Breaking Ground, December 2000 Page: 6
8 p. : ill.View a full description of this periodical.
Extracted Text
The following text was automatically extracted from the image on this page using optical character recognition software:
BREAKING GROUND
NCSHA Approves Practices for
LIHC Property Compliance
Courtesy ofNHC
Recently, the National Council of State Housing Agencies' (NCSHA) Board of
Directors unanimously approved recommended practices designed to help state
agencies better administer low income housing tax credit (LIHTC) property compli-
ance. It is expected that these recommended practices will strongly influence how states
monitor their LIHTC portfolio in the future. LIHTC properties have been monitored
for program compliance for eight years subject to Internal Revenue Service (IRS) guide-
lines. Additionally, states have chosen to develop sophisticated and efficient monitor-
ing systems that go well beyond the minimum requirements imposed by IRS regula-
tions. These compliance practices vary from state to state since they respond specifi-
cally to state needs. In an effort to create some uniformity among the states while
preserving flexibility, NCSHA received input from both state housing agencies as well
as national industry trade groups, compliance trainers and other industry representa-
tives. There are a total of 15 compliance practices that will serve as the minimum
standard. The 15 compliance practices fall into three major categories: 1) Standardized
Forms, 2) Compliance Administration, and 3) Gray Areas. For more information con-
tact NCSHA at (202) 624-7710 or visit www.ncsha.org. URural Housing (continuedfrom page 2)
This funding would assure timely response
to a well-conceived preservation program
for essential rehabilitation and provide
enough financing for new Section 515
rental projects in rural areas. New construc-
tion is needed for tenant demand, and to
provide needed incentives for developers
to stay abreast and utilize the Section 515
program.
Exit Strategy #2: The federal govern-
ment exit strategy would continue with
very limited funding, as available in recent
years, for the Section 515 Rental Housing
Program. These funding levels address only
most critical preservation and rehabilita-
tion needs with very limited funding in
target locations for new construction. In
the meanwhile, develop policies and pro-
cedures to eventually withdraw and end
the Section 515 Rental Housing Program.
The USDA-RHS would continue to work
with existing and prospective complex
owners and management to assure that fea-
sible projects may continue to provide ten-
ants with affordable housing. Assist exist-
ing tenants in complexes that are no longer
feasible to remain in program, with some
transition assistance to other safe, decent,
sanitary, and affordable housing, if avail-
able. This "exit strategy" from Section 515
financed affordable rental housing in rural
areas should minimize by policies and pro-
cedures the adverse consequences to the ex-
isting and prospective tenants and owners
of such properties.
Status Quo Strategy #3: The federal
government status quo strategy would con-
tinue to operate the Section 515 Rural
Housing Program in a manner similar tothe status quo practices utilized since 1994.
These practices include: 1) very limited
funding for preservation/rehabilitation and
almost no funding for new construction;
2) a modest amount of tenant subsidy for
existing units serving the low-low and very
low income households; 3) no well con-
ceived comprehensive preservation plan for
existing complexes; 4) no well conceived
comprehensive exit strategy without ad-
verse consequences to existing complex
owners and tenants; and 5) continued and
increasing loss of existing affordable rental
housing complexes in the Section 515 port-
folio. This loss of existing complexes is due
in part to the lack of project financial fea-
sibility, increased administrative burden
and cost, and the lack of project generated
funds from operations to properly main-
tain the Section 515 complexes.
Obviously, the "viable strategy #1"
would be preferred by those of us inter-
ested in serving the housing needs in rural
America. However, the "status quo strat-
egy #3" should be dismissed as ineffective
and inefficient use of resources, causing
hardship and concerns to all parties in-
volved in affordable rural rental housing.
There could certainly be some variations
to the three strategies that I have proposed.
Hard decisions may be difficult to achieve,
but with the proper leadership and focus,
the federal government needs to agree on a
basic strategy so that owners, developers,
and tenants can plan their future. UQAP (continued from page 1)
vided attendees with a spreadsheet detail-
ing the effect the allocation formula would
have had on the 2000 LIHTC allocation
to demonstrate what the group might ex-
pect in the 2001 allocation round.
The formula proposes that a portion of
the 4 percent tax credit attached to any
private activity Multifamily Mortgage Rev-
enue Bond proceeds each region receives
should be counted toward its portion of
the state credit ceiling amount. The for-
mula becomes both somewhat complex
and speculative at this point, as it must
integrate a random lottery-based distribu-
tion into the planning process. However,
by considering the bond/tax credits in the
formula, the credit ceiling can be stretched
to award additional credits to rural regions
where bond/tax credit properties are less
feasible.
After a lengthy discussion, the group
recommended that the Department base
the bond distribution adjustment on ac-
tual bond activity from the previous year,
rather than any projected bond determi-
nation awards, which LIHTC staff agreed
to review. Participants also requested that
the rules behind the regional allocation
formula detail how credits will be trans-
ferred from regions that do not receive
enough qualified applications to those that
do.
Reducing Costs, Paperwork
The topic of either a pre-application or
phased application process for the LIHTC
Program is one that has often been men-
tioned as desirable by housing advocates.
As a result, program staff was prepared to
discuss and examine this concept.
However, most participants appeared to
be less interested in the details of a two-
stage application process as they were in
simply streamlining the application pro-
cess to lower costs. Attendees also wanted
more guidance from the Department re-
garding where applications should and
should not be submitted under the new
allocation plan.
The discussion yielded several sugges-
tions that may be included in the 2001
QAP. One example is a recommendation
requiring only a market survey, rather than
a formal (and costly) market study, be re-
quired for an application. The market
study would be required of all applications
receiving credits at a later date. Another
suggestion was to have applicants "pre-no-
tify" the Department of where they in-
tended to apply, which TDHCA would
then post on its website. This would allow
other applicants to know where applica-tions were likely to be filed.
Furthermore, there was a consensus that
publishing public notices in area newspa-
pers was costly ($600 per ad in some metro
papers) and accomplished little in terms
of actually notifying concerned citizens.
Others stated that notifying city council
members, county commissioners, and le-
gitimate, recognized neighborhood groups
was both more affordable and effective than
a notice in any newspaper.
Other Discussion Group Highlights
Both discussion groups, in the final
analysis, were interested in ensuring an
applicant pool would be comprised of ex-
perienced and capable developers of afford-
able housing, and that the need for suchhousing remained great. The following is
a brief review of other issues, suggestions,
and recommendations covered by these
first-ever discussion groups:
Maximum Allocation Limit: Some at-
tendees wondered if a maximum percent-
age of the regional allocation should be
imposed, or would one project be able
to take an entire region's allocation of
credits.
Lower Income Households: Participants
were generally not opposed to adding
points for serving lower income levels;
however, there was concern that this
could adversely impact the scoring of ap-
plications from smaller cities in MSAs
with large metropolitan areas with high
rents but which cannot charge higher
rents. Would this type of scoring cause
applicants to propose developments that
may not be financially feasible with
changes to financing rates or the rental
market?
Supportive Services: Participants ex-
pressed a need for more guidance with
regard to how points for supportive ser-
vices will be assigned. Additionally, some
attendees wondered why service provid-
ers are required to be a nonprofit orga-
nization. It was suggested that public
housing authorities and local govern-
ment agencies may be a superior pro-
vider of supportive services in some ar-
eas of the state, but they would not be
eligible without the 501(c) designation.
Transitional Housing: One representa-
tive of a nonprofit organization suggested
that they would prefer to provide transi-
tional housing as part of a mixed income
development, due to NIMBY issues and
social integration issues where working
families serve as role models and ex-
amples of success.
Rural Project Definition: One recom-
mendation was the Rural Project defini-
tion be revised to account for Texas Ru-
ral Development eligibility in areas that
are above 20,000 in population and for
sites located outside of MSAs and PSAs
with populations over 20,000.
Rural and Nonprofit Set-Asides: Two
recommendations pertained to the
QAP's rural and nonprofit set-asides.
The first was a suggestion that the QAP
be revised to show that the 76-unit cap
on rural projects only apply to projects
in the rural set aside, not projects in ru-
ral areas competing in the general set
aside. The second was a suggestion that
all nonprofits competing in the non-profit set aside be pooled into the gen-
eral set aside for consideration after the
nonprofit set aside has been exhausted.
As mentioned, this was the first time
TDHCA has presented a pre-draft QAP
public forum. Based on the results, the
Department will continue to provide in-
terested parties greater opportunities to be
involved in the planning process. The two
discussion groups provided many specific
suggestions of value that will certainly be
considered for inclusion in the QAP. UTEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
YOU are cordially invited to...
Tell us what you think about the Texas Department of Housing
and Community Affairs. TDHCA is your office of housing and
community affairs, so you're always welcome to share your
comments, perspectives, and suggestions about TDHCA regard-
ing any of its programs and services. Your input is vital in shap-
ing the way the TDHCA develops, implements and administers
its opportunities. Jot down your remarks and send to: Communi-
cations
TDHCA, P.O. Box 13941
Austin, TX 78711-3941
Fax: (512) 475-3840 E-Mail: jmcfarre@tdhca.state.tx.us6
DECEMBER 2000
Upcoming Pages
Here’s what’s next.
Search Inside
This issue can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Periodical.
Texas. Department of Housing and Community Affairs. Breaking Ground, December 2000, periodical, December 2000; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1587234/m1/6/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.