2019 Qualified Allocation Plan (QAP) Changes under consideration - - PowerPoint PPT Presentation

Virginia Housing Development Authority

2019 Qualified Allocation Plan (QAP)

Changes under consideration

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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

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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

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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

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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%).

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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)

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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

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• 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)

Proposed Green Building Changes

Virginia Housing Development Authority

Additional Programmatic Items

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Income Averaging

• Permitted for all future developments
• Will consider projects already

approved for funding

• Reviewed on a case by case basis

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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

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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

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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

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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

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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

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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

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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.

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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

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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.

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Restructure Cost Limits

• Assign a square footage cost based
• n 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

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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

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15 minute break

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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.

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Additional Considerations

• Remove limit on number of market studies allowable per

analyst.

• Analysts must be an active member of NACHMA
• Parameters
• Underwriting guidelines

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Credits

• Credit refresh
• Deals demonstrating a legitimate threat of not placing in

service on time can have credits “refreshed” in exchange for principals not being allowed to compete in the next available competitive credit round.

• Additional credit request
• Developers seeking additional credits for deals after the

initial allocation may not seek an amount exceeding 10%

• f the original allocation.
• If additional amount exceeds 10% of original allocation,

the credits must be returned and the deal must re- compete during the 9% round.

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Hybrid Deals

• All applicants seeking a 9%/4% hybrid deal will

be required to meet with VHDA staff in advance of application submittal.

• Hybrid deals will not be allowed to

intersperse 9% and 4% units throughout a building in a non-contiguous manner.

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Point Items

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Proposed Point Changes

• Allow points on 4% application for 9/4

hybrid deals.

• Additional points for deeper targeting at

30% AMI.

• Currently incentives for units designated at 40%

and 50% of AMGI

• Enhanced subsidized funding category
• Firm Letter of Intent accepted on front end
• Broader list of accepted sources

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• Brick
• Brick, or other similar low-maintenance material as defined in the Manual

covering between 25% to 85% of the exterior walls; formula is 25 points times the percentage of exterior walls covered by brick(or other similar low- maintenance material), excluding the triangular gable end area, doors, windows, knee walls, columns, retaining walls and any features that are not a part of the facade. Community buildings are to be included in percentage

• calculations. Zero points if less than 25%, and no additional points if exceeding

85% .

• Similar low-maintenance materials include: Hokie Stone, Cultured Stone,

Limestone rocks or other pre-approved material.

• Dehumidification
• Points changed to only allowing hookup points for rehabs (2 pts) and both

rehabs and new construction to receive points if providing Dehumidification system for each unit (5 pts)

Proposed Point Changes

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Proposed Point Changes

• Bath fans
• Wired to primary light with delayed timer (3 pts)
• Bath fan with humidistat (2 pts)
• Wi-Fi access
• Community Room-restricted to residents only

usage (4 pts)

• Entire Property- free individual Wi-Fi for all

apartments (8 pts)

• Points for Interior solid core doors- (3 pts)
• Fire Prevention
• Ranges to have temperature limiting controls (4

Pts)

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Proposed Point Changes

• USB Ports
• One USB charging port in Kitchen, Living Room, and

all bedrooms (1 pt)

• LED Kitchen Lighting- All fixtures and meet MDCR

requirement (2 Pts)

• Outside unit entry ledge- Shelf or ledge outside primary

entry door in interior hallway (2 pts)

• Balconies (NC only) – each unit to have balcony or patio

(4 pts)

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Items for Removal

• 20 point category for buildings with 50 units or less
• Remove EnergyStar Appliances and Windows
• Remove HVAC efficiency
• Remove Water heater efficiency
• WaterSense only allowed if Certification not chosen (3 pts)
• Remove Emergency call systems pull cords
• Remove Continuous R-3 Sheathing
• Language for basis boost removal if deal is financially feasible

without it

• Remove penalty points for extension requests