2016 Governor s Housing Conference WELCOME. Ed Yandell, Senior Housing Credit Advisor. Low-Income Housing Tax Credit Program

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1 2016 Governor s Housing Conference WELCOME Ed Yandell, Senior Housing Credit Advisor

2 Partnership between private and public sectors Credit against federal income tax liability each year for 10 years Low-Income Housing Tax Credit Program Provides incentive to build/rehab affordable rental housing Governed by Section 42 of Internal Revenue Code

3 How the incentive works Tax Credit allocated to ownership entity of development Tax Credit purchased by investor(s) [syndication] Syndication proceeds offset development cost Offset development cost lowers need for bank debt Lower bank debt = lower debt service Lower debt service makes reduced rents financially feasible

4 How the LIHTC Works THDA allocates Tax Credits to developers Tax Credits are sold to investors (syndication) Lower development/debt costs result in affordable rents for at least 15 years Funds from syndication reduce the cost of debt/development

5 Income and rent restrictions Qualified Allocation Plan ( QAP ) Requirements Program Requirements 20/50 test or 40/60 test 15-year extended use period 15-year compliance period

6 Accessing the Tax Credit Program Familiarity with the QAP Site identification / type of proposed development Financial feasibility Varsity Sport

7 Keys to Success Thorough understanding of program requirements Local involvement and support Strength of development team Be realistic in scoring choices Location and market Long-term management of development

8 Key Features of QAP Tax Credit available (changes annually) Tax Credit limits (county, developer, development) Initial Application deadline Scoring system Cure and Review process Preliminary Award Letter Carryover Placed In Service

9 MAJOR CHANGES TO THE QAP FOR 2017 PLEASE NOTE: In the event of any discrepancy between this presentation and the final 2017 QAP, the final 2017 QAP shall control

10 Changes to Set- Asides Innovation Round Earlier Deadline November 1, 2016 Max one (1) Development Selected Details in Part VI-E of QAP

11 Innovative Round Specifics Uniqueness and innovative nature Ability to address an unmet need Contribution to THDA mission and goals Reasonableness of scope Financial Viability Competitive/Financial disadvantage Applicant capacity Finalists No more than five (5) Notified by November 15, 2016 Presentation (max 1 hour) in 2017

12 Qualified Census Tract (QCT) Aggregate Cap Reduced from 50% to 40% Basis Boost Eligible Developments: Rural DDA CNI RAD Multiple Applications for Same Site NOT ACCEPTED Health and Safety Correction Period 72 hours from notification Addresses life-threatening issues

13 Scoring 100 point maximum 44 point minimum Approximately the same weights as 2016

14 Non- Profit Set- Aside Highest-ranking qualified new construction Initial Application. Highest-ranking qualified preservation or rehabilitation Initial Application. Other qualified Initial Applications (in ranking order) if necessary to fill the set-aside. Initial Applications qualified for the QCT/CRP Set-Aside and/or the Rural Set-Aside will cross-count to the respective set-aside(s). Initial Applications that are qualified for, but not receiving a reservation from, the Non-Profit Set-Aside WILL be considered in subsequent set-asides and (if proposing new construction) the General Pool.

15 CNI Initiative Qualified Initial Applications utilizing CNI (in ranking order) Will cross count

16 RAD Set- Aside Qualified Initial Applications utilizing RAD (in ranking order) Initial Applications qualified for the QCT/CRP Set-Aside and/or the Rural Set-Aside will cross-count to the respective set-aside(s) Initial Applications that are qualified for, but not receiving a reservation from, the RAD Set-Aside WILL be considered in subsequent set-asides and (if proposing new construction) the General Pool

17 Preservation Set-Aside Qualified Initial Applications (in ranking order). Initial Applications qualified for the QCT/CRP Set-Aside and/or the Rural Set-Aside will cross-count to the respective set-aside(s). Initial Applications qualified for, but not receiving a reservation from, the Preservation Set-Aside WILL NOT be considered in subsequent set-asides or the General Pool.

18 QCT/CRP Set- Aside If other set-aside reservations have not included one (1) Initial Application qualified for the QCT/CRP Set-Aside, the highest ranking qualified Initial Application proposing new construction. Initial Applications that are qualified for, but not receiving a reservation from, the QCT/CRP Set-Aside WILL be considered in subsequent set-asides and (if proposing new construction) the General Pool.

19 Rural Set- Aside If other set-aside reservations have not included two (2) Initial Applications qualified for the Rural Set-Aside, the highest ranking qualified Initial Application(s) proposing new construction Initial Applications qualified for, but not receiving a reservation from, the Rural Set-Aside WILL NOT be considered in other setasides or the General Pool

20 Scholar House Maximum one (1) development Replaces partial allocation Details in Part VIII-E-9 of QAP Specifics Within 10 miles of Community College or Center of Applied Technology AND 4-year institution Transit to institution Rental Assistance Support Services

21 Low-Income Housing Tax Credit Construction Inspections TERRY MALONE CONTROL MANAGER

22 Why Past Experiences: Department of Justice Notification Incomplete/Poor Workmanship Partnerships Developers Architects Contractors

23 Expected Outcomes Promises Met Affordable Sustainability for 30 years Stronger Relationships

24 Preconstruction Meeting Reporting Requirements Site Visits Conducted on 9%, 4%, and Bond Deals Inspection Process Issuance of 8609(s)

25 Pre-Construction Meeting Prior to Construction/Rehab Required Attendance: Owner Representative Architect Contractor Initial Reporting Submitted

26 Initial Reporting Preservation Architectural Drawings and specs Environmental Report (if Phase II conducted) Draw Meeting Schedule Scope of Work, most recent New Construction Architectural Drawings and specs Draw Meeting Schedule Environmental Report (if Phase II conducted)

27 Reporting Requirements Quarterly Reporting THDA s Progress Report Form Any changes from initial specs Architect Reports Final Reporting 100% Completed to THDA

28 Conclusion Ensuring properties awarded housing credits are constructed within federal guidelines, applicable QAP standards, and applicable building codes in the creation of safe, sound, affordable housing opportunities.

29 LIHTC Interactive Mapping Tool

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31 LIHTC Interactive Map

32 LIHTC Interactive Map

33 LIHTC Heat Map

34 LIHTC by County

35 Multifamily Development Division Allocation Compliance Chris Marlin Ed Yandel Felita Hamilton Joe Bethel Judith Smith Rebecca Scott Stan Pack Terry Malone Terry Montgomery David Richardson Jawon Lauderdale Leontyne Washington Mark Cantu Marquel Mitchell Nekishia Potter Nicole Epperson Business Analyst Robert Lucas

36 2016 Governor s Housing Summit THANK YOU More Information: To join our list, please Felita Hamilton