Low-Income Housing Tax Credits & Preservation in Utah, 2018

 Utah's 2018 Qualified Allocation Plan (QAP) awards points for preservation projects.

Low Income Housing Tax Credits (9%)

Set Asides

The 2018 Utah Qualified Allocation Plan has set aside a percentage of the 9% Housing Credits to encourage various types of housing, with 35% set aside for the General Pool. Any unused Housing Credits from the other pools will be moved to the General Pool.

Thresholds

Due to various factors contributing to market instability of rental housing, UHC will not accept Applications for projects which increase the number of rental Housing Units in the following counties:

  • Carbon County 
  • Uintah County

Additional Requirements for Rehabilitation Projects

i. UHC, at its sole discretion, shall determine if a project qualifies as Substantial replacement of two or more major systems and their components including roof, fenestration, electrical, plumbing, HVAC, appliances, etc. The minimum rehabilitation expenditures are based on the age of the building(s) or 20% of the Adjusted Basis, whichever is greater. (See Exhibit 4A).

ii. Projects that include any financing from the United States Department of Agriculture or United States Department of Housing and Urban Development must provide a complete appraisal.

iii. Projects that include a purchase/sale of reserves may not include the cost of the reserves in Eligible Basis.

iv. Projects must consider rehabilitation costs per unit consistent with the Rehabilitation Safe Harbors ranges by age as shown in Exhibit 4A, except as otherwise approved by UHC.

v. Applications must include a comprehensive Capital Needs Assessment on the project and an independent third party verification of rents charged in the form of actual checks, audited rent rolls, etc., for at least one year prior to negotiations for the purchase of the project, together with a review by an independent CPA

vi. Projects with tenants in place at the time of Application must submit a relocation plan, describing the extent to which current tenants will be relocated or dislocated either temporarily or permanently, the amount of funds and assistance being provided to relocated/dislocated tenants, and the effort that will be made to bring relocated/dislocated tenants back to the project upon completion.

vii. UHC may inspect all projects upon Application and during construction to verify that work was performed according to what was itemized in the Application or subsequent documents.

viii. Project owners must certify at the time of Application that they have inspected 100%of the units.

ix. Projects will be required to meet current local building code.

x. Projects that are designated as either RD projects or HUD rent subsidized are required to submit prior year operating statements with the Application. 

The following minimum rehabilitation expenditures for 9 percent projects are based on the age of building(s).

Age of Building(s)                Minimum Rehab Per Unit

Pre-1940                                $50,000

1940 – 1970                          $45,000

1971 – 2017                          $40,000

Rehabilitation costs below these minimums must be discussed with UHC staff before submitting an Application. UHC encourages the preservation of Historic Buildings with  federal and/or state of Utah Historic Credits where feasible.

Points Incentives

To encourage the preservation of historic buildings*, Applicants may claim points in one of the following categories, but not both. The historic building(s) must be used for Housing Credit units. The historic character of the building(s) must be preserved.

a) Buildings that are on the National Register for Historic Places (see link https://heritage.utah.gov/history/national-register) – 3 points

b) Buildings in a Historic District (see link https://heritage.utah.gov/history/national-register) – 1 point

Extended Use/Y15/Qualified Contract

Projects must commit to an Extended Use Period which is 35 years after the close of the Compliance Period for a total of 50 years. For existing Housing Credit projects with a LURA in place, the total use period shall be either 50 years or the balance of years remaining on the current LURA, whichever is longer.

Basis Boost

Pursuant to the Housing and Economic Recovery Act of 2008, UHC has been provided authority to increase the Eligible Basis of certain buildings up to 130% of the Eligible Basis, when it determines that the financial feasibility of the building so requires. Projects located within 1/3 of a mile of walking distance along public access to an existing or currently under construction Trax or FrontRunner stop/station are considered Transit Oriented Developments (TOD) and will be considered a bonus area, eligible for a basis boost of up to 30 percent. UHC will use Google Maps as its measuring standard. Please note tax-exempt bond projects are ineligible for a basis boost in a UHC qualified bonus area. Scattered-site developments are not eligible for this basis boost unless all tax parcels are located within 1/3 of a mile distance.

Distressed Communities

Utah’s 2018 QAP sets aside 20% of its total allocation to non-metro areas and small projects.  This set aside is designed to encourage the development of affordable rental housing in rural and distressed areas of Utah. 

Community Revitilization Plan

Projects that involve the use of existing housing as part of a Community Revitalization Plan will recieve 5 points.

Contributed By: 
National Housing Trust

Other Items of Interest