Low Income Housing Tax Credits & Preservation in Hawaii, 2016-2017

Hawaii Housing Finance and Development Corporation establishes threshold requirements and cost containment measures in their 2016-2017 Qualified Allocation Plan. 

Set-Asides

Hawaii Housing Finance and Development Corporation does not include a set aside for the preservation of affordable housing.

Point Incentives

Hawaii Housing Finance and Development Corporation does include point incentives for a number of important housing issues, it does not include them to promote the preservation of affordable housing.

Thresholds

Applicants must meet all of the following Minimum Threshold requirements to receive consideration for an allocation or award of LIHTC. Failure to meet any Minimum Threshold shall result in the immediate rejection of the application. Minimum Thresholds are subject to verification by HHFDC.

  1. Market Study 
  2. Site Control 
  3. Capital Needs Assessment (For projects acquiring an existing property. All units need to be reviewed.) 
  4. Public Housing Waitlist/Homeless Services Programs - Applicant shall certify that all low-income units will be made available to people on the waiting list for low-income public housing and/or an acceptable shelter program. 
  5. Smoke Free - All projects will be smoke free. 
  6. Contractor Profit Limitation - Contractor’s profit, including general requirements and overhead, shall not exceed 14.0% of hard construction costs 
  7. Debt Service Ratio – There are a never of threshold requirements pertaining to the debt service ratio based upon whether the project has hard debt service and whether it is applying for an RHRF Project Award Loan. The Qualified Allocation Plan also provides some underwriting criteria and requirements. Click the link below for the full document. 
  8. Phase I Environmental Assessment - For acquisition/rehabilitation projects, the Phase I Envrionmental Assessment should address lead based paint and asbestos. 
  9. Proof of Non-Profit Status - If applying under the Federal non-profit set aside, submit the following: 
    1. Articles of Incorporation 
    2. Copy of a current 501(c)(3) IRS Tax Exemption Letter 
  10. Developer Fee - Developer Fee includes developer fee, developer overhead, management fee, consultant fee, etc. (as indicated in the Developer Fee section of Exhibit A of the Consolidated Application). 
    1. 9% (volume cap) LIHTC: 
      1. New Construction – maximum developer fee of 15% of the total development costs (excluding developer fee) or $3,750,000 (whichever is less). 
      2. Acquisition/Rehabilitation – maximum developer fee of 10% of the acquisition costs and 15% of the rehabilitation costs (excluding developer fee) or $3,750,000 (whichever is less).
    2. 4% (non-volume cap) LIHTC: 
      1. Maximum developer fee of 15% of the total development costs (excluding developer fee) if the applicant waives its right to a qualified contract. 
      2. Maximum developer fee of 5% of the total development costs (excluding developer fee) or $250,000 (whichever is less) if the applicant does not waive its right to a qualified contract. 
  11. Minimum Affordability Period: 
    1. Applicants requesting an award of 4% LIHTC must commit to a minimum affordability period of 45 years. 
    2. Acquisition/Rehabilitation applicants: affordability period must also exceed any pre-existing affordability period by no less than 30 years. 
  12. 4% LIHTC Developer Experience: 
    1. Minimum of one (1) LIHTC project Placed in Service by the Project Owner (General or Co-General Partner/Managing or Co-Managing Member). 
    2. Minimum of one (1) LIHTC project currently managed by the Management Agent. 

Extended-Use

Applicants electing to commit to an additional use period beyond the initial 15-year LIHTC compliance period (collectively the Extended Use Period) will be awarded points based on the table below. The election will be recorded in the Restrictive Covenant Document. Points will be awarded based on the following:

Total Extended Use Period (Total Length of Affordability Commitment)

  • 61 years or more –7 points
  • 55 to 60 years - 4 points 
  • 50 to 54 years - 3 points 
  • 45 to 49 years - 2 points 
  • 40 to 44 years - 1 point 
  • Less than 40 years - 0 points 

Basis-boost

Newly constructed buildings located outside of designated Difficult to Develop Areas or Qualified Census Tracts qualify as a high cost area and recieve a High Cost Area Designation. The additional LIHTC available from the “basis boost” will be used to offset the high cost of construction and land throughout the state.

Y15, Qualified Contract

Applicants that elect to waive the right to exercise a request for a qualified contract pursuant to Section 42(h)(6)(E)(i)(II) of the IRC will be awarded 20 points.

Owners may choose to cancel the QC Application at anytime during this process. However the owner will only be able to request a QC once during the entire additional use period of the project. Withdrawing the application will count as the only time an owner can request a QC Application.

Community Revitalization Plans

Projects located in a Qualified Census Tract will recieve two points in the scoring of their applications. The project will redevelop existing housing which contributes to a concerted community revitalization plan as determined by HHFDC. For example: site is located in an Enterprise Community, Empowerment Zone, or part of a County redevelopment plan. 

Contributed By: 
National Housing Trust

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