October 20, 2020

MEMORANDUM - Low-Income Housing Tax Credit Participants and Other Interested Parties - Proposed 2021 QAP


To: Low-Income Housing Tax Credit Participants and Other Interested Parties
Date: October 20, 2020
From: J.M. Barker, General Counsel/VP for Multifamily Housing, Arkansas Development Finance Authority
Re: Proposed 2021 QAP

At its meeting on October 15, 2020, the Arkansas Development Finance Authority (the “Authority”) proposed a Qualified Allocation Plan (“QAP”) to set forth criteria for the allocation and award of federal low-income housing tax credits (“LIHTC”) pursuant to applications filed with the Authority beginning in 2021. The proposed 2021 QAP is in many respects similar to the 2020 QAP now in effect but also contains significant changes. The proposed 2021 QAP is at https://drive.google.com/file/d/12CN434xl6uCliyblzfrtaLUvxvNeB0T-/view?usp=drive_link.

In accordance with state law, the Authority is soliciting public comment on the proposed 2021 QAP. Written comments will be accepted during a period beginning now and ending no sooner than November 19, 2020. The deadline for submitting written comments will be determined and announced after the Governor has approved the proposal under Executive Order 15-02. Written comment may be submitted by email to multifamily.housing@arkansas.gov or by regular mail to:

Attention: QAP Comments Arkansas Development Finance Authority 1 Commerce Way, Suite 602 Little Rock AR 72202

In accordance with federal law, the Authority will hold a public hearing on the proposed 2021 QAP. It is anticipated that the hearing will be held at 1:00 pm on Thursday, November 12, 2020, at the Authority’s offices and by Zoom teleconference. Because the Authority cannot schedule the public hearing before the Governor has approved the proposal under Executive Order 15-02, no assurance is offered at this time regarding the exact date and time of the hearing. Persons desiring to speak at the hearing are urged to submit a request, as soon as possible, for a reservation of time to speak. Requests should be submitted by email to multifamily.housing@arkansas.gov. It is likely that each person desiring to speak will be allocated five minutes though there can be no assurance in this regard at this time.

The Authority welcomes comment on any aspect of the proposed 2021 QAP but solicits comment on the following matters in particular:

-The Authority is concerned with affiliations among members of development teams and the possibility of undue charges and profits arising in connection with such affiliations. The proposed 2021 QAP contains a prohibition on affiliations between the project architect or engineer and any other development team member. Is such a prohibition justified and workable? Should other affiliations among development team members be prohibited? If so, which? Should payments among affiliates be regulated by, for example, requirements that goods or services may be obtained from an affiliate only at cost or after a bid process? Should the Authority require cost certification at the contractor level as a threshold requirement?

-The proposed 2021 QAP contains a per-unit cost cap ($200,000 in total development costs) applicable to developments financed with tax-exempt bonds and 4% LIHTC. Is such a cost cap feasible? If so, is the proposed amount appropriate? Should there be various cap amounts depending on the nature of the transaction (e.g., RAD projects)?

-The proposed 2021 QAP contains a scoring category under which applicants would earn points for controlling total development costs per unit. Should the Authority revise the category to provide for different cost levels depending on the type of buildings (e.g., higher permitted costs for the same score for single-family houses or duplexes)?

-The maximum score an application could achieve under the proposed 2021 QAP is 96 points. If the Authority wished to have a 100-point maximum, how should the remaining four points be awarded?