Agenda - Council Work Session - 01/10/2012

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5. Underground storage tanks 6. Asbestos and lead based paint Minnesota Housing may, at its sole discretion, reject applications or recapture tax credits from projects that appear unsuitable for the housing proposed. H. Maintenance and Operating Expense Review and Underwriting Certification Minnesota Housing has established Minimum Underwriting Standards and Management and Operating Expense Benchmarks (Also refer to Chapter 5.B Minimum Underwriting Standards for Amortizing Debt and Maintenance and Operating Expense Benchmarks) based upon Minnesota Housing's existing portfolio of developments and the recommended Best Practices for HTC Underwriting adopted by the National Council of State Housing Agencies (NCSHA) in 2002. These Minimum Underwriting Standards are described in the Multifamily Consolidated Request for Proposal Guide on Minnesota Housing's web site. Minnesota Housing will evaluate the completed Multifamily Housing Application and Lender Certification contained in the Maintenance and Operating Expense Review and Underwriting Certification Form (HTC 29) to determine the underwriting criteria used to calculate amortizing debt including but not limited to vacancy rates, debt coverage ratios, construction contingencies, management and operating expenses, reserve accounts, and inflation factors. Minnesota Housing will contact the applicant if there are any questions regarding the maintenance and operating budget. While Minnesota Housing strongly encourages the use of the published minimum standards and benchmarks, the applicant will be given an opportunity to adjust the M&O budget and resubmit prior to Minnesota Housing scoring of selection priority points. At a minimum, the following information must be submitted with the HTC application. 1. Owner narrative summary supporting the proposed maintenance and operating number included in the application. 2. a. For new construction: Copies of year-end operating information from three comparable developments that have been in operation at least five years. b. For existing developments: Copies of audited financial statements for at least three years, as long as the development has been in operation for at least five years. 3. a. For new construction: Name and phone number of local building inspector or housing official who can be contacted concerning each comparable development and its physical condition. b. For existing developments: Copies of three years of annual inspection reports by the local building inspector or housing official. The applicant should not assume this request will be automatically approved. If no supporting data is provided, the minimum underwriting standards and benchmarks will be used. Minnesota Housing also reserves the right to reject or adjust the maintenance and operating numbers based upon the information supplied, specific development type, circumstances and/or significant changes to the economics of the development's current marketplace. I. Financial Feasibility Proposals that meet the Project Selection Requirements in paragraphs B through H will be evaluated for financial feasibility as required by Section 1.42-17(a)(3) and Chapter 3K of this Procedural Manual. Projects determined not to be financially feasible will not be processed further in the current funding cycle. 31 12012 Housing Tax Credit Procedural Manual Rev. 04/2011