2011 Multifamily Application Training Workshop

1. 2011 TDHCA Multifamily Application Training Workshop

2. Workshop Format This workshop is for general guidance for the 2011 multifamily programs. There will be a Q&A at the end – feel free to ask question as we go along. It is advised to get development specific guidance in writing. Department rules and statutes supersede the workshop information. Applicants are responsible for understanding ALL rules, statutes and regulations applicable to the programs under which they apply.

3. December 1st • 8:30 Staff and Attendee Introductions • 8:45 Program Timelines / Eligibility • 9:15 Regional Allocation • 9:45 Pre-Application • 10:00 Break • 10:15 Application Process • 10:45 Threshold • 11:30 LUNCH • 12:30 Threshold (continued) • 1:00 4% HTC (for Bond Issuances) • 1:15 Real Estate Analysis • 2:45 Break • 3:00 Selection Criteria

4. December 6th • 1:00 Staff Introductions • 1:15 Program Timelines / Regional Allocation • 1:45 Electronic Application • 2:15 Threshold Criteria • 2:30 Break • 2:45 HOME Layering • 3:15 4% HTC/Bond • 3:30 Selection Criteria

5. 2011 Regional Allocation Estimated State Credit Ceiling is $52 million 85% of the State Credit Ceiling to be divided between the 13 State Service Regions and further split into urban and rural areas Statewide rural collapse (first) Statewide urban/rural collapse (second)

6. 13 State Service Regions

7. 2011 Allocation Set-Asides 15% At-Risk development - $ 7.8M 5% TRDO USDA - $2.6M 10% Nonprofit - $5.2M 20% Rural developments - $10.4M ($500,000 minimum in each region)

8. At-Risk Set-Aside Requirements Development must be at risk of losing affordability from financial benefits available to the Development. The 2011 QAP was changed to delete “all” from this statement. For example, if you have a property with an existing Section 236 loan that is eligible for prepayment, and you also have a Section 8 HAP contract that is not expiring, you would be considered eligible under the At-Risk Set-Aside because at least one of the subsidies is eligible for prepayment or expiring.

9. USDA Set-Aside Requirements Intent to Requests are no longer accepted. If you are submitting an application under the USDA Set-Aside a pre-application must be submitted by January 7, 2011. Must be funded through TRDO-USDA. Developments financed (in whole or in part) through TRDO-USDA’s §538 Guaranteed Rural Rental Housing Program will not be eligible under this set-aside. Any proposed Rehabilitation or Reconstruction of an existing §515 Development that retains the §515 loan and restrictions, will be considered under this set-aside.

10. Texas Statutory Limitations One Mile / Three Year Rule • Applies to counties over 1 million in population. • Developments proposing New Construction or Adaptive Reuse within one mile of another Development serving the same population that received Housing Tax Credits in the previous three years. • Local Resolution (Due April 1, 2011). • §2306.6703(a)(3) Texas Government Code and §49.8(2)(B) 2011 QAP.

11. Texas Statutory Limitations 2 X Per Capita • Municipality, ETJ or County that has twice the state average of units per capita supported by Housing Tax Credits or Private Activity Bonds. • Local Resolution (due April 1, 2011). • §2306.6703(a)(4) Texas Government Code and §49.8(2)(A) 2011 QAP.

12. Texas Statutory Limitations One Mile / Same Year Rule • Applies to counties over 1 million in population. • Two Applications being proposed in the same Application Round that are within one mile of each other, only one Application can be awarded. • §2306.67021 Texas Government Code and §49.4(c)(12) 2011 QAP.

13. Texas Statutory Limitations $2 million limitation • $2 million limitation to any Applicant, Developer, Related Party, Affiliate or Guarantor (unless the Guarantor is also the General Contractor and is not a Principal of the Applicant, Developer, Related Party or Affiliate). • $2 million request limitation per single Application. • §2306.67021 Texas Government Code and §49.5(b) 2011 QAP.

14. Texas Development Limitations • Census tracts with >30% of the households served by Housing Tax Credits. • 16 Unit Minimum • 252 Unit Max with 200 LI Unit Max • 252 Unit LI & Total Max for Bond deals • 80 Unit Max for Developments in Rural areas (applies to both Bond & HTC).

15. Texas Development Limitations Ineligible Applicants: An Applicant is ineligible if any Applicant, Development Owner, Developer or Guarantor involved with the Application has been: • voluntarily or involuntarily removed from a rent or income restricted multifamily Development by a lender, equity provider, or any other owners or investors as a Principal during the previous ten (10) years, however designated, or any combination thereof or if any litigation to effectuate such removal has been instituted, and is continuing at the time of Application the Department shall be promptly notified by the Applicant. • For information considered and addressed in a report to the Executive Director refer to 49.4(a)(9)(A)-(D) of the QAP. • No person shall be debarred except by formal action taken by the Board. • Debarment under this provision will be for a period not to exceed 5 years.

16. Texas Development Limitations Ineligible Applications: The Department will terminate an Application: • If more than 50% of the Developer Fee is deferred as reflected in the Sources and Uses exhibit in the Application or the commitments from the lender or syndicator. (§49.4(b)(11))

17. Texas Development Limitations Ineligible Developments: Any Development located in an Urban Area involving any New Construction of additional Units proposing: • more than 30% of the total Units are one bedroom and/or Efficiency Units; or • more than 55% of the total Units are two bedroom Units; or • more than 40% of the total Units are three bedroom Units ; or • more than 5% of the total Units are four bedroom Units; or • Only two and three bedroom Developments; or • More than 70% 2 bedroom in Qualified Elderly Developments.

18. Texas Development Limitations Ineligible Developments Qualified Elderly Development with two or more floors without elevators for any units or living space above the first floor. Any Development with any buildings with four or more floors without elevator service. Any Development that violates the Integrated Housing Rule §1.15 of the Texas Administrative Code. Any Development that contains residential units that violates the general public use requirement under Treasury Regulation §1.42-9.

19. Texas Development Limitations Ineligible Developments • Previously noted negative site features will now be considered an Ineligible Development. • To the extent an Application has a negative site feature noted in §49.4(c)(11) of the QAP the Applicant should notify the Department as soon as possible. The Department will terminate the Application pursuant to the QAP and the Applicant will be allowed the opportunity to appeal to the Board. • NOTE: the sooner the pre-application is submitted (i.e. prior to the January 7, 2011 deadline) could allow for the Applicant to be on the January Board agenda for consideration of the appeal.

20. Texas Development Limitations Ineligible Developments – Development Amenities - §49.4(c)(14) • All New Construction Units must be wired with RG-6 COAX or better and CAT3 phone cable or better, wired to each bedroom, dining room and living room; • Laundry Connections*; • Blinds or window coverings for all windows; • Screens on all operable windows*; • Disposal and Energy-Star rated dishwasher (not required for TRDO-USDA or SRO Developments; Rehabilitation Developments exempt from dishwasher if one was not originally in the unit)*; • Energy-Star rated refrigerator; • Oven/Range; • Exhaust/vent fans (vented to the outside) in bathrooms; • Energy-Star rated ceiling fans in living areas and bedrooms; • Energy-Star rated lighting in all Units which may include compact florescent bulbs; • Plumbing fixtures (toilets and faucets) must meet design standards at 30 TAC §290.252*; • All Units must be air-conditioned*; and • Fire sprinklers in all Units where required by local code*.

21. 30% Increase in Eligible Basis • QCT tract with >30% of the households served by Housing Tax Credits are not eligible for 30% increase in eligible basis. • The Development qualifies for and receives Renewable Energy Tax Credits. • A four story or greater Development with structural parking that is proposed to be located within one-quarter mile of existing major bus transfer centers, regional or local commuter rail transportation stations, and/or Transit Oriented Districts that are accessible to all residents including Persons with Disabilities

22. Competitive Housing Tax Credit Timeline

23. 2011 Competitive Housing Tax Credit Timeline • 12/20/2010 2011 Application Acceptance Period Begins • 01/07/2011 2011 Pre-Applications Due • 02/15/2011 Experience Certification Request Delivery Deadline

24. 2011 Competitive Housing Tax Credit Timeline • 03/01/2011 2011 Full Applications Due • 03/01/2011 Unit of General Local Gov’t Resolutions in Connection with Points Under §49.9(a)(5) Due. • 03/01/2011 Third-Party Reports Due (includes Phase I ESA, PCA and Appraisal, if applicable) • 04/01/2011 Local Resolutions Due & Market Analysis Report Due

25. 2011 Competitive Housing Tax Credit Timeline • Mid-May Final Scoring Notices Issued • Late June Release of Eligible Applications for Consideration for Award in July • Late July Final Awards • Mid-Aug Commitments Issued • 11/01/11 Carryover Documentation Due • 07/01/12 10% Test Documentation • 12/31/13 Placement in Service

26. Application Materials 2011 Application Checklist (fka ASPM) 2011 Competitive HTC Pre-Application 2011 Uniform Application 2011 Quantifiable Community Participation Packet 2011 Experience Certification Packet www.tdhca.state.tx.us/multifamily/Applications.htm

27. Application Reference Material 2011 Tax Credit Procedures Manual Application Checklist Definitions Program Rules Commitment Notice Documentation, Carryover, 10% Test, etc. 2011 HTC Reference Manual

28. Definitions – Format • 2011 QAP contains definitions specific only to Housing Tax Credit Applications. • Definitions that were in the QAP that could be applicable to other Department multifamily programs are now in the 2011 Definitions for Housing Program Activities Rule (10 TAC §1.1) • As part of the Tax Credit (Procedures) Manual we will include a document that lists all definitions applicable to a HTC Application (i.e. those found in §2306, §42, REA Rules, MF Bond Rules, etc.)

29. New Definitions (§49.3) • Transit Oriented District – A mixed-use residential and commercial area, located within a radius of one-quarter mile from an existing or proposed transit stop, designed to encourage pedestrian activities and maximize access to public transportation. • Tax Credit (Procedures) Manual – The manual produced and amended from time to time by the Department which reiterates the rules and provides guidance for the filing of tax credit related documents.

30. New Definitions (§1.1) • Unit of General Local Government – A city, town, county, village, tribal reservation or other general purpose political subdivision of the State. • Reconstruction – The demolition of one or more residential buildings in an Existing Residential Development and the reconstruction of an equal number or less of Units on the Development Site.

31. Revised Definitions (§1.1) • Adaptive Reuse– The change-in-use of an existing non-residential building (e.g., school, warehouse, office, hospital, hotels, etc.), into a residential building. Adaptive Reuse does not include the demolition of the external walls of the existing building. All units must be contained within the original walls of the existing building. Porches and patios may protrude beyond the exterior walls. Ancillary non-residential buildings, such as a clubhouse, leasing office and/or amenity center may be newly constructed outside the walls of the existing building or as detached buildings on the Development Site. • Governmental Instrumentality- A legal entity which is created by a Unit of General Local Government under statutory authority and which instrumentality is authorized to transact business for the Unit of General Local Government.

32. Revised Definitions (§1.1) • Rehabilitation - The improvement or modification of an Existing Residential Development through alteration, incidental addition or enhancement. The term includes the demolition of an Existing Residential Development and the Reconstruction of a Development on the Development Site, but does not include Adaptive Reuse. (§2306.004(26-a)) More specifically, Rehabilitation is the repair, refurbishment and/or replacement of existing mechanical and structural components, fixtures and finishes. Rehabilitation will correct deferred maintenance, reduce functional obsolescence to the extent possible and may include the addition of: energy efficient components and appliances, life and safety systems; site and resident amenities; and other quality of life improvements typical of new residential developments.

33. Document Submission All original submissions of the Pre-Application, Application and 3rd Party Reports must be submitted via CD-R. The Department will not accept these documents via FTP submission.

34. Document Submission The following information may be submitted directly on the Department’s FTP Server after an Electronic Filing Agreement has been submitted: • Deficiencies • Post Award Submissions

35. Pre-Application Electronic Submission Applicant must deliver one (1) CD-R containing a PDF copy and Excel copy of the complete pre-application. The pre-application will NOT be accepted via FTP. The correct Pre-Application Fee must be submitted with the pre-application in order for the pre-application to be accepted by the Department. Pre-Application Fee is $10 per Unit.

36. Pre-Application Submission • Pre-Application must be accompanied by a paper certification with an original signature in the form provided in the pre-application. • Pre-Applications that are submitted in person or by mail must be received by 5:00 p.m. (CST) on Friday, January 7, 2011.

37. Pre-Application Requirements Pre-Application – Tab 1 • 2011 Multifamily Document and Payment Receipt Pre-Application – Tab 2 • 2011 Electronic Filing Agreement Pre-Application – Tab 3 • 2011 Competitive Housing Tax Credit Pre-Application Certification Pre-Application – Tab 4 • Competitive Pre-Application Submission Form Pre-Application – Tab 5 • Competitive HTC Pre-Application Self-Scoring Form. Note: Pursuant to §49.7(a)(2)(A), an Applicant may not adjust the Self Score Form in an Administrative Deficiency without a specific request from TDHCA. Therefore, it is important that care is taken when requesting points.

38. Pre-Application Requirements Tab 6 - Evidence of Site Control through March 1, 2011. • A recorded warranty deed with a corresponding executed settlement statement (unless an identity of interest) • A contract for lease (45 yr minimum term) • A contract for sale or purchase option (for entire time Application is under consideration) • Evidence must be in the name of the Development Owner. If not in the name of the Development Owner, then the documentation must reflect an expressed ability to transfer the rights to the Development Owner. • If a contract is provided as evidence of site control, the closing date must be highlighted or flagged. If the date is not explicitly stated, but rather is triggered by other dates or periods, submit an outline of the dates that must be used to derive the closing date.

39. Pre-Application Requirements Tab 7 – Applicant Disclosure • Should the Applicant believe they have a potential violation of eligibility pursuant to 49.4 of the 2011 QAP this provide the Applicant the opportunity to bring this to the Department’s attention. • Any disclosure will be subject to review. • It is strongly encouraged that the Applicant submit this information to the Department prior to the January 7, 2011 Pre-Application deadline.

40. Pre-Application Requirements Tab 8 – Public Notification Information Form Tab 9 – Certification of Notifications at Pre-Application Form Note: All notifications must be made in accordance with the language outlined in the Neighborhood Organization Request and Public Notifications Format available in the “Templates” application materials on the Department’s website • Request for Neighborhood Organizations by December 20, 2010

41. Pre-Application Notifications Required Notification Entities: • All Neighborhood Organizations on record with the county or state whose boundaries include the proposed Development Site; • Superintendent of the school district; • Presiding officer of the board of trustees of the school district; • Mayor of any municipality; • All elected members of the Governing Body of any municipality; • Presiding officer of the Governing Body of the county; • All elected members of the Governing Body of the county; • State senator of the district containing the Development; and • State representative of the district containing the Development.

42. Full Application Submission • Applicant must deliver one (1) CD-R containing a PDF copy and Excel copy of the complete Application (Volumes 1-4). The Application will NOT be accepted via FTP. NOTE: Volume 4 not required for 4% HTC Applications • Applicant must deliver each 3rd Party Report on a separate CD-R. • The correct Application Fee must be submitted with the pre-application in order for the pre-application to be accepted by the Department. • Application Fee is $30 per Unit. ($20 if a Pre-Application was submitted) • Qualified Community Housing Development Organizations (CHDO) and Qualified Nonprofit Organizations that control the managing general partner are be eligible for a 10% reduction in required application fees. You must provide a copy of 501(c)(3) or (4) IRS documentation at the time of submission.

43. Full Application Submission • Full Application Deadline is by 5:00 p.m. (CST) Tuesday, March 1, 2011. • After the Application is submitted on CD-R, the Department will issue a User ID and password specific to the application for uploading deficiency responses and other required items. Only if a Pre-Application was not submitted.

44. Full Application Submission • Authorization to Release Credit Information Form. • Must be completed and signed for each organization that is a General Partner, Developer or Guarantor and each Natural Person that has an ownership interest of 10% or more in the Development Owner, General Partner, Developer, or Guarantor. • Nonprofit entities, public housing authorities and publicly traded corporations are only required to submit documentation for the entities involved; documentation for individual board members and executive directors is not required for this exhibit.

45. Mail and Delivery Information • For US Mail delivery: • TDHCA – Multifamily Finance Division • P.O. Box 13941 • Austin, TX 78711-3941 • For Overnight or Courier delivery: • TDHCA - Multifamily Finance Division • 221 East 11th Street • Austin, TX 78701 • Do NOT have U.S. Mail delivered to physical address. Capitol mailroom will not deliver.

46. Application Review Process • All Applications will first be reviewed to confirm eligibility under §49.4 (regarding Ineligibility) and §49.6(b) (regarding Set-Aside). • All Applications will be reviewed according to the Selection Criteria. • Applications that are competitive in their respective sub-regions will be reviewed according to the Threshold Criteria. • Applications that are competitive and meet Threshold will be transferred to the Real Estate Analysis division for Financial Feasibility review. • Final Scoring Notices will be issued in Mid-May. • Each step in the review process may generate Administrative Deficiencies.

47. Administrative Deficiencies • Purpose: to provide clarification or correction to information originally submitted in the Application. • If exhibits and other information required under 49.8 (Threshold) are not originally submitted with the Application (i.e. no financing commitment) staff will recommend termination. • If exhibits and other information is missing in part from the Application (i.e. financing commitment not executed by the lender) staff will request the missing or corrected information via an Administrative Deficiency. • Same process applies to Scoring Criteria – if information to substantiate points claimed for a scoring item is missing entirely staff will not award points. If information is missing in part staff will request missing information via an Administrative Deficiency and award points if resolved to the satisfaction of the Department.

48. Administrative Deficiencies • Deficiencies may be issued throughout the Application process. • Must be corrected within 5 business days from date the deficiency letter is issued. • 5 points will be deducted from score for each day deficiencies remain unresolved after 5:00 p.m. (CST) on the 5th day for the date the deficiency letter is issued. • Application will be terminated if deficiencies remained unresolved after 5:00 p.m. (CST) on the 7th day from the date the deficiency letter is issued.

49. Administrative Deficiencies 4% HTC / Tax-Exempt Bond Transactions • Must be corrected within 5 business days from date the deficiency letter is issued. • A penalty fee of $500 will be imposed for each day deficiencies remain unresolved after 5:00 p.m. (CST) on the 5th day for the date the deficiency letter is issued. • Application will be terminated if deficiencies remained unresolved after 5:00 p.m. (CST) on the 10th day from the date the deficiency letter is issued.

50. Previous Participation Review • Applicants that are competitive in their respective set-aside or sub-region and meet the requirements of threshold will be reviewed for compliance with all Department programs and commitments in accordance with §49.4(a)–(c). • Any Applications found to be in Material Non-Compliance in accordance with Chapter 60 are ineligible for funding under the Housing Tax Credit Program.