Transcript LIHTC Nuts & Bolts III

Property
Management & Tax
Credit Compliance
LIHTC NUTS & BOLTS III
Tera L. Lockley
Virginia Community Development Corporation
Linda Moss
Virginia Community Development Corporation
Presentation Goal
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To provide an overview of property
management, compliance and asset
management activities for life after
the allocation of the tax credits:
 Property
Management Expectations
 Asset
Management definition and
expectations and
 Compliance
from the Beginning to End
Property Management
Requirement
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In completion of the tax credit application, VHDA has a
section that applies to the plans for the property
management of the property.
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VHDA mandates that every property that receives a tax
credit allocation must obtain their Certified Property
Management Agent designation.
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If awarded their designation, VHDA awards terms from 1
year to a maximum of 3 years. The terms are renewable
and require completion of an application each time.
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All management entities must have this designation. So
need to decide whether to self-manage or to acquire a
3rd party management company off of VHDA’s approved
management list.
Property Management Basics:
Self-manage or 3rd party management
agent
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On-site property manager needs to have tax
credit experience
Or have extensive tax credit training(Basic,
Income/Assets, Intermediate, Fair Housing,
etc.)
Developing a Marketing Plan
Model Lease & Resident Selection Criteria
Lease-up activities
Rent Collections
Financial Reporting
Operating Budget process
Preventive Maintenance
Marketing
Plan(requested/reviewed by
VHDA)
Should Include
 Property Description
 Lease-up Goals
 Targeted Geographic Area
 Marketing Strategy
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Newspaper/Internet Advertising, Flyers,
Brochures, etc.
Community Outreach
Resident Referrals
Open Houses
Lease-up Specials
Property Signage
Model Lease &
Resident Selection Criteria
Lease Form
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Conform With State LTA Requirements
Should Be Workable, Lawful, Enforceable
Have Attorney Review
Typical Resident Selection Criteria*
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Employment History
Prior Landlord History
Credit Review
Criminal Background Check
*Other criteria may apply depending upon project financing
(ex: LIHTC, Section 8, HOME, Bond Program Financing)
Lease-up Activities
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Implement Marketing plan and review periodically for
what’s working and what’s not
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Track Lease-up goals to ensure that on target
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Meet often during the process to discuss the above
bulleted items
Rent Collections
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Develop Rent Collection Policy &
Forms, if self-managing or
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Review Management Agent’s Rent
Collection Policy & Forms
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Enforce!
Financial Reporting
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Should develop or receive monthly financial reports to
monitor the performance of the property
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Reports should include: Profit & Loss statement/Income
statement, Balance Sheet, Rent Roll, Accounts Payable
and Accounts Receivable reports
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Should understand or be able to explain any variances
Operating Budget Process
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Who Should Be Involved?
Should Include A Budget Narrative
Includes: Income, Expenses & Debt
Svc, Reserves, Capital Improvements
Information To Consider
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Current YTD Performance compared to
Development pro forma
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Market Conditions
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Maintenance needs
Preventive Maintenance Plan
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Benefits
Enhances Marketability & Resident
Retention
Increases Cost Effectiveness
Extends Useful Life Of Equipment
Cost Savings To Resident (ex: lower
utility costs)
Frequency
Monthly, Quarterly, Semi-Annually,
Annually
Fair Housing &
Uniform Residential LTA
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Fair Housing Amendments Act laws provide a critical way to deter
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VRLTA Landlord Tenant Act governs the rental of residential property.
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Section 504 Rehabilitation Act of 1973 & ADA of 1990
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Need For Continuing Education
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Who Needs It?
and counteract housing discrimination (ex: family composition,
discrimination based on race, religion, steering, etc.)
It is composed primarily of state statutory and common law which spells out
common rights and obligations of the landlord and resident.
Property Management Staff
Maintenance Staff
Asset Management definition
and activities
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Asset management involves monitoring the financial,
physical, and compliance performance of a property
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The Equity Partner/Syndicator you choose to work with
will be involved in the approval of the management agent
and may request additional information or trainings for the
staff
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They will also work with the management staff on tracking
the lease-up goals and activities to ensure timely delivery
of tax credits
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Will review the financial reports on a monthly/quarterly
basis to monitor the property’s performance and will ask
periodic questions concerning any change in property
performance, such as decrease in rental income, increase
in vacancies, increase in expenses, etc.
Asset Management activities
contd.
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Will review and in most cases, approve the annual
budget
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Will inspect the property on a scheduled basis and will
ask questions about maintenance activities, plans and
long range maintenance needs
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Asset management is an ongoing process for the next 15
years of operations of the property
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This ongoing process enables the Developer and Equity
Partner/Syndicator to establish a solid working
relationship that prepares the parties for a discussion
about the status of the property after year 15, i.e.
continue to operate as an affordable housing property
or a candidate for re-syndication
Low Income Housing Tax Credit
Program Basics--Compliance
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Minimum Set Asides(Federal & Owner’s
contract with State)
Rent & Income Limits
LIHTC Compliance Period
Original Resident Record Retention
Utility Allowances
Subsidy Layering Restrictions
Approval of Lease Agreement and
Verification forms
Minimum Set Asides
Federal Minimum Set Aside Requirements
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20% of units @ 50% of AMI
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40% of units @ 60% of AMI
Stricter Occupancy Requirements
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Subject To Owner’s Contract With State Agency (Ex:
100% @ 60%)
Rent & Income Limits
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Must Adhere To LIHTC Program Rent & Income Limits
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Hold Harmless/HERA Income Limits
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Available For Each Virginia Locality At www.vhda.com.
Sample Rent Table
Sample Income Table
LIHTC Program
Compliance Period
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Time Frame For Complying With LIHTC Program
Requirements
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Minimum Term Of 15 Years
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Can Be Extended Beyond 15 Years
Importance of Original Resident
Files Record Retention
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First Year Original Resident Files Kept 6 Years Beyond
Compliance Period
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Maintain Secure Storage for Original Resident Files along
with Electronic Back-Up
Utility Allowances
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6 available options in Virginia
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HUD rent schedule
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RD approved budget
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PHA(Public Housing Authority)
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Utility Company
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HUD Utility Model
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Engineer
Utility Allowances
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Evaluated annually
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90 days to implement, after publish date
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Utility allowance figure is subtracted from the gross
rent
Subsidy Layering Restrictions
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Other Program Restrictions
Project Based Section 8
HOME Program Funding
Bond Financing
Rural Development
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Must Meet All Program Regulations
Approved Lease Agreement
and Verification Forms
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Lease Agreement and Application Documents
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Should be approved by the Equity Partner/Syndicator
Verification Forms
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Approved Forms available on VHDA Website or
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Submitted to Equity Partner/Syndicator for approval
Overview of Project Lease-Up
Phase
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Pre-Lease-Up Planning
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Approval of Original Resident Files
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Lease-Up Phase for a New Construction Project
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Additional Compliance Challenges for an
Acquisition/Rehab Project
Pre-Lease-Up Plan
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Management and Equity Partner/Syndicator will meet to
discuss the pertinent aspects of Lease-Up, including
timely credit delivery
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Identify projected timing for completion of the lease-up
and the beginning of credit flow for the project
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Identify the number of BINs(Buildings) and best strategy
for occupying the buildings
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Market and Qualify applicants prior to completion of the
construction
Approval of Original Resident
Files
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The move-in of a tax credit eligible household is what
allows tax credits to begin to flow for that unit.
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The Equity Partner/Syndicator will normally require
approval of all original resident files prior to their
move-in to a unit
Lease-Up Phase – New
Construction Project
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Beginning of Lease-Up
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Tax Credit Documentation is valid for 120 days
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Application processing can begin when construction for a
building is projected to be complete within that
timeframe
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Qualified Occupancy – New construction
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Each household has been approved as a tax credit eligible
household prior to move-in
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A unit is qualified on the date the household signs the
certification of their total income/assets at move-in
Acquisition/Rehab: Additional
Compliance Challenges for
Management
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If a project has existing residents, a Relocation Plan is
required
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During Rehab, Tracking of Relocation of current
residents within the project may be necessary
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Strategic Planning is involved for the timing of
qualifying the existing residents
Ongoing Compliance During
the 15 years
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VHDA will conduct a File Audit and Physical Inspection
within the 1st year after Lease-Up completion, and then
every 3 years thereafter
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Equity Partner/Syndicator will conduct a File Audit and
Physical Inspection Annually
LIHTC Compliance
Training Options
A.J. Johnson Consulting – 757.599.3964
 Elizabeth Moreland Consulting –
1.800.644.0390
 TheoPro Compliance & Consulting Inc.
1.877.783.1133
 Quadel Consulting – 1.800.987.2581
 Spectrum Consulting – 207.767.8000
 National Center For Housing Mgt. –
1.800.368.5625
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Helpful Resources
 VHDA – www.vhda.com
 Institute of Real Estate Management –
www.irem.org
 Mid-Atlantic AHMA – www.midatlanticahma.org
 Novogradic – www.novogradic.com