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

Indiana’s 2018-2019 Qualified Allocation Plan (QAP) lists one of its housing goals to be substantially upgrade and preserve existing low income housing and are a part of a published community revitalization plan.

Set-Asides

The Indiana 2018-2019 QAP has a set aside of 10% credits for preservation.

Developments which involve the substantial rehabilitation (as outlined in the property’s Capital Needs Assessment – See Schedule F) of existing federally assisted affordable housing, and/or the demolition and decentralization of federally assisted affordable housing units utilizing the same site (over 50% of the units must be replaced in the Development/Application). This includes:

a. Developments that propose the preservation of HUD or USDA affordable housing; Rental Housing RHTC Developments with Compliance Periods that have expired or are expiring in the current year and the extended use agreement is still in place;

b. Federally assisted developments which entail demolition and decentralization of units with replacement of units on the same site as described above.

c. Rehabilitation hard costs must be in excess of $30,000 per unit to be considered in this category.

d. For Developments competing in all other set-asides, rehabilitation hard costs must be in excess of $20,000 per unit.

To be eligible for the set-aside when a project contains multiple building and construction types, at least 50% of the units must qualify as preservation units. The cost of furniture, construction of community buildings and common area amenities are not included in the minimum per unit amount. The applicant must provide a hard cost budget separating out the cost for furniture, construction of community buildings and common area amenities. USDA Rural Development Section 515 properties may include the cost of construction for community buildings and common area amenities in the minimum per unit amount

If two or more developments receive an equal total score, the following tie breakers will be used to determine the reservation:

  • Priority will be given to the development that competes under the highest number of set-asides.

 

Threshold

Applicants seeking an RHTC allocation under Indiana’s RHTC cap must score a total of 80 or more points under this Allocation Plan.

Applicants who perform rehabilitation work on pre-1978 Developments (i.e. buildings) are required to comply with the Lead Based Paint Pre-Renovation Rule (“Lead PRE”) and the State of Indiana’s Lead Based Paint Rules where applicable. (For more information visit www.epa.gov/lead or contact your local Environmental Protection Agency (EPA) Regional Office and www.ikecoalition.org for Indiana’s rules.) Required Documentation: The Applicant must certify that the Development will comply with these laws and rules.

 

Points Incentive

The 2018-2019 Indiana Qualified Allocation Plan (QAP) awards up to 63 points for project development characteristics. This includes up to 6 points for preservation of existing affordable housing.

Points will be awarded for up to the maximum of six (6) points in the preservation category as follows:

a. Six (6) points will be awarded for an Application that proposes the preservation of an existing affordable housing Development assisted with Rental Housing Tax Credits where the 15 year compliance period will/has expire(d) in the current year or earlier (the extended use agreement must still be in effect) IHCDA will review the owner’s past noncompliance, if any.

Required Documentation: A statement from the Applicant that provides the following information:

i) All current Building Identification Numbers (BIN) for the Development;

ii) The name of the Development during the time it was a RHTC Development and;

ii) The address of all buildings in the Development

OR

b. Up to Six (6) points will be awarded for an Application that proposes the preservation of HUD or USDA affordable housing (such as project based Section 8 or other forms of HUD funding or RD 515 properties). Developments receiving a preservation priority designation from HUD or USDA will be awarded points as follows:

Developments receiving a designation of high priority - 6 points

Developments receiving a designation of medium priority - 5 points

Developments receiving a designation of low priority - 4 points

Required Documentation: A letter from HUD or USDA that states the priority

designations (high, medium, or low priority) for projects that are the subject of

an Application pursuant to this Plan.

OR

c. Four (4) points will be awarded for an Application that proposes the preservation of any other affordable housing Development.

*NOTE: Developments eligible for points in this category are NOT also eligible for points under category d. vacant structure or g. infill/new construction

 

Up to 4 points will be awarded for developments that implement cost containment measures as Tax Credits Per Unit. Developments will be divided into three categories and compete against each other based on tax credit per program assisted unit.

i. New construction

ii. Rehabilitation

iii. Adaptive reuse

Points will be awarded based on the following distribution. Projects with more than one construction type will compete in the category that represents the majority of the units or development square footage if units are equal.

Lowest Tax Credit

Per Unit

80th

Percentile

60th

Percentile

40th

Percentile

20th

Percentile

Below 20th

Percentile

Points

4

3

2

1

0

  

Basis Boost

Developments located in a Qualified Census Tract (QCT) or Difficult to Develop Area (DDA) are eligible to increase or “boost” the eligible basis of their Development by up to 30% to determine the maximum credit amount. See Appendix E for a complete listing of QCTs and DDAs. The Authority may also increase or "boost" the eligible basis up to 30% for 9% projects to determine the maximum credit amount for Developments whose buildings are placed in service after July 30, 2008 if the eligible basis otherwise would be a low percentage of the total development costs due to any of the following:

1) Officially declared disaster area by the State of Indiana after January 1, 2008 which will assist in providing affordable housing to people affected by the disaster.

2) Competing under the Community Integration set-aside, Housing First set-aside or eligible for the Integrated Supportive Housing points under evaluation factors.

3) Competing under the Preservation set-aside.

4) Necessity of extensive site preparation and/or off-site costs. All such work must be reasonable based on the circumstances.

5) Demolition and new construction, rehabilitation of historic structures, and/or conversion of existing structures.

6) Commit to rent levels that maximize total points under Section G.1, “Rents Charged” scoring category. Buildings located in areas already qualifying for additional credits, will not qualify for an additional increase if they have already received the eligible basis boost. Required Documentation: Developments located in a declared disaster area must include:

(i) Documentation that the Development has been officially declared a disaster area by the Governor, and

(ii) A narrative description of how the proposed Development will help the area and the individuals affected by the disaster. All other Developments must provide a narrative explanation justifying the need to increase the eligible basis.

 

Community Revitalization Plan

4 points will be awarded if there is an adopted local redevelopment or community revitalization plan that clearly targets the specific neighborhood in which the project is located. A redevelopment or community revitalization plan may include, but is not limited to, a comprehensive plan, downtown master plan, neighborhood plan, economic development plan, etc. The applicant may only submit one Community Redevelopment/Revitalization Plan per community. If more than one plan is submitted for the same community, the application is not eligible for points in this category. The submitted plan must include each of the following:

i. A clearly delineated target area that includes the proposed project site;

ii. Detailed policy goals, which must include the rehabilitation or production of rental housing;

iii. Implementation measures along with specific, current, and ongoing time frames for the achievement of such policies and housing activities;

iv. The proposed development project must support at least one of the goals of the redevelopment or revitalization plan; and

v. An assessment of the existing conditions of the community.

The following are not eligible:

i. Short-term work plans, including Stellar Strategic Investment Plans;

ii. Consolidated plans, municipal zoning plans, or land use plans; or

iii. Plans that do not reflect the current neighborhood conditions;

iv. PUDs.

For scattered site projects, if not every community has a qualifying plan, points will be determined by taking the average by unit.

Required Documentation:

i. Documentation of the process used to develop and adopt the plan;

ii. Details regarding community input and public meetings held during the creation of the plan must be included in the application;

iii. A copy of the entire plan must be submitted;

iv. A map of area targeted by plan identifying location of project.

v. A narrative listing the location and page number of all required items within the plan.

For an additional two points:

If the plan has been adopted by a local unit of government and meets above items i. through v., an additional 1 point will be awarded.

Per Section 42(m) and IRS Notice 16-77, allocating agencies must give preference to a proposed development located within a Qualified Census Tract if that development is part of a concerted community revitalization plan. Therefore, If the plan meets all of the requirements of items i. through v. above and has been adopted by a local unit of government, an additional 1 point will be awarded for a maximum of 2 additional points (1 point for adoption and 1 point for location in a QCT). If the plan does not meet the requirements above or has not been adopted, then the bonus QCT point will not be awarded. To be considered a development located within a QCT, at least 50% of the total development units must be located within a QCT.

Required Documentation:

vi. Documentation of the process the local unit of government used to develop and adopt the plan; and

vii. Written approval from the local unit of government verifying the adoption of the plan.

Up to 4 points will be awarded if the proposed project is a phase or component of a Federally Assisted Revitalization Award such as:

1. Choice Neighborhoods revitalization initiative; OR

2. HUD designated Promise Zone or a Department of Education designated Promise Neighborhood; OR

3. New Market Tax Credit Development.; OR

4. Blight Elimination Program, where at least 50% of the development units or square footage is located on a site(s) that was assisted through the program; OR 2 points if at least 25% of the development units or square footage is located on a site(s) that was assisted through the program; OR

5. Similar Federal Program that has the following components (Rental Assistance Demonstration (RAD), HOME, and CDBG do not qualify):

i. Be part of a mixed income or mixed use phased community with a significant market component;

ii. Facilitate the de-concentration of poverty; and

iii. Provide for community improvements or amenities, which may include but are not limited to, new or improved public infrastructure, greenspace, improved transportation, quality of life enhancements, or other improvements benefiting the community.

Required Documentation: Place all documentation in Tab P.

i. A copy of the Grant/Award Agreement, which identifies the entity receiving the grant and the amount of the grant, and additional documentation reflecting the time limits for use of the grant;

ii. A letter from the Executive Director of the identified entity certifying that:

a) The housing units are an essential element of that Plan; and

b) The Tax Credits for the development proposed in the application are an essential component of the financing plan for the grant.

iii. For BEP awards, evidence that the City received the award and that the proposed land was part of it.

iv. For Promise Zone, a copy of the Certification of Consistency with Promise Zone Goals and Implementation.

v. A copy of the HUD approved Revitalization Plan (if applicable).

Contributed By: 
National Housing Trust

Other Items of Interest