Low-Income Housing Tax Credits & Preservation in Montana, 2017

While offering no set-aside for preservation, Montana Board of Housing (MBOH) provides point-incentives for preservation projects in their 2017 Qualified Allocation Plan (QAP). 

Set-Asides

In their 2017 Qualified Allocation Plan (QAP), Montana Board of Housing (MBOH) provides a 10% set-aside for nonprofit projects and a 20% set aside for small rural projects. No set aside is provided for preservation projects.

Point-Incentives

The 2017 QAP creates a framework allowing for 230 possible points for Project Characteristics.

  • 50 points will be awarded if the Application proposes the Preservation of existing affordable housing stock or increases the affordable housing stock through the use of federal funds or funds from other sources (e.g., donation of land, other substantial donations, reduction in taxes through tax abatement (other than non-profit exemption) or impact fees) to leverage the tax credit dollars. 
  • 20 points will be awarded if the Application proposes the Acquisition and/or Rehabilitation of buildings with local, state, and/or federal historic* preservation designations, existing affordable housing stock, or Projects applying for Rehabilitation tax credits that have completed their Compliance Period. 

Thresholds

Developments not scoring the minimum Development Evaluation Criteria score of 1100 points of 1300 possible points (or 850 points for non-competitive 4% Credit Bond Deals will not receive further consideration. Applications scoring at least the minimum Development Evaluation Criteria score of 1100 points or 850 points for non-competitive 4% Credit Bond Deals and meeting all other requirements of this QAP will be considered for an Award of Housing Credits as provided in this QAP.

Extended-Use

Federal law requires a 30-year or longer Extended Use Period. An Application in which the Applicant agrees to maintain units for low income occupancy beyond the Compliance Period will receive points as indicated below and must incorporate these restrictions into the Restrictive Covenants.

Years beyond initial 15Points Awarded
 15 years 0 points (30 total years)
16 – 20 years40 points (31 – 35 years)
21 – 25 years60 points (36 – 40 years)
26 – 30 years80 points (41 – 45 years)
Over 30 years100 points (46 years +)

Eventual Home Ownership* Applications must also specify an Extended Use Period and will receive points for the Extended Use Period chosen as provided above (refer to the “Eventual Home Ownership” portion of Section 3 for supplemental Application documentation and information requirements).

Basis Boost

Basis Boost for QCT and DDA Projects:

Federal law permits MBOH to reserve Housing Credits based on a “basis boost” of 30% for Projects in a Qualified Census Tract (“QCT”) or in HUD designated Difficult Development Areas (“DDA”). In addition, a 30% “basis boost” may be available for non-QCT or DDA Projects based upon the specific requirements specified below.

MBOH Discretionary Basis Boost for Non-QCT/DDA Projects:

For buildings not already eligible for the 30% “basis boost” by virtue of being located in a QCT or DDA, up to 130% of the eligible basis of a New Construction building or the Rehabilitation portion of an existing building may be considered in Awarding Housing Credits if MBOH determines that an increase in Housing Credits is necessary to achieve the Project’s 21 feasibility. MBOH staff may recommend an Award of Housing Credits, and the MBOH Board, at the time it considers authorizing Reservations of Housing Credits, may Award Credits for such buildings based upon a basis boost of up to 30%.

Applications for Projects not located in a DDA or QCT may be submitted with requested Housing Credits calculated at up to 130% of eligible basis. The Application narrative and supporting documentation must specify and explain in detail the applicable considerations supporting the need for the requested basis boost (i.e., any of items 1 through 5, below) and justify the need for the requested basis boost. The following factors may be considered in determining whether Housing Credits will be awarded based upon the discretionary basis boost:

  1. Qualification of the Application for the Small Rural Project set aside pool; 
  2. Qualification of the building location for Rural Development funding; 
  3. Targeting of more than 10% of the Project units to 40% or below area median income level or more than 62% of Project units to 50% or below area median income level; 
  4. The Project includes historical preservation or Preservation of existing affordable housing; or 
  5. The Project is located within a community where unusual market conditions produce higher than normal labor and material costs, unusually high land cost and/or rent and income limits which are too low to support the cash flows required by the Project’s financial structure. 

The MBOH discretionary basis boost does not apply to non-competitive 4% Credits.

Community Revitalization Plans

The 2017 QAP allows for a mamimum of 230 points to be awarded for Project Characteristics. Of those 230 points, 10 will be awarded if the Project is located in a Qualified Census Tract* or involves existing housing as part of a local (not national, state or regional) community revitalization plan* or similar plan. The Application must include any such local community revitalization plan and identify where in the plan such existing housing may be found.

Contributed By: 
National Housing Trust

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