Virginia Housing Development Authority

Tax-Exempt BondCompliance Training

February 11, 2016Virginia Housing Center

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Agenda

9:30 - Registration 10:00 - Training begins 11:00 - Break 12:00-1:00 - Lunch (provided) 1:00 - Training continues 2:00 - Break 3:30 - Class end

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About VHDA Self-supporting, not-for-profit, created by the Commonwealth of

Virginia in 1972, to help Virginians attain quality, affordable housing.

VHDA provides mortgages, primarily for first-time homebuyers and for developers of quality rental housing. We use no state taxpayer dollars, but raise money in the capital markets to fund our loans.

We teach free homeownership classes, and help people with disabilities and the elderly make their homes more livable.

VHDA works with lenders, developers, local governments, community service organizations and others to help put quality housing within the reach of every Virginian.

Since our founding, VHDA has financed more than 182,000 single family homes and 144,000 multifamily units.

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Types of VHDA Funding

Federal Programs (Tax Credits/Section 8) Rules & Regulations (Tax-exempt and

Taxable Bonds) Goals/Programs Align with State Housing

Policy Leads to program complexity lower

incomes, rents restrictions, conflicting program rules

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Program TypesLast count ~60 different process types in

Housing & Development Software (HDS) Taxable (TX) and Tax Exempt (TE) Home/RD/REACH/SPARC/HCD TX & TE, etc. with & w/o Tax Credits (TC) Exchange TCAP (TC Assist. Pgm - 2009 programs) S8/236/RAP MUMI EUA (TC properties in extended use period) ANY COMBO of the above & others not listed

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TE Bonds Overview Internal Revenue Code (IRC) sets out Treasurys

framework for raising $$s to run the govt

Tension between raising $$s & steering social policy (ex: encouraging homeownership or charitable deductions)

Ability to sell TE bonds is given by Congress which allows for some loss of tax revenue for public good

Congress provides the categories of tax-exemption. Multifamily housing is one of those categories

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TE Bonds Overview Rules allow VHDA to sell TE bonds & lend

proceeds of those bonds to provide construction and/or permanent mortgages

IRC Section 142 imposes many rules to ensure public purposes are met. VHDA monitors compliance with those rules.

If requirements not met, VHDA is at risk for substantial penalties

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TE Bonds Overview

Fund new construction or acquisition/ rehab

May fund facilities related to housing such as parking, community building, laundry, tot lots (but those must be used only for residents)

Units must be available for general public use. Ex: may not restrict rental of units only to employees of ABC Corp.

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TE Bonds Overview 20% at 80% & 80% at 115% of AMI not AFS

(115% to 150% May 1998) GENERALLY bond issues

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TE Bonds Overview

Minimum set asides for income 2 most used CURRENTLY are:20% of units at 50% of AMI AFS or 40% of units at 60% of AMI AFS

Remainder at 150% AMI not AFS May be other limits that apply from other programs Min. set aside limits are Adjusted for Family Size

(AFS) remember though, mix funding types, you mix limits

Rent limits? apply to TC, not VHDA funding

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VHDA Regulatory Agmt

Best advice is to get a copy of and READ the Regulatory Agreement

Reflects income limits & other rules

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Reg Agmt example pg 1

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Reg Agmt - example

Low Income 20% at 80% AFS

Students

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Reg Agmt - exampleLow Income 40% at 60% AFS

Students

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Reg Agmt - example

140% AU Rule

Change in HH Comp

Annual LI Verif& Cert

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Reg Agmt - exampleForm 8703

60% at 150% Moderate Income

Rent Surcharge

Recertifica-tion

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Compliancewhat?!...why?!

Cant we all just get along? Doesnt everyone do exactly what they

promised?

Ensure people receive the benefits of those programs

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Minimum Set Aside(Low-Income LI Units)

20/50 40/60

Ex: 150 unit property either 30 or 60 units must be occupied or held available for occupancy by households initially meeting the move-in income restriction, adjusted by family size (AFS)

25/60 (NYC)15/40 (Deep Rent Skewed)

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Minimum Set Aside

At the time 10% of the total units are occupied the minimum set aside must be continually maintained either occupied by qualified HHs or held available for occupancy

Existing property receive new TE Bond funding how to document minimum set aside

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Minimum Set Aside Cushion units in addition to meeting

the minimum set aside, VHDA will begin requiring a certain number of additional units to be rented to qualifying households. # of units still to be determined

To date recommended: 15% of the minimum set aside Ex: 60 LI *15% = 9 additional LI Total LI units 150 unit prop = 69

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Minimum Set Aside Cushion units are important If minimum set aside is met only to the unit and

a mistake is made & a HH moves in over the LI maximum or exceeds 140% at a recertification, the property is in noncompliance

Andall vacant units that were held available for occupancy for LI HHs & that were counted as part of the minimum set aside will lose LI status

Renting comes to a stop until enough LI HHs occupy the # of units required to satisfy the minimum set aside

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Moderate Income

Applies to households in units not required to meet the minimum set aside

Move-in income may be up to 150% of the AMI (not AFS). If over, apply adjustments on Worksheet B. If still over, HH not eligible to move in.

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Income Limits TE bond program uses income limits

published by HUD. Look for MTSP (Multifamily Tax Subsidy Program same as is used for TC)

HUD revises #s annually; VHDA publishes on our website by geographic region

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Income Limits MTSP HERA (Housing & Economic Recovery

Act) placed in service before 1/1/09 and with 20% at 50% or 40% at 60% minimum set asides

Confusing? Confirm with your CO

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Richmond Income Limits2 person HH AFS50% = $29,70060% = $35,640Median:80% = $59,360 ($74,200*80%)150% = $111,300 ($74,200*150%)

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HERA ExampleBoth tax-exempt bonds issued under Sec. 142 and Tax Credit properties may use the following HERA limits IF they meet the placed in service requirements and are in the areas listed

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Hold Harmless ExampleApplies to same properties as previous slide:

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Find Highest Allowed Income

Choose your state & county, then click on View County Calculations

https://www.huduser.gov/portal/datasets/il/il2015/select_Geography_mtsp.odn

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Find Highest Allowed IncomeResult will reflect the highest year allowed to use based on

placed in service date

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WTCMSWeb Tenant Compliance Management System

Site managers will enter data into this system CONSTANTLY move-ins, transfers, move-outs, changes in HH composition.

Print Certifications to sign. Track HH members, income amount &

type, rent, race/ ethnicity, etc. VHDA staff will use data for annual

reviews

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WTCMS

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WTCMS Help Online User Guide Contact your assigned Compliance

Officer (CO) VHDA Help Desk 804-343-5758 HelpDesk@vhda.com

On-line help request system pilot beginning March, implement following

YouTube video how to segments in next several months

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Household Composition

Who is included in a HH? HUD Handbook 4350.3, Change 4,

Chapter 3 http://portal.hud.gov/hudportal/HUD?src

=/program_offices/administration/hudclips/handbooks/hsgh/4350.3

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Household Comp - Included Most everyone in the family, including foster

children/adults Children away at school & home on breaks Unborn children, children in process of being

adopted, children 50% custody Temporarily absent family members ex: work in

another state, in hospital/rehab, in military (except adult children, unless leaving dependent), children of the family but in foster care

Choice to include or not: persons permanently in hospital/nursing home

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Household Comp Not Included

Live-in Aide

Guests

See Definitions in HUD Handbook 4350.3

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Application Process Comprehensive Application Verify income, and assets, if necessary

BEFORE MI Calculate income Determine if HH qualifies & at which level Enter data correctly - into WTCMS Print and sign Tenant Income Certification

Effective Date is MI Date

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Application Process/Forms

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Required VHDA Forms Privacy Lttr each adult, sign once before MI Lease Addendum sign with any NEW lease Worksheet B helps qualify a HH for a 150%

unit

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Admin Items Privacy Act Letter may be separate or

may include complete language in Application

Lease Addendum may be separate or may include complete language in lease

Lease term not less than 30 days nor more than 24 months

Security Deposits & notices follow Landlord Tenant Act & your procedures