conflicts within 24 hours of the time at which a reasonable person would have known of the existence of such Conflict. The Division Director shall inform the Director and Counsel of the Conflict. The Employee with the Conflict shall receive written direction from the Counsel describing how the Employee shall address the Conflict. Once the Counsel identifies a Conflict, he or she shall notify all Commissioners within 24 hours or at the next regular meeting. 4. Commissioners and Employees shall adhere to all laws providing equal opportunity to all citizens, clients of MHDC, and persons who do business with MHDC. Commissioners and Employees shall not engage in any form of harassment or discrimination, including harassment or discrimination on the basis of race, color, religion, national origin, ancestry, sex, age, disability, actual or perceived sexual orientation, gender identity, marital status, or familial status, or disability either at the workplace or in any context dealing with MHDC business. 5. Commissioners and Employees shall conduct the business of MHDC in a manner which inspires public confidence and trust and shall strive to avoid situations creating the appearance that they are violating these Standards of Conduct. 6. Commissioners and Employees shall act impartially and neither dispense, nor accept, special favors or privileges that improperly influence the performance of their official duties. 7. Commissioners and Employees shall not disclose confidential information gained by reason of their public position. The term confidential information shall bear the same meaning as defined in Mo. Rev. Stat Commissioners and Employees shall to the best of their ability protect and conserve MHDC property. 9. Commissioners and Employees shall not engage in business with MHDC or state government, hold Financial Interests, or engage in outside employment when such actions are inconsistent with the conscientious performance of their official MHDC duties. Willful violation of this provision shall result in suspension/debarment of the individual and/or entity which has engaged in a Business Relationship with a Commissioner or Employee which is inconsistent with the conscientious performance of their official MHDC duties. The individual and/or entity shall be suspended/debarred from responding to any Competitive Matter, for a period of two years commencing immediately following a determination that the individual or entity and Commissioner or Employee violated this Section 9. Notwithstanding the foregoing, nothing in this Section 9 is intended to create a prohibition on a Commissioner or Employee from having non-direct and passive investment interests which otherwise would constitute a violation of this Section 9. Furthermore, a Commissioner or Employee may have a direct Financial Interest which would otherwise be a Page 2 of 10 Adopted July, 31, 2009 Revised, 2016

186 violation of this Section 9, if the Financial Interest in question is placed in a blind trust prior to, and for the duration of, their status as a Commissioner or Employee. 10. The revised statutes of the State of Missouri contain provisions which address employment options for Commissioners and Employees following their discontinuation of service to MHDC (Mo.Rev.Stat (5-6)). MHDC wishes to expressly incorporate into these Standards of Conduct these sections and the statutory established definitions reference therein, as both may be amended from time to time. Furthermore, Limited Individuals are disallowed from accepting an offer of employment from any Interested Party while they retain their position with MHDC. Any entity which establishes an employee or contractual relationship with a Limited Individual while the Limited Individual retains their position with MHDC shall be suspended /debarred for two years, commencing on the date the Commission determines the entity established a prohibited relationship. All Interested Parties shall, as part of a response to any Competitive Matter, disclose the name of any former Commissioner or Employee whom they employ or with whom they have a contractual relationship. 11. Commissioners and Employees shall not purchase or sell MHDC Securities. If a Commissioner or Employee does purchase or sell a MHDC Security during or prior to their service with MHDC, they shall notify the Director, Chair, and Counsel of such action. Any newly appointed Commissioner or newly hired Employee is required to divest his or her interest in any MHDC Security upon the first year anniversary of their relationship with MHDC or at the time they have the ability to sell the MHDC Security at a yield which would match or exceed the yield of an investment in a 10 year U.S. Treasury for the period of time for which the Commissioner or Employee has owned the MHDC Security, which ever occurs first. If prior to divesting any MHDC Security, a Commissioner or Employee has a Conflict as a result of the same, the Commissioner or Employee shall follow the disclosure and recusal provisions provided for in these Standards of Conduct. Nothing in this Section 11 is intended to create a prohibition on a Commissioner or Employee from having non-direct, passive investment interest which may, but for this exception, violate this Section 11. Furthermore, a Commissioner or Employee may hold a direct Financial Interest which would otherwise constitute a violation of this provision, if the Financial Interest in question is placed in a blind trust prior to, and for the duration of, their status as a Commissioner or Employee. 12. Commissioners and Employees shall not knowingly invest in businesses that transact business with MHDC unless they fully disclose the nature of their investment and recuse themselves from any aspect of MHDC decision-making regarding the business in question. Disclosure and recusal shall be done in the manner described in Section 2 of these Standards of Conduct. 13. Commissioners and Employees shall not solicit, accept or retain any Consideration in exchange for taking any action or refraining from taking an action in their capacity as a Commissioner or Employee of MHDC. Page 3 of 10 Adopted July, 31, 2009 Revised, 2016

187 Commissioners and Employees shall not accept any Benefit if the giver has a business relationship with MHDC. The Commissioner or Employee has an affirmative duty to inquire of the Director, the Chair and Counsel regarding the Benefit in question and the Counsel will determine if MHDC has a business relationship with the granting party prior to Employee receiving Benefit. Commissioners and Employees may not accept payment of travel, lodging expenses or meals in connection with speaking engagements, conferences, conventions, association meetings, or similar functions other than the properly requested and process MHDC per diem amounts reimbursed from MHDC. Violation of this Section 13 will be handled in accordance with Section 18 of these Standards of Conduct, and any Conflict shall be disclosed during an open portion of a regular meeting of the MHDC. 14. Commissioners and Employees who run for or hold elective office may accept campaign contributions that are lawfully made, recorded and disclosed pursuant to applicable federal and state laws. However, this authorization is not an exception to the prohibition on receiving consideration in exchange for taking or refraining from taking an action in one's capacity as a Commissioner or Employee. Elected Commissioners shall have an affirmative duty to determine whether a given contribution would amount to a Conflict and, if so determined, notify the proper individuals pursuant to Section 2 herein. For the avoidance of doubt, Elected Commissioners who have identified a Conflict concerning a given campaign contribution shall recuse themselves from any Commissioner vote concerning the Conflict in the manner described in Section 2 herein. 15. Commissioners and Employees shall file all financial disclosure statements required by law with the appropriate agencies, including the Missouri Ethics Commission. 16. Commissioners who are unsure whether taking action or refraining from action would violate these Standards of Conduct shall seek guidance from Counsel. Employees who are unsure whether taking action or refraining from action would violate these Standards of Conduct shall disclose the potential Conflict to Counsel and abide by Counsel's directive. 17. In any application under a Competitive Matter, the applicant shall disclose the Owner and if applicable, the composition of their Development Team. MHDC is not charged with reviewing the disclosures provided for accuracy, completeness or validity, ; however, if brought to its attention, the MHDC will review allegations that an application willfully failed to comply with this provision. If MHDC determines that an applicant willfully failed to provide accurate information pursuant to this section, then the Owner shall be suspended/debarred from applying pursuant to a Competitive Matter for a period of two years from the time a violation under this provision is determined. 18. Commissioners who violate these Standards of Conduct may be subject to appropriate lawful action by MHDC, and, if warranted, be reported to the Missouri Ethics Commission and/or appropriate law enforcement authorities. Employees who violate these Standards of Conduct may be subject to appropriate lawful action by their supervisors, MHDC, and, if warranted, be reported to the Missouri Ethics Commission and/or appropriate law enforcement authorities. Page 4 of 10 Adopted July, 31, 2009 Revised, 2016

188 On August 28, 2009, the Counsel shall provide the Commission in an open regular meeting a process for reviewing violations of Section 9, 10, 17 and the Contact with Commissioners and Employees Policy of these Standards of Conduct. These procedures shall require a vote of the Commission in an open regular meeting of the MHDC. Based on the Counsel s review process, the Counsel shall provide a recommendation to the Commission in open regular meeting as to whether a violation has occurred that should result in the applicable remedy being enforced. The Commission shall then take a vote in open regular meeting as to whether the remedy should be implemented against the entity or individual making the violation. The Counsel and Director shall be responsible for ensuring full enforcement of remedies put in place by vote of the MHDC. Page 5 of 10 Adopted July, 31, 2009 Revised, 2016

189 CONTACT WITH COMMISSIONERS AND EMPLOYEES Commissioners and Employees may at any time and for any legal purpose initiate contact with anyone, including Interested Parties or agents of Interested Parties in the course of investigating any Competitive Matter. If an Interested Party initiates communication, in any form, with a Commissioner or Employee regarding a Competitive Matter following submission of the Interested Parties proposal, application, bid or response, the Interested Party shall follow the following disclosure procedure: Within 24 hours of contacting a Commissioner or Employee, the Interested Party must file a written notice of the contact with MHDC. The written notice will include a written description of any oral communication from the Interested Party to the Commissioner or Employee, and the written notice will include copies of any written or recorded materials provided to the Commissioner or Employee. In addition, within 24 hours of filing the notice of contact with MHDC, the MHDC staff will deliver, either in person, by facsimile, or electronic mail or through overnight courier, a copy of the notice (including any attachments) to each and every other Interested Party. During the Quiet Period, Interested Parties shall not initiate contact with Commissioners or Employees regarding a Competitive Matter. Failure to honor the provisions set forth herein regarding the Disclosure Period and/or Quiet Period shall result in the disqualification of the Interested Party s proposal, application, bid or response. The Counsel shall provide each Commissioner and Employee with a memo detailing the current disclosure and quiet period. CERTIFICATE The undersigned MHDC Secretary hereby certifies that these Standards of Conduct are a true and exact iteration of the Standards of Conduct of the MHDC as properly adopted on July 31, 2009 and as revised at a regular meeting of MHDC. Witness MHDC Secretary Date Adopted: July 31, Page 6 of 10 Adopted July, 31, 2009 Revised, 2016

190 I have received, read and understand the MHDC Standards of Conduct. By: Date: Page 7 of 10 Adopted July, 31, 2009 Revised, 2016

191 Exhibit A Definitions Benefit - Gifts, meals, favors, or anything of value or personal benefit Business Relationship Two or more parties being related or interrelated for the purpose of transaction business of any kind Chair - The chairperson of MHDC as elected by MHDC Commissioner All appointed and ex officio members of MHDC, including all proper designees of any member which are authorized to vote on behalf of the member they represent Competitive Matter Any matter which shall be put to the Commission for a vote where two or more Interested Parties could benefit from an outcome of the vote, including, but not limited to the award of any MHDC controlled or administered resources and any Commission approved contracts for services Conflict(s) - All conflicts of interest, potential conflicts of interest and situations where there may be any appearance of impropriety Consideration Any personal benefit, gift, favor, service, loan, fee, bribe, kickback or other compensation Counsel - The general counsel of MHDC Development Team The contractor, property manager, consultant, attorney, accountant, architect, title company, surveyor, physical needs firm, environmental firm, equity investor(s), bond purchaser, bond counsel, bond trustee, registered lobbyist Director The executive director of MHDC Disclosure Period The period of time after an Interested Party submits a proposal, application, bid or response in a Competitive Matter Division The divisions of MHDC include: rental production, finance, asset management, operations, and general counsel Division Director The highest ranking Employee in of each of the Divisions of MHDC Elected Commissioners The ex officio members of MHDC Page 8 of 10 Adopted July, 31, 2009 Revised, 2016

192 Employee - The Director and all employees of MHDC Financial Interest Any interest in any for-profit or non-profit entity of any kind, and relating to any type of business enterprise (not limited to housing) including, but not limited to, general partnership(s), limited partnership(s), limited liability companies, corporations, trusts, agency agreements, interlocking business agreements, and for which the interest is greater than 2% of the ownership in the same. Furthermore, for the purpose of non-profit entities the term "Financial Interest shall describe all subsidiaries of the non-profit entity as well as disclosure of all such entity s board members Interested Party - Any person or entity (or anyone acting at their direction or on their behalf) who submits a proposal, application, bid or response to a solicitation, request, notice or invitation to do so vis-à-vis a Competitive Matter Limited Individuals The Commissioners, Director, Counsel, and Division Directors MHDC the Missouri Housing Development Commission, a governmental instrumentality of the State of Missouri MHDC Security Any instrument of investment issued by MHDC Owner The individual, entity or entities applying for MHDC owned or controlled resources, along with each general partner, member or other type of ownership interest in the ownership entity and the developer entity, all reduced to their respective Principal level irrespective of the number of entity layers which may be present for any entity. Furthermore, non-profit entities disclosed under Section 17 shall describe all subsidiaries of the non-profit entity as well as disclosure of all such entity s board members. Principal Any human being who has any interest in an entity identified as a result of the a disclosure of the Owner Quiet Period - The period consisting of seven days prior to a scheduled MHDC decision on a Competitive Matter Standards of Conduct The policy of MHDC which describes for Commissioners and Employees the standards of acceptable behavior in connection with their MHDC activity Sunshine Law The State of Missouri open records law as codified at Mo.Rev.Stat , as may be amended from time to time Page 9 of 10 Adopted July, 31, 2009 Revised, 2016

193 Page 10 of 10 Adopted July, 31, 2009 Revised, 2016

194 4) Report of Staff f. Bylaw Revision

195

196 RESOLUTION NO A RESOLUTION AMENDING THE BY-LAWS OF THE MISSOURI HOUSING DEVELOPMENT COMMISSION TO REDUCE THE NUMBER OF REQUIRED REGULAR MEETINGS EACH YEAR FROM SIX (6) MEETINGS TO FOUR (4) MEETINGS. WHEREAS, Article IV, Section 2 of the By-Laws of the Missouri Housing Development Commission be, and hereby is, amended and restated in its entirety to read as follows: Section 2. Regular Meetings. Except as otherwise provided, the Commission shall conduct a minimum of Four (4) Commission meetings (the Annual Meeting shall be included when determining the minimum number of Regular Meetings) throughout the calendar year. The date, time and location of each meeting will be established by the Chairman of the Commission. Written notice of the date, time and location will be provided to each Member by mail, fax or at least one week prior to the date fixed for the meeting. Public notice of Commission meetings will conform to the state s public notice law as amended from time to time. CERTIFICATION I HEREBY CERTIFY that the foregoing is a true and correct copy of a Resolution regularly presented to, and duly adopted by, the commissioners of the Missouri Housing Development Commission at a meeting duly called and held in Columbia, Missouri on the 29 th day of April, 2016, at which a quorum was present and voted, and that such Resolution is duly recorded in the minutes of the commission. Dated, 2016 (SEAL) WITNESS/ATTEST: Secretary

197 4) Report of Staff g. Request for approval of the 2017 Missouri Housing Trust Funds (MHTF) Draft Allocation Plan and NOFA

198

199 4) Report of Staff h. Request for approval of 2017 Draft QAP for public hearings

200

201 4) Report of Staff i. Rental Production recommendations Tax Exempt Bond Round

202