Texas Register, Volume 38, Number 51, Pages 9155-9408, December 20, 2013 Page: 9,286
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which the Grant, Direct Loan and/or Housing Credit Allocation will
be considered. For any period of time during which the existing
buildings are occupied or otherwise producing revenue, holding costs
may not include capitalized costs, operating expenses, including, but
not limited to, property taxes and interest expense.
(iii) In no instance will the acquisition cost utilized
by the Underwriter exceed the lesser of the original acquisition cost
evidenced by clause (ii)(I) of this subparagraph plus costs identified
in clause (ii)(II)(-b-) of this subparagraph, or if applicable the "as-is"
value conclusion evidenced by clause (ii)(II)(-a-) of this subparagraph.
The resulting acquisition cost will be referred to as the "Adjusted Ac-
quisition Cost."
(C) Eligible Basis on Acquisition of Buildings. Build-
ing acquisition cost, excluding acquired reserve balances, will be in-
cluded in the underwritten Eligible Basis if the Applicant provided an
appraisal that meets the Department's Appraisal Rules and Guidelines
as described in 10.304 of this chapter. The underwritten eligible build-
ing cost will be the lowest of the values determined based on clauses
(i) - (iii) of this subparagraph:
(i) the Applicant's stated eligible building acquisi-
tion cost;
(ii) the total acquisition cost reflected in the Site
Control document(s), or the Adjusted Acquisition Cost (as defined in
subparagraph (B)(iii) of this paragraph), prorated using the relative
land and building values indicated by the applicable appraised value;
(iii) total acquisition cost reflected in the Site Con-
trol document(s), or the Adjusted Acquisition Cost (as defined in sub-
paragraph (B)(iii) of this paragraph), less the appraised "as-vacant"
land value; or
(iv) the Underwriter will use the value that best cor-
responds to the circumstances presently affecting the Development and
that will continue to affect the Development after transfer to the new
owner in determining the building value. Any value of existing favor-
able financing will be attributed prorata to the land and buildings.
(2) Off-Site Costs. The Underwriter will only consider
costs of Off-Site Construction that are well documented and certified
to by a Third Party engineer on the required Application forms and
supporting documentation.
(3) Site Work Costs. The Underwriter will only consider
costs of Site Work that are well documented and certified to by a Third
Party engineer on the required Application forms and supporting doc-
umentation.
(4) Building Costs.
(A) New Construction and Reconstruction. The Un-
derwriter will use the Marshall and Swift Residential Cost Handbook,
other comparable published Third-Party cost estimating data sources,
historical final cost certifications of previous Housing Tax Credit de-
velopments and other acceptable cost data available to the Underwriter
to estimate Building Cost. Generally, the "Average Quality" multiple,
townhouse, or single family costs, as appropriate, from the Marshall
and Swift Residential Cost Handbook or other comparable published
Third-Party data source, will be used based upon details provided in
the Application and particularly building plans and elevations. The
Underwriter will consider amenities, specifications and development
types not included in the Average Quality standard.
(B) Rehabilitation and Adaptive Reuse.
(i) The Applicant must provide a detailed narrative
description of the scope of work for the proposed rehabilitation.(ii) The Underwriter will use cost data provided by
the Property Condition Assessment (PCA). In the case where the PCA
is inconsistent with the Applicant's estimate as proposed in the Total
Housing Development Cost schedule and/or the Applicant's scope of
work, the Underwriter may request a supplement executed by the PCA
provider reconciling the Applicant's estimate and detailing the differ-
ence in costs. If the Underwriter determines that the reasons for the
initial difference in costs are not well-documented, the Underwriter uti-
lizes the initial PCA estimations.
(5) Contingency. All contingencies identified in the Ap-
plicant's project cost schedule, including any soft cost contingency,
will be limited to a maximum of 7 percent of Building Cost plus Site
Work and off-sites for New Construction and Reconstruction Develop-
ments, and 10 percent of Building Cost plus Site Work and off-sites for
Rehabilitation and Adaptive Reuse Developments. For Housing Tax
Credit Developments, the percentage is applied to the sum of the eli-
gible Building Cost, eligible Site Work costs and eligible off-site costs
in calculating the eligible contingency cost. The Applicant's estimate
is used by the Underwriter if less than the 7 percent or 10 percent limit,
as applicable, but in no instance less than 5 percent.
(6) Contractor Fee. Contractor fees include general
requirements, contractor overhead, and contractor profit. General
requirements include, but are not limited to, on-site supervision or
construction management, off-site supervision and overhead, jobsite
security, equipment rental, storage, temporary utilities, and other
indirect costs. Contractor fees are limited to a total of 14 percent on
Developments with Hard Costs of $3 million or greater, the lesser of
$420,000 or 16 percent on Developments with Hard Costs less than
$3 million and greater than $2 million, and the lesser of $320,000
or 18 percent on Developments with Hard Costs at $2 million or
less. For tax credit Developments, the percentages are applied to the
sum of the Eligible Hard Costs in calculating the eligible contractor
fees. For Developments also receiving financing from USDA, the
combination of builder's general requirements, builder's overhead,
and builder's profit should not exceed the lower of TDHCA or USDA
requirements. Additional fees for ineligible costs will be limited to the
same percentage of ineligible Hard Costs but will not be included in
Eligible Basis.
(7) Developer Fee.
(A) For Housing Tax Credit Developments, the Devel-
oper fees and Development Consultant fees included in Eligible Basis
cannot exceed 15 percent of the project's eligible costs, less Developer
fees, for Developments proposing fifty (50) Units or more and 20 per-
cent of the project's eligible costs, less Developer fees, for Develop-
ments proposing forty-nine (49) Units or less.
(B) Any additional Developer fee claimed for ineligible
costs will be limited to the same percentage but applied only to ineli-
gible Hard Costs (15 percent for Developments with fifty (50) or more
Units, or 20 percent for Developments with forty-nine (49) or fewer
Units). Any Developer fee above this limit will be excluded from To-
tal Housing Development Costs. All fees to Affiliates and/or Related
Parties for work or guarantees determined by the Underwriter to be
typically completed or provided by the Developer or Principal(s) of
the Developer will be considered part of Developer fee.
(C) In the case of a transaction requesting acquisition
Housing Tax Credits:
(i) the allocation of eligible Developer fee in cal-
culating Rehabilitation/New Construction Housing Tax Credits will
not exceed 15 percent of the Rehabilitation/New Construction eligible
costs less Developer fees for Developments proposing fifty (50) Units
or more and 20 percent of the Rehabilitation/New Construction eligible38 TexReg 9286 December 20, 2013 Texas Register
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Texas. Secretary of State. Texas Register, Volume 38, Number 51, Pages 9155-9408, December 20, 2013, periodical, December 20, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth379981/m1/132/: accessed May 1, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.