Agenda - Council Work Session - 03/13/2012

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6. The extent to which the nonprofit materially participates within the meaning of Section 469(h) of the Internal Revenue Code in the development and operation of the project throughout the term of the Declaration. Minnesota Housing will also look at the nonprofit's involvement in the project -related construction, management, ownership interest, sharing of fees and funding provisions. If the nonprofit set -aside is exhausted during a round, the nonprofit applicant with proposed projects in Minnesota Housing's jurisdiction may be eligible for tax credits from the appropriate for -profit set -aside and selected based upon its point ranking. (See also Article 4 and 5 of the QAP). However, any proposal with a qualified nonprofit applicant must comply with the nonprofit requirements of IRC Section 42(h)(5)(C) and (D) including material participation for the term of the declaration. This requirement is a covenant on the land that shall apply to all subsequent owners. D. Rural Development/Small Project Set -Aside Eligible projects must have either: o A Rural Development (RD) financing commitment or, o A site located in an RD service area (Housing Tax Credit Manual Chapter 11 Reference Materials section) and consisting of twelve (12) or less units. All projects within this set -aside must meet all applicable HTC Design Requirements. First priority will go to projects with applications for financing or a commitment from Rural Development. A developer may have a maximum award of two (2) projects within this set -aside each allocation year. Once a project has elected to participate in this set -aside, the project may not be transferred to an alternative set -aside in the existing round. The tax credits will not be allocated to an RD project until a financing commitment has been executed. E. Developer and Development Limits During the allocation year, no more than 10 percent of the State's per capita volume limit in tax credits may be awarded to any one developer or general partner. No more than $1,000,000 in cumulative tax credits may be awarded to any one development. At the sole discretion of Minnesota Housing, these limits may be waived for projects that involve community revitalization, historic preservation, preservation of existing federally assisted buildings, housing with rents affordable to households at or below 30 percent of median income or in response to significant proposed expansions in area employment or natural disaster recovery efforts. Minnesota Housing may also waive these limits during Round 2 if there are excess tax credits at year-end. Applicants should not assume that this waiver will be automatically provided or rely on this statement when determining the scope of the proposed project. F. Transfer of Ownership Minnesota Housing strongly discourages the transfer of ownership in projects that have been awarded tax credits. For the long term viability of quality housing, Minnesota Housing's position is that the development and management teams making the decisions in developing the tax credit housing need to also own and operate the project for the long term. Any transfer of title of a selected project or transfer of more than a 50 percent interest in a general partner or change in a nonprofit partner prior to a date five years after the project's new construction/rehabilitation placed in service date will be considered a material change in the project and will be subject to the approval of Minnesota Housing. Owners wishing to change or transfer ownership must submit a completed and executed Notice of Intent to Transfer Ownership (HTC 27), Transfer Agreement if prior to issuance of 8609 (HTC 20), a transfer of ownership fee, (See Chapter 9) and any other documentation that Minnesota Housing deems necessary. 2012 Housing Tax Credit Procedural Manual 16