Low Income Housing Tax Credits & Cost Containment in Maine, 2019

MaineHousing uses Total Development Cost (TDC) caps as a cost containment measure in the 2019 Qualified Allocation Plan

The amount of Credit allocated for a Project will not exceed the lesser (a) the amount the Project is eligible to receive under Section 42 of the Code as determined by MaineHousing, (b) the amount MaineHousing determines is necessary for the financial feasibility of the Project and its viability as a LIHTC Project throughout the Credit Period, and (c) the Maximum Credit Amount.

 

Maximum Credit Amount - The maximum amount of Credit that will be allocated for each Project is the lesser of (i) $20,000 per Credit Unit in the Project, (ii) 25% of the 2019 State Ceiling, and (iii) the amount MaineHousing determines is necessary to ensure the Project’s financial feasibility and long-term viability pursuant to Section 42 of the Code.

 

Total Development Cost (TDC) Cap - the TDC of the Project may not exceed the

below TDC Cap for a project of its type at any time prior to the later of the construction

loan closing or an allocation of Credit for the Project.

 

Type of Project

TDC Index Cap

Adaptive Reuse

$265,000 per unit

New Construction

$230,000 per unit

Acquisition and Rehabilitation of Existing Housing

$150,000 per unit

 

Demolition and reconstruction of all housing on the same site or another site will be treated as new construction. If a Project involves more than one project type, the TDC Cap for the Project is the sum of the pro rata share of the TDC Cap allocable to each type based on the number of units in each type.

 

Financial characteristics:

Total Development Cost (TDC) – loss of 8 to 10 points

Points are based on the percentage by which the Project’s TDC is less than or greater than the Benchmark TDC for a project of its type,

 

Type of Project

Lower Limit of Range (per unit cost)

Upper Limit of Range (per unit cost)

Adaptive Reuse

$220,000

$230,000

New Construction (Other Housing)

$190,000

$200,000

Acquisition and Rehabilitation of Existing Housing

$105,000

$115,000

 

 

If the Project involves more than one type, the Benchmark TDC is the sum of the pro rata share of TDC allocable to each based on the number of units.

 

Percentage of Project’s TDC to Lower/Upper Limit of Range for Project Type:

Points:

>10% less than Lower Limit

10 points

8% to 10% less than Lower Limit

8 points

5% to <8% less than Lower Limit

6 points

2.5% to <5% less than Lower Limit

4 points

Lower Limit to <2.5 % less than Lower Limit

2 points

Upper Limit to <3.5% more than Upper Limit

-2 points

3.5% to <7% more than Upper Limit

-4 points

7% to 10% more than Upper Limit

-6 points

>10% more than Upper Limit

-8 points

 

If the Project’s TDC increases between its initial Notice to Proceed and its final tax credit cost certification for any reason, except market conditions or other circumstances beyond the Applicant’s control as determined by MaineHousing, then all eligible Applications submitted by the Applicant, any Principal thereof and their Affiliates in the next round in which they apply will lose 5 points. The parties may be ineligible to submit an application in the following round under Section 4.D.

 

If more than one Application have the same score, the Application for the least amount of Credit and 0% deferred debt from MaineHousing per unit will have priority. If the Applications request the same amount of these resources, the Application with the most acceptable plan to convert the Project to affordable homeownership for the residents after the Extended Use Period will have priority. The plan must describe the process for transferring ownership to the residents, the purchase price or process for determining it, any financial assistance available for residents (including any reserves), how the affordability will be maintained, and must provide for homebuyer counseling and professional representation of the residents at the time of the conversion.

Contributed By: 
National Housing Trust

Other Items of Interest