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MHDC DEVELOPER’S GUIDEFor Multifamily Programs2018
MHDC 2018 Developer’s GuideTable of ContentsIntroduction . 1Rental Production Cycle . 1MHDC Funding Sources . 2Low Income Housing Tax Credits .2HOME Loans and Grants .3National Housing Trust Fund Loans and Grants .4Fund Balance Loans .4Tax Credit Assistance Program Income (TCAP Program Income) .4Risk Share Insurance .4Tax‐Exempt Bonds .5Community Initiatives Funding .6Application Information . 6Notice of Funding Availability .6The Application.6Meeting with MHDC Staff.7Application Deadline .7Submitting an Application.7Public Hearings .7Housing Priorities . 8Nonprofit Involvement Set‐aside Priority .8Set‐aside Preferences (eligible for up to 30% boost in eligible basis) .9Independence Enabling Housing Units (eligible for up to 30% boost in eligible basis) . 17Service‐Enriched Housing Priority (eligible for up to 30% boost in eligible basis) . 18Veteran’s Housing (eligible for up to 30% boost in eligible basis) . 21Preservation Priority (eligible for up to 30% boost in eligible basis) . 22Minority‐Owned Business Enterprise (“MBE”)/Women‐Owned Business Enterprises(“WBE”) Priority . 23Property Disposition Priority . 24Compliance Period and Affordability Priority . 2450% AMI Priority . 24Workforce Housing (eligible for 30% boost in eligible basis) . 24Transit Oriented Development (TOD) (eligible for 30% boost in eligible basis). 25Redevelopment Plan. 25Opportunity Area . 25Selection Criteria . 26Geographic Region . 26Development Characteristics . 27Market Characteristics. 29i
MHDC 2018 Developer’s GuideDevelopment Team Characteristics . 31Financial Feasibility . 32Community Impact . 33Application Review . 33Initial Review . 34Primary Documentation Review . 35Secondary Documentation Review . 35Site Review . 35Competitive Review . 36Application Forms, Exhibits, and Digital Media . 36Rental Housing Programs Application . 37Application Fee . 37Project Description . 38Narrative Description . 38Site Review Information . 39Market Study. 40Preliminary Financing Commitments . 41Site Control . 43Local Jurisdiction Contact Verification . 44Statutorily Required Documentation . 45Housing Priority Documentation . 46Zoning Letter . 46Architectural Items . 47Sustainable Housing Information . 48Broadband Requirements . 49Relocation and Existing Multifamily Operations Data. 49Homeownership Plan . 51PHA Approved Utility Allowances . 51Developer and General Partner Information . 51Management Company Certification . 52Application Underwriting Standards . 52Sources . 53Debt . 53Construction Loans . 53Permanent Loans . 54Amortization . 54Deferred Developer Fee . 54Income from Operations during Construction . 55Eligible Basis . 55Credit Pricing . 56ii
MHDC 2018 Developer’s GuideHistoric Credits . 57Uses. 57Maximum Development Cost . 57Contractor Fees . 57Developer Consultant Fees . 58MHDC Loan Fees . 61Construction Inspection Fee . 61Appraisal. 61Construction Cost Analysis . 61Construction Labor Costs . 62Construction Loan Interest . 62Sustainable Housing Fee . 62Contingency . 62Tax Credit Fee . 62Tax Credit Monitoring Fee . 62Syndication Costs . 63Operating Reserve . 63Replacement Reserve . 63Debt‐Service Reserve. 63Service Enriched Reserve . 63Other Uses . 63Project Income . 63Rents . 64Other/Commercial Income . 64Income Trending . 64Vacancy . 64Maximum Income / Maximum Rents . 64Operating Expenses . 64Expense Trending . 65Replacement Reserves . 65Security . 65Application Approval . 65Standards of Conduct . 65Commission Approval . 66Pre‐Conditional Reservation . 67Ownership Entity Organizational Documents: . 67Property Information . 68Conditional Reservation . 68Firm Commitment . 69iii
MHDC 2018 Developer’s GuideFirm Commitment Exhibits . 69Allocation of Low‐Income Housing Tax Credits (LIHTC). 77Carryover Allocation Agreement (9% Credit Developments) . 7742(m) Letter (4% Credit Developments) . 78Applicable Credit Percentage. 78Building Identification Number (BIN) . 78Acquisition Credits – Claiming Requirements . 7910% Test. 79Construction Loan Closing Guidance . 80Key Milestones in the Construction Loan Closing Process . 80Loan Closing Checklist Due Diligence Requirements . 82MHDC Loan Documents . 84Construction Phase . 85Pre‐Construction Conferences . 85Construction Loan Disbursements . 85Requesting the Initial Advance of Mortgage Proceeds . 85Requesting Advance of Mortgage Proceeds during Construction . 86Processing the Advance of Mortgage Proceeds during Construction . 87Construction Retainage . 87Stored Materials . 87Change Orders . 87Escrows . 88Requesting the Final Advance of Mortgage Proceeds. 88Latent Defects . 88Conversion/Permanent Loan Closing . 88Conversion Requirements. 89Permanent Loan Closing Process and Requirements . 90Final Allocation/Cost Certification . 90Required Final Allocation Documentation . 90Compliance Reporting . 92Annual Reporting . 92Asset Management . 94Lease Up. 95Program Compliance Inspections . 96Deficiency Resolutions and Penalties for Non‐Compliance . 98Non‐Compliance Fees. 98Affordable Housing Assistance Program (AHAP). 98iv
MHDC 2018 Developer’s GuideManagement Company Set‐up at Application/Firm Commitment . 100Ownership Change/Transfer of Physical Assets (TPA) . 100Management Company Change . 102Management Company Fee Increase . 102Occupancy Data Submission Guidelines. 102Rent Increase Guidelines . 103Workforce Eligibility . 104Policy . 104Compliance Guidance . 106Compliance Requirements . 106Contract Language . 107Worksite Safety and OSHA Training . 108Transient Employer Requirements . 109Prevailing Wage . 109Introduction . 109Workers . 109Wage Rates and Payroll Processing . 110Reporting. 112Inspections . 113Underpayments and Corrections . 114Additional Information and Guidance . 114Homeownership . 115Determining Sales Price . 119Additional HOME Rules . 121Community Housing Development Organizations . 122Formation and Structure . 122Relationship to For‐Profit Entities. 122Capacity/Compliance . 123MHDC Certification Requirements . 123Environmental Review . 125MBE/WBE Initiative. 127MBE/WBE Definitions . 128Purpose . 130Summary of Program . 130Participation Standard. 130MBE/WBE Priority . 131Certification/Definition of MBE/WBE Companies . 131Application for MHDC Funding . 132v
MHDC 2018 Developer’s GuideFirm Submission . 132Good Faith Efforts . 132Calculation of Participation Rate . 133Cost Categories . 135MBE/WBE Compliance Responsibilities . 136Record Keeping. 137Reporting. 137Non‐Compliance . 137Section 3. 138Introduction . 138Definitions. 138Section 3 Purpose . 140MHDC Policy Statement . 140Section 3 Coordinator . 141Section 3 Meeting.
and submitted by the development team. Upon the satisfaction of all MHDC closing requirements, the loan, tax credit, grant, and/or Risk Share Insurance documents, as applicable, are executed and the financing is closed. During the construction phase, MHDC staff monitors construction progress through on‐site
