Agenda - Council Work Session - 03/13/2012

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Owners of a property receiving a federal subsidy have the option of treating the subsidy amount as if it were a federal grant and deducting the amount of the subsidy from the qualified basis or costs against which the amount of the credit is calculated. G. Review of Federally Assisted Projects Minnesota Housing will review projects using Rural Development Section 515 Rural Housing Loan funds in accordance with Minnesota Housing's currently approved underwriting practices and procedures. So as to achieve a coordinated underwriting to the extent reasonably possible, it is the responsibility of the applicant to provide Minnesota Housing with available underwriting requirements and other requirements for the project which have been established by Rural Development. Prior to issuance of the IRS Form 8609, the applicant must submit to Minnesota Housing a copy of RD Form 3560-51, Multiple Family Housing Obligation -Fund Analysis for reference in the determination of the final allocation of tax credits to a project. H. Federal Subsidy Layering Review Section 911 of the Housing and Community Development Act of 1992 requires that specific procedures be followed for subsidy laying review when tax credits and HUD assistance are combined in a single project. Sponsors of projects that combine HUD assistance and tax credits should be aware that subsidy layering review must be completed for their projects, and should contact Minnesota Housing to receive additional information prior to submitting their application. Suballocators are responsible for assuring that subsidy layering reviews are completed for developments within their jurisdiction where they are the housing credit allocating agency. Subsidy layering review is required for the following programs, but not limited to: o Metropolitan Housing Opportunity Program (MHOP), o U.S. Housing and Urban Development (HUD) Insurance o Section 8 project -based rental assistance, etc. At a minimum the following documents must be submitted: 1. Rental Housing Project Income analysis and appraisal, signed and dated by HUD (Form 2264a); 2. A line item sources and uses statement, 3. Partnership (Syndication) Agreement, spelling out the equity contributions and dates of disbursement; and 4. Copy of Multifamily Rental Housing Common Application Form. Project Eligibility The purpose of the housing tax credit is to assure that a sufficient number of rental units are available on an affordable basis to low income persons. Applicants should be cautioned that this set -aside represents the minimum number of units that must meet both rent and income restrictions to qualify for tax credits for each year of the credit period. A project must, for a specific period of time, meet one of the following minimum tests: o 20/50 Test: To meet the 20/50 Test, a minimum of 20 percent of the residential units must be both rent restricted and occupied by individuals whose income is at or below the 50 percent Multifamily Tax Subsidy Project limits, "MTSP limits" (as established for different geographical areas and published by the U.S. Department of Housing and Urban Development) adjusted for family size; or o 40/60 Test: To meet the 40/60 Test, a minimum 40 percent of the residential units must be both rent restricted and occupied by individuals whose income is at or below the 60 percent MTSP limits, adjusted for family size. J 2012 Housing Tax Credit Procedural Manual 118