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LIHTC Applications FAQ

This LIHTC Applications FAQ page is the method for submitting questions related to application requirements and scoring criteria for the 2019 competitive low income housing tax credit allocation round. Staff will make a good faith effort to post responses to questions within three business days of receipt. Note that staff may edit questions for clarity before posting them to this page. If you believe that your question was misrepresented and your question was not answered correctly, please submit a follow-up question or clarification of your question. Questions will not be accepted after 5PM, January 24, 2019.

Question Submission

NOTICE: Site control must be in the name of the Project Owner, if formed, or the General Partner or a managing member of the General Partner. The QAP anticipates that in many cases the legal entity that will ultimately be the Project Owner (the Limited Partnership) will not have been formed at the time that the Initial Application is submitted. The QAP, therefore, allows for site control in the name of a General Partner or managing member of a General Partner.


Cost and Fee Limits

The below FAQs are from prior years, but may answer questions still pertinent to the current QAP.

Q1: USDA-RD 515 projects require a lump-sum contract. RD doesn't lock in the Builder's Overhead, General Requirements, and Profit until there is a signed contract. When does MFA lock in the amount of Overhead, General Requirements, and Profit for a RD lump-sum contract?

A1: The maximum builder's fees, as well as developer fees, are locked in at Initial Application. For LIHTC purposes, any amount of fees that exceed the lesser of the limits established at Initial Application or the percentage limitations will be excluded from the Project's Eligible Basis when calculating the tax credit allocation.

Q2: If 2015 rents and income limits are available prior to end of year 2014, may we use those rents and income limits in our initial tax credit application?

A2: If 2015 rents and income limits are available prior to the Application Deadline, Applicants may use those rents and income limits in the initial tax credit application. Bear in mind, however, in many areas around New Mexico rents set at the rent limit for households at 60 percent of area median income may be very close or above market rents and MFA will not underwrite to rents in excess of the achievable LIHTC rents indicated in the MFA commissioned market study for the Project.

Q3: Can we capitalize replacement reserves for the first 15 years? We understand this is a non-eligible basis project cost.

A3: Replacement reserves for the first 15 years may be capitalized in the development budget assuming that there is a source of funds that can be used to establish the reserve account. Keep in mind that establishing reserve accounts may not be an eligible expense for some MFA funding sources and that if the capitalization of the reserve account results in projected excess cashflow, MFA may reduce subsidy for the Project. The appropriate accounting treatment of capitalized reserve accounts should be determined by a qualified CPA or tax attorney.

Q4: The QAP requires the gross rents to be reduced “by a utility allowance that accurately reflects the cost of tenant-paid utilities by unit size.” The project owner is required to certify that it “has obtained accurate, allowable, current utility allowances for use in the calculation of rents for the Project, and acknowledges this to be an annual requirement for the duration of the Compliance Period.” Neither of these provisions appears to require that the applicant base the utility allowance upon local Section 8 utility allowances. May the applicant use utility allowances based upon an alternative, such as an energy consumption model prepared by an independent third-party engineer or energy rater? If so, does MFA have any specific requirements for what must be included or standards that must be met?

A4: New construction projects that do not have a rental assistance contract must use the utility allowance schedule approved by the local housing authority. Projects that have rental assistance contracts may use the utility allowance approved in those contracts. Existing projects may use a utility allowances based on historical utility consumption which has been approved in advance by MFA. MFA will not approve or use utility allowances based on utility consumption modeling. Please note, if the project is also using HOME funds, there may be additional rules that will apply to the utility allowances permitted during operations.

Q5: What are the cash flow requirements for projects without hard debt? Will this be in the underwriting supplement?

A5: Determinations regarding the cash flow requirements for projects with no hard debt will be made a case-by-case basis. Generally speaking, MFA has two obligations to consider when analyzing the cash flow of a project. First, MFA must ensure that the projected income of the project is sufficient to cover all operating expenses and all required (hard) debt payments with a reasonable cushion. Second, MFA must reasonably ensure that a project has only enough subsidy to be financially viable. Therefore, if a proposed project has no debt (hard or cash flow contingent) but financial projections indicate that the project could support a reasonable mortgage payment, MFA may reduce the tax credits allocated to the project and require the owners to secure a commercial loan or other funding to make the project financially whole. Alternately, if a project has no debt (hard or cash flow contingent) and the financial projects indicate that the project will have minimal or negative cash flow during the compliance period, MFA may reject the application as being not financially feasible. Because determinations regarding the cash flow requirements for projects with not hard debt will be made a case-by-case basis, it will not be covered in the underwriting supplement.

Q6: How should a cash flow only loan be shown on Schedule C-1 (Cash Flow Projection)? Should cash flow only loans show any amount in the Payment Column (Column G) in Schedule A-1 (Sources of Funds)?

A6: Payments on cash flow loans do not need to be shown on the Cash Flow Projection or on Schedule A-1.


Scoring Criteria

Q1: If a municipality does not typically issue statements determining blight, what alternative documentation will be acceptable for the Blighted Buildings and Brownfield Site Reuse criteria?

A1: The application must include a letter from the Local Government Building Division stating the proposed site meets the requirements of the QAP for blight. In the event that the Local Government will not issue a determination of blight, the Applicant must provide a letter from the Local Government stating the Local Government’s policy, a third party report indicating that the site meets the QAP’s definition of blight, and the Applicant must provide documentary support such as notices of violation of: (1) Local Government’s codes or regulations or, (2) the recorded covenants, conditions and restrictions for the property or, (3) a condemnation notice from public record. The application must also include photos of the blighted structure, neighborhood, or area. MFA reserves the right to determine whether or not the site meets these requirements.

Q2: Can a project receive the 3 points under “Other Scoring Points Available” for being “located in a town or municipality with a population less than 16,000 people pursuant to data published by the 2016 US Census Bureau, and the MFA-ordered Market Study supports need for the project,” if the town is an unincorporated Census Designated Place (CDP), with their own zip code?

A2: Yes, a Census Designated Place (CDP) may be considered in the Small Town scoring criteria, if the edge of the CDP is separated by at least five straight miles from the border of the next town or CDP.

Q3: A requirement criterion 1 is that net worth/net assets of the nonprofit must be substantiated by reviewed or audited financial statements. The nonprofit was established recently, and while they currently have the asset requirements of the QAP, they will not have the audited financials by the submission deadline. The financials have been reviewed by a CPA and all returns per IRS requirements have been filed. 

A3: If a CPA has reviewed the nonprofit financials, that would suffice. As stated above, the requirement is to have the assets of the nonprofit substantiated by reviewed or audited financial statements.  In this case they would be substantiated by a CPA review.

Q4: I am curious if there is any guidance on what the resolution (from government partner) should include under the leverage section item 27b. Is there an example of a resolution or can it be general as long as it names the specific contribution and the receiving entity?

A4: The resolution must state terms, specific contribution being made, and clearly indicates the receiving entity. If you would like to see a past, approved resolution, please feel free to make a public records request.

Q5:  We would like to provide semi-annual CPR training as one of our enrichment services for a project prioritizing seniors. Would this approved as an MFA enrichment service and if so, for how many points?  We did notice that this is a listed service for Households with Children Housing Priority.

A5: The semi-annual CPR training as described for a senior project is eligible for 1 point.

Q6: Our proposed 2019 9% LIHTC project, which is in a 2019 QCT and in an area of very low income, is considering incorporating a community service facility as defined by Internal Revenue Code §42(d)(4)(C). This facility would be on the same site as the housing units. Is the square footage of a community service facility included in the efficient use of tax credits calculation in the LIHTC 9% application?

A6: The amount of credit for the community service facility cannot be more than 25% of the eligible basis up to $15,000,000 plus 10% of the remaining eligible basis of the project. In addition to the eligible basis limitations, to be included in project basis:

  1. Project must be located in a QCT;
  2. A facility must be designed to serve primarily individuals with an income no higher than 60% of AMI;
  3. A comprehensive market study of the housing needs of low-income residents in the area must have been conducted prior to the awarding of the credits, and the need for the services should have been noted in the market study;
  4. The facility must be used to provide services that will improve the quality of life for community residents;
  5. The facility must be located on the same tract of land as one of the buildings of the qualified LIHTC project;
  6. Any fees charged for services must be affordable to individuals at or below the 60% income level.

The square footage of any space meeting the above criteria is eligible to be included in the efficient use of tax credit calculation as long as there is no rent charged, which would designate the space as commercial.

Q7: For Leveraging points, the QAP says that construction permit fee waivers may count as a contribution provided applicant submits a signed letter from the local governmental entity confirming the legal basis for imposing the permit fee(s) and the amount of the permit fee(s) to be waived. Who exactly does this signed letter need to be from?  Is it the jurisdiction's planning/building department, the City/County Manager or Elected Officials?

A7: The letter needs to be from the entity imposing (or forgiving) the fee.

Q8: Please clarify the process for PBV that are applied  to the project through a Housing Authority utilizing the LIHTC process as a allowable competitive process per 24 CFR Part 983.51 (d) as public notice and sustaining affordability points.

A8: In order to be eligible for the Sustaining Affordability points, the application submission must include a copy of the Federal Rental Assistance Contract (if applicable) and a copy of Federally Approved Rent Schedule indicating Approved Rents and Utility Allowances documenting that the project will have a federal rental assistance contract covering at least 75% of the units.  In absence of the RAC and rent schedule, we will consider equal documentation from the issuing agency to confirm that the vouchers have already been allocated to the project.

Q9: Our proposed project is in the unincorporated area of a county adjacent to a city which has had recent LIHTC awards.  Although it is geographically near the City, it is not in its legal borders.  Our unincorporated area has not had an active LIHTC award since 1996, and it was a 4% project. Scoring item #22 of the 2019 QAP says: (iv) The Project is to be located in a town or municipality with no "active: LIHTC Project. "Active" is defined as a town or municipality for which a LIHTC award was made in the last five (5) calendar years an the MFA-ordered Market Study supports need for the project (3 points): Is it correct to conclude that our project would be eligible to receive points under this category?

A9: The intent of the scoring criterion described under Section III.E.22.iv of the QAP was to provide new affordable housing opportunities in areas where those opportunities do not exist.  “Municipalities” include cities, towns and villages.  Although counties are not mentioned in the criterion, if a county, including both incorporated and unincorporated areas, does not have an “active” project, then a proposed project could be eligible for points.    However, the project described above is within a county that has many “active” projects, and thus does not meet the intent of the scoring criterion of offering new affordable housing opportunities in areas where those opportunities do not exist and would not be eligible for points under scoring criterion III.E.22.iv.  

Q10: For the scoring criteria of Households with Special Housing Priority, option A allows for 15 points. Do these points include the additional points a project can go for or is that separate? If not, then where in the tax credit scoring worksheet can we indicate that we want an additional 10 points for this category?

A10: Projects electing to provide units for Households with Special Housing Needs may be eligible for up to either 10 or 15 points, depending on the percentage of set aside units provided in the project. A list of services the project can provide to tenants (and the corresponding points eligible) can be found in the QAP under that scoring criterion.

The below FAQs are from prior years, but may answer questions still pertinent to the current QAP.

Q1: For Criterion 1, where a local non-profit’s net worth/net assets are below $250,000 (or below $1M), does the partnering entity with the net worth/net assets in excess of (or a combined net worth) $250k (or $1M) also have to be a nonprofit entity to qualify as a partnering entity to receive points?

A1: Nonprofits, NMHAs and TDHEs with net worth/net assets below $1,000,000 (or below $250,000) may partner with another entity to increase the General Partner’s combined net worth above this threshold. A for-profit partner entity’s reviewed financial statements may be used to achieve the net worth/net assets thresholds.

Q2: Projects which include the remediation and reuse of a brownfield site are eligible for points. Using the checklist, to qualify for these points, the applicant must provide a Phase II Environmental Site Assessment and a remediation budget. How recent must the Phase II Environmental Site Assessment be? Is a report that is several years old sufficient?

A2: The Phase II Environmental Site Assessment should be dated within 6 months of the application date.

Q3: In order for a project to be considered for the nonprofit set aside and points, the nonprofit must materially participate in the development and operation of the project throughout the compliance period. Which compliance period does this refer to? The IRS required compliance period or that which the applicant commits to as shown on the application? If the IRS required compliance period, is it 15 or 30 years?

A3: If a project is designated as part of the nonprofit set aside, the nonprofit must materially participate in the development and operation of the project throughout the Compliance Period as that term is defined in Section 42 of the IRS Code and the Qualified Allocation Plan (QAP). With regard to the scoring criterion, the QAP states that the Qualified Nonprofit Organization, NMHA, or TDHE must own at least 51% of the General Partner interest and be receiving a minimum of 10 percent of the developer fee as identified in the Project Application. The QAP does not provide for an expiration requirement that the Qualified Nonprofit Organization, NMHA, or TDHE own at least 51% of the General Partner interest.

Q4: I have someone who wants to submit a package, but couldn't make the QAP training. Is there anything we can do for them? Can they take Elizabeth Moreland's online class?

A4: In relation to scoring for “Nonprofit, New Mexico Housing Authority (NMHA), or Tribally Designated Housing Entity (TDHE) Participation,” online compliance courses are not an acceptable substitute to the MFA QAP training. Completion of training programs such as the site-based Housing Credit Certified Professional (HCCP) training, or equivalent training programs, may be acceptable. Actual acceptable substitutes, however, will be approved on a case-by-case basis by MFA’s Housing Tax Credit Program Manager based on a review of agenda or curriculum for the proposed course.

Q5: Does MFA have a form template certification for LEED APs of LEED for Home Providers to sign? Also, please clarify whether or not the LEED certification also requires the Owner's signature.

A5: For years that LEED was required MFA does not have a template for the certification. The certification, however, simply needs to state that the LEED AP or LEED for Homes Provider has examined the Project plans and specifications and that it is reasonable to expect that the project will be able to achieve LEED certification if the project is built according to the plans and specifications. This certification only needs to be signed by the LEED AP or LEED for Homes Provider.

Q6: If a nonprofit has audited financials for their fiscal year-end (typically June, 2013), will they be required to obtain accountant reviews of their calendar year-end financial statements?

A6: Fiscal year-end audited financials are sufficient.

Q7: If the nonprofit shows assets in excess of $1,000,000 do the other general partners have to provide audited or accountant-reviewed calendar year-end financials?

A7: No, if the fiscal year-end audited financials for the nonprofit show net assets in excess of $1,000,000, the for-profit GP does not need to provide reviewed financials.

Q8: In determining the gross square footage for a project we want to make sure that we are correctly calculating the areas. We have heated space, mechanical and storage space, and exterior decks that are enclosed by railing and “covered” by the deck above. Are all of these areas calculated as part of the Gross building square footage? Decks require construction activity to create the space for use. We have typically used the BOMA calculation method from the outside of the wall in.

A8: The exterior decks should not be included in the calculation.

Q9: When calculating the efficient use of credits, low income square footage means the sum of each Building’s Gross Square Feet, so if a project has structured parking (on a subterranean level) that is part of the project’s eligible basis, would this square footage be included in this calculation? It seems as though this should be treated the same as garages and should be included, although this definition in the QAP is silent as to parking.

A9: For the purpose of calculating efficient use of credits, garages and structured parking will be treated the same as surface parking. It should not be included in the Building’s Gross Square Feet when calculating efficient use of credits. In mixed use or mixed income projects, the cost of the parking should be included in eligible basis proportional to the space specifically designated for low income resident use and provided to residents at no charge.

Q10: The Efficient Use of Tax Credits scoring criterion has tax credits per low income unit and tax credits per low income square foot benchmarks. Must the tax credits requested be below these benchmarks to be eligible for points or can it be equal to and be eligible points?

A10: For Efficient Use of Tax Credits scoring the tax credits per low income unit and tax credits per low income square foot must be less than the benchmarks to be eligible for the points.

Q11: Can an applicant request less tax credits than the project is otherwise eligible for in order to meet the benchmarks and obtain points for Efficient Use of Tax Credits?

A11: Yes, an applicant can request less tax credits than the project is otherwise eligible for in order to meet the benchmarks and obtain points for Efficient Use of Tax Credits. As stated in the QAP, however, all projects will be underwritten to ensure financial feasibility and applications which fail to demonstrated financial feasibility may be rejected. Also, projects awarded points for Efficient Use of Credits may not apply for additional credits if projects cost increase or if other anticipated funding sources are not obtained.

Q12: Should commercial space square footage be included in the sum of each Building’s Gross Square Feet for the purpose of calculating the Efficient Use of Credits?

A12: As indicated on the Efficient Use of Credits Worksheet, commercial space should be excluded from the sum of each Building’s Gross Square Feet for the purpose of calculating the Efficient Use of Credits.

Q13: When a city is contributing property and waiving permit/utility connection fees how should this be reflected on schedule A and schedule A-1?

A13: If the property, for example, is worth $300k and the fee waivers are worth $20k, the cost of the building of $300k and the cost of the fees of $20k should be shown on the Schedule A and then the same amounts on the schedule A-1 as a source of funds with the city listed as the contributor.

Q14: Can the cost of donated property or waived fees be included in eligible basis?

A14: Since the property is donated and the fees are waived they do not represent actual costs to the project and cannot be included in eligible basis.

Q15: When calculating the maximum allowable developer fee should applicants use the total development cost including donated property and waived fees?

A15: No, since the donated property and waived fees are not actual costs, they will not be included in total development cost when calculating the maximum allowable developer fee.

Q16: We would like to request that Community Gardens be included as an additional Social Service scoring criteria for the Families with Children set aside. 12 to 15 8'x8' raised garden beds will be provided with instructional classes being provided during the growing season by a qualified educational entity.

A16: The delivery of at least four monthly gardening classes per year during the growing season by a qualified instructor is eligible for one point as an additional enrichment service for Families with Children or Seniors. In addition to the standard requirement of all enrichment services of being delivered on-site, at no charge to all residents, and actively linked to the Project, to be eligible for the additional point for this activity the Project must include gardening space of at least three square feet per unit for at least 50 percent of the units in the Project.

Q17: Our project will be serving seniors. We would like the following services approved for one point each: 1) semi-annual Medicaid eligibility screening and application assistance, 2) quarterly job training, search assistance, and/or placement, and 3) quarterly computer training. All services would be provided on-site by qualified service providers at no cost to residents.

A17: The services as described are eligible for 1 point each.

Q18: The enrichment service that we are asking you to approve for 2 points is a maintenance/homeownership training provided by a qualified organization. This training will be offered quarterly at no charge to the residents and be conducted on-site at the proposed community building and/or at the agency’s the maintenance department located ¼ of a mile away from the development. A description of the services is as follows: the owners recognize the need to educate the residents of the tax credit development in maintenance and homeownership training. Although the residents will be tenants, the owner wants to empower them with the tools they need by providing them with tips on living in a home for the long term. As a “homeowner” the residents will be taught to be observant, understand what to look for, and develop skills. With this program, the low-income tenants could be set on a path to eventually purchase their first home and also be successful at taking care of the home. The following is not meant to be an all-inclusive list, but is to help MFA understand the level of detail the owner will commit to teaching the residents of the tax credit development: 1) Living greener items: turn the lights off when not needed, understand phantom energy use and prevention, and water conservation measures. Keep the bathroom exhaust fan on while the shower is in use to prevent mold/mildew and enhance indoor air quality. 2) Mechanical items include: teach how to properly change the air filters at the proper intervals, including the dryer filter. Show how to clean the bathroom exhaust fans regularly, properly set the programmable thermostat, and clean the range hood regularly to prevent grease build-up. 3) Plumbing items: teach how to identify small plumbing repairs before they become big ones, how to properly plunge a toilet, and understand what should and shouldn’t be flushed. 4) Electrical items: how to reset a tripped breaker, change light bulbs, change the smoke detector batteries, and prevent circuit overloading.

A18: The maintenance/homeownership training as described is eligible for 1 point.

Q19: Regarding Projects Receiving a Local Contribution, what type of documentation is required if the resolution from the municipality does not state financing terms?

A19: If the resolution from the municipality does not state financing terms a copy of an executed development agreement or similar document must be included with the application.

Q20: The application checklist indicates that applications must include a “Municipality’s certification to MFA, or a copy thereof, that the project and contribution has been analyzed by the Governmental Entity and the contribution meets the requirements of the Affordable Housing Act and Rules Section 5.4.” How do we determine if this certification has been provided to MFA and is there a template for this certification?

A20: There is no template for this certification. Each certification will be unique and correspond to requirements enumerated in the specific municipality’s Affordable Housing Plan and Affordable Housing Ordinance. Please contact Laura Chavez, Community Liaison (lchavez@housingnm.org) for questions regarding a municipality’s certification to MFA.

Q21: Would a finding of asbestos in an existing building make the project eligible for points under the Blighted Buildings and Brownfield Site Reuse criterion as a Brownfield site?

A21: A finding of asbestos, or lead-based paint, in an existing building would not make the project eligible for points under the Blighted Buildings and Brownfield Site Reuse criterion as a Brownfield site. The hazardous substance, pollutant, or contaminant must be attributable to the site (e.g. land) in order for the property to be considered a Brownfield site by MFA.

Q22: One of the buildings in the project we are working on contains a foot-print of 4,200 gross square feet. Because of its height, the building will accommodate 2 floors of 4,200 square feet. Can we count the 8,400 square feet as adapted space for the 20% adaptive reuse calculation.

A22: As long as you do not have to modify the building envelope to accommodate the 2nd floor, you can count the gross square footage of each floor.

Q23: PH PBRA commitments. Can you elaborate on requirements in the checklist for TDHEs? In the case of new construction projects, what evidence is acceptable that then Project is eligible to receive a HAP request or otherwise will have a HAP in place at the appropriate time (and where the LP is not formed at application)? Secondly, beyond having a Plan that spells out how the funds would be used for PBRA consistent with NAHASDA, there is no requirement for public notice or HUD review and determination that the TDHE owned units are selected.

A23: TDHE must provide two items to evidence the commitment to provide project based rental assistance contract: 1) a copy of the TDHE’s administrative plan indicating their intent to use their NAHASDA funding to provide project-based vouchers, and 2) a resolution from the tribal council or the TDHE indicating their intent to use their NAHASDA funding to provide project-based vouchers to the proposed project.

Q24: For the Leveraging Resources scoring criteria, are contributions in the form of cash which comprise 5% of the TCD, and therefore 5 points in scoring, would be eligible to be added to the 5 points for contributions of Native American Trust Land, for a total of 10 points. Is that correct?

A24: That is correct. A donation of Native American Trust Land automatically receives 5 points for the Leveraging Resources scoring criteria. Cash contributions made in addition to the donation of land are eligible for additional points. So, a project that receives a donation of Native American Trust Land and a cash contribution of 4.75% of total development cost would be eligible for 9 points (5 points for the donation of land plus 4 points for the cash contribution).

Q25: Please verify that for purposes of determining efficient use of credits, that the tax credit request amount (Schedule F) would be used to calculate the per unit and per square foot amount.

A25: Schedule F actually calculates the maximum tax credit request. Applicants may, however, request less tax credits than the project is otherwise eligible for in order to obtain points for Efficient Use of Credits. Consequently, MFA will use the amount of tax credits requested as listed on page 1 of the application form when calculating scoring for Efficient Use of Credits.

Q26: Can you please clarify the types of documentation that will satisfy the requirement to demonstrate exempt purpose to foster the production of affordable housing?

A26: The Articles of Incorporation should reference the production of affordable housing as one of the purposes of the organization.

Q27: Is there a template available for the certification that the nonprofit is not affiliated with, or controlled by a for-profit? If not can you please clarify the minimum required information, signatories and whether it needs to be notarized?

A28: The certification can be as simple as the following statement signed by an authorized representative: “I hereby certify that [your organizations name] is not affiliated with, or controlled by a for-profit entity.” The certification does not need to be notarized.

Q28: Is there a template for the certification that the nonprofit owns 51% of the General Partnership? If not can you please clarify the minimum required information to be contained in that certification, signatories and whether it needs to be notarized?

A28: The certification can be as simple as the following statement signed by an authorized representative of each General Partner: “I hereby certify that [the name of the nonprofit] will own not less than 51% of the General Partnership.” The certification does not need to be notarized.

Q29: I have several different plans for our community and I am unsure as to how to label them. One is a housing plan and one is a long term community plan. I am having a hard time deciphering the specific definition of a concerted community revitalization plan. Could you clarify what this means?

A29: “Concerted Community Revitalization Plan” means a Metropolitan Redevelopment Plan as defined in NMSA 1978 Section 3-60A-4 prepared and enacted by a local, county or tribal government at least six months prior to the application deadline. For Projects located on sovereign tribal lands, “Concerted Community Revitalization Plan” means a written plan similar in content and affect to a Metropolitan Redevelopment Plan as defined in NMSA 1978 Section 3-60A-4, prepared and enacted by a tribal government at least six months prior to the application deadline, which identifies barriers to community vitality and promotes specific concerted revitalization activities within an area having distinct geographic boundaries.

Q30: Are manager's units included in total units for the purposes of determining 20% set aside and other applicable set asides based on total units?

A30: Units set-aside for Project employees (property managers, maintenance staff, etc.) for which rent is collected will be considered unavailable to the general public and, thus, will be treated as market rate units. Units set-aside for Project employees for which rent is not collected will be treated as common area.

Q31: Should requests for approval of additional enrichment services be requested in writing through the portal or via letter to MFA or both?

A31: Either method of submitting a request for approval of alternate services will be accepted. Often the description of proposed services can be lengthy and it is appropriate to send request for approval via email. If, however, the description if fairly short it is appropriate to send the request via the portal.

Q32: For sustaining affordability points, please confirm that "a copy of the public notice of the PBV proposal selected" only applies to projects which are allocated PBVs through an RFP process administered by a Housing Authority. Said another way, if a project is awarded a competitive source of financing from a federal, state or local source and subsequently the local Housing Authority commits PBVs to the project, a public notice of the PBV proposal selected is not applicable.

A32: 24 CFR Part 983.51(d) requires public notice of the PBV proposal selected regardless of the selection process used.

Q33: We are working on a project within a jurisdiction that has a Downtown Master Plan. The project site is within 1/2 mile of the designated Main Street district as identified in the plan, however, the district is not listed as a designated New Mexico MainStreet area. Can we provide a copy of the plan and radius map to qualify for the points under criterion 17?

A33: In order for a proposed project to be eligible for points for being in proximity to a designated New Mexico MainStreet area, the area must be designated as either a Certified New Mexico MainStreet Program or a Start-Up New Mexico MainStreet Program by New Mexico MainStreet.

Q34: The municipality that we are working with intends to make a contribution to our project as an economic development activity pursuant to the Local Economic Development Act [5-10-1 to 5-10-13 NMSA1978] (LEDA). What items are required for the project to be eligible points under project selection criteria “Project Receiving a Local Contributions” for this contribution?

A34: The application must include all of the items on the checklist for the scoring criterion with one exception. In lieu of the municipality's certification to MFA that the project and contribution has been analyzed by the Governmental Entity and the contribution meets the requirements of the Affordable Housing Act and Rules Section 5.4., the application will need to include a certification from the state of New Mexico Economic Development Department stating that the contributions proposed by the municipality are lawful under LEDA.


Miscellaneous

Q1: Does MFA provide substantive feedback or input to Applicants after receiving the Pre-Application and/or meeting with applicant? Or are those processes informational for the MFA, e.g., a way for the MFA to understand its own likely review pipeline?

A1: The meetings are more informational on both ends.  While the meetings are required for every 4% deal, we encourage them for 9% deals. It provides opportunities for MFA to identify any red flags and provides an opportunity to make sure everyone is on the same page regarding the tax credit (and/or bond) process. 

Q2: Is part B of the Design Standards outlining what documentation is required for the initial application, while Part A is for finishing up the preliminary plans and designs that are drafted from the Part B requirements?

A2: Yes, Part A goes through what specific Design Standards MFA holds all projects to, and Part B fully outlines the requirements for submittal.

Q3: We are trying to understand when the timeline for the market study results so that they can be incorporated into the final underwriting for the application.

A3: As described in the QAP, Section IV. C. 8, projects passing the threshold review in a 9 percent tax credit allocation round and ranking among the top scoring Projects and/or wherein MFA determines a study is warranted, MFA may commission a standardized market study by outside professionals chosen pursuant to the requirements of MFA’s procurement policy and having no financial interest in any of the Projects. For all tax-exempt bond financed Projects, MFA shall commission or cause to be commissioned, a standardized market study by outside professionals chosen pursuant to the requirements of MFA’s procurement policy and having no financial interest in any of the Projects. A deposit is required with each Application. Any additional cost of these studies will be charged to Applicant and failure to pay any additional costs within 20 calendar days of the billing will result in rejection of the Application.

In other words, MFA-ordered Market Studies are ordered during the application scoring/processing phase if warranted, and that Market Study will remain part of the application and final underwriting.

The below FAQs are from prior years, but may answer questions still pertinent to the current QAP.

Q1: Can you provide the actual product name, manufacturer and specifications of the "Brown Classification Folder" you are requiring and where to purchase it?

A1: The preferred brown classification folder is the Universal® UNV10280 Pressboard Classification Folder, Legal, Six-Section, Red. Other acceptable brown classification folders include the [IN]PLACE Moisture Resistant 6-Fastener Classification Folders with 2 Dividers, Legal, Red and Staples® 100% Recycled Classification Folders, Legal, 2 Partitions, Red. If you perform a web search using any of the above product descriptions you should be able to locate the most convenient point of purchase for you.

Q2: In reference to the brown classification folder, is there an order or sequence in which the contents of the application should be organized within the folder?

A2: Please organize the material from left to right starting with Tab 1. Fill each section of the classification folder with as many tabs as reasonable before continuing to the next. It is ok if the last section of the folder is empty (doubtful). Conversely, if the application will not reasonably fit into a single classification folder, please place the remaining tabs in a second folder.

Q3: I somehow misplaced my Certificate of Completion for the QAP Training and it is a required document in the LIHTC application. How can I get a duplicate copy?

A3: Please contact Stacy Havens at shavens@housingnm.org for a duplicate.


Application Requirements

Q1: Will you confirm a previous FAQ which said that only federal financing needs to be listed on Schedule H? Also, would you confirm that Board members need to sign compliance affidavits, but they do not need to sign a Schedule H unless they have interests in restricted properties that do not appear on the nonprofit’s Schedule H. Assuming board members do not have interests in restricted properties other than nonprofit’s, only the executive director needs to sign schedule H on behalf of the organization. The executive director also needs to sign Schedule H.

A1: Schedule H only applies to federally financed projects. If a board member does not have interest in a restricted property other than the nonprofit’s, they do not need to fill out a separate schedule H. Only the executive director needs to sign the nonprofit’s schedule H.

Q2: The 2019 QAP Section III C. 7. Pre-Application Requirements (page 17) states Synopsis is due on January 23, 2019 and the Application Attachment "Development Synopsis and Intent to Submit Tax Credit Application" states its due on January 24, 2019. Which date is correct?

A2: The date listed in the QAP is correct, and the document in the application has been updated.

Q3: This question is in regards to application submission 20c "IRS Certificate of Good Standing." We have been informed by the IRS that they do have any document called a "Certificate of Good Standing." They can reissues a letter affirming tax exempt status, which is the same as the letter used to evidence 501C3 status for item 20b. The reissue of this letter typically takes a minimum of three weeks to process and to be mailed once requested. But this will not be an option if the Federal Government shutdown persists. The NM Secretary of State does offer a "Certificate of Good Standing" for nonprofits organizations, will this document satisfy the requirement for item 20c?

A3: The NM Certificate of Good Standing is the document that will satisfy item 20c.

Due to the government shutdown, we recognize that some of the requirements of the 2019 LIHTC application may be difficult to obtain. We will allow for delays in some materials on a case-by-case basis, but will require all materials in order to score and underwrite the application. Every effort to obtain the required materials and/or provide substitute documents must be evidenced. We recommend notifying MFA of any difficulties ahead of the application deadline.

Q4: With respect to Tab 20c IRS Certificate of Good Standing dated after January 1, 2019, will it suffice to provide a copy of the IRS Exempt Organization Select Check online inquiry information for the nonprofit applicant? With the government being shut down, it is impossible to request a IRS Certificate of Good Standing at this time.

A4: The NM Certificate of Good Standing is the document that will satisfy item 20c.

Due to the government shutdown, we recognize that some of the requirements of the 2019 LIHTC application may be difficult to obtain. We will allow for delays in some materials on a case-by-case basis, but will require all materials in order to score and underwrite the application. Every effort to obtain the required materials and/or provide substitute documents must be evidenced. We recommend notifying MFA of any difficulties ahead of the application deadline.

The below FAQs are from prior years, but may answer questions still pertinent to the current QAP.

Q1: a) For Schedule H and Compliance Affidavit submittals, is it correct that only the President or CEO of the General Partner (s) is required to submit two Schedule Hs/Affidavits? One as General Partner, CEO or President and one as an individual. This is assuming that the CEO and President is also not a Principal in another entity with other federally financing. 2) Is Types of Financing to be listed on Schedule H federal financing only?

A1: a) The President or CEO of the General Partner(s) is no longer automatically required to submit two Schedule Hs/Affidavits. Only one Schedule H is required for an entity providing that none of the Principals of that entity have any interests in federally subsidized Projects other than those listed on the entity’s Schedule H. If any Principal has an interest in a federally subsidized Project, they must complete a Schedule H disclosing those interests. All Principal must provide a Compliance Affidavit. b) Only federal financing needs to be listed on Schedule H.

Q2: If the LLLP has already been established, should the initial tax credit application be under the LLLP or non-profit GP of the LLLP?

A2: The initial tax credit application should be under the LLLP if the LLLP has already been established.

Q3: We have a zoning letter for this project dated September 2013. Will this suffice for the January 2014 submittal or do we need to update this letter?

A3: Zoning letters should be dated within 6 months of the Application Deadline so your zoning letter should be acceptable provided it meets the requirements listed in the QAP.

Q4: On a project that consists of SRO, efficiency, 1-2-3 bedroom units with more than one income/rent tier, do the income/rent tiers have to be distributed throughout, including the SRO units? Can we maintain all the SRO units at the 30% AMI?

A4: Income/rent tiers must be distributed throughout all unit types proportionally. Projects may not maintain all SRO units at the 30% AMI tier.

Q5: I see from the application checklist that the contractor resume does not have to be submitted until carryover. Schedule D requires a contractor signature. Do I need to have a contractor signature on Schedule D at the time of application even though the resume is not required?

A5: If a contractor has not been selected, then the resume is not required and schedule D does not need to be signed by a contractor for the initial application.

Q6: If the LLLP has not been established what entity should be listed as the legal name of the project owner on Schedule J?

A6: The legal name should be listed as TBD if the LLLP has not been established and the signatories should sign as General Partner(s).

Q7: Can you clarify if non-profit board members need to sign a compliance affidavit and complete a schedule H and also that only executive director needs to complete a compliance affidavit and schedule H on behalf of the non-profit?

A7: Board members need to sign compliance affidavits but they do not need to sign a Schedule H unless they have interests in restricted properties that do not appear on the non-profit’s Schedule H. Assuming board members do not have interests in restricted properties other than non-profit’s, only the executive director needs to sign schedule H on behalf of the organization. The executive director also needs to sign Schedule H.

Q8: Schedule I has an information requirement of "On-site Manager". What is MFA's definition of "On-site Manager"? Does that mean a manager that resides on the premises, or does it mean the manager has an office on the premises? Please clarify...

A8: For Schedule I, on-site manager means a manager that resides at the property.

Q9: Can you please direct me to the drawing package submittal requirements for the standard LIHTC application submittals?

A9: Please see Part B: MFA Submission Instructions for Preliminary Architectural Documentation for Multifamily Housing Applications within the Mandatory Design Standards for Multifamily Housing (Item 16 of the Application.)

Q10: Can the site plan and landscaping plan be combined on one sheet?

A10: The site plan and landscaping plan may be combined on one sheet provided you can get all of the information on one sheet and still have it clearly legible.

Q11: What alternate document would be acceptable to show lack of encumbrances on Native American Trust Land?

A11: Lack on encumbrances on Native American Trust Land should be shown with a certified or uncertified Title Status Report from the Bureau of Indian Affairs.

Q12: For the purpose of the Compliance Affidavit, are Principals considered all board members and executive staff?

A12: For the purpose of the Compliance Affidavit, Principals are considered all board members and executive staff of a General Partner as well as any person or entity receiving a portion of the developer fee. Each of these individuals should complete and provide a Compliance Affidavit. Please see the definition of Principal in the glossary section of the QAP for more clarification.

Q13: Square foot calculations: The Gross Square Feet (as defined in the QAP) is used for the calculation of the Efficient Use of Tax Credits. a) How should schedule B and F be reconciled with the Application Page 3 and the Efficient Use of Tax Credits EUC, if schedule B and F are interior dimensions? b) Relatedly, how is schedule B reconciled with other Schedule F and the application if dimensions are interior dimensions of units (heated sq ft in floor plan) and not exterior and not inclusive of common hallways, etc.

A13: Schedule F is based on Gross Square Feet of the Units. Schedule F should reconcile with square feet of Low Income Units and Market Rate Units listed on page 3 of the application. The sum of Each Building's Gross Square Feet listed on the Efficient Use of Credits Worksheet must reconcile with the total square feet (minus commercial space) indicated on page 3 of the application form. Since Schedule B is the only form that uses net square feet (interior dimensions) it will not reconcile with the other forms.

Q14: You've clarified that Board members that do not have interests in other restricted properties do not have to submit separate Schedule H's. Are you referring to personal interests in other restricted properties? Would Board members sitting on multiple Boards be required to submit Schedule H's for properties owned by the secondary entity?

A14: A Board member that serves on multiple Boards has an interest in the properties owned by each of the organizations, so the Schedule H for that Board member should list all of the properties owned by each of the organizations.

Q15: Does or can MFA cc the Letter to the local government official to that official's administrator or deputy staff if that information is provided in the application?

A15: MFA will only provide notice to the local government official.


Feasibility and Underwriting

Q1: If a market study shows a lower vacancy rate than 7 percent (or 5 percent for senior properties), can the lower rate be used in the proforma?

A1: No, 7 percent (or 5 percent for a senior project) is the lowest vacancy rate allowable in the proforma.

Q2: Since our application for the 2018 9% LIHTC round did not receive an allocation, we are planning to submit an application for the 2019 9% LIHTC round for the same project. The HUD field office notified us that the letter is still valid. Do we need to request a new letter dated within the last six months of the 2019 round deadline?

A2: A letter or written statement from HUD (within six months of the 2019 round deadline) indicating that the previous letter is still valid would suffice.

Q3: Per the MFA 2019 Low Income Housing Tax Credit (LIHTC) Initial Underwriting Supplement, "For projects with at least 90% of all units covered by a federal rental assistance contract MFA will use the market study vacancy factor but not less than 5%." By this, it would seem that we can underwrite 5% vacancy for our project. However, your excel file has a locked cell on the 7% vacancy figure.  Will you accept a 5% vacancy rate in this circumstance?  If so, how would we adjust the pro forma?

A3: If you look in the 3.a Universal Rental Schedules A-I, under tab C-1, there is an unlocked cell for the vacancy rate (highlighted in yellow) at the top of the page. 


Set-Asides

Q1: If a project applies for credits out of the USDA set-aside or nonprofit pool, and qualifies for more than what is in the set-aside, would credits be made available from the general pool before any general pool projects are allocated?

A1:  Yes, if the scoring and ranking process, without regard to the nonprofit set-aside, does not result in awards to qualified nonprofits sufficient to fulfill the 10% set-aside, the next highest scoring, qualified-nonprofit-eligible projects will receive awards sufficient to fulfill the 10% set-aside requirement ahead of the lowest scoring projects that would have otherwise received an award.  If there are not enough qualified-nonprofit-eligible projects to use the entire 10% set-aside, the balance of the set-aside funds may NOT be made available to other projects. 

Similarly if the scoring and ranking process, without regard to the USDA set-aside, does not result in awards to USDA projects sufficient to fulfill the 10% set-aside, the next highest scoring, USDA-eligible project will receive an award sufficient to fulfill the 10% set-aside requirement ahead of the lowest scoring projects that would have otherwise received an award.  However if the highest scoring USDA project does not fulfill the entire 10% USDA set-aside, but there are insufficient tax credits remaining in the set-aside to fully fund a second USDA project, only the top scoring USDA project will be awarded credits under the set-aside.  In this case, the balance of the USDA set-aside funds MAY be made available to other projects. 

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