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221(d)(4) Tax Credit Pilot Program
ModeratorToni Jackson, Jones Walker, LLP
Panel MembersKen Cooper, HUD
Ray Landry, Davis-Penn MortgageRandy Mason, Mason Joseph Company Inc.
Richard Price, Berkadia
Historic Lofts of Waco High, 815 Columbus Avenue, Waco, TX
• Adaptive reuse of dilapidated 1911 school building and gym
● Architectural elementssuch as chalkboards, basketball goals and shot clocks were preserved and incorporated in the units
Photo: Baylor University
Photo: Randy Willis
TAX CREDIT PILOT SECTION 221(d)(4)
LIHTC and HUD
History • Low Income Housing Tax Credit (LIHTC) program enacted
as part of the Tax Reform Act of 1986• Administered by Treasury Department and State Housing
Finance Agencies (HFAs)• July 2008 – Housing and Economic Recovery Act (HERA)
provided statutory rulings for FHA multifamily program changes to facilitate use of insured mortgages with LIHTC developments
Guidance for LIHTC applications• Multifamily Accelerated Processing (MAP) Guide, revised January 29,2016
• Mortgagee Letter 2012-1, LIHTC Pilot Program 223(f)
• Tax Credit Pilot FAQs
• Mortgage Insurance Reduction – Federal Register, January 28,2016
• Mortgagee Letter for 221(d)(4) Program
o To be released summer/fall 2016
MAP Guide Highlights, Chapter 14, Revised January 29, 2016
• All tax credit projects underwritten using “single underwriter model”
• Tax credit usually go “direct-to-firm”
• Identity of interest permitted between lenders and equity syndicators, investors, or bridge loan lenders in limited circumstances
MAP Guide Highlights, Chapter 14, Revised January 29, 2016
• Streamlined processing including delayed submission of final plans
• No market study for projects with at least 90% project based rental assistance
• No cost certification required for tax credit project loans under 80% of cost
Approach to 221 (d)(4) Pilot Expansion
• Incorporate “Lessons Learned” From 223(f)• Use demonstration projects in California: One Project
Approved , One in processing in FTW through WLS• Incorporate 221(d)(4) Program into Pilot via Notice, in
order to: • Continue to Increase Pilot Production• Allow New Construction and Substantial Rehab Projects
to be done
Tax Credit Pilot Section 221 (d)(4) Key Elements
• Sub-Rehabs or New Construction
• Not Limited by 223(f)’s $40K/Unit Rehab Limit
• Rents Must Have a 10% Discount to Market, or a 20 Year Project Based Section 8 Contract for at least 90% of the Units
• “Clean” less Complex Proposals Suitable for Quicker, Single Underwriter Processing Required
Tax Credit Pilot Section 221 (d)(4) Key Elements (Continued)
• No projects with Historical or Environmental Issues
• Solid, HUD-experienced Developer, General Contractor and Architect
• Experienced Lender
Likely (d)(4) Processing Fundamentals
• Concept Meetings Required
• Early Elimination of Projects with Environmental or Historical Structures Concerns
• Single Designated Underwriter with Assistance from Architect, and Assistance from Valuation and Other Tech Staff Only as Needed
Likely (d)(4) Processing Fundamentals(Continued)
• Commitment to Expedited, High Priority 221(d)(4) Processing in Field Offices (120 days, application to closing)
• Dedicated HQ Staff in Production and Asset Management
• Immediate Communications between HUD and MAP Lender as Issues Arise
Likely (d)(4) Processing Fundamentals(Continued)
• Streamlined Appraisal Review When Possible
• Architecture and Cost – Streamlined Review When Possible for New Construction, with Possibility of Using Equity Investor’s Cost and Plan Review, with Certification
• Use of Simplified MAP Checklists for (d)(4)s and Elimination of Redundant or Unnecessary Documents
• Abridged Loan Committee Template for HUD Underwriter Use (Narrative)
Application Process – What to Expect
Concept Meetings & Loan Committee
• Concept Meetings occur Tuesday – Thursday at 10:00 a.m. (CT). Concept meetings are held in Kansas City and Fort Worth
• Please contact Carolyn Wright at 817-978-5899 if you wish to schedule a Concept Meeting; additional meeting times may be established if the calendar is booked beyond two weeks
• Loan Committee is held Tuesday – Thursday from 1:00 p.m. – 3:00 p.m. (CT)
Concept Meeting Map FY 2016
• Arkansas - 6 Concepts
• Iowa - 4 Concepts
• Kansas - 5 Concepts
• Louisiana - 31 Concepts
• Missouri - 20 Concepts
• Nebraska - 5 Concepts
• New Mexico - 9 Concepts
• Oklahoma - 5 Concepts
• Texas - 115 Concepts
Total200 Concepts
Application Intake & Assignment
• As of May 5, 2014, all applications are submitted to the Fort Worth Office:
ATTN: Production DivisionU.S. Department of HUD801 Cherry Street, Unit #45, Suite 2500Fort Worth, TX 76102
• Applications are uploaded to a Regional system and assigned for processing (based on capacity) throughout Fort Worth and Kansas City
• Within 3 – 5 days of receipt of application, the assigned Underwriter will email the lender with instructions on where to send the hard copy
FY 16 YTD FY 15 comments
134 184 Project slightly less than 2015
$ 1.853 Billion $ 2.345 Billion Project dollar volume to be greater than 2015
Firm Commitments Issued FY 15 & 16
FY 16 Breakdown Southwest Region134 Firms Issued
NC/SR
%
$
223f Refi
%
$
223a7 Refi
%
$HFA Risk Shg
%
$
No LIHTC/TE
Bonds
%
$
LIHTC/TE
Bonds
%
$
NC/SR
%
$
223a7 Refi
%
$
223f Refi
%
$
ALL PROGRAMS77%
LIHTC23%
Southwest Region Workload July 15, 2016 – Firms Not Issued
SOA In Processing221 NC/SR 28 (8 LIHTC)223f 13 (4 LIHTC)223a7 4Total 45 (12 LIHTC)
4 Underwriting Teams 19 underwriters at present
Processing Data from 10/1/2015 –04/1/2016
NC/SR – 60 DaysFirms Issued
33
Firms Issued on Time33
Percent Issued on Time100%
21
51 DaysAverage Processing Time
223(f) – 45 DaysFirms Issued 35
Firms Issued on Time 35
Percent Issued on Time 100%
40 DaysAverage Processing
Time
223(a)(7) – 30 DaysFirms Issued 8
Firms Issued on Time 8
Percent Issued on Time 100%
21 DaysAverage Processing
Time
55 Days FY 15
61 Days FY 15
26 Days FY 15
Closing Coordination
• As part of the Transformation, the position of Closing Coordinator was established to manage and coordinate the closing process
• Closing Coordinators and Technical Branch Chiefs meet weekly to review work Closing and Technical assistance workload to balance work across the Region
• Rebecca Livens, Krystle Hamilton, and Leslie Winston are the Closing Coordinators in the Southwest Region.
Completed 175 Closings FY 16 YTD
15
28
24
16
21
11
17
15
24
4
Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Kansas City 16
Fort Worth 34
Total 50
Pending Closings
Region VI Program AttorneysFORT WORTH REGIONAL OFFICE
U.S. Department of Housing and Urban Development
801 Cherry St., Unit 45, Suite 2500
Fort Worth, TX 76102
William Daley Regional Counsel (817) 978-5990
Jack Stark Deputy Regional Counsel (817) 978-5991
Betsy Darling Attorney Advisor (817) 978-5998
Christopher Kinnear Attorney Advisor (817) 978-5995
Carol Horton Paralegal Specialist (817) 978-5929
Vickie Spinks Paralegal Specialist (817) 978-5988
NEW ORLEANS FIELD OFFICE
U.S. Department of Housing and Urban Development
Hale Boggs Federal Building
500 Poydras Street, 9th Floor
New Orleans, LA 70130
Bam V. Gressett Associate Regional Counsel (504) 671-3741
Emily Turner Attorney Advisor (504) 671-3745
Gwen Tucker Paralegal (504) 671-3744
Region VI Program Attorneys ContinuedSAN ANTONIO FIELD OFFICE
U.S. Department of Housing and Urban Development
H. Garcia Federal Building
615 E. Houston Street, Suite 347
San Antonio, TX 78205
Debra L. Loya Chief Counsel (210) 475-6880
Brian Surratt Attorney Advisor (210) 475-6807
Sylvia Caballero Paralegal Specialist (210) 475-6879
OKLAHOMA CITY FIELD OFFICE
U.S. Department of Housing and Urban Development
301 NW 6th St., Suite 200
Oklahoma City, OK 73102
Mikel Anderson Associate Regional Counsel (405) 609-8431
Randall McMains Attorney Advisor (405) 609-8459
Gaylene Fox Paralegal Specialist (405) 609-8415
Region VI Program Attorneys Continued
LITTLE ROCK FIELD OFFICE
U.S. Department of Housing and Urban Development
425 W. Capitol Ave., Suite 1000
Little Rock, AR 72201
Jessica Lee Chief Counsel (501) 918-5702
Elaine Holland Paralegal Specialist (501) 918-5761
Region VII Program Attorneys
KANSAS CITY REGIONAL OFFICE
(Jurisdiction: Kansas, Nebraska, Western Missouri)
U.S. Department of Housing and Urban Development
Gateway Tower II
400 State Ave., Suite 200
Kansas City, KS 66101
Gayle E. Bohling Regional Counsel (913) 551-6736
Bion W. Vance Deputy Regional Counsel (913) 551-5795
Kevin M. Muesenfechter ARC Hsg Fin & Prog (913) 551-5492
Bradley E. Laxson Attorney Advisor (913) 551-6992
Alphonso L. Eason Attorney Advisor (913) 551-5442
SAINT LOUIS FIELD OFFICE (Jurisdiction: Eastern Missouri)
U.S. Department of Housing and Urban Development
Robert A. Young Federal Building
1222 Spruce St.
St. Louis, MO 63103
Daniel J. Dugan Chief Counsel (314) 418-5255
Douglas J. Finer Attorney Advisor (314) 418-5254
Michelle M. Berken Paralegal Specialist (314) 418-5252
Region VII Program Attorneys Continued
DES MOINES FIELD OFFICE (Jurisdiction: State of Iowa)
U.S. Department of Housing and Urban Development
Neal Smith Federal Building
210 Walnut St., Room 937
Des Moines, IA 50309
James V. Provenzale Chief Counsel (515) 284-4496
Sang-Ki Han Attorney Advisor (515) 284-4465
221d4 New Construction$1.8 B17,813 units
221d4 SubRehab$125.6 M2,048 units
220 SubRehab$54.3 M376 units
241a/223f refi$2.5 M364 units
HFA Risk New Construction/SubRehab$7.2 M172 units
213 Coop$21.2 M148 units
Southwest Region Construction Activity
April 2016
Total2.09 B21,143 Units
Construction Email BoxWe have assigned a Construction Analyst Loan Administrator to handle all construction requests for the Southwest Region
We encourage you to submit the following construction requests to [email protected] upon Initial Closing of all New Construction/Sub Rehab loans:
•Permissions to Occupy (PTO)•Change Orders•Draw Requests•Construction Inspections
Upon retrieval from the email box, the Fort Worth and Kansas City Technical Specialist Branch Chiefs will assign the work to the appropriate staff
31
LIHTC Contacts
Southwest Region
Elizabeth Arteaga – Branch Chief, Fort WorthArteaga, Elizabeth [email protected]
Buis, Michael A <[email protected]>817-978-5809
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