Low Income Housing Tax Credits & Preservation in Hawaii, 2018-2019

Hawaii Housing Finance and Development Corporation establishes threshold requirements and cost containment measures in their 2018-2019 Qualified Allocation Plan. 

The Hawaii 2018 Qualified Allocation Plan (QAP) shall be effective for reservations and awards of LIHTC for the calendar year 2018 and 2019.

Set-Asides

Hawaii Housing Finance and Development Corporation (HHFDC) does not include a set aside for the preservation of affordable housing.

Point Incentives

The Hawaii 2018-19 QAP outlines that if the applicant elects to limit the total Developer Fee as a percentage of the total development cost (excluding developer fees) as presented in the application, the applicant may receive scores for this criterion.

Developer Fees on Rehabilitation Projects

-       Between 15% and 13% 0 points

-       Between 13% and 11% 1 point

-       Between 11% and 9% 2 points

-       Less than 9% 4 points

If the project will preserve the historic nature of an existing building, those that are on a national or state historic registry, the project will receive one (1) point.

Thresholds

Hawaii’s 2018-19 QAP states that no more than one (1) acquisition or rehabilitation project may be awarded a 9% (volume cap) LIHTC per calendar year.

Applicants must meet all the Minimum Threshold requirements as outlined in the Hawaii 2018-19 QAP to receive consideration for an allocation or award of LIHTC. Failure to meet any Minimum Threshold shall result in the immediate rejection of the application. Minimum Thresholds are subject to verification by HHFDC.

The thresholds relevant to rehabilitation and preservation of affordable housing include;

Developer Fee - Developer Fee includes developer fee, developer overhead, management fee, consultant fee, etc. (as indicated in the Developer Fee section of Exhibit A of the Consolidated Application).

  • 9% (volume cap) LIHTC:

- Acquisition/Rehabilitation – maximum developer fee of 10% of the acquisition costs and 15% of the rehabilitation costs (excluding developer fee) or $3,750,000 (whichever is less).

Extended-Use

Acquisition/Rehabilitation applicants have a minimum affordability period that must exceed any pre-existing affordability period by no less than 30 years.

Applicants electing to commit to an additional use period beyond the initial 15-year LIHTC compliance period (collectively the Extended Use Period) will be awarded points based on the table below. The election will be recorded in the Restrictive Covenant Document. Points will be awarded based on the following:

Total Extended Use Period (Total Length of Affordability Commitment)

  • 61 years or more –7 points
  • 55 to 60 years - 4 points
  • 50 to 54 years - 3 points
  • 45 to 49 years - 2 points
  • 40 to 44 years - 1 point
  • Less than 40 years - 0 points

Basis-boost

The 2018-19 Hawaii QAP defines High Cost Area Designation Newly constructed buildings located outside of designated Difficult to Develop Areas or Qualified Census Tracts qualify as a high cost area. The additional LIHTC available from the “basis boost” will be used to offset the high cost of construction and land throughout the state.

Y15, Qualified Contract

Applicants that elect to waive the right to exercise a request for a qualified contract pursuant to Section 42(h)(6)(E)(i)(II) of the IRC will be awarded 20 points.

Owners may choose to cancel the QC Application at anytime during this process. However the owner will only be able to request a QC once during the entire additional use period of the project. Withdrawing the application will count as the only time an owner can request a QC Application.

Contributed By: 
National Housing Trust

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