Low Income Housing Tax Credits & Preservation in Montana, 2018

The Montana Housing Board provides incentives for preservation in the 2018 Qualified Allocation Plan

 

Set-Asides

Montana Board of Housing provides a 10% set-aside for nonprofit projects and a 20% set aside for small rural projects.

Point-Incentives

Of 230 possible points for Project Characteristics:

·      Preservation of or Increase in Housing Stock (50 points possible) 50 points will be awarded if the Application proposes the Preservation of existing affordable housing stock or increases the affordable housing stock through the use of federal funds or funds from other sources (e.g., donation of land, other substantial donations, reduction in taxes through tax abatement (other than non-profit exemption) or impact fees) to leverage the tax credit dollars.

·      Preservation of Affordable Housing Projects (20 points possible) 20 points will be awarded if the Application proposes the Acquisition and/or Rehabilitation of buildings with local, state, and/or federal historic* preservation designations, existing affordable housing stock, or Projects applying for Rehabilitation tax credits that have completed their Compliance Period.

Thresholds

Developments not scoring the minimum Development Evaluation Criteria score of 1100 points (or 850 points for non-competitive 4% Credit Bond Deals) of the total possible 1290 points available will not receive further consideration. Applications scoring at least the minimum Development Evaluation Criteria score of 1100 points or 850 points for non-competitive 4% Credit Bond Deals and meeting all other requirements of this QAP will be considered for an Award of Housing Credits as provided in this QAP.

Montana’s minimum Substantial Rehabilitation standard is expenditures the greater of (i) $15,000 (for 4% projects)/$25,000 (for 9% Projects) of Hard Cost Per Unit, or (ii) an amount which is not less than 30% of the adjusted basis of the building during a 24-month or shorter period.

Extended-Use

Extended Low Income Use* (100 points possible) Federal law requires a 30-year or longer Extended Use Period. An Application in which the Applicant agrees to maintain units for low income occupancy beyond the Compliance Period will receive points as indicated below and must incorporate these restrictions into the Restrictive Covenants

Years beyond initial 15 year compliance period:

  • 15 years  = 0 points (30 total years)
  • 16 – 20 years = 40 points (31 – 35 total years)
  • 21 – 25 years = 60 points (36 – 40 years)
  • 26 – 30 years = 80 points (41 – 45 years)
  • Over 30 years = 100 points (46 years +)

 

 

 

 

Montana’s 2018 QAP requires all applicants to waive and forfeit the right to request that MBOH locate a non-profit qualified buyer (the “qualified contract process”).

Y15

Projects applying for rehabilitation tax credits that have completed their compliance period are eligible for the 20 points awarded for the Preservation of Affordable Housing Projects.

Basis Boost

Basis Boost for QCT and DDA Projects

 Federal law permits MBOH to reserve Housing Credits based on a “basis boost” of 30% for Projects in a Qualified Census Tract (“QCT”) or in HUD designated Difficult Development Areas (“DDA”). In addition, a 30% “basis boost” may be available for non-QCT or DDA Projects based upon the specific requirements specified below.

Preservation projects quality for MBOH’s discretionary 130% Basis boost, as do the following project types:

1.       Qualification of the Application for the Small Rural Project set aside;

2.       Qualification of the building location for Rural Development funding;

3.       Targeting of more than 75% of Project units to 50% or below area median income level;

4.       The Project includes historical preservation, Preservation or replacement of existing affordable housing; or

5.       The Project is located within a community where unusual market conditions produce higher than normal labor and material costs, unusually high land cost and/or rent and income limits which are too low to support the cash flows required by the Project’s financial structure.

The MBOH discretionary basis boost does not apply to non-competitive 4% Credits

 

Contributed By: 
National Housing Trust

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