avoiding technical corrections 2012-2013 qualified allocation plan forum september 5, 2012
TRANSCRIPT
Avoiding Technical Corrections
Overview
• 67 developments applied for tax credits in the 2012 Round
• 14 projects were awarded credits
• Importance of maximizing points – 4 points could be the difference between getting an award or not!
Avoiding Technical Corrections
Common Technical Corrections
• Financial statements from principals – don’t leave anyone out
• Site plan does not include placement of accessible units
• Units plans do not have square footage
• Affidavits missing from development team members (see Form A, pages 21-22)
• Exceeding fee limitations (i.e. architect, contractor)
• Phase 1 does not include FEMA floodplain map and wetlands map
Avoiding Technical Corrections
“Silly” Technical Corrections
• Lender Letter of Interest – lacking the required language
• Not submitting the supplemental application fee for HOME or Development Fund - $500 for each
• Missing a signature (i.e. Form C, Form K)
• Missing a form (i.e. Form K)
• Submitting documents more than 6 months old (datedbefore May 1, 2012)
• Making assumptions (i.e. no need for CNA)
• Copy and paste – wrong development name
• Document filed/saved in the wrong folder
Avoiding Technical Corrections Underwriting Technical Corrections
• DOUBLE CHECK CALCULATIONS!!
• Operating Reserves - between four to six months (Operating Expense plus debt service) or $1,500/unit (whichever is greater).
• Replacement Reserve minimum contributions must be used:
Rehabilitation: $350 per unit per yearNew Construction: $250 per unit per yearSingle Family Units: $420 per unit per yearHistoric Rehabilitation: $420 per unit per year
• Replacement Reserves must escalate at a rate of 3% per year.
Avoiding Technical Corrections Underwriting Technical Corrections
• Rental Income Growth – 0-2% per year.
• Operating Expense Growth – 1-3% per year. IHCDA requires operating expense growth to be at least 1% higher than rental income growth.
• Management Fee maximum - 5-7% of “effective gross income” (gross income for all units less Vacancy Rate).
• If outside of IHCDA guidelines, please provide explanation!!
Avoiding Technical Corrections
• All applicants will be required to use a 20% basis boost and 9% to calculate the maximum 9% credit request.
• 20% basis boost to be utilized for Scoring Criteria Credit Reduction Section G.4(b).
• Reservation letters will designate a 30% basis boost. This is to ensure adequate basis to support credits awarded, in the event of the loss of the 9% flat rate.
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New 3rd Party Market Study Reviewer Ribbon Demographics & M.E. Shay & Co.
• Submit all items listed on Market Study Checklist
Avoiding Technical Corrections
Scoring Pitfalls to Avoid
• All maps need to clearly show the project site• Map of nearby amenities must have ¼ and
½ mile radius• All forms must be signed and dated by all
necessary parties• Redevelopment plans must show evidence of
community participation and input• Credit reduction calculated correctly• Unique features – don’t be modest!
Avoiding Technical Corrections
General Reminders
• Follow the submission guidelines in Schedule G
• Form C due to IHCDA by October 1st
• Applications due by 5:00 PM in the IHCDA office on Thursday, November 1, 2012
• Semi-Annual Progress Reports – If pending 8609, these are due by 12/31/12
Avoiding Technical Corrections
2013A-C Tentative Timeline
• November 5, 2012 – Applicant list posted on the website
• 3rd Week of November – IHCDA will notify the highest elected official of the local jurisdiction of tax credit applications
• 1st Week of December – CNA report completed and provided to the applicant
• 1st Week of January – Notification of Technical Corrections and any concerns regardingMarket Studies
Avoiding Technical Corrections
2013A-C Tentative Timeline - Continued
• 4th Week of January – Issuance of Preliminary Score Sheets
• February 28, 2013 – Recommendations made to IHCDA Board of Directors
• March 28, 2013 – Reservation fees due for awarded developments