Post on 26-Feb-2016
description
American Recovery and Reinvestment Act of 2009
Tax Credit Assistance Program (TCAP)
Section 1602 Tax Credit Exchange Program
www.in.gov/ihcda
July 10, 2009Webinar
Guidance
Department of Housing & Urban Development – TCAP
Department of the Treasury– Section 1602 Exchange Program
Released Frequently Asked Questions & Answers 7-9-09
*Policies & Procedures Are Subject To Revisions*Announced in Multi-Family Noticeshttp://www.in.gov/ihcda/2520.htm
Located on theQAP Page
Availability of Funds
TCAP– $38 million– IHCDA must
commitment 75% by: February 16, 2010
– Draw 75% by: February16, 2011
– Draw 100% by: February 16, 2012
Section 1602 Exchange– $164 million
100% of unused 2008 per capita credits
40% of 2009 per capita credits
– Draw 100% by:December 31, 2010
TCAP & 1602 Exchange
Timing– Application round is open
IHCDA will accept applications on a rolling basis IHCDA will respond within 30 days
– IHCDA Executive Director has received Board approval to award TCAP & 1602 Exchange Funds
Affordability Period– 30 years– Agree to waive Section 42 Qualified Contract
Provision
TCAP
Subject to Section 42 regulations, QAP, HUD’s CPD Notice 09-03, IHCDA legal agreements
Threshold Eligibility1. 9% credits from 2008, 2009, or 20102. Must be eligible and demonstrate ability to meet federal
requirements3. Expend 75% of TCAP funds by February 16, 2011 & 100%
by February16, 20124. Continue to meet QAP’s criteria
1. Market2. Financial feasibility3. Development team capacity4. Remain in Compliance
TCAP
Eligible Use of Funds– Capital Investment in eligible Section 42
Developments – Cost Must Be In Eligible Basis– Subject to same Section 42 rules– As required by IHCDA, including conditions to
receive the tax credit reservation Set-Aside Threshold Scoring
– All other requirements of the ARRA of 2009
TCAP
Application Process– Demonstrate achievable construction timing– TCAP Application
Amount requested Sources & Uses Cost estimates for federal compliance (Davis-Bacon) Anticipated closing date Construction & Completion schedule Development Status Report Explanation of request
– Written explanation of efforts to obtain equity Readiness to proceed criteria documentation
TCAP
Selection Criteria1. Meet Threshold Eligibility, Follow Application
Process, Demonstrate Eligible Use of Funds2. Preference to Preservation & Elderly Set-Aside3. Demonstrate ability to draw 75% before 12-31-10
& PIS by 12-31-20114. Demonstrate “Readiness Criteria” items 1-105. Demonstrate Readiness to secure competitive
equity within 120 days of commitmenti. MUST CLOSE ON EQUITY BEFORE IHCDA WILL
ENTER INTO AN AWARD AGREEMENT
TCAP
General Requirements– Underwriting
Recently accepted application will remain in force– Cost estimate to satisfy federal requirements (Davis
Bacon)– Other changes that are reasonable may be approved
– Post Awards Expend TCAP funds according to the Commitment Inability to meet ARRA expenditure requirements may
result in de-obligation IHCDA will exercise remedies for loan default or other
noncompliance issues
TCAP
Loan Terms1. Deferred loan with no interest or principal loan for
30 years2. Construction loans3. Bridge loans4. Permanent loans
TCAP
Loan Terms Continued– Construction
Financing for construction or rehabilitation Interest rate at 0% Amortized over 30 years Term not to exceed 24 months Full recourse against the borrower Portion of construction may remain in as a Bridge loan
TCAP
Loan Terms Continued– IHCDA will subordinate TCAP to first lien position– No prepayment will be allowed prior to 2-17-2012– Disburse at closing or construction upon evidence of
costs have been incurred
TCAP
Development Fee– Development Service Agreement– Inclusion of other fees to service providers must be
supported (actually performed & not duplicative)– Other fees will not be paid to entities related to GP
or Developer except for General Contractor Waiver request – demonstrate cost saving to the
development including third party cost comparison
TCAP
Development Fee Continued:– 50% of the fee will paid:
30% at closing of TCAP 10% during construction – prorata w/const. Completion 30% at Construction Completion 30% at Stabilization & Final Inspection
TCAP
Developer Fee Continued: Remaining 50% deposited into a controlled account Paid out 1/10th over the next 10 years
– Maintain 1.15:1.10 DCR– Remain in compliance with Section 42 & IHCDA
TCAP
Midwestern Disaster Credits– 2008 developments that received Midwestern
Disaster Credits must request to exchange a nominal amount of credits prior to September 1, 2009 to be eligible for TCAP
– 2009 developments will automatically receive a nominal amount of per capita credits
TCAP
Reporting & Compliance– Report due the day before the end of each quarter (October
1st)– IHCDA will collect data points with each draw
Completion status Jobs created & retained Other federal reporting requirements Subcontractor awards (pending guidance)
– Noncompliance is subject to recapture Required to register for a
– D-U-N-S number – www.grants.gov– Central Contractor Registration (CCR) – www.ccr.gov
TCAP
Loan Agreement– Will set-forth all TCAP requirements
Lien & Restrictive Covenant Agreement– Funds cannot be drawn in advance– Funds cannot be placed in escrow– Funds must be expended within 3 days
TCAP
Cross Cutting Federal RequirementsThis is not an all encompassing list
– Environmental & Historic Review– Construction Contract Requirements– Davis-Bacon Labor Standards– Affirmative Marketing– Site & Neighborhood Standards– Fair Housing Act– Anti-Lobbying Restrictions– The Drug-Fee Workplace Act of 1988– Lead Based Paint Requirements– Accessibility
QUESTIONS?
Questions and answers from today’s webinar will be posted on IHCDA’s website at: http://www.in.gov/ihcda/2514.htm
Section 1602 Exchange Program
Subject to Section 42 regulations, QAP, Treasury “Terms and & Conditions”, IHCDA legal agreements
Threshold Eligibility1. 9% credits from 2008, 2009, or 2010
a. 08 developments located outside of a MDA county are eligible to exchange up to 100% of their credit awardi. List of MDA counties is located on page 2ii. Utilized IHCDA approved Financial Service Agent (FSA)
b. All other developments from 08, 09, & 10 must demonstrate equity investment has been securedi. Investor must agree to share asset management reports
2. Must be eligible and demonstrate ability to meet federal requirements
Section 1602 Exchange Program
Threshold Continued:3. Owners must draw (expend) 100% before
December 31, 2010 Final claim is due to IHCDA by December 1, 2010 Owner is responsible for sources to cover any part not
drawn by December 1, 2010
4. Continue to meet QAP Criteria5. Development has not been issued IRS Form 8609
Section 1602 Exchange Program
Application Process– No Application Fee (Treasury Guidance in 7-9-09 Q &A, 5a)– Demonstrate achievable construction timing– Section 1602 Exchange Application
Amount requested Sources & Uses Construction & Completion schedule Development Status Report Explanation of request Readiness to proceed criteria documentation Written explanation of efforts to obtain equity Current/Updated Phase 1, Market Study, CNA, Site Control
Section 1602 Exchange Program
Eligible Use of Funds– Capital Investment in eligible Section 42
Developments - cost must be in eligible basis – Subject to same Section 42 rules– As required by IHCDA, including conditions to
receive the tax credit reservation Set-Aside Threshold Scoring
– All other requirements of the ARRA of 2009
Section 1602 Exchange Program
Eligible Use of Funds: Treasury FAQ: 7-9-09 – Question 4f: Which costs are eligible to be paid
w/Section 1602 funds?– Answer: Section 1602 follows the same
requirements as LIHTC. Section 1602 funds may pay for development costs to the same extent as allowed under Section 42 of the IRC. For example, the acquisition of land is ineligible under Section 1602, as it is under Section 42.
Section 1602 Exchange Program
Eligible Use of Funds: Treasury FAQ: 7-9-09 – Question 4h: What is the maximum amount of a subward?– Answer: The amount of a subaward cannot exceed 85% of the
amount of a building’s eligible basis as determined at the end of the first year of the credit period (as defined in Sect(f)(1) of the IRC) and, also for this purpose, eligible basis includes any increase for buildings located in high cost areas under Sect 42(d)(5)(B). The subawardee must maintain sufficient documentation to demonstrate that the allowable construction, acquisition, and rehabilitation costs of a qualified low-income building equal or exceed the amount of the subaward.
Section 1602 Exchange Program
Selection Criteria1. Meet Threshold Eligibility, Follow Application
Process, Demonstrate Eligible Use of Funds2. Preference to Preservation & Elderly Set-Aside3. Demonstrate competitive equity investment4. Draw 100% before 12-31-10: Readiness Criteria
Section 1602 Exchange Program
Underwriting– Request will be equal to anticipated equity
Increase as a result to fund additional reserves Ensure amount necessary for financial feasibility Award will be no more than the eligible basis
Section 1602 Exchange Program
Development Fee– Development Service Agreement– Inclusion of other fees to service providers must be
supported (actually performed & no duplicative)– Other fees will not be paid to entities related to GP
or Developer except for General Contractor Waiver request – demonstrate cost saving to the
development including third party cost comparison
Section 1602 Exchange Program
Development Fee Continued:– 50% of the fee will paid:
30% at closing of Section 1602 Exchange Funds 10% during construction – prorata w/const. Completion 30% at Construction Completion 30% at Stabilization & Final Inspection
Section 1602 Exchange Program
Development Fee Continued:– No Equity Investor– Less than $300,000 developer fee
50% deposited into a controlled account Paid out 1/10th over the next 10 years
– Maintain 1.15:1.10 DCR– Remain in compliance with Section 42 & IHCDA
– Developer fee exceeds $300,000 50% is deferred and paid out of cash flow
Section 1602 Exchange Program
Developer Fee Continued:– Development with an equity investor
50% deposited into a controlled account Paid out 1/10th over the next 10 years
– Maintain 1.15:1.10 DCR– Remain in compliance with Section 42 & IHCDA
Section 1602 Exchange Program
Types of Financing– Awarded as a forgivable loan
30 year term with no interest or principal Subordinate to first lien holder Disburse funds upon evidence of incurred cost
Section 1602 Exchange Program
Loan Agreement– Will set-forth all Section1602 requirements
Lien & Restrictive Covenant Agreement– Funds cannot be drawn in advance– Funds cannot be placed in escrow– Funds must be expended within 3 days
Section 1602 Exchange Program
Reporting & Compliance– Report due the day before the end of each quarter (October
1st) Further guidance by Treasury in July (Q& A 8a)
– IHCDA will collect data points with each draw Completion status Jobs created & retained Other federal reporting requirements Subcontractor awards (pending guidance)
– Noncompliance is subject to recapture by Treasury– Does not trigger cross cutting federal rules (Davis-Bacon,
Environmental or Historic Review, URA) Treasury Q & A 4e (Section 504 does apply)
QUESTIONS?
Questions and answers from today’s webinar will be posted on IHCDA’s website at: http://www.in.gov/ihcda/2514.htm
The next section will cover the FSA component
Section 1602 Exchange Program
Financial Service Agents (FSA)– Assigned to developments without an investor
Application submitted to IHCDA Owner request a FSA within application
– IHCDA assigns FSA & provides application
Approved FSAs:– City Real Estate Advisors, Inc.
Brian McDonnell
– Great Lakes Capital Fund Jack L. Brummett
– House Investments Doug Sylvester
Section 1602 Exchange Program
FSA Continued– FSA Fee is equal to 4% of the total Exchange &
TCAP award, not to exceed $125,000– Partnership will pay legal fees & third party reports– Asset Management Fee will annually be the greater
of $5,000 or $100 per unit. Pre-funded reserve established at closing.
Section 1602 Exchange Program
FSA Continued:– IHCDA will enter into a tri-party agreement with the
owner and FSA– Services will include:
Due Diligence Services Underwriting Services Closing Service
QUESTIONS?
Questions and answers from today’s webinar will be posted on IHCDA’s website at: http://www.in.gov/ihcda/2514.htm
Thank you
J. Jacob SipeMulti-Family Manager
jsipe@ihcda.in.gov