2019 Qualified Allocation Plan (QAP) Changes under consideration Virginia Housing Development Authority
2019-2020 QAP Schedule 1/3-1/8 & 1/18 QAP Discussions in multiple locations 2/15/2018 QAP Discussion Forum – The Westin, Richmond 4/10/2018 Present possible QAP Changes to Board 7/26/2018 2019 QAP Focus Group - Today 8/15/2018 QAP Items presented to VHDA Board of Commissioners 9/18/2018 QAP Focus Group being held during VHA Credit Conference 9/26/2018 2019 QAP Public Hearing/Close Comment Period 10/10/2018 VHDA Board of Commissioners approve 2019 QAP 2
2019-2020 QAP Discussion Items • Potential Threshold Items • Programmatic Items for Consideration • Point Items • Note: throughout the discussions that the QAP pertains to both 9% and 4% allocations 3
Threshold • Special Needs Population • Unless prohibited by an applicable federal subsidy program, each applicant shall commit in the application to provide a leasing preference to individuals (i) in a target population identified in a memorandum of understanding between the Authority and one or more participating agencies of the Commonwealth, (ii) having a voucher or other binding commitment for rental assistance from the Commonwealth, and (iii) referred to the development by a referring agent approved by the Authority. The leasing preference shall not be applied to more than ten percent (10%) of the units in the development at any given time. • No longer a point item • No longer requiring a compliance waiver 4
Threshold • Applicants receiving credits must waive their right to pursue a Qualified Contract (QC). • Any principals participating in a deal that has, or is currently, pursuing a QC in Virginia is not eligible for an allocation of credits (9% or 4%). • Any principals participating in a deal that has, or is currently, pursuing a planned foreclosure in Virginia is not eligible for an allocation of credits (9% or 4%). 5
VHDA Green Focus Group • Purpose is to give recommendation on Green building requirements and energy efficiency items for 2019 QAP • 14 Non-VHDA members to include General Contractors, engineers, property management, and Developers • Met once a month since October for 4 hours each time • Had presenters from 7 Green Certification programs – EarthCraft Homes, LEED, EnergyStar, Passive House, National Green Building Standard (NGBS), Enterprise Green Communities, and Zero Energy Ready Home (ZERH) • Consulted with Virginia Department of Energy Quality (DEQ) and Virginia Department of Mines, Minerals, and Energy (DMME) 6
Current Green Certification and Energy Efficiency Incentives • LEED- Silver (15 pts), Gold (35pts), Platinum (45 pts) • EarthCraft- Certification (15 pts), Gold (35 pts) with Benchmarking (add 10 pts) • Dehumidification hookups and systems ($750 and $1,500 cost increases) • Energy Star Kitchen, Laundry Appliances, Windows and Glass doors • Heat/AC-SEER-AFUE High performance • Sub-metered water expense • WaterSense faucets, showerheads and toilets • High speed internet service • Energy efficient water heaters • New Construction only: EPA Energy Star qualified bath vent fans • R-3+ wall sheathing insulation 7
Proposed Green Building Changes • Add baseline energy performance requirement- Verified by a third party independent non-affiliated certified RESNET rater • New Construction – EnergyStar Certification • Rehab- 30% performance increase over existing based on HERS Index or evidence of a HERS index of 80 or better • Adaptive reuse – Must evidence a HERS index of 95 or better • Additional Green Certification options (5 points each) • EarthCraft Gold • LEED • NGBS Silver or higher • Enterprise Green Communities • Zero Energy Ready Home (future points) • Passive House (future points) 8
Additional Programmatic Items Virginia Housing Development Authority
Income Averaging • Permitted for all future developments • Will consider projects already approved for funding • Reviewed on a case by case basis 10
Income Averaging VHDA Requirements • 100% Low Income – No Market Units • Yes, on Line 8b of the 8609 Form Multiple Building Election • Initial Unit Mix Showing the Average Set- Aside must be provided • Forfeit Qualified Contract Option 11
Income Averaging Other Considerations • Tax Credit Developments in the Ext. Use Period May Elect This Minimum Set-Aside Existing EUA Will Not be Terminated or Amended • Assigned Unit Set Asides Must Float • Must Have a Reasonable Distribution of Set-Asides Across All Unit Sizes 12
Income Averaging Other Considerations • Limited Use of Project Based Rental Assistance (PBRA) for the Deeper Set- Asides • Calculation of Income & Rent Based Upon Published MTSP 50% AMI Limits • Property Management Software Enhancements 13
Income Averaging Compliance Monitoring • No Change •VHDA Audit cycle or sample size •100% Tax Credit Properties Must Complete One Full Annual Certification •Tax Exempt Bond Minimum Set-Aside Requirements when combined with Tax Credits 14
Income Averaging Compliance Monitoring • Change •Monitoring Fee Schedule •Annual Owner Certification & Year End Reporting Requirements •Reportable Non-Compliance for All Set- Asides on Form 8823 15
Income Averaging On-Going Compliance • Next Available Unit Rule applied to the New Federal Set-Asides • Leasing Guidelines to Address Changes in Household Income and Adjustment of Set- asides • Unidentified & Mysterious 16
Innovation Pool • Innovation Pool— 12.5% • A set-aside of credits for deals determined to be pursuing innovative options in order to enhance the design and/or reduce development turnaround time, irrespective of the ranking by the scoring system. Innovative options many include but are not limited to: • Innovative construction methods which reduce construction time; • More than 50% of funding already committed to the deal; • Regional collaboration and support; • Utilizing unique up-zoning activities promoting greater density; • Other options TBD. • The development must be submitted through a separate pre- application process, as well as within the 9% competitive application round. • Credits will be awarded upon review by a panel of both internal and external reviewers. 17
Restructure of the ASH Pool • Applications will coincide with March competitive dates • Accessible Supportive Housing (ASH) continues to receive forward allocations • Ownership structure must demonstrate capacity for supportive housing through certification or other pre-approved source • Must complete VHDA’s supportive housing certification • Minimum of 15% accessible units • Demonstration of rental assistance • Additional annual requirements may be further defined in the manual • ASH deals may also compete in the competitive geographic pools 18
Opportunity Zone Incentive • Any proposed development that is to be located in a revitalization area meeting the requirements of Virginia Code 36-55.30:2.A. or within a state designated Opportunity Zone with a binding commitment from an Opportunity Zone fund/investor. • 10 points for census tracts deemed eligible without a resolution; • 15 points for developments located within an established revitalization area or Housing Rehabilitation Zone as evidenced through a local ordinance/resolution; • or, 25 points within a state designated Opportunity Zone with a binding commitment as defined in the manual. 19
Restructure Cost Limits • Assign a square footage cost based on historical LIHTC data • Localize with Marshall & Swift multipliers for geographic pools • Assign a cost at application and update at 8609 • Removal of land and acquisition costs 20
Restructure of Developer Fees • Remove 20% developer fee for 4% deals with EarthCraft • New per unit structure as follows: Declining Scale 4% Allowable fee per unit 0-60 Units $20,000 61-120 Units $15,000 Greater than 120 $10,000 Declining Scale 9% Allowable fee per unit 0-30 Units $20,000 31- 60 Units $15,000 Greater than 60 $10,000 21
15 minute break 22
Additional Considerations • General Contractor (GC) Cost Certification • Provide a GC cost certification in addition to total development cost certification . • Capital Needs / Physical Needs Assessment • For credits awarded to rehab projects require a capital needs assessment by a competent/ licensed third party. • Inclusion of a Phase I Environmental Study • Site visits by VHDA staff will be part of the reservation application review. • Discretion to reject an application on sites that present health and/or safety concerns. 23
Additional Considerations • Remove limit on number of market studies allowable per analyst. • Analysts must be an active member of NACHMA • Parameters • Underwriting guidelines 24
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