Low Income Housing Tax Credits & Preservation in Maryland, 2018

Maryland’s 2018 Qualified Allocation Plan includes the preservation of existing affordable housing in its priority funding categories and awards points for projects that preserve existing housing.

 

Thresholds

Maryland DHCD’s Guide lists the following Threshold criteria applicable to rehabilitation:

1)  Total hard construction costs (exclusive of fees or overhead items) of rehabilitation for projects must be at least $15,000 per unit and supported by a building evaluation report performed by an engineer or other qualified professional.

2) The scope of work must include exterior renewal by providing any needed repairs and cleaning of finishes to provide an improved visual impact on the neighborhood.

3) Project designs must include complete replacing or upgrading of aging finishes, fixtures, equipment or systems and site conditions that are nearing the end of their useful life or show signs of excessive wear, deterioration, are in need of repair, or are obsolete or inefficient.

4)   4) Newly installed mechanical ventilation must terminate at the exterior of the building, not the attic or other unconditioned or interstitial space. Best efforts must be made to extend existing mechanical ventilation to terminate at the exterior of the building.

Extended Use

All projects requesting competitive LIHTC, RHFP funds, and/or RHW must agree to at least forty (40) years of low-income occupancy restrictions, unless a structured fifteen (15) year transition to homeownership is presented and accepted.

Basis Boost

All family projects located in a Community of Opportunity will qualify for the State Basis Boost without prior CDA approval.

CDA may make a determination that a project is eligible for the State Basis Boost on its own initiative at any time, based upon review of the project’s sources and uses. Limitations on the maximum amount of Rental Housing Financing Programs (RHFP) funds and LIHTC continue to apply to projects receiving a Basis Boost under this section, unless CDA uses its discretion to adjust the amount of RHFP funds and LIHTC to balance the demand for resources

Projects which receive competitively allocated credits are eligible for the State Basis Boost. The Housing Economic Recovery Act of 2008 (HERA) does not permit the State Basis Boost for projects that receive credits outside the State’s annual allocation of tax credits. (i.e., tax- exempt bond financed projects are not eligible for the State Basis Boost)

Point Incentives

With this 2018 update of the Maryland Qualified Allocation Plan for the Allocation of Federal Low Income Housing Tax Credits (QAP) and Multifamily Rental Financing Program Guide (Guide), the Maryland Department of Housing and Community Development (DHCD)1 has established the following set of priorities to guide the award of competitive funding:

1. Family Housing in Communities of Opportunity

2. Housing in Community Revitalization and Investment Areas

3. Integrated Permanent Supportive Housing Opportunities

4. Preservation of Existing Affordable Housing

 5. Elderly Housing in Rural Areas of the State Outside Communities of Opportunity

 6. Permanent Supportive Housing for Veterans and Persons Experiencing Homelessness

Up to 14 points may be awarded for Nonprofits (NPs), Public Housing Authorities (PHAs) and Minority/Disadvantaged Business Enterprises (MBE/DBEs):

PHAs perform the unique mission of providing decent, safe rental housing for very low-income families, elderly, and persons with disabilities. There are over 19,000 public housing units in the State of Maryland housing over 47,000 people. These units are an important resource for some of the State’s most vulnerable populations. DHCD wants to support and encourage the preservation, rehabilitation, and transformation of public housing resources and the coordination with such HUD programs as the Choice Neighborhoods/HOPE VI and Rental Assistance Demonstration.

Year 15: -Qualified Contracts

If a project owner makes a request to CDA to obtain a "Qualified Contract" (as defined by the Internal Revenue Code) pursuant to §42(h)(6)(E) and (F), the project owner shall furnish to CDA and/or any other parties to the Qualified Contract with such information as CDA shall require, including, but not limited to: past and current operating expense and occupancy data; evidence of tenant notification; financial statements; environmental assessments; and past, pending, or threatened litigation. CDA reserves the right to adopt such additional requirements and procedures as are desirable in order to enable it and project owners to comply with any future requirements imposed by the IRS through the Internal Revenue Code.

Contributed By: 
National Housing Trust