What is a QAP? What is a QAP? Q ualified A llocation

Transcription

1 What is a QAP? What is a QAP? Q ualified A llocation P lan 1

2 Explain three different ways: Overview Legally Practically Overview Set of policies determining distribution of LIHTCs Also include rules for their use QAPs required under IRC Section 42(m) Determined by allocating agencies, mostly states usually annual, but some span two years Involves a lot of public input Covers all LIHTCs, meaning bond financed projects must satisfy QAP requirements to claim 4% 2

3 Definition Section 42 defines a QAP: Contains the agency s selection criteria Gives preference to projects: serving the lowest income tenants, for the longest periods, and which are located in qualified census tracts, the development of which contributes to a concerted community revitalization plan Does not: say what it means to give a preference, or define any of the terms used Selection Criteria Not the same as a required preference QAPs must consider: Project location Housing needs characteristics Project characteristics Sponsor characteristics Tenant populations with special needs Public housing waiting lists Households with children Projects intended for eventual tenant ownership Energy efficiency Historic nature of the project 3

4 Selection Criteria and Preference Only says have to include these criteria No further specificity for what each means Technically do not even have to provide incentives with first four, no indication of how would do so for others, arguably could discourage No limitation on including other factors Conversely, must have some kind of preference for lowest incomes for longest periods concerted revitalization plans in QCTs Practically QAPs have four main components Each is equally important Set-Asides divide LIHTCs based on various characteristics Thresholds are fundamental requirements of eligibility Preferences result in selection of eligible projects within a set-aside Underwriting is the agency s review and modification of a project s numbers 4

5 Set-Asides Can take the form of: a maximum or minimum number of projects or amount of LIHTCs Section 42 requires 10% nonprofit actually max of 90% to projects without a tax-exempt entity Other examples include: new construction and rehabilitation geographic regions (N-S-E-W, urban and rural) different tenant populations (family, elderly) certain project types (public housing) Threshold Eligibility Section 42 requires a market study Other examples include: financing being committed all zoning approvals in place developer has LIHTC experience certain design features 5

6 Preferences Many dozens, used in various ways: numerical points (most common) or verbal objective/measurable or subjective/evaluated applications score on their own or relative to others what developer has accomplished or promises to do Question is less about amount available or percent of total Relative ability to score is more important for example, building gazebos or sites in certain Census tracts all projects can do the former, only some can be the latter gazebos don t differentiate, Census tracts do Underwriting Often a form of threshold Inherent tension between: minimizing subsidy, and making a long-term real estate investment Many requirements, including: capital costs developer fee debt coverage ratio maximum housing expense 6

7 Can find them on Novogradac s website: Commenting: Initial Steps Determine where the current QAP process stands Know the goal, what kind of projects want to see funded any unique characteristics (e.g., location, partners, uses) Understand effect of current rules why/how do LISC s projects end up winning, or not not always obvious, assumptions may be incorrect Review past submitted comments LISC s so as to build on them and avoid contradictions also others, particularly those with related interests Prepare and submit comments share drafts with NEF contact and LISC Policy staff 7

8 Commenting: Ongoing Process A continuing effort less sequential than an overall approach Look ahead to listed or likely upcoming draft release dates if not announced, base it on past cycles goal is to have comments in before draft is posted Be informed of agency and others perspectives sign up for agency announcements attend all listening sessions, public hearings, etc. read anything posted to the website speak with agency staff at least annually 8