Recovery Act Assistance For LIHTC Projects

1. Recovery Act Assistance For LIHTC Projects Tax Credit Assistance Program & Grants in Lieu of Tax Credits

2. American Recovery and Revitalization Act of 2009 • The primary purpose is to preserve and create jobs and promote economic recovery in a transparent manner • Funded activities should commence as quickly as is consistent with prudent management

3. Recovery Act Programs for LIHTC • Tax Credit Assistance Program • Administered by U.S. Department of Housing and Urban Development • Grants in Lieu of Tax Credits • Administered by U.S. Department of Treasury

4. GRANTS TO STATES FOR LOW INCOME HOUSING PROJECTS IN LIEU OF TAX CREDITS Jean Whaley, Grants Award Manager U.S. Department of the Treasury

5. Grants in Lieu of Tax Credits Highlights • Authorized by Section 1602 of the American Recovery & Reinvestment Act 2009 • Grants to States for LIHTC projects in lieu of LIHTCs for 2009 • Finance the construction or acquisition and rehabilitation of qualified low-income buildings

6. Grantee Eligibility • Housing credit agency for: • 50 States, • District of Columbia, • the Commonwealth of Puerto Rico, • the Virgin Islands, • American Samoa, • Guam, • Northern Mariana Islands • Files Form 8610 Annual Low-Income Housing Credit Agencies Report with the IRS

7. Eligible Projects • Projects for subawards which are qualified low-income buildings under Section 42 of the Internal Revenue Code • Subawards for a project [building(s)] may not exceed the amount necessary to ensure the financial feasibility of the project and its viability as a project throughout the credit period.

8. Maximum Grant Amount • 85 percent of: • 10 times 100% of • (a) unused State housing credit ceiling (if any) of the State for calendar year 2008 and • (b) amount of State housing credit ceiling returned in 2009 • Plus • 10 times 40% of • (c) greater of $2.30 multiplied by State population or $2,665,000 and • (d) unused housing credit carryover allocated to State in 2009 National Pool

9. Application Process • Housing Credit Agency • Submit to 1602Apply@do.treas.gov : • Completed application; • Signed Terms and Conditions; and • Direct Deposit Sign Up Form

10. Application Process • For the grant amount calculation, only two of the four factors that comprise the 2009 State Housing Credit Ceiling are known at this time: • Factor (a) State’s unused housing credit ceiling (if any) for CY 2008 and • Factor (c) the greater of $2.30 multiplied by the State population or $2,665,000

11. Application Process • State agencies can submit subsequent applications through 2010 as • Factor (b) the amount of State housing credit ceiling returned in 2009 and • Factor (d) the unused housing credit carryover allocated to the State from a National Pool of unused credits become known

12. Application Process • U.S. Department of the Treasury will: • Disburse grant funds based on complete applications • Provide notification if application is incomplete and instructions to remedy the deficiency • Complete eligibility and completeness review within 10 working days • Send Award Notice that grant has been awarded and funds are available

13. Use of Funds • Grantee shall use all grant amounts to make subawards, or transfer to other agencies to make subawards. • Subawards shall be cash assistance and are not required to be repaid unless there is a recapture event related to the qualified low-income building. • Grantee shall not use grant election amounts for other purposes, including administrative costs.

14. Use of Funds Grantee may: • Collect reasonable fees from subawardee to cover its duties under Section 1602(c)(3) of the Act, Compliance and Asset Management. • Reasonable fees are amounts customarily charged for same or similar services and may not exceed costs. • Disburse grant funds to subawardees in 2009 and 2010. No grant funds may be disbursed to subawardees after December 31, 2010.

15. Reporting State Housing Credit Agency shall: • Provide periodic reports as required by Treasury. • Financial status report and project performance report is required on a quarterly basis, due 10 working days after the end of the quarter. • Quarters end on March 31, June 30, September 30, and December 31.

16. Unused Grant Funds Grantee shall return to the U.S. Treasury: • Any grant election amounts not disbursed to subawardees before January 1, 2011 • including any interest earned in excess of $200 on grant funds held by the State housing credit agency before a subaward is made and that is not used for subawards before January 1, 2011.

17. Tax Credit Assistance Program(TCAP) Marcia Sigal Policy Division Director HUD Office of Affordable Housing Programs

18. TCAP Highlights • Funds were appropriated under the HOME Program heading, but HOME rules (including Consolidated Planning) do not apply • HUD will distribute TCAP funds to state housing credit agencies in proportion to the amount of the FY 2008 HOME appropriation received by all participating jurisdictions in a state

19. Eligible Grantees • Eligible TCAP grantees are state housing credit agencies of: • The 50 states • The District of Columbia • The Commonwealth of Puerto Rico

20. Eligible Projects • Eligible TCAP projects are: • Rental housing projects that received or will receive an award of LIHTC under Section 42(h) of the IRC during federal fiscal years 2007, 2008 or 2009. (October 1, 2006 through September 30, 2009)

21. Eligible Uses of Funds • Can only be used for capital investment in eligible LIHTC projects • Capital investment is defined as costs included in the ‘eligible basis’ of a project under Section 42 of the IRC • Funds subject to rules and limitations established for LIHTC projects under Section 42 of the IRC

22. TCAP Project Selection Competition • Funds must be awarded competitively and in accordance with the QAP • Selection criteria must be transparent and include consideration of commitment and expenditure deadlines

23. TCAP Written Agreements • A written agreement between the grantee and project owner is required. • The written agreement must: • Set forth all TCAP program and federal grant requirements; • Enforce requirements through recordation of a restriction binding on all owners and successors; and • Be signed by grantee and project owner before any TCAP funds are disbursed.

24. Commitment & Expenditure Deadlines • The Recovery Act establishes three deadlines for the use of TCAP funds. Each grantee must: • Commit not less than 75% of its grant by February 16, 2010; • Demonstrate that it has expended75% of its grant by February 16, 2011; and • Expend 100% of its grant by February 16, 2012.

25. Program Income • Program Income means gross income, received by the grantee, generated by the use of TCAP funds during the grant period. • Grantee must record program income received in HUD’s Integrated Disbursement and Information System (IDIS) and use it in accordance with the TCAP requirements.

26. Program Income – cont. • Grantee must expend all program income for eligible TCAP costs before additional TCAP grant funds are drawn from the U.S. Treasury. • Grantees should factor in expected program income when developing a strategy for meeting the commitment and expenditure deadlines.

27. Accountability, Transparency and Reporting • The Recovery Act requires the grantee to post the following on its website: • A description of the competitive selection criteria used to make TCAP awards; and • A list of all projects selected for funding, including TCAP funding amounts. • Additional guidance on accountability and reporting requirements may be found at: http://www.whitehouse.gov/omb/

28. Integrated Disbursement and Information System (IDIS) • Grantees must use IDIS to commit funds to projects, draw down funds, and report project accomplishments. • At least two staff people must have IDIS access – one to request draws, one to approve draws.

29. IDIS – cont. • Grantees must submit TCAP IDIS Access Request Form (HUD-40099) to HUD as soon as possible. • Obtain the form at: • www.hud.gov/offices/adm/hudclips/forms/hud4.cfm • Use HOME IDIS e-learning system for training: www.hud.gov/offices/cpd/affordablehousing/training/web/elearning/index.cfm

30. Federal Grant Requirements • Unlike LIHTC, TCAP funds are Federal financial assistance and trigger many Federal requirements, many of which cannot be waived

31. Federal Grant Requirements • The following federal grant requirements apply to TCAP-assisted projects: • Fair Housing Act • Title VI of the Civil Rights Act of 1964 • The Age Discrimination Act of 1975 • Affirmatively Furthering Fair Housing • Section 504 of Rehabilitation Act of 1973 • National Environmental Policy Act and Related Laws

32. Federal Grant Requirements - cont. • Davis-Bacon Prevailing Wages; • Lead-Based Paint Poisoning Prevention Act and the Residential Lead-Based Paint Hazard Reduction Act of 1992; • “Anti-lobbying” restrictions; • The Drug-free Workplace Act of 1988; • OMB Regulations and Circulars including: • 24 CFR part 85; 2 CFR Part 222; OMB Circular A-133; 2 CFR Part 2424

33. Submission Requirements • To receive funding, state housing credit agencies must submit, within 30 days of issuance of the TCAP Notice: • Statement of intent to accept TCAP funds; • Description of competitive selection criteria;

34. Submission Requirements – cont. • Procedures for ensuring TCAP commitment and expenditure deadlines will be met; • Statement that the state housing credit agency has conducted a minimum 5-day public comment period for this submission.

35. Grant Agreement • Upon acceptance of submission package, HUD will execute a grant agreement with the state housing credit agency. • The grant agreement will include: • TCAP program requirements; • Applicable federal grant requirements; and • OMB reporting requirements.

36. Collaboration • Grantees may wish to: • Partner with a State agency, (e.g., State HOME PJ), to train your staff or to perform required tasks (e.g. IDIS input, environmental review) • Contract with experts to train staff or assist in administering the TCAP program

37. Davis-Bacon Jade Banks Senior Policy Advisor Office of Labor Relations

38. Davis-Bacon • Prevailing wages for all laborers and mechanics employed by contractors and subcontractors • 1 ½ pay for all hours worked over 40 in a week • Certified payrolls for each week work is performed

39. Davis-Bacon: What Grantees must do… • Obligate owners to take necessary steps • Ensure the contract for construction contains the correct wage decision and labor standards • Monitor contractor compliance • Ensure full correction of any wage/reporting deficiencies

40. D-B Applicability under Different Scenarios • Construction work completed • Construction work underway • Contract awarded but work not begun • Original work complete - New work/contract contemplated • No contract/construction as yet

41. Davis-Bacon Resources • www.hud.gov/offices/olr • Regional/field Labor Relations staff • www.hud.gov/offices/olr/laborrelstf.cfm • Agency and Contractor Guides • Handbook 1344.1 • Headquarters Office of Labor Relations • Jade.M.Banks@hud.gov • (202)402-5475

42. Environmental Review Process for Responsible Entities 24 CFR Part 58 Charlie Bien, AICP Director, Environmental Review Division

43. Environmental Review Statutes • National Environmental Policy Act of 1969 • Related laws and authorities

44. HUD Regulations • 24 CFR Part 58 Procedures for Responsible Entities (RE) • 24 CFR Part 51 Hazards • 24 CFR 52 Intergovernmental • 24 CFR Part 55 Floodplains • 24 CFR 50 HUD Procedures

45. When do environmental requirements apply? • States with formal application process: • Date the State receives the project owner’s application • States without a formal application process: • Date the project owner accepts the State’s TCAP award

46. Who is the responsible entity? • State acts as the environmental certifying officer • HUD field office CPD Director executes “Authority to Use Grant Funds” (HUD 7015.16) • Environmental review costs cannot be charged to TCAP

47. Can TCAP funds be committed before completion of environmental review? • Cannot commit TCAP funds before completion of environmental review • Conditional commitment of funds allowed with restrictions: NOT a legal claim for funding • Cannot undertake “choice-limiting” activities

48. What happens if work is underway or completed? • Proceed only if existing contract requires work to proceed. • Any negative environmental impacts must be mitigated • RISK- Projects that fail to achieve environmental clearance are ineligible • May be able to use a pre-existing federal environmental review if no changes

49. Environmental Review Process • Define the project • Aggregate activities • Study alternatives • Determine level of review • Conduct review • Publish or post when required • Request Release of Funds (RROF) • Receive authority to use grant funds • Commit funds and implement project • Monitor mitigation

50. Level of Review • Full assessment • Categorically excluded • Categorically excluded NOT subject to 58.5 • Exempt