Agenda - Council Work Session - 01/10/2012

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B. Multiple Buildings Projects may include "multiple buildings" having similarly constructed housing units, provided the buildings are located on the same tract of land, are owned by the same person for federal income tax purposes and are financed pursuant to a common plan of financing. Scattered site buildings on different tracts of land will also qualify if the project meets all of the other requirements described above and the project is 100 percent rent restricted. C. Nonprofit Set -aside Federal law requires that 10 percent of the total annual credit available be reserved each year exclusively for projects involving ownership by nonprofit organizations which have a 501(c)(3) or (c)(4) status or appropriate equivalent designation approval from the IRS. On an annual basis, Minnesota Housing and suballocators may reserve an additional 5 percent for a total annual nonprofit set -aside of 15 percent. The nonprofit must be local, organized and incorporated in the state of Minnesota and have significant experience in Minnesota as a sponsor, owner, or manager of low-income housing. The nonprofit must have the fostering of low-income housing as one of its exempt purposes and must "materially participate" in the ownership, development and operation of the low-income project through the term of the Declaration. The intent of Section 42 is to ensure that a for -profit entity or individual does not set up a "sham" nonprofit organization in order to tap the nonprofit set -aside. This could include establishing a nonprofit organization for the specific project, without any history, experience, local community involvement, or financial strength. The nonprofit organization must demonstrate that the nonprofit is acting independently and free from influence of control by the for -profit project team members. Minnesota Housing reserves the right to contact the officers and directors of the nonprofit organization to determine their independence. Minnesota Housing will require that all nonprofits applying for the nonprofit set -aside, disclose all identity of interest between the nonprofit and any member of the for -profit project team. An identity of interest would include any officer, director, partner, stockholder, relative, seller or owner of land or building involved, processing agent, real estate salesperson or broker, employee, or anyone acting to represent any for -profit member of the project team who controls or influences the decisions of the nonprofit. If there is an identity of interest, affiliation or conflict, as determined by Minnesota Housing, Minnesota Housing will disqualify the nonprofit from receiving credits from the nonprofit set -aside. In making this determination, Minnesota Housing will consider the following: 1. The nonprofit's history, funding sources and composition of its board; 2. Past experience and anticipated future activities of the nonprofit, including involvement in the local community; 3. Sources and manner of funding of the nonprofit; 4. The nonprofit's degree of financial strength for completion and operation of the project during the term of the Declaration; 5. The relationship of the principals involved in the formation of the nonprofit organization with for -profit individuals concerning the tax credit application. A nonprofit cannot be affiliated with or controlled by a for -profit entity by: a. Having more than a 25 percent share of common board members; or b. Having more than 25 percent of its funding, directly or indirectly, from the parent entity; or c. Having any other type of association that is not considered an arms -length affiliation. 5 12012 Housing Tax Credit Procedural Manual Rev. 04/2011