1. TX Rural Housing Preservation Academy Housing Tax Credits
April 11, 2018

2. What is a housing tax credit
Created by Congress with the Tax Reform Act of 1986 and regulated by Internal Revenue Code Section 42.
Investors use tax credits as a dollar-for-dollar reduction in income tax liability.
Created to encourage private industry to develop affordable housing

3. Two Types of Housing Tax Credits
Annual State Credit Allocation – Competitive Cycle - 9%
Maximum issued to each state at per capita per year
Consolidated Appropriations Act of 2018 increased the cap for the next four years
$75 million for 2018
Non-Competitive Credits - Tax Exempt Bond awards – 4%
Non-competitive and year round
No limit to the amount of allocation
For those of you who would like to review the details….

4. Typical ownership structure
The Limited Partner (Investor/Syndicator) pays the General Partner (Applicant/Developer) for the credit.
This investment in the development creates equity.
The debt service using the 9% program is generally about 35% of the funds needed to complete the development.

5. Typical ownership structure
The ownership structure is the same for 4% credits (coupled with tax-exempt bonds).
The debt service using the 4% program is generally about 70-75% of the funds needed to complete the development.

6. 9% Set Asides / Allocations
Regional Allocations:
13 Regions
Rural and Urban Subregions
Amount per region based on formula, Rural Subregions receive $500,000 minimum
Set Asides:
Nonprofit (per IRS) – 10%
At Risk/Preservation – 15% ($11,315,113 in 2018)
USDA Subcomponent – 5% ($3,771,704 in 2018)
At least 20% must be used in Rural areas

7. Developments at risk of losing their affordability
9% At-risk Setaside
Developments at risk of losing their affordability
Generally acquisition and rehabilitation
Reconstruction on same site or move to better location
Previously received subsidy to support affordability
Includes USDA setaside
Rehabilitation only unless receiving 514
514/515/516

8. 9% Allocation limitations
Allocations are limited to no more than $1.5 Million per development in subregions and $2.0 million in At-Risk
Limited to $3.0 Million total annually per applicant, developer, guarantor or related party

9. 9% Pre-App & Application Submission
The deadline for 9% Pre-Applications is early January.
The deadline for the 9% full Applications is late February or early March.
Actual dates published annually in the QAP
4% Applications do not have a deadline

10. Ineligibility
Ineligible if municipality (or county) has more than twice the state average of units per capita supported by credits (Local Resolution)
One Mile Rule (3 years) – application proposing new construction - same type of household (Local Resolution) – does not apply to certain developments
Two Mile Rule Same Year (9% only) – counties with population more than 1 million - no exemptions

11. Ineligibility
Census Tract with more than 20% HTC units per total households (Local Resolution)
Limitation on Additional Phases if not stabilized – does not apply to certain developments

12. Threshold Criteria
Evidence of appropriate zoning – may be an underwriting condition
Undesirable Site Features or Undesirable Neighborhood Characteristics
Resolutions for “Two Times per Capita”, One Mile Rule, others as needed

13. Threshold criteria
New Construction/Reconstruction will be required to have “Energy Star” rated appliances, ceiling fans and lighting.
Accessibility and Visitability
Size limits:
Rural, 80 units maximum, applies to 9% and 4%, may be waived for certain communities
Minimum 16 units

14. Affordability requirements
Developments must choose which minimum income restrictions will be placed on the development.
20% of the units at 50% of AMGI
40% of the units at 60% of AMGI
30 year minimum affordability
15 year compliance period
Additional 15 year extended use period

15. 9% Scoring and Selection
Criteria promoting development of high quality housing
Size and Quality of units
Sponsor Characteristics (HUB and Nonprofit)
Criteria to serve and support Texans most in need
Income and Rent levels, Section 811
Tenant Services
Opportunity Index
Underserved Area

16. 9% Scoring and Selection (continued)
Criteria promoting community support and engagement
Local Government Support and Development Funding
Declared Disaster Area
Quantifiable Community Participation
Community Support from State Representative
Input from Community Organizations
Concerted Revitalization Plans

17. 9% Scoring and Selection (continued)
Criteria promoting the efficient use of limited resources and applicant accountability
Financial Feasibility
Cost per Square Foot
Pre-Application Participation
Leveraging of Private, State and Federal Resources

18. Qualified Allocation Plan and Rules
The Qualified Allocation Plan (QAP) (10 TAC Chapter 11) and Uniform Multifamily Rules (10 TAC Chapter 10) govern the housing tax credits program.
Multifamily Housing Revenue Bond Rule (10 TAC Chapter 12) and Multifamily Direct Loan Rule (10 TAC Chapter 13)
Regular QAP Roundtables, Forum on TDHCA website, meetings with organizations (RRHA, TAAHP) during the year.
The Draft QAP is generally presented at the September Board meeting with public comment period following. The Final QAP at the November Board meeting. The Final QAP is required by statute to be approved and signed by the Governor on or before December 1st.

19. Key Contacts
Sharon Gamble, Competitive Tax Credit Program Administrator (9%)
Teresa Morales, Multifamily Finance Division Manager, Bond & Noncompetitive Tax Credit (4%)
Marni Holloway, Multifamily Finance Division Director
ntacts.htm

20. TEXAS DEPARTMENT OF HOUSING
Contact Information
TEXAS DEPARTMENT OF HOUSING
AND COMMUNITY AFFAIRS
221 E. 11th Street, Austin, TX 78701
P.O. Box 13941, Austin, TX
Phone:
Toll Free:
Web: