Low-Income Housing Tax Credits & Cost Containment in Missouri, 2018

The 2018 Missouri Qualified Allocation Plan (QAP) sets cost limits on acquisition and non-acquisition projects, as well as per-unit calculations that applicants should follow.

Cost Containment

Development Cost Minimums: For rehabilitation developments seeking 9% or 4% Credits, the total construction costs must equal or exceed 40% of the total replacement costs. On a case by case basis, and upon submission of reasonable and well-documented justification, MHDC may in its sole discretion permit exceptions to the 40% threshold.

Development Cost Maximums: The maximum total development cost for a development cannot exceed the current Maximum Development Cost Limits published on the MHDC website. Maximum Development Cost Limits are determined using the HUD method of calculating the 221(d)(3) total replacement cost limits. MHDC reserves the right, on rare occasions, to allow exceptions to the cost limit on a case-by-case basis if unique development characteristics that meet or exceed the standards and goals of this Plan are incorporated into the proposal.

Acquisition-Rehabilitation projects are limited to the lesser of:

a) The sum of 8% of acquisition costs for the first $2,000,000 of acquisition costs, 6% of any additional acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs

b) The per-unit developer fee maximum calculation as per the chart below:

Units

Developer fee Maximum

Units 1-40

$20,000/unit

Units 41-100

$17,500/unit

Units 101-150

$15,000/unit

Units 151+

$12,500/unit

Please see Section III.B.b. Development Size, for further information on developments which contain more than 50 affordable units

The Conditional Reservation Agreement approved developer fee cannot be increased for any reason without Commission approval. In cases where there is a consultant or co-General Partner, the applicant must fill out “Developer/Co- Developer/Consultant Fee Structure Exhibit” detailing the responsibilities of each party. If the consultant is not providing development guarantees, whether to any lender or any other partner or member of the ownership entity, then the maximum allowable consultant fee cannot exceed thirty percent (30%) of the total developer fee.

Acquisition-Rehabilitation Developments where an Identity of Interest Relationship Exists between the Seller and the Buyer of Real Estate is limited to the lesser of:

(a) the sum of 3% of acquisition costs, 15% of the first $4,000,000 of non-acquisition total replacement costs and 10% of any additional non-acquisition total replacement costs, or

(b) the per-unit calculation from the chart below. NOTE: This does not apply to entities or individuals who meet either one of the following criteria:

(1) the developer has owned the property for less than four (4) years; or

(2) the developer has submitted an unsuccessful LIHTC rehabilitation application for the property within four (4) years of acquisition and has not owned the property for more than six (6) years. A detailed definition of “Identity of Interest” is located in the Developer’s Guide.

The annual federal 9% Credit shall be limited to an amount necessary for the feasibility of the development, but in no event can the federal 9% Credit be awarded without Commission approval (“Initial Approval Amount”). The maximum amount of Credit that can be allocated to any one development without further Commission approval is the Initial Approval Amount plus 10% of the Initial Approval Amount (“Maximum Credit Amount”). In MHDC’s sole discretion, for any development determined to be eligible for a basis boost (see Section II.C.5 above), the annual federal 9% Credit shall by limited to an amount necessary for the feasibility of the development. MHDC has the right to lower the amount of annual Federal LIHTC for purposes of application review and approval.

Contributed By: 
National Housing Trust

Other Items of Interest