Title 9 Part 2040

The Tax Reform Act of 1986, as amended, (the "act") establishes a Federal tax credit (“low- income housing credit,” “LIHTC” or "credit") administered by state housing agencies for owners of housing for persons of low-income. The act authorizes the governor of each state to allocate the low-income housing credit ceiling among governmental units and other issuing authorities in the state. The act requires that the allocation of credit to owners of low-income housing be coordinated by a single state housing credit agency. The act further requires each agency allocating credits to adopt a qualified allocation plan (the “plan” or the “QAP”) which sets forth the criteria and preferences by which credit will be allocated to projects. By Executive Order, the New York State Division of Housing and Community Renewal has been designated as the State Housing Credit Agency to allocate the credit in a manner which maximizes the public benefit by addressing the State's need for low-income housing and community revitalization incentives. In order to provide for the effective coordination of the State's low-income housing credit program with section 42 of the United States Internal Revenue Code (the "code"), this plan shall be construed and administered in a manner consistent with the code and regulations promulgated thereunder.

The division will publish at least annually in the State Register a notice of credit availability which informs applicants of submission dates and deadlines for future funding rounds.

Applicants requesting an allocation of credit must submit an application in a form approved by DHCR. The division may request any and all information it deems necessary for project evaluation. If any submission or documentation is insufficient to complete any evaluation of the proposed project, processing will be terminated. DHCR will not request or accept updated information related to incomplete or insufficient exhibits or attachments used primarily for rating an application.

The division shall charge an application fee of $3,000, due at the time of application. The division shall charge a fee of $1,000 if a binding agreement is requested. A credit allocation fee of eight percent of the first year credit allocation amount is due at the time of request for the issuance of carryover allocation. Non-profit applicants (or their wholly-owned subsidiaries) which will be the sole general partner or partners of the partnership/project owner or sole managing member or members of the limited liability company/project owner may request and be approved to defer payment of processing fees until the time of carryover allocation.

Only applications submitted by a published deadline will be evaluated for an allocation. Applications will be reviewed for completeness, eligibility, scoring, project feasibility, site suitability, consistency with the division’s underwriting standards and whether a proposed project advances the State’s housing goals and objectives, including any goals set forth by the Regional Economic Development Council strategic plan applicable to the area in which the project is located. The division expects to notify applicants within 150 days from the application deadline on allocation decisions. The process the division employs for allocating credit entails the following:

At each stage of processing (i.e., application, reservation, binding agreement or allocation) applications will be subject to a threshold eligibility review, which will include, but not necessarily be limited to, whether the project meets the following minimum requirements as well as requirements described in a notice of credit availability, request for proposals, design requirements manual, capital programs manual or other manual or document issued by the division:

Project applications which pass threshold eligibility review shall be scored and ranked based upon the following criteria as may be further described in a notice of credit availability, request for proposals, design requirements manual, capital programs manual or other manual or document issued by the division.

These evaluations will be based upon the project's specific economic needs subject only to statutory limitations.

After March 1, 2008, applications for LIHTC from projects financed by tax-exempt bonds subject to the private activity bond volume cap in accordance with section 42(h)(4)(A) of the code will be processed by the New York State Housing Finance Agency under its procedures. This section shall apply to applications filed with DHCR pursuant to section 42(h)(4)(A) of the code. All other provisions of this Part shall remain in full force and effect for applications filed pursuant to this section prior to March 1, 2008. Projects financed by tax-exempt bonds subject to the private activity bond volume cap in accordance with section 42(h)(4)(A) of the code may be allocated low-income housing credit which is not taken into account regarding the State housing credit ceiling.

Complete applications must be submitted at 60 days prior to the proposed construction start date on a form approved by DHCR and will be accepted and processed throughout the calendar year. The division may request any and all information it deems necessary for project evaluation. If any submission is incomplete or if documentation is insufficient to complete any evaluation of the proposed project, processing will be suspended. Complete applications will be reviewed relative to criteria contained in section 2040.3(e) and (f) of this Part for eligibility and public purpose. Within 60 days after receipt of a complete application the division will issue to the applicant a finding as to whether the application is consistent with this qualified allocation plan and the amount of LIHTC for which the project qualifies pursuant to section 2040.3(g) of this Part. If the application is consistent with this qualified allocation plan, the applicant will receive processing instructions for a final allocation of credit. If the project is found to be inconsistent with the division's qualified allocation plan the owner will be notified of the reasons.

The division shall charge an application fee of $2,000, due at the time of application. A credit allocation fee of three percent of the first year credit allocation amount is due at the time of request for the issuance of final credit allocation. Not-for-profit applicants (or their wholly-owned subsidiaries) which will be the sole general partner of the partnership/project owner or sole managing member of the limited liability company/project owner may request and be approved to defer payment of the application fee until the time of issuance of the final credit allocation.

In accordance with code section 42(m)(2)(D) the issuer of the tax exempt bonds is responsible for determining the dollar amount of credit which is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period. Such determination must be included in the applicant's request to the division for a final allocation of credit. The division will process requests for a final allocation of credit within 60 days from receipt of all required documentation including an executed credit regulatory agreement with proof of recording. The division will apply the criteria as set forth in section 2040.3(g) of this Part (except for section 2040.3[g][1][ii] of this Part) in determining the amount for the final credit allocation.

The regulatory requirements of projects receiving an allocation under the terms of this section is described in section 2040.5 of this Part and shall be subject to compliance monitoring as described in section 2040.7 of this Part.

The division shall require the owners of projects which receive a credit allocation after 1989 to execute a regulatory agreement. The regulatory agreement must be recorded as a restrictive covenant which runs with the land and returned to the division after recording (prior to the issuance of the final credit allocation). The regulatory agreement shall be made available for public inspection at the rental office of the owner and referenced in all marketing materials and a copy, or a division approved summary thereof, attached to the lease of each low-income unit.

The regulatory agreement shall specify, for the low-income portion of the building(s) that: the agreement shall be binding on all successors of the owner; the owner agrees to be bound by any regulations duly promulgated by the division or the Federal government for projects receiving low-income housing credits; the owner shall disclose the restricted rent for a dwelling unit to the prospective tenant prior to the execution of a lease; the owner shall secure from the tenant such information as is reasonably necessary to annually verify income; the owner shall address any citations for building code violations made by a municipality within 90 days of receipt; the owner shall ensure that the applicable fraction, as defined in the code, for the building for each taxable year in the extended use period will not be less than the applicable fraction specified therein; the owner shall consent to enforcement in any State court of the extended use requirement by any income eligible person; the owner shall annually submit a certification to DHCR stating that the building(s) is (are) owned and operated in compliance with the provisions of the code and any regulations promulgated thereunder, and provide such other information as the division may deem necessary; and the owner shall not retaliate against any tenant who notifies the division of alleged violations of the regulatory agreement. The extended use agreement shall include an agreement to waive any right to request a qualified contract and provide that the extended use period will not be subject to early termination pursuant to the qualified contract provisions as defined in section 42(h)(6)(F) of the code. The extended use agreement shall contain a provision which states that the agreement shall not be terminated if ownership is transferred by foreclosure or by a deed-in-lieu of foreclosure as a result of any action to collect debt which is owed to any entity which at any time after the issuance of a final credit allocation had any ownership interest in the project.

This section only applies to projects in which the project owner has a regulatory agreement executed by the division which specifically grants the right to request a qualified contract. The owner may request only in writing, by certified mail to DHCR to the attention of the LIHTC monitoring officer, that DHCR produce a qualified contract from a buyer who will continue to operate the building(s) for low-income use. A request for a qualified contract shall be an irrevocable offer to sell during the applicable one-year period. If DHCR presents a qualified contract during the above one-year period, such qualified contract shall confer upon the buyer an exclusive right to purchase the project. For the purpose of determining the value of a qualified contract, “cash distributions from (or available for distribution from) the project” as set forth in the code shall include management incentive fees paid or due to anyone who at any time after the issuance of a final credit allocation had any ownership interest in the project. DHCR will specify the checklist of items required to be submitted as part of a request for a qualified contract. A nonrefundable fee, in an amount determined by DHCR, is due upon submission of a request for a qualified contract. The owner shall be required to pay for any services reasonably determined by DHCR to be necessary for the technical review of a request for a qualified contract by an accountant, appraiser or other relevant expert.

Requests for information made under the Freedom of Information Law, must be in writing, and may be mailed to DHCR's Office of Legal Affairs, 38-40 State Street, Albany, NY 12207, or e-mailed to [email protected]

Any and all changes in the ownership interests or principals of any project (prior to issuance of final credit allocation) for which an application has been submitted to DHCR, will be subject to written confirmation by DHCR that DHCR has no objection to the change(s) proposed. DHCR reserves the right to disallow any application where there have been changes in the ownership interests or principals.

The division shall not be required to inspect a building under subdivision (d) of this section if the building is financed by the Rural Housing Service (RHS) under the section 515 program, the RHS inspects the building (under 7 CFR part 1930), and the RHS and DHCR enter into a memorandum of understanding, or other similar arrangement, under which the RHS agrees to notify the agency of the inspection results.

In addition to any other remedies which may be available, in accordance with the requirements of the code, the division shall notify project owners and the IRS of noncompliance with any of the above requirements or failure to submit any owner certification required by this plan as follows:

The division shall retain records of noncompliance or failure to certify for six years beyond the agency's filing of the respective IRS form 8823. In other cases the division must retain the certifications and records described in sections 2040.7 and 2040.8 of this Part for three years from the end of the calendar year the division receives the certified records.

The division, at its discretion, may delegate its monitoring functions to another State housing credit agency or retain an agent or other private contractor to perform monitoring to the extent delegation of the division's monitoring activities is permitted by law.

Compliance with the requirements of the code is the sole responsibility of the owner of the building for which the credit is allowable. DHCR's obligation to monitor for compliance with the requirements of the code does not impose liability on DHCR for an owner's noncompliance.

Article 2-A of the Public Housing Law (the law), established a State tax credit to be administered by DHCR for owners of housing for persons of low-income. The law authorizes the commissioner to allocate the State low-income housing tax credit (SLIHC) to eligible buildings in the State. The law provides that the SLIHC program be administered in the same manner as the Federal Low-Income Housing Credit Program (LIHTC) authorized by section 42 of the code and administered by the commissioner pursuant to this Part and authorizes the commissioner to promulgate rules and regulations necessary to administer the provisions of the law. All determinations by the commissioner regarding eligibility shall be final. All the processes and procedures applicable to the LIHTC Program shall apply to the SLIHC Program except as modified below.

A notice of credit availability will be issued annually by the DHCR following enactment of statute providing credit allocation authority. Such notice shall remain in effect until such time as the SLIHC credit allocation authority is expended or expired.

Project applications which pass threshold eligibility review shall be scored and ranked based upon the following criteria as may be further described in a notice of credit availability, request for proposals, design requirements manual, capital programs manual or other manual or document issued by the division.

DHCR shall determine the dollar amount of the SLIHC to be allocated to a project in the same manner as when determining the dollar amount of a LIHTC allocation.

The division reserves the right to allocate SLIHC in a manner which affirmatively advances fair housing, yields an equitable distribution of SLIHC throughout the State, to ensure the participation of qualified non-profit organizations, to implement such special priorities or demonstration programs contained in the notice of credit availability or request for proposals and to advance coordinated investments by State, Federal and local government partners. The division also reserves the right to assign scoring points as set forth in section 2040.3(f) of this Part to the extent a project addresses the division’s underwriting and design standards, as set forth in a request for proposals. Any special priorities or demonstration programs shall be consistent with priorities and selection criteria set forth herein and shall be described in detail in the notice of credit availability and requests for proposals. Notwithstanding the scoring system set forth above, the division reserves the right to deny any request for an allocation of SLIHC irrespective of its point ranking if such request is inconsistent with the State's housing goals including the housing objectives of a regional economic development council applicable to the area in which the project is located; and shall have the power to allocate SLIHC to a project irrespective of its point ranking, if such intended allocation is: in compliance with the law; in furtherance of the State's housing goals; including the housing objectives of a regional economic development council applicable to the area in which the project is located; and determined by the commissioner to be in the interests of the citizens of the State of New York. A written explanation shall be available to the general public for any allocation of a housing credit dollar amount which is not made in accordance with established priorities and the selection criteria set forth herein.

The division reserves the right to set aside credit for the purpose of implementing the State’s housing goals, including the housing objectives of the regional economic development council applicable to the area in which the project is located, the division reserves the right to set aside credit, including, but not limited to, set-asides for housing opportunity projects, preservation projects and supportive housing projects.