Low Income Housing Tax Credits & Rural Housing in Arkansas, 2019

The Arkansas Development Finance Agency (ADFA) awards a 30% Basis Boost for projects funded in part by Rural Develoment (RD) 

Pursuant to IRC  §42(d)(5)(B)(v), the Authority designates that the eligible basis of any qualified low‐income new building will be increased by thirty percent (30%) if it is funded in part by Rural Development

In the event Rural Development ("RD") requires initial operating capital in an amount greater than ADFA's Operating Deficit Reserve, ADFA's required Operating Deficit Reserve under (a) above must be funded. In the event that RD requires initial operating capital in an amount less than ADFA's Operating Deficit Reserve required under (a) above, ADFA will credit the amount of reserves required by Rural Development to the total amount of reserves required under (a) and (b) above, but in no event shall the total amount of reserves be less than that required under (a) above. (For example, if under (a) $50,000 is required and under (b) $10,000, and Rural Development requires $20,000 of initial operating capital, the owner must fund a separate Operating Deficit Reserve account, withdrawals from which must be approved by ADFA, in the amount of $30,000. Using the same amounts except that RD requires $70,000 initial operating capital, the owner must fund a separate $50,000 Operating Deficit Reserve).

A copy of the December bank statement for the Operating Reserve account and the Replacement Reserve account must be submitted by the Owner to ADFA's Compliance Department by February 1 of each year. If the December bank statements do not evidence a year-end summary of each month's balance, copies of bank statements for all twelve (12) months, for the Operating Reserve and the Replacement Reserve, shall be submitted to ADFA by February 1 of each year. The ending balance of the Operating Deficit Reserve account plus the development's ending cash balance per RD Form 3560-7, plus the balance of RD's initial operating capital must total the amounts required under (a) and (b) above; thus, general partner of owner or member, shareholder or partner of general partner of owner may have to deposit funds into the separate Operating Deficit Reserve account to total this amount.

ADFA acknowledges that RD shall have authority over the initial operating capital account and that RD will review and approve or deny all withdrawal requests by owner from such account. ADFA shall have approval authority over the separate Operating Deficit Reserve account. Owner shall not make any withdrawals from the Operating Deficit Reserve account without providing the following items to ADFA:

1) supporting documentation evidencing the need for the funds;

2) written evidence from RD that the use of reserve funds is not an eligible expense from RD initial operating capital account or that insufficient funds exist in the account; and

3) written guaranty by the owner or general partner of owner, as deemed appropriate by ADFA, that sufficient funds will be deposited into the ADFA Operating Deficit Reserve account so that at the end of the year the total funds in the Operating Deficit Reserve account equal the amount required under (a) above as modified herein for Rural Development developments.