99-346 C.M.R. ch. 16, § 7 - PROJECT EVALUATION

A. Amount of Credit. The amount of Credit allocated will be determined as follows:

1. The calculation of the amount of Credit will be based on 130% of Eligible Basis. MaineHousing has designated the entire State as a DDA under Section 42(d)(5)(B)(v) of the Code because of the high cost of developing housing, the low median income, and the high annual operating costs for housing relative to other states;

2. To determine the amount of Credit, MaineHousing will use the lesser of (a) the market rent, based on the Application market study as approved by MaineHousing, and (b) the maximum Credit rent. For three or more bedroom units MaineHousing will use the maximum Credit rent for two-bedroom units plus $50.00;

3. The amount of Credit allocated for a Project will not exceed the least of

a) the amount the Project is eligible to receive under Section 42 of the Code,

b) the amount MaineHousing determines is necessary for financial feasibility and viability throughout the Credit Period, and

c) the Maximum Credit Amount;

4. The Applicant must submit financial and all other required information. MaineHousing will evaluate the need for Credit based on

a) all sources of financing, including the terms and conditions,

b) equity expected to be generated by reason of tax benefits, and

c) the uses of funds, including the reasonableness of development costs and operating expenditures; and

5. In order to determine the amount of Credit, MaineHousing must identify a gap between development sources and uses absent a Credit allocation. MaineHousing may limit recognition of Intermediary Costs, re-characterize Project sources and uses and make reasonable assumptions with respect to projected revenues and expenses. MaineHousing will also take into consideration any federal limitations when combining the Credit with other federal assistance (i.e. "subsidy layering" guidelines).

B. Developer Fee. Developer Fee will be determined as follows:

1. Maximum Developer Fee. The total Developer Fee may not exceed the sum of 15% of the Housing Development Costs, plus 10% of the costs of acquisition of land, existing buildings and equipment, determined without regard to the Developer Fee.

2. Net Developer Fee. The amount of Developer Fee not deferred may not exceed $750,000 plus any unused construction contingency returned to the Applicant after completion.

3. Additional Developer Fee. An Applicant is eligible for Developer Fee in excess of the Net Developer Fee calculated above only if it is deferred and used to increase the tax credit basis.

C. General Contractor Intermediary Costs. The general contractor's Intermediary Costs must be:

1. separated from other construction and rehabilitation costs,

2. with general conditions and overhead and profit parsed out, and

3. no more than 14% of the Total Construction Cost, within the following ranges:

a) General conditions up to 6% of Total Construction Cost, and

b) Overhead and profit up to 8% of Total Construction Cost

D. Time of Credit Determination. MaineHousing will determine the amount of Credit at the time of

1. Application, which will be evidenced by the Notice to Proceed;

2. the allocation of Credit, including any carryover allocation;

3. the date each Qualified Building is Placed in Service; and

4. if a Qualified Building is allocated Credit pursuant to Section 9, the date of issuance of the tax-exempt bonds.

Prior to each determination, the Applicant must certify the full amounts of all funding sources and provide any other information required by MaineHousing.

E. Market Study. The applicant must submit a comprehensive market study prepared by a qualified professional in accordance with the National Council of Housing Market Analysis Model Standards for Market Studies for Rental Housing. MaineHousing may require the Applicant to either correct any inadequacies it identifies or submit a new market study. MaineHousing also may elect to commission its own market study.

F. Construction Cost Increases. MaineHousing may allocate additional Credit to a Project if its construction costs increase after the Application date and the increase is the result of market conditions or other circumstances beyond the Applicant's control. Any additional Credit will not exceed an amount necessary to generate equity equal to 5% of the Total Construction Cost based on construction bids.

Notes

99-346 C.M.R. ch. 16, § 7