[Federal Register Volume 79, Number 187 (Friday, September 26, 2014)]
[Notices]
[Pages 57955-57966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22971]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5417-N-02]
Administrative Guidelines; Subsidy Layering Reviews for Section 8
Project-Based Voucher Housing Assistance Payments Contracts and Mixed-
Finance Development
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Notice.
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SUMMARY: This document provides Administrative Guidelines (Guidelines)
which qualified Housing Credit Agencies (HCAs) must follow in
implementing subsidy layering reviews in accordance with the
requirements of the Housing and Economic Recovery Act of 2008 (HERA),
in those cases where the HCA elects to conduct the review. In certain
instances, described in this notice, HUD will follow these Guidelines
in implementing subsidy layering reviews to satisfy the requirements of
section 102(d) of the Department of Housing and Urban Development
Reform Act of 1989 (HUD Reform Act). The requirements in this notice do
not supersede the subsidy layering requirements of other Federal
programs.
This notice sets forth the guidelines for conducting subsidy
layering reviews for mixed-finance public housing projects and for
newly constructed and rehabilitated structures combining other forms of
government assistance with project-based voucher assistance under
section 8 of the United States Housing Act of 1937 (1937 Act).
[[Page 57956]]
FOR FURTHER INFORMATION CONTACT: Luci Ann Blackburn, Urban
Revitalization Division, Office of Public and Indian Housing,
Department of Housing and Urban Development, 451 7th Street SW., Room
4134, Washington, DC 20410; telephone number 202-402-4190 (this is not
a toll free number); or Miguel A. Fontanez Sanchez, Director, Housing
Voucher Financial Management Division, telephone number 202-402-4212
(this is not a toll free number). Individuals with speech or hearing
impairments may access this number through TTY by calling the toll free
Federal Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
A. Summary Chart
The remainder of this notice describes the current requirements
regarding subsidy layering reviews for different development scenarios.
The current legal requirements and HUD's policy, which are more fully
described in this notice, are summarized for ease of reference in the
following chart:
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Certification
required under
Type of project SLR reviewer section 102(d) of the
HUD Reform Act
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PBV (without LIHTC), New HUD.............. Yes.
Project.
PBV only (without LIHTC), SL Review not No.
Existing Project. required.
PBV with LIHTC................ HCA \1\ or HUD... If the HCA were to do
the review, and the
HCA's SL Review took
into account
proposed PBV
assistance,
certification would
not be required.\2\
Otherwise, HUD must
certify.
PBV with LIHTC and Mixed HCA \3\ or HUD... Yes.
Finance.
Mixed Finance without LIHTC... HUD.............. Yes.
Mixed Finance with LIHTC...... HCA \4\ or HUD... Yes, by entity
performing review.
Mixed Finance with LIHTC/No HUD.............. Yes.
HCA or HCA declines to do
review.
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B. The Housing and Economic Recovery Act of 2008 (HERA)
HERA (Pub. L. 110-289, approved July 30, 2008) made numerous
revisions to the Section 8 Project-Based Voucher program. On November
24, 2008, at 73 FR 71037, HUD published a Federal Register notice to
provide information about HERA's applicability to HUD's public housing
and Section 8 tenant-based and project-based voucher programs. That
notice provided an overview of key provisions of HERA that affect HUD's
public housing programs, and identified those provisions that are self-
implementing, requiring no action on the part of HUD for participants
to commence taking action to be in compliance, and those provisions
that require implementing regulations or guidance on the part of HUD.
That notice also stated that HUD would be issuing implementing guidance
on section 8(o)(13)(M)(i) of the 1937Act (42 U.S.C.
1437f(o)(13)(M)(i)), as applicable to newly constructed or
rehabilitated housing. (See 73 FR 71039.)
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\1\ It should be noted that, at the time of publication of this
Notice, HUD is doing the subsidy layering reviews in all types of
cases, including in mixed-finance projects with LIHTC.
\2\ Even though not required by HERA, HUD in practice requires
certifications in these cases.
\3\ See footnote 1.
\4\ See footnote 2.
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On July 9, 2010, at 75 FR 39561, HUD published a Federal Register
notice stating the guidelines HCA's must use in conducting subsidy
layering reviews for newly constructed and/or rehabilitated structures
combining other forms of government assistance with project-based
voucher assistance. These notices state that the HERA provision
relating to the elimination of subsidy layering reviews for existing
housing is self-implementing; the provision relating to State or local
agencies performing subsidy layering reviews for project-based voucher
housing assistance payment (HAP) contracts for new construction and
rehabilitated projects is not self-implementing. This notice restates
and updates these prior notices, including specific guidelines related
to subsidy layering and low-income housing tax credit (LIHTC).
C. Rental Housing Policy Alignment
Through the work of the Rental Housing Policy Alignment team, an
outgrowth of the Interagency Rental Policy Working Group formed in
2011, various workstreams are currently underway to streamline
government oversight and align standards across federal agencies
providing funding for affordable rental housing.\5\ One of these
workstreams is the Subsidy Layering Review group, which seeks to
provide a template for agencies within a State to share duties and
information related to approval and review of federally-funded
affordable housing. A pilot program aiding the signing of Memoranda of
Understanding between various State and federal agencies providing
affordable housing assistance was conducted successfully across seven
states in 2012,\6\ and HUD intends to publish a guidebook that will
allow all agencies that wish to enter into such an agreement to do so.
This notice provides guidance and updates on how and in what situations
such agreements can be utilized to reduce the burden of subsidy
layering review on government agencies.
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\5\ See http://www.whitehouse.gov/blog/2011/02/01/urban-update-aligning-federal-rental-housing-policy.
\6\ See http://www.huduser.org/portal/pdredge/pdr_edge_featd_article_012612.html.
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D. Section 102 of the HUD Reform Act and Other Authorities
HUD's regulations in 24 CFR part 4 implement section 102(d) of the
HUD Reform Act (42 U.S.C. 3545(d)) and contain a number of provisions
designed to ensure greater accountability and integrity in the way in
which HUD makes assistance available under certain of its programs.
Section 4.13 of 24 CFR (Limitation of assistance subject to section
102(d)) requires HUD to certify, in accordance with section 102(d) of
the HUD Reform Act, that assistance made available by HUD for a
specific housing project will not be more than is necessary to make the
assisted activity feasible after taking into account assistance from
other government sources. In order to make that certification, a
subsidy layering review must be performed. In addition, The Housing and
Community Development Act of 1992 (Pub. L. 102-550, approved October
28, 1992), as amended by the Multifamily Housing
[[Page 57957]]
Property Disposition Reform Act of 1994 (Pub. L. 103-233, approved
April 4, 1994) added a ``Subsidy Layering Review'' provision at 42
U.S.C. 3545 note, which states that the subsidy layering requirement
for projects receiving assistance under a HUD program and receiving tax
credits may be satisfied ``by a certification by a housing credit
agency to the Secretary, submitted in accordance with guidelines
established by the Secretary, that the combination of assistance within
the jurisdiction of the Secretary and other government assistance
provided in connection with a property for which assistance is to be
provided within the jurisdiction of the Department of Housing and Urban
Development and under section 42 of the Internal Revenue Code of 1986
shall not be any greater than is necessary to provide affordable
housing.'' This statutory note also sets requirements for equity
capital and project costs. Finally, as noted, in 2008, HERA altered
some of these subsidy layering requirements.
Project Based Assistance But No LIHTC
Section 2835 of HERA adds subparagraph (M) to section 8(o)(13) of
the U.S. Housing Act of 1937, 42 U.S.C. 1437(o)(13), which provides
that a subsidy layering review shall not be required for project-based
assistance (1) for an existing structure, or (2) if a subsidy layering
review has been conducted by the applicable State or local agency.
However, this section does not speak to the case where HUD conducts the
review, hence that situation is governed by other applicable law,
specifically, section 102(d) of the HUD Reform Act, 42 U.S.C. 3545(d),
which requires that the Secretary certify that assistance within the
jurisdiction of the Department (except that Title II mortgage insurance
for this purpose is not considered such assistance) to any housing
project shall not be more than is necessary to provide affordable
housing after taking account of assistance described in subsection
(b)(1) of this section. Assistance under (b)(1) includes ``any related
assistance from the federal government, a State, or a unit of general
local government, or any agency or instrumentality thereof.''
HUD Assistance Plus LIHTC
As noted, 42 U.S.C. 3545 note provides that an HCA certification
submitted in accordance with HUD guidelines will suffice in lieu of a
HUD review when HUD assistance and LIHTC are used in a project. Where
there is no current delegation of subsidy layering review authority to
an HCA, on a case-by-case basis, and within its sole discretion, HUD
may delegate the subsidy layering review activity to a local HCA
subject to HUD's review under 42 U.S.C. 3545 note and these guidelines.
In such cases, HUD may request the HCA to make changes to the subsidy
layering review or HUD may revise the HCA's subsidy layering review as
needed. Id.
Mixed-Finance and Public Housing Without LIHTC
It is also possible for mixed-finance arrangements to occur with
other forms of federal assistance, but without LIHTC. In regard to such
mixed-finance and public housing, the applicable law is again section
102(d) of the HUD Reform Act, and HUD is responsible for performing
subsidy layering reviews.
II. Certification
A. HUD's Certification Requirements Pursuant to 102(d) of the HUD
Reform Act
HUD's regulation at 24 CFR 4.13 states that before HUD makes any
assistance subject to section 102(d), with respect to a housing project
for which other government assistance is, or is expected, to be made
available, HUD will determine, and execute a certification, that the
amount of the assistance is not more than is necessary to make the
assisted activity feasible after taking account of the other government
assistance. This review certifies that there are no duplicative
government subsidies when combining HUD housing assistance and forms of
other federal, State, or local government assistance. Where an HCA has
performed a subsidy layering review for a project that has been
allocated LIHTCs and the subsidy layering review took into
consideration the proposed project-based voucher assistance, section
2835(a)(1)(F) of HERA eliminates the need for the HUD Reform Act's
section 102(d) certification requirement. However, HUD's obligation to
certify in accordance with 102(d) of the HUD Reform Act and
implementing regulations at 24 CFR 4.13 still exists where a review has
not been substituted in accordance with the Guidelines contained in
this notice.
1. HCA Participation Where LIHTC Administered by the HCA Is Involved
An HCA is ordinarily designated for the purpose of allocating and
administering the LIHTC program under section 42 of the Internal
Revenue Code (IRC), and so may do the subsidy layering review pursuant
to authorization under this notice where there is LIHTC. In those
transactions where there are other forms of government assistance
involved, as in proposed project-based voucher projects, which do not
include LIHTC, and the HCA has no involvement in respect to the
assistance, HUD will generally conduct subsidy layering reviews and
make the required HUD Reform Act's section 102(d) certification in
accordance with 24 CFR 4.13 for such projects as it is currently doing.
HUD will also continue to conduct the review where there is no HCA
available, or the applicable HCA has declined to perform the subsidy
layering review.
2. HCA Participation Where Other Assistance Administered by the HCA May
Be Involved
Currently, transactions involving LIHTC are the only case where the
HCA has substantial involvement and, absent a waiver requested by the
locality and granted by HUD for good cause, are generally the only case
where the HCA performs the subsidy layering review. However, in the
future, Congress may appropriate forms of assistance where there is
involvement by a local HCA. In those cases, HUD may, by notice
published in the Federal Register, on such terms and conditions as HUD
may provide, and where not contrary to statutory authority, delegate
performance of the subsidy layering review to the local HCA.
B. HCA Certification Under HERA
Under section 8 of the 1937 Act, specifically at 42 U.S.C.
1437f(o)(13)(M), the HUD Reform Act section 102(d) certification is not
required with respect to project-based assistance, or if a subsidy
layering review has been conducted by the applicable HCA. These
Guidelines require that HCAs make an initial certification to HUD when
the agency notifies HUD of its intent to participate. The HCA
certification provides that the HCA will, among other things, properly
apply the Guidelines which HUD establishes. In addition, after a
subsidy layering review has been performed by the applicable HCA, the
HCA must certify that the total assistance provided to the project is
not more than is necessary to provide affordable housing (Appendix B of
this notice).
III. Intent To Participate
An HCA must notify HUD of its intent to participate in the
preparation of subsidy layering reviews for projects combining other
forms of government assistance with project-based voucher assistance
before performing subsidy layering reviews pursuant to this notice.
[[Page 57958]]
Questions or requests for clarification relating to subsidy layering
reviews for units under the project-based voucher program and the
implementation of these Guidelines should be addressed to HUD
Headquarters, Section 8 Financial Management Division, and should be
answered prior to an HCA's notification to HUD of its intent to
participate.
A. Letter to HUD
An interested HCA shall notify HUD of its intent to perform subsidy
layering reviews for newly constructed and rehabilitated projects that
will receive project-based voucher assistance by sending a brief letter
(Appendix A of this notice), executed by an authorized official of the
HCA informing HUD that it: (1) Has reviewed these Guidelines; (2)
understands its responsibilities under these Guidelines; and (3)
certifies that it will perform the subsidy layering review as it
relates to project-based voucher assistance in accordance with all
statutory, regulatory and Guideline requirements. Such letters should
be forwarded via email to the Section 8 Financial Management Division
at HUD Headquarters at the following address:
[email protected].
B. HUD Acknowledgement
Once HUD has been notified of an HCA's intention to participate,
HUD will acknowledge that participation by a written letter to the HCA,
and post the agency's name on the Office of Public and Indian Housing's
Web site as a participating agency. Once an HCA's intent to participate
is acknowledged by HUD through a response letter, that agency may
perform subsidy layering reviews, and certify such reviews have been
performed, on behalf of proposed project-based voucher HAP contracts
for newly constructed or rehabilitated units in accordance with the
HCA's existing requirements, provided such requirements are in
substantial compliance with these Guidelines.
C. Revocation of Participation
If HUD determines that an HCA has failed to substantially comply
with these Guidelines, or statutory or regulatory requirements, HUD may
discontinue the HCA's permission to perform subsidy layering reviews on
behalf of proposed project-based voucher HAP contracts. HUD will inform
the HCA in writing of such a determination.
D. HUD Participation
HUD will follow these Guidelines in conducting the required subsidy
layering reviews, and issue a HUD Reform Act section 102(d)
certification pursuant to such review for projects in cases where: (1)
The HCA's authority has been revoked by HUD; (2) an HCA opts to not
accept the responsibilities pursuant to section 2835(a)(1)(F) of HERA;
(3) project-based voucher assistance is combined with other government
assistance that does not include LIHTCs, and the HCA does not have the
authority to conduct such review; or (4) the project is mixed finance.
E. Applicability
These guidelines apply to any contract, grant, loan, cooperative
agreement, or other form of assistance, including the insurance or
guarantee of a loan or mortgage that is provided under a program
administered by HUD for use in, or in connection with, a specific
housing project. Assistance provided under section 8(o)(13) of the 1937
Act (42 U.S.C. 1437f) (project-based vouchers) for new construction or
rehabilitated projects is assistance to which section 102(d) of the HUD
Reform Act applies for subsidy layering review purposes.
IV. Definitions
Category 1 subsidy layering review--Subsidy layering review for
proposed project-based voucher HAP contracts where the HCA conducts the
review, with consideration of project-based voucher assistance.
Category 2 subsidy layering review--Subsidy layering review for
proposed project-based voucher HAP contracts where the HCA conducts the
review, but without consideration of project-based voucher assistance.
Housing Credit Agency (HCA)--For purposes of performing subsidy
layering reviews for proposed project-based voucher projects, a housing
credit agency includes a State housing finance agency, a participating
jurisdiction under HUD's HOME Investment Partnerships program (see 24
CFR part 92), or other State housing agencies that meet the definition
of ``housing credit agency'' as defined by section 42 of the Internal
Revenue Code of 1986. Any agency for which HUD has previously
acknowledged its participation and posted the agency's name on the
Office of Public and Indian Housing's Web site as a participating
agency prior to the effective date of this notice is also considered to
be an HCA for purposes of performing subsidy layering reviews, except
where HUD has revoked the HCA's authority to perform subsidy layering
reviews.
Mixed-finance development--Mixed-finance development refers to the
development (through new construction or acquisition, with or without
rehabilitation) or modernization of public housing pursuant to 24 CFR
905.604, where the public housing units are owned in whole or in part
by an entity other than a PHA. There are various potential scenarios
for the ownership structure of a mixed-finance project, such as: Public
housing units may be owned entirely by a private entity; a PHA may co-
own with a private entity; or a PHA affiliate or instrumentality may
own or co-own the units.
Other government assistance is defined to include any loan, grant,
guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or
any other form of direct or indirect assistance from the federal
government, a State, or a unit of general local government, or any
agency or instrumentality thereof.
Substantial compliance --For purposes of making the HERA
certification, an HCA may perform subsidy layering reviews for proposed
project-based voucher HAP contracts for newly constructed and
rehabilitated units in accordance with the HCA's existing requirements,
provided such requirements are in substantial compliance with these
Guidelines. To be in substantial compliance, the HCA's guidelines shall
be at least as stringent as these Guidelines, and require equivalent
disclosures from the ownership entity.
V. Public Housing Agencies (PHA) Responsibilities
A. When Subsidy Layering Reviews Are Required
When a new construction or rehabilitation project has been selected
by a PHA pursuant to program regulations at 24 CFR part 983 and the
project combines other forms of governmental assistance, the PHAs must
request a subsidy layering review. As part of the selection process,
the PHA must require information regarding all HUD and/or other
federal, State, or local governmental assistance to be disclosed by the
project owner. Form HUD-2880 \7\ (Appendix C of this notice) may be
used for this purpose, but is not required. The PHA must also instruct
the owner to complete and submit a disclosure statement even if no
other governmental assistance has been received or is anticipated. The
statement must be submitted with the owner's application for project-
based vouchers. The PHA must also inform the owner that if any
information changes on the disclosure,
[[Page 57959]]
either by the addition or deletion of other governmental assistance,
the project owner must submit a revised disclosure statement. If before
or during the HAP contract, the owner receives additional HUD or other
governmental assistance for the project that results in an increase in
project financing in an amount that is equal to or greater than 10
percent of the original development budget, the owner must report such
changes to the PHA and the PHA must notify the HCA, or HUD (if there is
no participating HCA in their jurisdiction), that a further subsidy
layering review is required.
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\7\ See http://portal.hud.gov/hudportal/documents/huddoc?id=2880.pdf.
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B. Requesting Performance of Subsidy Layering Reviews
The PHA must request a subsidy layering review through the
participating HCA. A list of participating HCAs will be posted on HUD's
Office of Public Housing's Web site and updated periodically. If an HCA
is not designated in the PHA's jurisdiction, the PHA should contact its
local HUD field office. The PHA will be informed if there is in fact an
HCA in their jurisdiction that will conduct the review or if the PHA
must submit the required documentation to its local HUD field office.
The local field office will request HUD Headquarters to conduct the
subsidy layering review.
C. Providing Documents Required for Review
The PHA is responsible for collecting all required documentation
from the owner. The documentation required is contained within Appendix
D of this notice. The PHA is also responsible for providing the HCA
with all documents required for the subsidy layering review. The
documents must be forwarded to the HCA with a cover letter. If the
initial submission to the HCA is incomplete, the HCA is in need of
further documentation, or if new information becomes available, the PHA
must provide the documentation to the HCA during the review process.
The PHA should contact the HCA to determine whether any documents
the PHA is required to provide are already in the possession of the
HCA. If the most recent copies of documents the PHA has collected from
the owner are already in the HCA's possession, the PHA must state in
its cover letter to the HCA which documents are not included because
the HCA has informed it that the documents are already in the HCA's
possession. The PHA must still maintain a complete set of the required
documents with the project file for quick reference by either HUD or
the PHA.
D. Subsidy Layering Review Timing and Outcome
In accordance with program regulations at 24 CFR 983.55, a PHA may
not provide project-based voucher assistance until after the required
subsidy layering review has been performed in accordance with these
Guidelines. Therefore, before entering into an Agreement to Enter into
Housing Assistance Payments Contract (AHAP), the PHA must await the
outcome of the subsidy layering review. All other pre-AHAP requirements
must also be satisfied before AHAP execution (e.g., environmental
review). If the HCA with jurisdiction over the project has conducted
the subsidy layering review, the HCA must certify to HUD that the
project-based voucher assistance is in accordance with HUD subsidy
layering requirements. The HCA must provide a copy of the certification
to the PHA to signify to the agency that the subsidy layering review
has been completed and a determination has been made that the project-
based voucher assistance does not result in excessive government
assistance. The PHA may proceed to execute an AHAP at that time.
If the subsidy layering review results in excessive public
assistance, the HCA will notify HUD, in writing, with a copy to the
PHA, of the outcome. The notification will include either a
recommendation to reduce the LIHTC allocation, proposed amount of
project-based voucher assistance, or other assistance, or a
recommendation to permanently withhold entering into an AHAP for the
proposed project. HUD will consult with the HCA and the PHA prior to
issuing its final determination either adopting the HCA's
recommendation or revising the recommendation. Once the PHA receives
HUD's final decision, the PHA must notify the owner in writing of the
outcome.
If HUD conducts the review, HUD is responsible for making the
required HRA section 102(d) certification pursuant to 24 CFR 4.13. If
it is determined that the project-based voucher assistance does not
result in excessive government subsidy, HUD will notify the PHA in
writing. If it is determined that combining housing assistance payment
subsidy under the project-based voucher program with other governmental
assistance results in excessive public assistance, HUD will require
that the PHA reduce the level of project-based voucher subsidy or
inform the owner that the provision of project-based voucher assistance
shall not be provided.
VI. Subsidy Layering Review Categories--Overview
A. Category 1--Proposed Project-Based Voucher HAP Contracts Where the
HCA Conducts the Subsidy Layering Review and Considers Project-Based
Voucher Assistance
Section 8(o)(13)(M)(i) of the 1937 Act (42 U.S.C.
1437f(o)(13)(M)(i)), as added by section 2835(a)(1)(F) of HERA,
provides that a subsidy layering review in accordance with section
102(d) of the HUD Reform Act is not required if a subsidy layering
review has been conducted by a qualified HCA (of course, HUD retains
the option to conduct the review itself). Section 42(m)(2) of the IRC
(26 U.S.C. 42(m)(2)) mandates that HCAs ensure that the amount of
housing tax credit awarded to a project is the minimum amount necessary
for the project to be placed-in-service as affordable rental housing.
As part of its section 42(m)(2) review, the HCA considers all federal,
State, and local subsidies which apply to the project. In making the
determination that the LIHTC dollar amount allocated to a project does
not exceed the amount the HCA determines is necessary for the financial
feasibility of the project, the HCA must evaluate and consider the
sources and uses of funds and the total financing planned for the
project, the proceeds expected to be generated by reason of the LIHTC,
the percentage of the LIHTC dollar amount used for project costs, and
the reasonableness of the developmental and operational costs of the
project. The subsidy layering review Guidelines under this notice are
similar to those required under the IRC section 42(m)(2) review.
The amendment made to the requirements of HUD Reform Act section
102(d) pursuant to section 2835(a)(1)(F) of HERA (for purposes of
project-based voucher assistance), codified at 42 U.S.C.
1437f(o)(13)(M)(i), alleviates the duplication of subsidy layering
reviews (that consider the same factors for the same reasons) by both
HUD and HCAs. The only other review element that an HCA must consider
with the addition of project-based voucher assistance to a proposed
project, is the effect the operational support provided by the project-
based vouchers will have on the HCA's analysis in regards to the level
of subsidy required to make the project feasible without over-
compensation. HCAs must therefore analyze the operating pro-forma that
reflects the inclusion of the project-based voucher assistance as part
of the subsidy layering review process. The operational support
analysis will consider the debt coverage
[[Page 57960]]
ratio (DCR) and the amount of cash-flow generated by an individual
project to determine if excess funding exists within the total
development budget.
In light of the above, when a proposal for project-based voucher
assistance is contemporaneous with the application for, or award of,
LIHTCs, the subsidy layering review required by these Guidelines may be
fulfilled by the IRC section 42(m)(2) review if such review
substantially complies with the subsidy layering review requirements
under this notice. The Department expects that in most cases it will.
If the IRC section 42(m)(2) review substantially complies with the
requirements of a subsidy layering review under this notice, the HCA
may make the required certification (Appendix B of this notice) to HUD
without conducting an additional subsidy layering review pursuant to
these Guidelines. If the HCA cannot make the required certification
because the operation pro-forma was not reviewed as part of its IRC
section 42(m)(2) review in the manner required by these Guidelines, the
HCA must perform the limited review as described in section VIII.B of
this notice and, if necessary, reduce the subsidy source within its
control (i.e., the total tax credit allocation amount) or promptly
notify HUD of a recommendation to reduce the project-based voucher
units or subsidy.
Where HUD conducts the review, for the reasons previously stated,
in addition to evaluating the operational budget, HUD must analyze
whether certain development costs (specifically general condition,
over-head, profits, and developer's fee) are or were excessive. If it
is determined that such costs are excessive, HUD will reduce the amount
of project-based voucher assistance to a level that will sustain the
project's viability without overcompensation. HUD will notify the PHA
before any action to reduce the project-based voucher units due to
issues of overcompensation.
B. Category 2--Proposed Project-Based Voucher HAP Contracts Where the
HCA Conducts the Subsidy Layering Review Without Consideration of
Project-Based Voucher Assistance
Where a subsidy layering review has been conducted by an HCA on a
proposed project-based voucher project for purposes of allocating
LIHTCs which may have also included other forms of government
assistance, but such review did not consider project-based voucher
assistance (e.g., project-based vouchers were obtained subsequent to
the LIHTC allocation), the HCA may conduct a limited review with an
emphasis on the operational aspects of the project in accordance with
Section VIII.B of this notice.
Although project-based voucher projects are exempted from a full
subsidy layering review, the HCA must still be able to certify when
combining HUD and other governmental assistance, including project-
based voucher assistance, that the project is not receiving excessive
compensation. The HCA will be able to make this certification if the
review performed as required by section 42(m)(2) of the IRC
substantially complied with these Guidelines. In addition to ensuring
there is no excessive subsidy, the review must also consider whether
there are any duplicative forms of assistance (i.e., rental assistance
from some other state, federal or local source). If it is found that
there is duplicative rental assistance for the same unit, the unit does
not qualify for project-based voucher assistance, and the HCA must
apprise the PHA of such finding. For purposes of this analysis, LIHTC
units are not considered duplicative rental assistance.
C. Category 3--Mixed-Finance Public Housing Projects
Under HUD's mixed-finance regulations, subsidy layering review must
be conducted by HUD or its designee (e.g., the HCA) pursuant to section
102(d) of the HUD Reform Act (42 U.S.C. 3545(d)). HUD is responsible
for subsidy layering reviews for mixed-finance and public housing
development projects. On a case-by-case basis, and within its sole
discretion, HUD may delegate the subsidy layering review activity to a
local HCA subject to HUD's review. In such cases, HUD may request the
HCA to make changes to the subsidy layering review or HUD may revise
the HCA's subsidy layering review as needed.
VII. Subsidy Layering Review Guidelines--Procedural Description
Subsidy layering reviews are required prior to the execution of an
AHAP for new construction and projects that will undergo
rehabilitation, if the project combines project-based voucher
assistance with other governmental assistance. When an HCA has
conducted a subsidy layering review in connection with the allocation
of LIHTC, the standards used by the HCA must substantially comply with
these Guidelines. When HUD is conducting the subsidy layering review it
will follow these Guidelines and use the Subsidy Layering Analysis form
(Appendix E of this notice).
A. Maximum Allowable Amounts
Maximum Allowable Amounts are those that cannot be exceeded under
any circumstances. If values provided by the project owner exceed the
maximum allowable amounts, reductions must be made in either the
proposed amount of project-based voucher assistance, or the LIHTC
equity to bring the values below the maximum allowable amounts before
the HCA can make its certification to HUD, and, where HUD is performing
the review, before the HRA section 102(d) certification can be made. In
the case of LIHTC syndication proceeds, if the values provided by the
project owner are lower than the minimum LIHTC price, the PHA shall not
enter into an AHAP with the owner unless the LIHTC allocation is
reduced to bring the value of the tax credits at or above the minimum
LIHTC price.
B. Safe Harbor Standards
Safe harbor standards are generally applicable development
standards. Although the safe harbor standards can be exceeded under
certain circumstances, projects for which the owner's documented
development costs and fees are within the safe harbor standards can
move forward without further justification. If any of the owner's costs
and/or fees exceed the safe harbor limits, but are within the maximum
allowable amount, additional justification and documentation are
required.
Between the safe harbor standard and the maximum allowable amounts
for each of the factors considered in the review is a range in which
values may be acceptable if they are justified based on project size,
characteristics, location, and risk factors. Additional documentation
must be requested from the project owner that demonstrates the need for
values that exceed the safe harbor standards. If the review is being
conducted by an HCA, instead of HUD, project costs exceeding the safe
harbor standards must be consistent with the HCA's published qualified
allocation plan. Under no circumstances may costs exceed the total
maximum allowable amounts.
For all projects falling within Category 1, the reviewer (either an
HCA, or HUD) must evaluate development costs to determine whether pre-
development cost associated with the construction of the project is
within a reasonable range, taking into account project size,
characteristics, locations and risk factors; and whether over-head,
builder's profit and developer's fee are also within a reasonable
range, taking
[[Page 57961]]
into account project size, characteristics, locations and risk factors.
VIII. Subsidy Layering Reviews--Guidelines and Requirements
A. Category 1 Subsidy Layering Reviews
For Category 1 projects, HCAs will review all proposed sources and
uses of funds. HCAs will also consider all loans, grants, or other
funds provided by parties other than HUD and will assess the
reasonableness of any escrow or reserve (i.e., maintenance,
operational, and replacement reserves) proposed for the project, taking
into account project size, project characteristics, project location
and project risk factors, as determined by the HCA, even if such
reserves do not affect the amount of subsidy allowed under applicable
program rules.
1. Safe Harbor Percentage Allowances
HCAs will use the following safe harbor standards which HUD has
established for subsidy layering analysis purposes for project-based
voucher HAP contracts: The percentage allowances may be negotiated
between the safe harbor and maximum allowable amounts with the project
sponsor and the individual HCAs to reflect their assessment of the
market and to respect their qualified allocation plan. Any approved
fees that exceed safe harbor amounts must be justified by special
circumstances, such as market conditions or other circumstances that
HUD may determine.
a. Standard (1)
General Condition: safe harbor--six percent (6%) of construction
contract amount.
b. Standard (2)
Overhead: safe harbor--two percent (2%) of construction contract
amount.
c. Standard (3)
Builder's Profit: safe harbor--six percent (6%) of construction
contract amount.
The total allowed or allowable Safe Harbor percentages for General
Conditions, Overhead, and Builder's Profit are based on hard
construction costs and the maximum combined costs shall not be more
than fourteen percent (14%) of the hard construction cost.
d. Standard (4)
Developer's fee: safe harbor--twelve percent (12%) of the total
development cost (profit and overhead).
The maximum allowable developer's fee is fifteen percent (15%) of
the project costs (profit and overhead).
2. When Development Costs Exceed the Safe Harbor Standard
If the costs for builder's profit, or developer's fee, exceed the
safe harbor values without satisfactory documentation for the need for
higher costs, either the HCA or HUD will take the actions outlined
below:
a. HCA Performing Review
In cases where an HCA is performing the review, the HCA must reduce
the subsidy source within its control, i.e., the total tax credit
allocation amount, whenever necessary to balance the project's sources
and uses.
b. HUD Performing Review
Where HUD is performing the review and it is determined that, after
evaluating allowable sources and uses, the combination of assistance
will result in excessive subsidy, HUD will reduce the proposed amount
of project-based voucher assistance.
3. When Development Costs Are Within Safe Harbor
If all safe harbor standards are met, the HCA must examine the
effect project-based voucher assistance will have on the operation's
pro-forma before making its LIHTC allocation. If the safe harbor and
operational standards (discussed below) are met, the HCA must submit
its certification to HUD with a copy to the applicable PHA along with
its sources and uses statement. If HUD is conducting the review, HUD
will make the determination and notify the PHA that an AHAP may be
signed.
4. Operations Standards
a. Debt Coverage Ratio
In addition to the analysis of the development budget as part of
the subsidy layering review process, the HCA must also evaluate the
project's 15-year operating pro-forma and apply the standards discussed
below and contained within the Operations section of Appendix E of this
notice. Project-based voucher assistance and the amount of cash flow
the project-based voucher rent amounts will generate for a given
project must be carefully analyzed. The HCA must analyze the project's
projected DCR over a 15-year period (the maximum initial term of the
project-based voucher HAP contract). The DCR is determined to ensure
that the net-income for the project is sufficient to cover all
repayable debt (i.e., non-forgivable loans) over the life of the debt.
In order to determine realistic costs over a 15-year period, the HCA
must use appropriate trending assumptions for their market area.
Generally, operating expenses should be trended at 1 percent to 3
percent per year and rent increases should be trended at 1 percent to 3
percent per year for the first 5 years and 3 percent for each year
thereafter. The minimum DCR is 1.10 and the maximum DCR may be up to
1.45 provided cash flow for the project does not exceed the limit
established in accordance with section VIII.A.4.b of this notice. HUD
may adjust these amounts by notice as new data becomes available.
If it is projected that the DCR will not fall below the minimum
DCR, the project should have sufficient cash flow to pay all project
operating expenses and amortized debt on the project, and have an
acceptable percentage of the required debt service available for other
uses. In addition, the established DCRs should ultimately provide
sufficient cash-flow to subsidize very low-income and extremely low-
income families through the project-based voucher program that the
LIHTC program is unable to reach. If the DCR exceeds the maximum stated
above, there may be government assistance in the project which is more
than necessary to make the project feasible.
Since variances in such things as vacancy rate, operating cost
increases, and rent increases all affect the net operating income of a
project, the HCA must perform further trending analysis to determine
whether the number of proposed project-based vouchers should be reduced
or whether the proposed rent amounts should be reduced. For example, if
over the 15-year period the DCR begins to decrease and at some point it
falls below the minimum of 1.10, all trending assumptions and costs
should be re-visited before recommending a reduction in the project-
based voucher subsidy. After further analysis, if the DCR is still at a
level above the maximum allowable level, the HCA may either reduce the
LIHTC allocation amount (for Category 1 projects) or recommend to HUD
the appropriate project-based voucher subsidy amount including
supporting documentation. HUD will require that the PHA reduce the
level of project-based voucher subsidy. When HUD is performing the
review, HUD will, if necessary, reduce the voucher units or monthly
project-based voucher rents proposed by the PHA.
b. Cash-Flow
In addition to determining an acceptable DCR, actual cash flow to
the project must also be analyzed. Cash-flow is determined after
ensuring all debt can be satisfied and is defined as total income to
the project minus total
[[Page 57962]]
expenses. If the cash flow (minus any acceptable reserve amounts)
exceeds 10 percent of total expenses, the cash generated from the
project-based voucher assistance may be greater than is necessary to
provide affordable housing. HUD may adjust this 10 percent standard by
notice if new data becomes available.
If the cash-flow is greater than 10 percent of the total operating
expenses, the HCA must require the owner to re-visit the operating pro-
forma to bring cash flow to a level that does not exceed 10 percent of
the total operating expenses. If the owner declines, the HCA shall
recommend to HUD a reduction in the project-based voucher rents or the
number of project-based voucher units. Any recommendation shall include
documentation to support the HCA's recommendation. When HUD performs
the review, and cash flow is greater than 10 percent of the total
operating expenses, HUD will notify the PHA of its determination and
instruct the PHA to require the owner to re-visit the operating pro-
forma to bring the cash flow to a level that does not exceed 10 percent
of the total operating expenses. If the owner declines, HUD will notify
the PHA of the maximum number of project-based voucher units that may
be approved and the maximum project-based voucher rent amounts that may
be approved.
B. Category 2 Subsidy Layering Reviews
Category 2 projects shall only be required to undergo a limited
review. The limited review shall consist of a review of the 15-year
operations pro-forma and a review to ensure there is no duplicative
assistance (as stated above in section VI.B of this notice). The
Operations Standards outlined in section VIII.A.4. of this notice shall
be used for Category 2 subsidy layering reviews. Where it is determined
that the inclusion of project-based voucher assistance will result in
governmental assistance that is more than necessary to provide
affordable housing, the HCA will make a recommendation, including
supporting documentation, to HUD as to the appropriate project-based
voucher subsidy amount. If HUD is performing the review, HUD will, if
necessary, reduce the voucher units or monthly project-based voucher
rents proposed by the PHA.
C. Category 3 Subsidy Layering Reviews
Section 35 of the 1937 Act (42 U.S.C. 1437z-7) allows HUD to
provide Capital or Operating Funds, or both, to a mixed-finance public
housing project. According to the statute, the units assisted with
Capital or Operating Funds shall be developed, operated, and maintained
in accordance with the requirements of the 1937 Act. The statute
permits such projects to have other sources of funding, including
private funding and LIHTC funding under the Internal Revenue Code (26
U.S.C. 42).
Regulations related to mixed-finance development are found at 24
CFR 905.604. Pursuant to 24 CFR 905.606 PHAs must submit a development
proposal as well as other specific materials and documentation for HUD
approval as a precondition to HUD's release of public housing funds for
a project's construction. Under 24 CFR 905.610(b), after the PHA
submits the evidentiary materials and other documentation required by
HUD shall carry out a subsidy layering analysis pursuant to section
102(d) of the HUD Reform Act ``to determine whether the amount of
assistance being provided for the development is more than necessary to
make the assisted activity feasible after taking into account other
governmental assistance.'' The subsidy layering review is currently
conducted as a part of HUD's review of a development proposal and
evidentiary materials and is not designated by HUD to HCAs.
Contents of Subsidy Layering Analysis for Mixed-Finance Projects
The HUD subsidy layering analysis for mixed-finance projects will
include the following review:
a. Cost Control and Safe Harbor Standards for Rental Mixed-Finance
Development; Risk Factors. HUD will review all mixed-finance projects
for compliance with HUD's Cost Control and Safe Harbor Standards
(revised April 9, 2003), found at: http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_9880.pdf. These standards also contain
risk factors for developers with fees above the safe harbor standards.
If a project is at or below a safe harbor standard, no further
review will be required by HUD. If a project is above a safe harbor
standard, additional review by HUD will be necessary. In order to
approve terms above the safe harbor, the housing authority must
demonstrate to HUD in writing that the negotiated terms are appropriate
for the level of risk involved in the project, the scope of work, any
specific circumstances of the development, and the local or national
market for the services provided, as described in the Cost Control and
Safe Harbor Standards
b. Total Development Cost. HUD will review the total development
cost of each mixed-finance development to ensure that public housing
funds are not spent in excess of the Total Development Cost (TDC) and
Housing Construction Cost (HCC) limits pursuant to Sec. 941.306. PIH
Notice 2011-38 or successor notice contains the current TDC and HCC
limits for specific jurisdictions, and can be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/publications/notices/2011.
An automated TDC worksheet can be found at the following Web site
on mixed-finance development: http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/hope6/mfph.
c. Pro Rata Test. To ensure that the amount of public housing funds
committed to a project is proportionate to the number of public housing
units contained in the project, HUD will conduct a ``Pro Rata Test''.
To meet this test, the proportion of public housing funds compared to
total project funds committed to a project must not exceed the
proportion of public housing units compared to the total number of
units contained in the project. For example, if there are a total of
120 units in the project and 50 are public housing units, the public
housing units are 42 percent of the total number of units in the
project. Therefore the amount of public housing funds committed to the
project cannot exceed 42 percent of the total project budget, unless
otherwise approved by HUD. However, if public housing funds are to be
used to pay for more than the pro rata cost of common area
improvements, HUD will evaluate the proposal to ensure that common area
improvements will benefit the residents of the development in a mixed-
income project.
d. Net Low-Income Tax Credit Equity. Projects using LIHTC as part
of their financing are reviewed to ensure that the sale of these
credits results in an amount of net tax credit equity being invested in
the project that is consistent with amounts generally contributed by
investors to similar projects under similar market conditions, and that
is not less than 51 cents for each dollar of tax credit allocation
awarded to a project. HUD also reviews this net amount to ensure that
it represents a market rate of equity, given the current market for the
purchase of tax credits. To calculate the discounted net proceeds, HUD
reviews the gross syndication proceeds and other expenses relevant to
completing the tax credit syndication, compounding the equity
installments received prior to the project's Place-in-Service Date and
discounting the installments received after this date. If the project
receives 51
[[Page 57963]]
cents or less or does not receive a market rate of equity, it is
subject to additional review to reassess the project's fees and costs.
For mixed-finance projects that comply with the mixed-finance
requirements of this notice, no further subsidy layering analysis will
be required. For those projects that fail to comply, PHAs must (i)
restructure the project so it complies with the requirements and
resubmit the revised documentation to HUD for approval, or (ii) provide
sufficient justification to HUD to allow HUD to approve a variation(s)
from the mixed-finance requirements of this notice.
IX. Monitoring
HUD may perform quality control reviews of subsidy layering reviews
performed by participating HCAs. The quality control reviews will
examine the following:
Whether all required documents and materials were
available to the reviewer.
Whether the values were correctly determined to be inside
or outside of the approvable range.
If values were above the safe harbor standards, whether
sufficient documentation was available to the reviewer to justify the
higher costs.
If necessary, whether subsidy was reduced correctly.
If it is determined that any required documentation was not
provided, or that any portion of the review was performed incorrectly,
HUD may require appropriate corrective action.
Dated: September 22, 2014.
Jemine A. Bryon,
Acting Assistant Secretary for Public and Indian Housing.
Appendix A
HCA's Notice of Intent to Participate
[
, 20]
U.S. Department of Housing and Urban Development
451 7th Street, SW
Room 4232
Washington, DC 20410
By: Email: [email protected]
Re: HCA's Intent To Participate--Subsidy Layering Reviews for Proposed
Project-Based Voucher Housing Assistance Payments Contracts
Ladies and Gentlemen:
The undersigned, a qualified Housing Credit Agency as defined under
Section 42 of the Internal Revenue Code of 1986, hereby notifies the
United States Department of Housing and Urban Development that it
intends to conduct Subsidy Layering Reviews pursuant to HUD's
Administrative Guidelines for Proposed Section 8 Project-Based Voucher
Housing Assistance Payments Contracts for the purpose of ensuring that
the combination of assistance under the Section 8 Project-Based Voucher
Program with other federal, State, or local assistance does not result
in excessive compensation. By signifying our intent to participate, the
(name of agency) hereby
certifies that:
The required personnel have reviewed the above cited statutes, the
Federal Register Notice--Administrative Guidelines: Subsidy Layering
Reviews for Proposed Section 8 Project-Based Voucher Housing Assistance
Payments Contracts and Mixed-Finance Development, and 24 CFR Section
983.55.
The agency understands its responsibilities under the above cited
statutes and the Guidelines. The agency certifies it will perform
subsidy layering reviews in accordance with all statutory, regulatory
and Guideline requirements, as well as any future HUD Notices,
Directives, or other program information.
By executing this Intent to Participate, the undersign acknowledges
that its participation will continue unless and until, the Department
of Housing and Urban Development revokes this intent or
(name of agency)
informs the HUD, in writing, upon 30 days' notice of its decision to
withdraw its intent to participate.
This Notice of Intent to Participate is hereby executed and dated
as of the date first listed above. By executing this Notice of Intent,
the (name of
agency) certifies that, upon HUD approval, the
(name of agency)
shall immediately assume the responsibility of performing subsidy
layering reviews for proposed Section 8 Project-Based Voucher Housing
Assistance Payments Contracts.
The Undersigned requests that the Department of Housing and Urban
Development please direct all inquiries and correspondence relating to
this Notice to:
[UNDERSIGNED NAME AND Title]
[STREET ADDRESS]
[CITY], [STATE] [ZIP]
Attention of: [NAME], [TITLE]
By Phone--[XXX-XXX-XXXX]
By Fax--[XXX-XXX-XXXX]
By Email--[email address]
[NAME OF Agency]
By:
-----------------------------------------------------------------------
Name:
Title:
The completed, signed, and dated Notice of Intent to Participate
should be sent as a PDF attachment to an email message addressed to
Miguel Fontanez at [email protected]. The email
message subject line should read ``Submission of Notice of Intent to
Participate.''
For questions concerning the submission and receipt of the email
please call (202) 708-2934.
Appendix B
HCA Certification
For purposes of the provision of Section 8 Project-Based Voucher
Assistance authorized pursuant to 42 U.S.C. section 8(o)(13), section
2835(a)(1)(M)(i) of the Housing and Economic Recovery Act of 2008
(HERA), section 102 of the Department of Housing and Urban Development
Reform Act of 1989, and in accordance with HUD's Administrative
Guidelines, all of which address the prevention of excess governmental
subsidy, I hereby certify that the Section 8 Project-Based Voucher
Assistance provided by the United States Department of Housing and
Urban Development to
, located in
is not more than
is necessary to provide affordable housing after taking into account
other government assistance.
Name of HCA------------------------------------------------------------
Printed Name of Authorized HCA Certi-fying Official--------------------
Signature of Authorized HCA Certifying Official------------------------
Date-------------------------------------------------------------------
Appendix C
HUD Form 2880
http://portal.hud.gov/hudportal/documents/huddoc?id=2880.pdf
Appendix D
DOCUMENTS TO BE SUBMITTED BY THE PHA TO THE APPLICABLE HCA OR HUD
HEADQUARTERS FOR SUBSIDY LAYERING REVIEWS
1. Narrative description of the project. This should include the
total number of units, including bedroom distribution. If only a
portion of the units will receive project-based voucher assistance,
this information is needed for both the project as a whole, and for the
assisted portion.
2. Sources and Uses of Funds Statement
Sources: List each source separately, indicate whether loan, grant,
syndication proceeds, contributed equity, etc. Sources should generally
include only permanent financing. If
[[Page 57964]]
interim financing or a construction loan will be utilized, details
should be included in a narrative (item 3 below).
Uses: Should be detailed. Do not use broad categories such as
``soft costs.'' Acquisition costs should distinguish the purchase price
from related costs such as appraisal, survey, titled and recording, and
related legal fees. Construction and rehabilitation should include
builder's profit and overhead as separate items.
3. Narrative describing details of each funding source. For loans,
details should include principle, interest rate, amortization, term,
and any accrual, deferral, balloon or forgiveness provisions. If a
lender, grantor, or syndicator is imposing reserve or escrow
requirements, details should be included in the narrative. If a lender
will receive a portion of the net cash flow, either as additional debt
service or in addition to debt service, this should be disclosed in the
narrative.
4. Commitment Letters from lenders or other funding sources
evidencing their commitment to provide funding to the project and
disclosing significant terms. Loan agreements and grant agreements are
sufficient to meet this requirement. However, proposal letters and
letters of intent are not sufficient to meet this requirement.
5. Appraisal Report. The appraisal should establish the ``as is''
value of the property, before construction or rehabilitation, and
without consideration of any financial implications of tax credits or
project-based voucher assistance.
An appraisal establishing value after the property is built or
rehabilitated is not acceptable unless it also includes an ``as is''
valuation.
6. Stabilized Operating Pro Forma. Should include projected rental,
commercial, and miscellaneous income, vacancy loss, operating expenses,
debt service, reserve contributions, and cash flow.
The analysis must be projected over a 15 year period. Income and
expenses must be trended at
percent.
7. Tax Credit Allocation Letter. Issued by the State tax credit
allocation agency, this letter advises the developer of the amount of
LIHTCs reserved for the project.
8. Historic Tax Credits. Some projects in designated historical
districts may receive an additional one time historic tax credit. When
applicable, the amount of the historic tax credit should be disclosed.
9. Equity Contribution Schedule. If equity contributed to the
project will be paid in installments over time, a schedule should be
provided showing the amount and timing of planned contributions.
10. Bridge Loans. If the financing plan includes a bridge loan so
that proceeds can be paid up front when equity contributions are
planned over an extended period, appropriate details should be
provided.
11. Standard disclosure and perjury statement.
12. Identity of Interest Statement.
13. PHA commitment letter for project-based voucher assistance.
14. Proposed project-based voucher gross rent amounts.
BILLING CODE 4210-67-P
[[Page 57965]]
[GRAPHIC] [TIFF OMITTED] TN26SE14.002
[[Page 57966]]
BILLING CODE 4210-67-C
Appendix F
SOURCES AND USES STATEMENT
(Sample Format)
SOURCES:
Debt Sources:
Mortgage--
Loans--
Other Loans (specify)--
Other (Specify)--
Equity Sources:
Grants available for project uses--
Estimated Net Syndication Proceeds--
Additional Owner Equity Necessary \8\--
---------------------------------------------------------------------------
\8\ This line may be used for the additional amount needed from
the owner to balance sources against uses when no additional monies
are available from other sources.
---------------------------------------------------------------------------
Other Equity Sources (specify)
Total Sources: $
PROJECT USES:
Mortgage Replacement Cost Uses--
Total Land Improvements--
Total Structures--
General Requirements--
Builder's General Overhead--
Builder's Profit \9\--
---------------------------------------------------------------------------
\9\ Builder's Profit for non-Identity-of-Interest cases (a SPRA
allowance may also be added below). See also Standard #1
safe harbor and ceiling standard alternatives before completing. The
Mortgage Use lines relating to Builder's Profit and Developer's Fee
may be left blank if alternative funding standards are used, and the
amounts are reflected below.
---------------------------------------------------------------------------
Architects' Fees--
Bond Premium--
Other Fees--
Construction interest--
Taxes--
Examination Fee--
Inspection Fee--
Financing Fee--
FNMA/GNMA Fee--
Title & Recording--
Legal--
Organization--
Cost Certification Fee--
Contingency Reserve (Sub Rehab)--
BSPRA/SPRA (if applicable)--
Acquisition Costs--
SUBTOTAL MORTGAGEABLE REPLACEMENT COST USES$
Non-Mortgage Uses:
(i.e. Uses Payable by Sources Other than the Mortgage) \10\
---------------------------------------------------------------------------
\10\ Note that syndication expenses are included below in the
estimation of Net tax credit proceeds for this Statement, and
therefore, are not included within this Statement.
Working Capital Reserve or \11\--
---------------------------------------------------------------------------
\11\ Only Letter of Credit Costs may be included if the reserve
is funded by a Letter of Credit.
---------------------------------------------------------------------------
Operating Deficit Reserve \12\--
---------------------------------------------------------------------------
\12\ Indicate the full cash reserve amount if funded by LIHTC
proceeds. Indicate only the costs of obtaining a Letter of Credit
for the reserve if funded by a Letter of Credit at initial closing.
SUBTOTAL NON-MORTGAGEABLE USES--$
TOTAL PROJECT USES$
Estimated Net Syndication Proceeds:
The HCA may use this format before completing the Net Syndication
Proceeds estimate line above on the Sources and Uses Statement, and
must use this format to reflect final allocation determination
assumptions.
Total Tax Credit Allocation--$
Estimated Gross Syndication Proceeds--$
Syndication Expenses:
Accountant's Fee--$
Syndicator's Fee--$
Attorney's Fee \13\--$
---------------------------------------------------------------------------
\13\ Such fees may not duplicate legal nor title work charges
already recognized. Therefore, only fees associated with the
additional legal service associated with LIHTC projects should be
recognized here by the HCA.
---------------------------------------------------------------------------
HCA Fee--$
Organizational Expense \14\--$
---------------------------------------------------------------------------
\14\ Such expenses may not include Organizational expenses which
are already included, and should not be duplicated. Therefore, only
extraordinary organizational expenses incurred because of the
additional LIHTC-associated application preparation activities
should be included here.
---------------------------------------------------------------------------
Other (Specify)--$
Subtotal Syndication Expenses--$ \15\
---------------------------------------------------------------------------
\15\ See Guideline Standard #3 for separate safe harbor
and ceiling limitations for private and public offerings.
---------------------------------------------------------------------------
Bridge Loan Costs less Interest (if applicable)--$
Adjustment for Early and Late Installments (See Glossary, Net
Syndication Proceeds Estimate for adjustment explanation)--$
Total Reductions from Gross--$
Estimated Net Syndication Proceeds--$
[FR Doc. 2014-22971 Filed 9-25-14; 8:45 am]
BILLING CODE 4210-67-P