provide additional tax credits to those
developments in need of additional financing.
Distribution of the $20,463,053 in TCAP funding must be done on a
competitive basis. The Board of Directors has determined to award TCAP funding
in association with the other funding sources available as indicated by the
financial needs of the applicant. The following "Arkansas's Three Tier
Selection Process" and 2009 Guidance and Procedures have been approved by the
Board of Directors on May 15, 2009, and June 18, 2009, respectively, for the
distribution of TCAP funds and Exchange Program fund.
2.
Tier Two - Considered after
determine amount of credits remaining after Tier One awards for purposes of
awarding additional tax credits; TCAP Exchange/Subawards and/or Addiitonal HOME
Funds.
a. Application will be by submission
of a 2009 Special Application, to provide information required for the TCAP and
Exchange/Subaward Programs, to include updated financial commitment letters, an
updated Pro Forma, Attachment C, and, if applicable, updated attachment G.
Applicants must meet the minimum debt coverage ratio of 1.10.
b. Applications for funding will only be
considered if the applicant is eligible for such funding pursuant to the
American Recovery and Reinvestment Act and Section 42 of the Internal Revenue
Code and if submitted by the deadline date determined by ADFA.
c. To be eligible for TCAP funds, the
applicant must retain no less than $1,000 in annual federal low-income housing
tax credits, or, $10,000 in the aggregate.
d. Applications requesting TCAP funds will be
based upon priority and competitive scoring as follows:
i. Certification to a development timeline
that verifies the development will expend 100% of the TCAP funds awarded no
later than November 15, 2010 and will place in service no later than December
31, 2011. Failure to make the certifications eliminate the applicant's
eligibility for funding separate from that in the applicant's Original
Application. Failure to adhere to the timelines required will result in a
recapture of tax credits, TCAP or Exchange/Subaward funds, as
applicable.
ii. The Final Score
received with 2008 scores adjusted to match 2007 scoring criteria. (The Final
Score for 2008 will be reduced by any bonus points received under Item #11
"Market Feasibility Study" as the bonus points were not available for 2007.
With this reduction, the scoring criteria for 2007 and 2008 are identical);
and
iii. 5 priority points to those
applicants requesting additional tax credits. Additional tax credits must be
purchased at no less than $.50 per additional tax credit requested. Recipients
of additional tax credits will not be eligible to return any tax credits
allocated or reserved by ADFA for the purpose of receiving TCAP funds or an
Exchange/Subaward.
iv. In the event
of a tie, the Board of Directors for the Authority will award priority based
upon factors in the application such as: market need, number of affordable
units; income/rent limitations; energy efficiency; and unit
amenities.
v. TCAP funds will be
awarded based upon the highest score as determined under this subsection.
vi.The maximum amount of the TCAP
fund award will be $500,000.
e. Applicants requesting the maximum amount
($500,000) of TCAP funding will be eligible for additional HOME funds not to
exceed $900,000, including any previous allocation. Recipients may use the
additional HOME funds to reduce permanent debt, deferred developer fee, or
other funding source in the Original Application.
f. To be eligible for an Exchange/Subaward,
the applicant must request, at a minimum, $100,000 in TCAP funding. Equity
created by an Exchange/Subward can only be used to replace equity lost from the
Original Application.
g. If
requesting Exchange/Subaward, applicants must provide the following:
i. Written statement from most recent
investor/syndicator submitted to ADFA which indicates that the
investor/syndicator has rescinded its previous equity commitment to the
applicant. The written statement must reference the date and terms of the
previous equity commitment rescinded and the amount rescinded. If the
rescission is limited to a portion of the previous credit amount accepted and
equity commitment, the investor/syndicator statement must specifically identify
the amount of credits and amount of equity that remain accepted and committed;
ii.Written statement from
nationally recognized investor/syndicator indicating that the
investor/syndicator has been contacted by the applicant and rejected an offer
to purchase any/all of the tax credits offered. The rejection must specifically
identify the amount of credits offered and rejected. If the rejection is
limited to a portion of the tax credits offered, the investor/syndicator
statement must specifically identify the number of credits accepted for
purchase and amount of equity to be paid for such purchase; and
iii.Sworn statement by the applicant that:
A. In addition to the investor/syndicator
identified in subsection 2g.ii above, the applicant has
contacted two additional nationally recognized investors/syndicators and they
have rejected the purchase of any tax credits allocated to the
applicant;
B. Each
investor/syndicator contacted has made no offer/counter-offer to purchase
credits allocated at any per credit price.
h. Recipients must provide official evidence,
e.g., building permit, construction permit, etc. that they can
begin construction within 120 days of commitment of funding. Failure to produce
this evidence will result in no eligibility to receive subsidy.
i. Applicants must certify that the
development's buildings will be placed service as required by Section 42 of the
Internal Revenue Code.
3.Tier Three - 2009 APPLICANTS -
Considered after determine amount of credits remaining after Tier Two awards
for purposes of awarding additional tax credits; TCAP and/or Exchange/Subawards
a.Funding availability will include:
i. Tax credits remaining after the 2007 and
2008 outstanding developments have been awarded additional tax credits and
Exchange/Subaward;
ii.TCAP funds
remaining after award to 2007 and 2008 outstanding developments
iii.Exchange funds available after award to
2007 and 2008 outstanding developments
iv.HOME funds
availability.
b. 2009
applicants will be scored as required under the 2009 QAP.
c. 2009 applicants will be awarded remaining
tax credits based upon the highest score. Following a reservation of the tax
credit award, if any TCAP, Exchange/Subaward, or HOME funds remain available,
applicants will be given an opportunity to request such funding with the
highest scoring development receiving priority. In the event of a tie, the
Board of Directors for the Authority will award priority based upon factors in
the application such as: market need, number of affordable units; income/rent
limitations; energy efficiency; and unit amenities.
d. To be eligible for TCAP funds, the
applicant must retain no less than $1,000 in annual federal low-income housing
tax credits, or, $10,000 in the aggregate.
e. TCAP funds will be awarded based upon the
following priorities:
i. Certification to a
development timeline that verifies the development will expend 100% of the TCAP
funds awarded no later than December 31, 2010 and will place in service no
later than December 31, 2011. Failure to make the certifications eliminate the
applicant's eligibility for funding separate from that in the applicant's
Original Application. Failure to adhere to the timelines required will result
in a recapture of tax credits, TCAP or Exchange/Subaward funds, as applicable;
and
ii.The highest score as
determined under subsection c. above.
f. Applicants requesting the maximum amount
($500,000) of TCAP funding will be eligible for additional HOME funds not to
exceed $900,000, including any previous allocation. Recipients may use the
additional HOME funds to reduce permanent debt, deferred developer fee, or
other funding source in the Original Application.
g. To be eligible for an Exchange/Subaward,
the applicant must have requested, at a minimum, $100,000 in TCAP funding.
Equity created by an Exchange/Subaward can only be used to replace equity lost
from the Original Application.
h. If
requesting Exchange/Subaward, applicant must provide the following:
i. Written statement from most recent
investor/syndicator submitted to ADFA which indicates that the
investor/syndicator has rescinded its previous equity commitment to the
applicant. The written statement must reference the date and terms of the
previous equity commitment rescinded and the amount rescinded. If the
rescission is limited to a portion of the previous credit amount accepted and
equity commitment, the investor/syndicator statement must specifically identify
the amount of credits and amount of equity that remain accepted and committed;
ii.Written statement from
nationally recognized investor/syndicator indicating that the
investor/syndicator has been contacted by the applicant and rejected an offer
to purchase any/all of the tax credits offered. The rejection must specifically
identify the amount of credits offered and rejected. If the rejection is
limited to a portion of the tax credits offered, the investor/syndicator
statement must specifically identify the number of credits accepted for
purchase and amount of equity to be paid for such purchase; and
iii.Sworn statement by the applicant that:
A. In addition to the investor/syndicator
identified in subsection 2h.ii above, the applicant has
contacted two additional nationally recognized investors/syndicators and they
have rejected the purchase of any tax credits allocated to the
applicant;
B. Each
investor/syndicator contacted has made no offer/counter-offer to purchase
credits allocated at any per credit price.
i. Recipients must provide official evidence,
e.g., building permit, construction permit, etc. that they can
begin construction within 120 days of commitment of funding. Failure to produce
this evidence will result in no eligibility to receive subsidy.
j. Applicants must certify that the
development's buildings will be placed service as required by Section 42 of the
Internal Revenue Code.
Board Approval
Any award made pursuant to Arkansas' Three-Tier selection process
is subject to the approval of the Board of Directors for the Arkansas
Development Finance Authority. The Board of Directors has the authority to
determine the amount of any additional tax credits, TCAP, Exchange/Subaward or
additional HOME funds requests based upon the financial feasibility analysis of
any applicant.
2009 Guidance and Procedures Tax Credit
Assistance Program ("TCAP")
* ADFA's TCAP Application has been accepted by HUD.
* $20,463,053 available for 2007, 2008 and 2009 LIHTC
"awardees."
* "Awardee" defined to include those development owners publicly
announced by Board of Directors as receiving a reservation of tax
credits.
> Does not include those development owners who
returned their tax credits prior to enactment of ARRA.
* Apply by application as provided by ADFA.
* Award of TCAP funding based on:
a) Certification to timeline that verifies
development will expend 100% of TCAP funds no later than November 15,
2010;
b) Final Score received
during original round with 2008 amended to match 2007 criteria with award to
highest final score;
c) 5 points
for requesting "additional" tax credits i. Total amount of tax credits to be
allocated cannot exceed $600,000 or $625,000, if applicable. ii. "Additional"
tax credits do not include previously allocated credits or 2009 credits awarded
or "swapped" in lieu of 2009 credits iii. Commitment will be for at least $.50
per credit
* Eligibility for TCAP:
a) 2007, 2008, and 2008 awardees
b)Must retain minimum amount of $1,000 in
annual federal low-income housing tax credits, or $10,000 in the aggregate.
i. Cannot be "Disaster" credits
only.
ii. Can be "swapped" 2009
credits.
iii. Must place in service
in accordance with year of allocation of "retained" tax credits.
iv.If "retain" (swap for) 2009 tax credits,
required to adhere to 2009 QAP including Minimum Design Standards - Universal
Design requirements.
c)
Maximum amount of award is $500,000
> Applicants requesting maximum amount of TCAP - $500,000 -
will be eligible to request additional HOME funds not to exceed
$900,000.
d) Applicant must
provide official evidence, e.g., building permit; construction
permit, that can begin construction within 120 days of commitment of funding
e) Applicant must certify that the
development's buildings will be placed in service in accordance with Section 42
of the IRC.
* Commitment and Expenditure deadlines:
a. Within 90 days of selection, the Authority
will complete environmental reviews on the selected developments;
b. Within 30 days of environmental clearance,
the Authority will enter into a written agreement with the recipient committing
payment of the TCAP award based on the following:
i. Recipient's agreement that TCAP funds will
be awarded in the form of a loan, secured by mortgage, amortized over the term
of the development's affordability period as selected in the recipient's tax
credit application, to be payable monthly based on one-half surplus cash (to be
defined), with a balloon payment of the balance at the end of the affordability
period;
ii.Recipient's agreement
that a covenant binding ownership and its successors will be recorded
restricting the development property by those TCAP program requirements and
crosscutting federal grant requirements required by Notice CPD-09-03. Those
requirements will be separately identified in the covenant;
iii. Recipient's agreement that TCAP funds
may only be used for capital investment. Capital investment will be defined to
mean costs included in "eligible basis" (not including 30% basis
boost), except costs associated with the construction, acquisition or
rehabilitation of a swimming pool(s), under Section 42 of the Internal Revenue
Code;
iv. Recipient's agreement
that costs incurred or expended prior to entry of the agreement are not
eligible for TCAP funding.
v.
Recipient's agreement that it will not incur or expend costs for TCAP funding
prior to the completion of a pre-construction conference between the recipient
and the Authority and the issuance of a "Notice to Proceed" by the
Authority;
vi. Recipient's
agreement that it will incur or expend "eligible" costs based upon the
following timeline:
A. Within 90 days of
"Notice to Proceed" - 25% of TCAP award;
B. Within 180 days of "Notice to Proceed" -
50% of TCAP award;
C. Within 270
days of "Notice to Proceed" - 75% of TCAP award;
D. No later than November 15, 2010 - 100% of
TCAP award;
vii.
Recipient's agreement that failure to meet the deadline requirement of
subsections b(vi )(A), b(vi)(B), or
b(vi)(C), above, will require the recipient to set-aside an
equivalent percentage, i.e., 25%, 50%, or 75%, of its
developer's fee into escrow. Said amount will be payable to the developer in
equal annual payments over 15 years following placement in service of the
development;
viii. Recipient's
agreement that failure to meet the deadline requirement of subsection
b(vi)(D), above, will result in the de-obligation,
i.e. non-payment of any remaining TCAP funds, plus recapture
of all TCAP funding previously awarded to the recipient;
ix. Recipient's agreement that payment of
TCAP funds will be based upon a schedule set forth in the agreement after
on-site inspections by the Authority and receipt of, at a minimum, the
following:
A. Receipts or invoices of costs
incurred or expended;
B.
Certification by certified public accountant that the costs incurred or
expended, as presented, constitute "eligible basis" under Section 42 of the
Internal Revenue Code; and
C.
Number of jobs created and retained during the period for which costs were
incurred or expended; and
x. Recipient's agreement that failure to
place all buildings in the development in service in accordance with Section 42
will result in the recapture of all TCAP funding awarded to the recipient.
xi.Recipient's agreement that the
provisions of
26
U.S.C. §
42(h)(6)(E)(ii)
-3-year tenant protections in event of foreclosure -- will apply to
the development.
*
Distribution of recaptured TCAP
funds.
a. Recaptured TCAP
funds will be offered, in the order of the highest score, to any applicant that
had previously applied for TCAP funds but did not receive the amount applied
for due to a lack of TCAP funding.
b. The maximum award of $500,000 will apply
to the award of recaptured TCAP funds.
c. The commitment and expenditure timelines
of Section b(
vi) above will apply. Dependent upon the date of
recapture, the Authority will have the discretion to set timelines different
from those set forth in Section b(
vi) above. However, any
timelines determined by the Authority will be set to ensure compliance with
commitment and expenditure timelines imposed by the American Recovery and
Reinvestment Act of 2009 and Section
IV.C of Notice CPD-09-03.
* All commitment and expenditure timelines will be
tracked and reported to HUD in IDIS
Section 1602 Grants in Lieu of Tax Credits
("Exchange Program")
* Available to developments placed in service after December 31,
2008.
* Acquisition costs for existing building(s) not eligible for
Exchange Subaward if placed in service before January 1, 2009.
> Acquisition basis cannot include value of cash
reserves
* Apply by application as provided by ADFA. ADFA will have
application form ready no later than June 26, 2009.
* Must have requested at least $ 100,000 in TCAP funding a) Which
means must retain minimum amount of $1,000 in annual federal low-income housing
tax credits, or $10,000 in the aggregate b) Can be "swapped" 2009
credits
* Cannot receive Exchange Subaward if allocated "additional tax
credits."
* Can only be used to replace equity lost from ORIGINAL
APPLICATION
* Cannot exceed eligible basis costs not including 30%
basis boost.
> TCAP plus Exchange funds cannot exceed eligible
basis costs not including 30% basis boost.
* Must place in service in accordance with year of allocation of
"retained" tax credits.
* Required to adhere to 2009 QAP including Minimum Design
Standards - Universal Design requirements
* Applicant must provide the following:
a) Written statement from most recent
investor/syndicator submitted to ADFA which indicates that the
investor/syndicator has rescinded its previous equity commitment to the
applicant.
b) Written statement
from nationally recognized investor/syndicator indicating that the
investor/syndicator has been contacted by the applicant and rejected an offer
to purchase any/all of the tax credits offered.
c) Sworn statement by applicant that:
i. In addition to the investor/syndicator
identified above, the applicant has contacted two additional nationally
recognized investors/syndicators and they have rejected the purchase of any tax
credits allocated to the applicant .
ii.Each investor/syndicator contacted has
made no offer/counter-offer to purchase credits allocated at any per credit
price
d) Applicant must
provide official evidence, e.g., building permit; construction
permit, that can begin construction within 120 days of commitment of
funding
e) Applicant must certify
that the development's buildings will be placed in service in accordance with
Section 42 of the IRC.
f) Subaward
will be in the form of a grant payable after costs incurred or expended.
* Must execute agreement with ADFA prior to disbursement that
sets forth:
a) All Section 1602
program requirements;
b) Section 42
requirements;
c) Provides for
recapture of funds when:
i. Failure to place
in service in accordance with Section 42; or
ii.Percentage of low-income units falls below
percentage of Exchange Subaward; or
iii.Number of units falls below minimum
set-aside
A. No partial recapture -- All or
nothing on recapture amount
B. One
unit out of compliance does not trigger recapture
iv.Recapture exposure amount decreases 6.67%
for each full year of compliance
d)Requires recipient to provide the following
information prior to any payment of Exchange Subaward:
i. Name of recipient entity
ii.Name of development
iii.Brief description of
development
iv.Location of project:
city/county/State/zip code
v.Number
of construction jobs created
vi.Number of construction jobs
retained
vii.Number of
non-construction created
viii.Number of non-construction jobs
retained
ix.Number of total housing
units newly constructed
x.Number of
total housing units rehabilitate
xi.Number of low-income housing units newly
constructed
xii.Number of
low-income units rehabilitated
e)Recipient's agreement that it will incur or
expend "eligible" costs based upon the following timeline:
i. Within 90 days of "Notice to Proceed" - 25 %
of Exchange award;
ii. Within 180 days of "Notice to Proceed" - 50%
of Exchange award;
iii. Within 270 days of "Notice to Proceed" -
75% of Exchange award;
iv.. No later than November 15, 2010 - 100% of
Exchange award;
f)
Recipient's agreement that failure to meet the deadline requirement of
subsections e(i); e(ii); e(iii), above, will
require the recipient to set-aside an equivalent percentage, i.e., 25%,
50%, or 75%, of its developer's fee into escrow. Said amount will be
payable to the developer in equal annual payments over 15 years following
placement in service of the development;
g) Recipient's agreement that failure to meet
the deadline requirement of subsection e(
iv), above, will
result in the de-obligation,
i.e. non-payment of any remaining
TCAP funds, plus recapture of all TCAP funding previously awarded to the
recipient;
* Must incur or expend 100% of Exchange Subaward by
November 15, 2010.
2009 Applications
* Will be based upon 2009 application
* Made before September 30, 2009
* 2009 applicants will be awarded tax credit remaining after the
2007 and 2008 outstanding developments have been awarded additional tax credits
and Exchange/Subaward
> Based upon the highest score
* Following a reservation of the tax credit award, if any TCAP,
Exchange/Subaward, or HOME funds remain available, applicants will be given an
opportunity to request such funding with the highest scoring development
receiving priority
* Criteria for eligibility of TCAP and Exchange funds will be
same as set forth above for the 2007 and 2008 awardees Amendments
The above guidance is subject to change as necessary to
administer the TCAP and Section 1602 Grants in Lieu of
Tax Credit Programs in accordance with state and federal
requirements.