221(d)(4) tax credit pilot program - taahp. · pdf file221(d)(4) tax credit pilot program...

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 SWConstruction@hud.gov 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 HElizabeth.H.Arteaga@hud.gov817-978-5498

Buis, Michael A <Michael.A.Buis@hud.gov>817-978-5809

32

Comments, Questions, or

Concerns?

33

Please contact

817-978-5836 or

kenneth.l.cooper@hud.gov