Avoiding Technical Corrections

2012-2013Qualified Allocation Plan

Forum

September 5, 2012

Avoiding Technical Corrections

Overview

• 67 developments applied for tax credits in the 2012 Round

• 14 projects were awarded credits

• Importance of maximizing points – 4 points could be the difference between getting an award or not!

Avoiding Technical Corrections

Common Technical Corrections

• Financial statements from principals – don’t leave anyone out

• Site plan does not include placement of accessible units

• Units plans do not have square footage

• Affidavits missing from development team members (see Form A, pages 21-22)

• Exceeding fee limitations (i.e. architect, contractor)

• Phase 1 does not include FEMA floodplain map and wetlands map

Avoiding Technical Corrections

“Silly” Technical Corrections

• Lender Letter of Interest – lacking the required language

• Not submitting the supplemental application fee for HOME or Development Fund - $500 for each

• Missing a signature (i.e. Form C, Form K)

• Missing a form (i.e. Form K)

• Submitting documents more than 6 months old (datedbefore May 1, 2012)

• Making assumptions (i.e. no need for CNA)

• Copy and paste – wrong development name

• Document filed/saved in the wrong folder

Avoiding Technical Corrections Underwriting Technical Corrections

• DOUBLE CHECK CALCULATIONS!!

• Operating Reserves - between four to six months (Operating Expense plus debt service) or $1,500/unit (whichever is greater). 

• Replacement Reserve minimum contributions must be used: 

Rehabilitation: $350 per unit per yearNew Construction: $250 per unit per yearSingle Family Units: $420 per unit per yearHistoric Rehabilitation: $420 per unit per year

• Replacement Reserves must escalate at a rate of 3% per year.

Avoiding Technical Corrections Underwriting Technical Corrections

• Rental Income Growth – 0-2% per year.

• Operating Expense Growth – 1-3% per year. IHCDA requires operating expense growth to be at least 1% higher than rental income growth.

• Management Fee maximum - 5-7% of “effective gross income” (gross income for all units less Vacancy Rate).

• If outside of IHCDA guidelines, please provide explanation!!

Avoiding Technical Corrections

• All applicants will be required to use a 20% basis boost and 9% to calculate the maximum 9% credit request.

• 20% basis boost to be utilized for Scoring Criteria Credit Reduction Section G.4(b).

• Reservation letters will designate a 30% basis boost. This is to ensure adequate basis to support credits awarded, in the event of the loss of the 9% flat rate.

-----------------------------------------------------------------------------------------New 3rd Party Market Study Reviewer Ribbon Demographics & M.E. Shay & Co.

• Submit all items listed on Market Study Checklist

Avoiding Technical Corrections

Scoring Pitfalls to Avoid

• All maps need to clearly show the project site• Map of nearby amenities must have ¼ and

½ mile radius• All forms must be signed and dated by all

necessary parties• Redevelopment plans must show evidence of

community participation and input• Credit reduction calculated correctly• Unique features – don’t be modest!

Avoiding Technical Corrections

General Reminders

• Follow the submission guidelines in Schedule G

• Form C due to IHCDA by October 1st

• Applications due by 5:00 PM in the IHCDA office on Thursday, November 1, 2012

• Semi-Annual Progress Reports – If pending 8609, these are due by 12/31/12

Avoiding Technical Corrections

2013A-C Tentative Timeline

• November 5, 2012 – Applicant list posted on the website

• 3rd Week of November – IHCDA will notify the highest elected official of the local jurisdiction of tax credit applications

• 1st Week of December – CNA report completed and provided to the applicant

• 1st Week of January – Notification of Technical Corrections and any concerns regardingMarket Studies

Avoiding Technical Corrections

2013A-C Tentative Timeline - Continued

• 4th Week of January – Issuance of Preliminary Score Sheets

• February 28, 2013 – Recommendations made to IHCDA Board of Directors

• March 28, 2013 – Reservation fees due for awarded developments

Avoiding Technical Corrections

Thank You and Good Luck!

Indiana Housing and Community Development Authority30 S. Meridian Street, Suite 1000

Indianapolis, IN 46204(317) 232-7777