1. Nebraska Investment Finance Authority © 2005 Tax Credit Basics

2. Nebraska Investment Finance Authority © 2005 Source of Funds Funds originated from the Internal Revenue Code, Section 42. Tax Reform Act of 1986. The amount of tax credits issued to each state is based on $1.90 per capita per year. Amount to Allocate in 2006 (estimated): $3,319,707 Generally over-subscribed: 3:1

3. Nebraska Investment Finance Authority © 2005 Types of Credits and Unit Requirements To qualify:20% of Units at 50% AMI* or 40% of Units at 60% AMI* *AMI = Area Median Income Types of Credits: –Annual “9% cycle” for construction (new/rehab) First Round Applications Due: 9/12/2005 Second Round Applications Due: 2/20/06 CRANE Applications: Accepted monthly –4% credits with Tax Exempt Bonds: Applications accepted monthly.

4. Nebraska Investment Finance Authority © 2005 Ownership Structure Tax Credit Apartments, Limited Partnership General Partner (Sponsor\Developer) 1% Limited Partner (Tax Credit Investor) 99% Tax Credits Equity

5. Nebraska Investment Finance Authority © 2005 Ownership Structure The Limited Partner (L.P.) owns 99% or more and receives 99% or more of the credits. The L.P. pays the General Partner (Applicant/Developer) generally between $.75 and $.85 per credit.

6. Nebraska Investment Finance Authority © 2005 Commitment to Affordability Only get credits for the low income units (qualified basis). Retain affordability period for 15 year compliance period plus a 15 year extended use period. Income and rent restrictions. NIFA offers points for longer affordability periods.

7. Nebraska Investment Finance Authority © 2005 Syndication Rate and Gap Equity is generated from an award of Tax Credits. Annual credit amount x 10 year credit period x syndication rate. Cash from sale of credits fills the gap between the permanent loan and the total development cost.

8. Nebraska Investment Finance Authority © 2005 2006 Set-Asides 2006 Per Capita Allocation: $3,139,707 At least 10% to Qualified Non-profits 50% Rural \ 50% Urban (MSAs) $1 million for CRANE projects

9. Nebraska Investment Finance Authority © 2005 Qualified Allocation Plan and Rules The QAP governs the annual distribution of tax credits. Points are awarded for specific items. Applicants must meet threshold requirements. The QAP and Application can be downloaded from NIFA website: www.nifa.org

10. Nebraska Investment Finance Authority © 2005 Threshold Requirements Development Costs Determined Preliminary Plans and Specifications Site Control (valid for 90 days) Zoning Approved (or conditional use permit) Utilities are available and adequate List of Board of Directors State and/or Local Subsidies

11. Nebraska Investment Finance Authority © 2005 Threshold Requirements Continued Syndicator Interest Letter (valid for 6 months) Construction/Permanent Financing (valid for 6 months) 15 Year Operating Proforma Site Specific Market Study Pre-notification to the Mayor Capital Needs Assessment (for Rehab Only)

12. Nebraska Investment Finance Authority © 2005 Underwriting Site information Construction design Estimated development costs Financing structure Organization Structure (capacity at G.P level?) Market Study Financial Feasibility

13. Nebraska Investment Finance Authority © 2005 Calculations of Tax Credits & Equity Total Development Cost$3,000,000 Less: Non-eligible (i.e. land-soft cost) (200,000) Eligible Basis$2,800,000 Applicable fraction (% of LIHTC units)X 100% Qualified Basis $2,800,000 Tax Credit Applicable PercentageX9% Annual Tax Credit $ 252,000 Tax Credit Period X 10 yrs. $2,520,000 Equity at $.80 per CreditX.80 $2,016,000 Total Development Cost$3,000,000 Less: Equity (2,016,000) Required Debt$ 984,000

14. Nebraska Investment Finance Authority © 2005 In today’s market the average development must has a least two or three sources of funding. Low-Income Housing Tax Credits Affordable Housing Trust Fund Federal Home Loan Bank HOME funds USDA – Rural Development funding CDBG TIF funds Historic Tax Credits Tax Exempt Bond Financing Developer Note Grants

15. Nebraska Investment Finance Authority © 2005 Other Important Dates Conditional Reservation: –Follow-up information due within 60 days of Board approval. Carry-over Application: –Due November 1 for projects receiving allocations prior to June 30. Projects receiving allocations after June 30 have 5 months from the date of conditional reservation. Cost Certification Application –Due 60 days from the Placed In Service (PIS) date. Annual Compliance Reports: –Due by January 15 th following the PIS date, and each year thereafter.

16. Nebraska Investment Finance Authority © 2005 LIHTC Fees Application Fee: Greater of 1% of annual credit request or $500. (CRANE Application fee = $500) Reservation/Carry-over Fee: 2% of annual credit request. Allocation Fee: Due at Cost Certification: 2% of annual credit actually allocated. Annual Compliance Fee: 2% of annual credit actually allocated.

17. Nebraska Investment Finance Authority © 2005 Maximums NIFA does not prescribe maximum per unit costs. NIFA allows no more than 18% of annual LIHTC authority per development. Developers no more than 34% of total annual allocation. Developer Fees and Contractor Profit/Overhead combined can be no more than 20% of eligible basis.

18. Nebraska Investment Finance Authority © 2005 Compliance Monitoring Annual Owner Certification of Continuing Compliance Report required. File review and inspection required no later than the end of the 2 nd year following PIS. On-site reviews and inspections required at least every three years thereafter.

19. Nebraska Investment Finance Authority © 2005 Contact for Allocation Questions Robin A. Ambroz Manager of LIHTC Program 1230 “O” Street, Suite 200 Lincoln, NE 68508 Phone: 402-434-2947 Fax: 402-434-3921 Email: robin.ambroz@nifa.org

20. Nebraska Investment Finance Authority © 2005 Contacts for Compliance Dudley Beyer402-434-6931 dudley.beyer@nifa.org Jim Hubka402-434-6939 jim.hubka@nifa.org Kelly Schultze402-434-3907 kelly.schultze@nifa.org Teresa Kile402-434-3916 teresa.kile@nifa.org

21. Nebraska Investment Finance Authority © 2005 NIFA Website http://www.nifa.org