Virginia Housing Development Authority s1

PROPOSED REGULATIONS

For information concerning Proposed Regulations, see Information Page.

Symbol Key Roman type indicates existing text of regulations. Italic type indicates proposed new text. Language which has been stricken indicates proposed text for deletion. VIRGINIA HOUSING DEVELOPMENT AUTHORITY "Applicant" means an applicant for credits under this chapter and also means the owner of the development to whom the REGISTRAR'S NOTICE: The Virginia Housing Development credits are allocated. Authority is exempt from the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia) pursuant to § 2.2- "Credits" means the low-income housing tax credits as 4002 A 4; however, under the provisions of § 2.2-4031 A, it is described in § 42 of the IRC. required to publish all proposed and final regulations. "IRC" means the Internal Revenue Code of 1986, as amended, and the rules, regulations, notices and other official Title of Regulation: 13 VAC 10-180. Rules and Regulations pronouncements promulgated thereunder. for Allocation of Low-Income Housing Tax Credits (amending 13 VAC 10-180-10, 13 VAC 10-180-50, and "IRS" means the Internal Revenue Service. 13 VAC 10-180-60). "Low-income housing units" means those units which are Statutory Authority: § 36-55.30:3 of the Code of Virginia. defined as "low income units" under § 42 of the IRC. Public Hearing Date: November 1, 2002 - 10 a.m. "Low-income jurisdiction" means any city or county in the Commonwealth with an area median income at or below the Agency Contact: J. Judson McKellar, Jr., General Counsel, statewide Virginia nonmetro area median income established Virginia Housing Development Authority, 601 S. Belvidere by the U.S. Department of Housing and Urban Development Street, Richmond, VA 23220, telephone (804) 343-5540, FAX ("HUD"). (804) 783-6701 or e-mail [email protected]. "Principal" means any person (including any individual, joint Summary: venture, partnership, limited liability company, corporation, The proposed amendments (i) include a definition of nonprofit organization, trust, or any other public or private "principal"; (ii) revise the definition of "revitalization area"; entity) that (i) with respect to the proposed development will (iii) require market studies for developments intended for own or participate in the ownership of the proposed persons age 55 and older to be submitted prior to the development or (ii) with respect to an existing multi-family application date; (iv) reject any application from an rental project has owned or participated in the ownership of applicant with a principal that has or had an ownership or such project, all as more fully described hereinbelow. participation interest in a development at the time the The person who is the owner of the proposed development or authority reported such development to the IRS as no multi-family rental project is considered a principal. In longer in compliance and no longer participating in the determining whether any other person is a principal, the federal low-income housing tax credit program; (v) reduce following guidelines shall govern: (i) in the case of a readiness points; (vi) provide points for proposed partnership that is a principal (whether as the owner or developments competing in a new community development otherwise), all general partners are also considered principals, pool; (vii) prohibit applicants receiving points for granting regardless of the percentage interest of the general partner; preference to Section 8 tenants from requiring annual (ii) in the case of a public or private corporation or minimum income that exceeds the greater of $3,600 or 2.5 organization or governmental entity that is a principal (whether times the portion of rent to be paid by a tenant; (viii) change as the owner or otherwise), principals also include the the points awarded to developments subject to an existing president, vice president, secretary, and treasurer and other Rural Development 515 loan; (ix) award points to any officers who are directly responsible to the board of directors development receiving a real estate tax abatement for 10 or or any equivalent governing body, as well as all directors or more years or receiving a new project-based subsidy from other members of the governing body and any stockholder HUD or Rural Development for the greater of 5 or 10% of having a 25% or more interest; (iii) in the case of a limited the units of the proposed development; (x) award points to liability company that is a principal (whether as the owner or projects serving populations with mobility impairments; (xi) otherwise), all members are also considered principals, change points awarded to developer experience; (xii) regardless of the percentage interest of the member; (iv) in increase the credit cap for related principals to 15% of the case of a trust that is a principal (whether as the owner or Virginia’s per capita dollar amount of credits for such credit otherwise), all persons having a 25% or more beneficial year; (xiii) allow for the establishment of a LHA set-aside; ownership interest in the assets of such trust; (v) in the case (xiv) change description of "durable siding" to "durable fiber of any other person that is a principal (whether as the owner cement siding"; (xv) reduce the threshold score to receive or otherwise), all persons having a 25% or more ownership credits to 375 points; and (xvi) make other miscellaneous interest in such other person are also considered principals; administrative clarification changes. and (vi) any person that directly or indirectly controls, or has 13 VAC 10-180-10. Definitions. the power to control, a principal shall also be considered a principal. The following words and terms when used in this chapter shall have the following meaning, meanings unless the context "Qualified application" means a written request for tax credits clearly indicates otherwise: which is submitted on a form or forms prescribed or approved

Volume 19, Issue 2 Virginia Register of Regulations Monday, October 7, 2002 1 Proposed Regulations by the executive director together with all documents required the total financing package, including the various subsidies by the authority for submission and meets all minimum scoring and the anticipated syndication or placement proceeds that requirements. will be raised. The following cost information, if applicable, needs to be included in the application to determine the "Qualified low-income buildings" or "qualified low-income feasible credit amount: site acquisition costs, site preparation development" means the buildings or development which costs, construction costs, construction contingency, general meets the applicable requirements in § 42 of the IRC to qualify contractor's overhead and profit, architect and engineer's fees, for an allocation of credits thereunder. permit and survey fees, insurance premiums, real estate taxes "Revitalization area" means (i) any area (i) designated by a during construction, title and recording fees, construction municipality for implementation of either a "redevelopment period interest, financing fees, organizational costs, rent-up plan" meeting the requirements of § 36-51 of the Code of and marketing costs, accounting and auditing costs, working Virginia or a "conservation plan" meeting the requirements of capital and operating deficit reserves, syndication and legal § 36-51.1 of the Code of Virginia; or (ii) any area documented fees, development fees, and other costs and fees. All by local government officials as a revitalization area that (a) applications seeking credits for rehabilitation of existing units has established boundaries at least a year old at the time must provide for contractor construction costs of at least applications are submitted and (b) has local or state funds that $7,500 per unit. have been spent in furtherance of the revitalization objectives; Each application shall include evidence of (i) sole fee simple or (iii) that is subject to a plan using Hope VI funds from HUD. ownership of the site of the proposed development by the The revitalization area described in clause (ii) of this definition applicant, (ii) lease of such site by the applicant for a term must be part of a plan adopted by the local government that exceeding the compliance period (as defined in the IRC) or for should include discussions of the type of developments that such longer period as the applicant represents in the will be encouraged, the potential sources of funding, and application that the development will be held for occupancy by services to be offered in the area. A comprehensive plan does low-income persons or families or (iii) right to acquire or lease not qualify as documentation of a revitalization area. such site pursuant to a valid and binding written option or 13 VAC 10-180-50. Application. contract between the applicant and the fee simple owner of such site for a period extending at least four months beyond Prior to submitting an application for reservation, applicants any application deadline established by the executive director, shall submit on such form as required by the executive provided that such option or contract shall have no conditions director, the letter for authority signature by which the within the discretion or control of such owner of such site. A authority shall notify the chief executive officers (or the contract that permits the owner to continue to market the equivalent) of the local jurisdictions in which the developments property, even if the applicant has a right of first refusal, does are to be located to provide such officers a reasonable not constitute the requisite site control required in clause (iii) opportunity to comment on the developments. When scoring above. No application shall be considered for a reservation or the applications, the executive director will award points to allocation of credits unless such evidence is submitted with those applications that submit the form within the deadlines the application and the authority determines that the applicant established by the executive director and subtract points from owns, leases or has the right to acquire or lease the site of the those applications that fail to submit the form by such proposed development as described in the preceding deadlines. sentence. In the case of acquisition and rehabilitation of Prior to submitting an application for reservation, any developments funded by Rural Development of the U.S. applicant proposing a development intended to serve 55 or Department of Agriculture, the site control document does not over housing, as defined by the United States Fair Housing need to be approved by all partners of the seller if the general Act, shall submit a market study, in form and substance partner of the seller executing the site control document satisfactory to the authority, that shows adequate demand for provides (i) an attorney's opinion that such general partner the housing units to be produced by the applicant’s proposed has the authority to enter into the site control document and development. such document is binding on the seller or (ii) a letter from the existing syndicator indicating a willingness to secure the Application for a reservation of credits shall be commenced by necessary partner approvals upon the reservation of credits. filing with the authority an application, on such form or forms as the executive director may from time to time prescribe or Each application shall include, in a form or forms required by approve, together with such documents and additional the executive director, a certification of previous participation information as may be requested by the authority in order to listing all residential real estate developments receiving an comply with the IRC and this chapter and to make the allocation of tax credits under § 42 of the IRC in which the reservation and allocation of the credits in accordance with general partner(s) principal or their affiliates has principals this chapter. The executive director may reject any application have or had an ownership or participation interest, the location from consideration for a reservation or allocation of credits if in of such developments, the number of residential units and such application the applicant does not provide the proper low-income housing units in such developments and such documentation or information on the forms prescribed by the other information as more fully specified by the executive executive director. director. Furthermore, for any such development, the applicant must indicate, for developments receiving an allocation of tax The application should include a breakdown of sources and credits under § 42 of the IRC, whether any such development uses of funds sufficiently detailed to enable the authority to the appropriate state housing credit agency has ever been ascertain what costs will be incurred and what will comprise determined to be out of compliance filed a Form 8823 with the

Volume 19, Issue 2 Virginia Register of Regulations Monday, October 7, 2002 2 Proposed Regulations

IRS reporting noncompliance with the requirements of the IRC The executive director may establish criteria and assumptions by the appropriate state housing credit agency, and if so, an to be used by the applicant in the calculation of amounts in the explanation of that such noncompliance and whether it has application, and any such criteria and assumptions may be had not been corrected at the time of the filing of such Form indicated on the application form, instructions or other 8823. The executive director may reject any application from communication available to the public. consideration for a reservation or allocation of credits unless the above information is submitted with the application. If, The executive director may prescribe such deadlines for after reviewing the above information or any other information submission of applications for reservation and allocation of available to the authority, the executive director determines credits for any calendar year as he shall deem necessary or that the general partner(s) principal or principals do not have desirable to allow sufficient processing time for the authority to the experience, financial capacity and predisposition to make such reservations and allocations. If the executive regulatory compliance necessary to carry out the director determines that an applicant for a reservation of responsibilities for the acquisition, construction, ownership, credits has failed to submit one or more mandatory operation, marketing, maintenance and management of the attachments to the application by the reservation application proposed development or the ability to fully perform all the deadline, he may allow such applicant an opportunity to duties and obligations relating to the proposed development submit such attachments within a certain time established by under law, regulation and the reservation and allocation the executive director with a ten-point scoring penalty per documents of the authority or if an applicant is in substantial item. noncompliance with the requirements of the IRC, the After receipt of the applications, if necessary, the authority executive director may reject applications by the applicant. No shall notify the chief executive officers (or the equivalent) of application will be accepted from any applicant with a principal the local jurisdictions in which the developments are to be that has or had an ownership or participation interest in a located and shall provide such officers a reasonable development at the time the authority reported such opportunity to comment on the developments. development to the IRS as no longer in compliance and no longer participating in the federal low-income housing tax The development for which an application is submitted may credit program. be, but shall not be required to be, financed by the authority. If any such development is to be financed by the authority, the The application should include pro forma financial statements application for such financing shall be submitted to and setting forth the anticipated cash flows during the credit period received by the authority in accordance with its applicable as defined in the IRC. The application shall include a rules and regulations. certification by the applicant as to the full extent of all federal, state and local subsidies which apply (or which the applicant The authority may consider and approve, in accordance expects to apply) with respect to each building or herewith, both the reservation and the allocation of credits to development. The executive director may also require the buildings or developments which the authority may own or submission of a legal opinion or other assurances satisfactory may intend to acquire, construct and/or rehabilitate. to the executive director as to, among other things, 13 VAC 10-180-60. Review and selection of applications; compliance of the proposed development with the IRC and a reservation of credits. certification, together with an opinion of an independent certified public accountant or other assurances satisfactory to The executive director may divide the amount of credits into the executive director, setting forth the calculation of the separate pools and each separate pool may be further divided amount of credits requested by the application and certifying, into separate tiers. The division of such pools and tiers may among other things, that under the existing facts and be based upon one or more of the following factors: circumstances the applicant will be eligible for the amount of geographical areas of the state; types or characteristics of credits requested. housing, construction, financing, owners, occupants, or source of credits; or any other factors deemed appropriate by him to Each applicant shall commit in the application to provide best meet the housing needs of the Commonwealth. relocation assistance to displaced households, if any, at such level required by the director. An amount, as determined by the executive director, not less than 10% of the Commonwealth's annual state housing credit If an applicant submits an application for reservation or ceiling for credits, shall be available for reservation and allocation of credits that contains a material misrepresentation allocation to buildings or developments with respect to which or fails to include information regarding developments the following requirements are met: involving the applicant that have been determined to be out of compliance with the requirements of the IRC, the executive 1. A "qualified nonprofit organization" (as described in director may reject the application or stop processing such § 42(h)(5)(C) of the IRC) which is authorized to do business application upon discovery of such misrepresentation or in Virginia and is determined by the executive director, on noncompliance and may prohibit such applicant from the basis of such relevant factors as he shall consider submitting applications for credits to the authority in the future. appropriate, to be substantially based or active in the community of the development and is to materially In any situation in which the executive director deems it participate (regular, continuous and substantial involvement appropriate, he may treat two or more applications as a single as determined by the executive director) in the development application. and operation of the development throughout the

"compliance period" (as defined in § 42(i)(1) of the IRC); ("nonprofit set-aside"). If any such nonprofit pools are set- and aside is so established, the executive director may rank the applications therein and reserve credits to such applications 2. (i) The "qualified nonprofit organization" described in the meeting the requirements of the nonprofit set-aside before preceding subdivision 1 is to own (directly or through a ranking applications and reserving credits in to any other partnership), prior to the reservation of credits to the pools, and any such applications in such nonprofit pools not buildings or development, all of the general partnership receiving any reservations of credits or receiving such interests of the ownership entity thereof; (ii) the executive reservations in amounts less than the full amount permissible director of the authority shall have determined that such hereunder (because there are not enough credits then qualified nonprofit organization is not affiliated with or available in such nonprofit pools to make such reservations) controlled by a for-profit organization; (iii) the executive shall be assigned to such other pool as shall be appropriate director of the authority shall have determined that the hereunder; provided, however, that if credits are later made qualified nonprofit organization was not formed by one or available (pursuant to the IRC or as a result of either a more individuals or for-profit entities for the principal termination or reduction of a reservation of credits made from purpose of being included in any nonprofit pools (as defined any nonprofit pools or a rescission in whole or in part of an below) established by the executive director, and (iv) the allocation of credits made from such nonprofit pools or executive director of the authority shall have determined otherwise) for reservation and allocation by the authority that no staff member, officer or member of the board of during the same calendar year as that in which applications in directors of such qualified nonprofit organization will the nonprofit pools have been so assigned to other pools as materially participate, directly or indirectly, in the proposed described above, the executive director may, in such development as a for-profit entity. situations, designate all or any portion of such additional In making the determinations required by the preceding credits for the nonprofit pools (or for any other pools as he subdivision 1 and clauses (ii), (iii) and (iv) of subdivision 2 of shall determine) and may, if additional credits have been so this section, the executive director may apply such factors as designated for the nonprofit pools, reassign such applications he deems relevant, including, without limitation, the past to such nonprofit pools, rank the applications therein and experience and anticipated future activities of the qualified reserve credits to such applications in accordance with the nonprofit organization, the sources and manner of funding of IRC and this chapter application. In the event that during any the qualified nonprofit organization, the date of formation and round (as authorized hereinbelow) of application review and expected life of the qualified nonprofit organization, the ranking the amount of credits reserved within such nonprofit number of paid staff members and volunteers of the qualified pools set-aside is less than the total amount of credits made nonprofit organization, the nature and extent of the qualified available therein, the executive director may either (i) leave nonprofit organization's proposed involvement in the such unreserved credits in such nonprofit pools set-aside for construction or rehabilitation and the operation of the reservation and allocation in any subsequent round or rounds proposed development, the relationship of the staff, directors or (ii) redistribute, to the extent permissible under the IRC, or other principals involved in the formation or operation of the such unreserved credits to such other pool or pools qualified nonprofit organization with any persons or entities to applications as the executive director shall designate be involved in the proposed development on a for-profit basis, reservations therefor in the full amount permissible hereunder and the proposed involvement in the construction or (which applications shall hereinafter be referred to as "excess rehabilitation and operation of the proposed development by qualified applications") or (iii) carry over such unreserved any persons or entities involved in the proposed development credits to the next succeeding calendar year for inclusion in on a for-profit basis. The executive director may include in the the state housing credit ceiling (as defined in § 42(h)(3)(C) of application of the foregoing factors any other nonprofit the IRC) for such year. Notwithstanding anything to the organizations which, in his determination, are related (by contrary herein, no reservation of credits shall be made from shared directors, staff or otherwise) to the qualified nonprofit any nonprofit pools set-aside to any application with respect to organization for which such determination is to be made. which the qualified nonprofit organization has not yet been legally formed in accordance with the requirements of the IRC. For purposes of the foregoing requirements, a qualified In addition, no application for credits from any nonprofit pools nonprofit organization shall be treated as satisfying such or any combination of pools may receive a reservation or requirements if any qualified corporation (as defined in § 42(h) allocation of annual credits in an amount greater than (5)(D)(ii) of the IRC) in which such organization (by itself or in $500,000 unless credits remain available in such nonprofit combination with one or more qualified nonprofit pools after all eligible applications for credits from such organizations) holds 100% of the stock satisfies such nonprofit pools receive a reservation of credits. requirements. The executive director may establish a set-aside of credits as The applications shall include such representations and he may deem appropriate to applicants either relying on the warranties and such information as the executive director may experience of a local housing authority for developer require in order to determine that the foregoing requirements experience points described hereinbelow or using Hope VI have been satisfied. In no event shall more than 90% of the funds from HUD in connection with the proposed development Commonwealth's annual state housing credit ceiling for credits ("LHA set-aside"), or both. If any such LHA set-aside is so be available for developments other than those satisfying the established, the executive director may rank the applications preceding requirements. The executive director may establish and reserve credits to applications meeting the requirements such pools ("nonprofit pools") a set-aside of credits as he may of the LHA set-aside before reserving credits to any other deem appropriate to satisfy the foregoing requirement application (except any applications needed to meet the

Volume 19, Issue 2 Virginia Register of Regulations Monday, October 7, 2002 4 Proposed Regulations nonprofit set-aside). In the event that during any round (as deadlines established by the executive director. (10 authorized hereinbelow) of application review and ranking the points; failure to make timely submission, minus 50 points amount of credits reserved within such LHA set-aside is less for any proposed development other than a rehabilitation than the total amount of credits made available therein, the of existing apartments) executive director may either (i) leave such unreserved credits in such LHA set-aside for reservation and allocation in any b. (1) A letter dated within three months prior to the subsequent round or rounds; (ii) redistribute such unreserved application deadline addressed to the authority and credits to such other applications as the executive director signed by the chief executive officer of the locality in shall designate reservations therefor in the full amount which the proposed development is to be located permissible hereunder; or (iii) carry over such unreserved stating, without qualification or limitation, the following: credits to the next succeeding calendar year for inclusion in "The construction or rehabilitation of (name of the state housing credit ceiling (as defined in § 42(h)(3)(C) of development) and the allocation of federal housing the IRC) for such year. Notwithstanding anything to the tax credits available under IRC Section 42 for that contrary herein, applicants relying on the experience of a local development will help meet the housing needs and housing authority for developer experience points described priorities of (name of locality). Accordingly, (name of hereinbelow and/or using Hope VI funds from the U.S. locality) supports the allocation of federal housing tax Department of Housing and Urban Development (HUD) in credits requested by (name of applicant) for that connection with the proposed development shall not be development." (50 points; or 60 points if the eligible to receive a reservation of credits from any nonprofit proposed development is a rehabilitation of existing pools set-aside. apartments that did not receive points in subdivision The authority shall review each application, and, based on the 2(a) above) application and other information available to the authority, (2) No letter from the chief executive officer of the shall assign points to each application as follows: locality in which the proposed development is to be 1. Readiness. located, or a letter addressed to the authority and signed by such chief executive officer stating neither a. Written evidence satisfactory to the authority of (i) support (as described in subdivision b (1) above) nor conditional approval by local authorities of the plan of opposition (as described in subdivision b (3) below) as development or site plan for the proposed development to the allocation of credits to the applicant for the (30 points) or (ii) approval by local authorities of the plan development. (25 points) of development or site plan for the proposed development or that such approval is not required. (40 points; (3) A letter in response to its notification to the chief applicants receiving points under this subdivision (1a) are executive officer of the locality in which the proposed not eligible for points under subdivision 5a below) development is to be located opposing the allocation of credits to the applicant for the development. In any b. Written evidence satisfactory to the authority (i) of such letter, the chief executive officer must certify that approval by local authorities of proper zoning or special the proposed development is not consistent with use permit for such site or (ii) that no zoning requirements current zoning or other applicable land use regulations. or special use permits are applicable. (40 points) (0 points) c. Valid building permit(s) or letter dated within three c. Proposed developments competing in any pool months prior to the application deadline stating that all established specifically for community revitalization plans approvals are in place and building permits will be issued may receive points from one of the following categories upon receipt of all fees. (20 points) while competing in such pool: d. c. Submission of plans and specifications or, in the c. Documentation (1) Applications with documentation case of rehabilitation for which plans will not be used, a in a form approved by the authority from the local unit-by-unit work write-up for such rehabilitation with authorities government officials that the proposed certification in such form and from such person development is located in a revitalization area, or satisfactory to the executive director as to the completion determination by the authority that and the proposed of such plans or specifications or work write-up. (20 development is an integral part of the planned points multiplied by the quotient calculated by dividing the revitalization. (50 points) percentage of completion of such plans and specifications or such work write-up by 75% not to exceed 20 points.) (2) Applications with documentation in a form approved by the authority from local government officials that (i) 2. Housing needs characteristics. the proposed development is located in a revitalization area with established boundaries (beyond the a. Submission of the letter in the form prescribed by the boundaries of the proposed development), (ii) local or authority with the necessary any required attachments, state funds have been spent or budgeted in providing such information necessary for the authority to furtherance of the revitalization objectives, and (iii) the send a letter addressed to the current chief executive proposed development will further the goals of the officer (or the equivalent) of the locality in which the planned revitalization. (25 points) proposed development is located, soliciting input on the proposed development from the locality within the

(3) The proposed development involves either (i) g. Any development receiving (i) a real estate tax substantial rehabilitation (contractor’s cost of at least abatement for 10 or more years or (ii) new project-based $50,000 per unit) or adaptive reuse of vacant or subsidy from HUD or Rural Development for the greater derelict structures (15 points) or (ii) the rehabilitation of of 5 or 10% of the units of the proposed development. properties deemed troubled by a local government (10 points) based on the physical condition of the property, documented crime/drug problems or similar factors. (10 3. Development characteristics. points) a. The average unit size. (100 points multiplied by the If the proposed development (i) includes the rehabilitation sum of the products calculated by multiplying, for each of existing housing (add 5 points) or (ii) is located in a unit type as defined by the number of bedrooms per unit, Difficult Development Area as defined by HUD or in an (i) the quotient of the number of units of a given unit type Enterprise Zone or Housing Revitalization Zone divided by the total number of units in the proposed designated by the state (20 points) if the proposed development, times (ii) the quotient of the average actual development is in a qualified census tract within either a gross square footage per unit for a given unit type minus Revitalization Area, Enterprise Zone or Housing the lowest gross square footage per unit for a given unit Revitalization Zone. (25 add 5 points) type established by the executive director divided by the highest gross square footage per unit for a given unit type d. Commitment by the applicant to give leasing established by the executive director minus the lowest preference to individuals and families (i) on public gross square footage per unit for a given unit type housing waiting lists maintained by the local housing established by the executive director. If the average authority operating in the locality in which the proposed actual gross square footage per unit for a given unit type development is to be located and notification of the is less than the lowest gross square footage per unit for a availability of such units to the local housing authority by given unit type established by the executive director or the applicant or (ii) on section 8 (as defined in 13 VAC greater than the highest gross square footage per unit for 10-180-90) waiting lists maintained by the local or nearest a given unit type established by the executive director, section 8 administrator for the locality in which the the lowest or highest, as the case may be, gross square proposed development is to be located and notification of footage per unit for a given unit type established by the the availability of such units to the local section 8 executive director shall be used in the above calculation administrator by the applicant. (10 points for either (i) or rather than the actual gross square footage per unit for a (ii) above; Applicants receiving points under this given unit type.) subdivision may not require an annual minimum income requirement for prospective tenants that exceeds the b. Lower amount of credit request. (50 points multiplied greater of $3,600 or 2.5 times the portion of rent to be by the percentage by which the total amount of the paid by such tenants.). annual tax credits requested is less than $1,000,000, including negative points using the percentage in which e. Any of the following: (i) firm financing commitment(s) the total amount of annual credits requested is greater from the local government, local housing authority, than $1,000,000. Developments financed with tax-exempt Federal Home Loan Bank affordable housing funds, or bonds will receive an automatic 25 points under this the Rural Development of the U.S. Department of scoring category.) Agriculture, for a below-market rate loan or grant or (ii) a resolution passed by the locality in which the proposed c. Evidence satisfactory to the authority documenting the development is to be located committing such financial quality of the proposed development's amenities as support to the development in a form approved by the determined by the following: authority or (iii) evidence from Rural Development that the (1) The following points are available for any development will remain subject to existing financing from application: Rural Development. In the case of (iii) above, if the applicant is, or has any common interests with, the (a) If 2-bedroom units have 1.5 bathrooms and current owner, directly or indirectly, the application will 3-bedroom units have 2 bathrooms. (15 points only qualify for these points if the applicant waives all multiplied by the percentage of units meeting these rights to any developer's fee and any other fees requirements) associated with the acquisition and rehabilitation (or (b) If all units have a washer and dryer. (7 points) rehabilitation only) of the development unless permitted by the executive director for good cause. (The amount of (c) If all units have a balcony or patio. (5 points) such financing or value of local support will be divided by (d) If all units have a washer and dryer hook-up only. the total development sources of funds and the proposed (3 points, no points if points awarded in subdivision 1 development receives two points for each percentage (b) above) point up to a maximum of 40 points.) (e) If all units have a dishwasher. (2 points) f. Any development subject to (i) HUD's Section 8 or Section 236 programs or (ii) Rural Development’s 515 (f) If all units have a garbage disposal. (1 point) program, at the time of application. (20 points)

(g) If the development has a laundry room. (1 point, (3) The following points are available to proposed no points if points awarded in subdivision 1 (b) developments which rehabilitate or adaptively reuse an above) existing structure: (h) If a community/meeting room with a minimum of (a) If all bathrooms, including ones with windows, 800 square feet is provided. (5 points) have exhaust fans ducted out. (1 point) (i) If all units have a range hood above the stove. (1 (b) If all existing, single-glazed windows in good point) condition have storm windows, and all windows in poor condition are replaced with new windows with (j) If all metal windows have thermal breaks, and if integral storm sash or insulating glass. The insulating insulating glass for metal or vinyl windows and sliding glass metal windows must have a thermal break. The glass doors have a 10-year warranty against insulated glass must have a 10-year warranty against breakage of the seal from date of delivery. (1 point) breakage of the seal. (3 points) (k) If all insulation complies with Virginia Power (c) If all apartments have a minimum of one electric Energy Efficient Home Requirements, with a smoke detector with battery backup. (1 point) minimum R=30 insulation for roofs. (2 points) (d) If all bathrooms have ground fault interrupter (l) If all refrigerators are frost free, a minimum size of electrical receptacles. (1 point) 14 cubic feet, and provide separate doors for freezer and refrigerator compartments. (1 point) (e) If the structure is historic, by virtue of being listed individually in the National Register of Historic (m) If all exterior doors exposed to weather are Places, or due to its location in a registered historic metal. (1 point) district and certified by the Secretary of the Interior (n) Brick exterior walls. (15 points times the as being of historical significance to the district, and percentage of exterior walls covered by brick) the rehabilitation will be completed in such a manner as to be eligible for historic rehabilitation tax credits. (o) Durable fiber-cement lap siding other than brick (5 points) that complies with ASTM 1186 standard specifications and is warranted to last for 50 or more (f) All buildings have a minimum insulation of R=30 years. (5 points) for attics and R=19 for crawl spaces. (3 points) (p) If the development has a minimum STC (sound (g) All public areas, such as community rooms, transmission class) rating of 52 for the floor laundry rooms, and rental office are accessible to construction between units. (3 points) persons in wheelchairs. (1 point) (q) All kitchen cabinets comply with authority (h) If replacing the roof, removing the old roof and minimum guidelines. (1 point) felt. (1 point) (r) All closet doors are side hinged (no bi-fold or The maximum number of points that may be awarded sliding doors). (1 point) under any combination of the scoring categories under subdivision 3 c of this section is 50 points. (s) All exterior wood, including trim, fascia and rake boards are clad in aluminum. (1 point) d. Any proposed 50 unit or less development that meets at least three of the following criteria: (i) sets maximum (2) The following points are available to applications rents on all units at or below 25% of the gross income of electing to serve elderly and/or physically disabled households at or below 50% of the area median income tenants as elected in subdivision 4 a of this section: (without vouchers or rental assistance); (ii) restricts at (a) If all cooking ranges have front controls. (1 point) least 20% of the units for occupancy by households with incomes at or below 40% of the area median income; (iii) (b) If all units are adaptable for the handicapped in requires at least 60% of the developer's fee to pay buildings with elevators. (2 points) development costs; and (iv) has below market rate financial assistance from local, state or federal (c) If all units have an emergency call system. (3 government. (20 points) points) e. Any nonelderly development in which the greater of 5 (d) If all bathrooms have grab bars and slip-resistant or 10% of the units (not to exceed 14) (i) provide federal bottoms for bathtubs. (1 point) project-based rent subsidies or equivalent assistance in (e) If all bathrooms have an independent or order to ensure occupancy by extremely low-income supplemental heat source. (1 point) persons; (ii) conform to Americans with Disabilities Act Architectural Guidelines (ADAAG) requirements as set (f) If all corridors have a handrail on one side. (1 forth in the Virginia building code as BOCA Chapter 11 point) (13 VAC 5-61); and (iii) are actively marketed to people (g) If all entrance doors to each unit have two eye with special needs in accordance with a plan submitted viewers, one at 48 inches and the other at standard as part of the application for credits (if special needs height. (1 point) includes mobility impairments, the units described above

must include roll-in showers and roll-under sinks and c. Any applicant that includes a principal that was a ranges). (50 points) principal in a development at the time the authority reported such development to the IRS for an uncorrected f. Any nonelderly development in which the greater of 5 or major violation of health, safety and building codes. 10% of the units (not to exceed 14) (i) have rents within (minus 50 points for a period of three years after the HUD’s Housing Choice Voucher (HCV) payment violation has been corrected) standard; (ii) conform to ADAAG requirements as set forth in the Virginia building code as BOCA Chapter 11 d. Any applicant that includes a principal that was a (13 VAC 5-61); and (iii) are actively marketed to people principal in a development at the time the authority with mobility impairments including HCV holders in reported such development to the IRS for noncompliance accordance with a plan submitted as part of the that has not been corrected by the time a Form 8823 is application for credits. (30 points) filed by the authority. (minus 15 points for a period of three years after the time the authority filed Form 8823) g. Any nonelderly development in which 4.0% of the units (i) conform to ADAAG requirements as set forth in the e. Beginning January 1, 2003, any applicant that includes Virginia building code as BOCA Chapter 11 (13 VAC 5- a principal that is or was a principal in a development that 61); and (ii) are actively marketed to people with mobility (i) did not build a development as represented in the impairments in accordance with a plan submitted as part application for credit (minus 20 points for a period of three of the application for credits. (15 points) years after the development is placed in service, in addition to any other penalties the authority may seek 4. Tenant population characteristics. under its agreements with the applicant), or (ii) has a a. Commitment by the applicant to lease low-income reservation of credits terminated by the authority (minus housing units in the proposed development to either: (i) 10 points a period of three years after the credits are 55 or over housing as defined by the United States Fair returned to the authority). Housing Act or (ii) physically or mentally disabled 6. Efficient use of resources. persons. Applicants committing to serve physically disabled persons must meet the requirements of the a. The percentage by which the total of the amount of federal Americans with Disabilities Act (42 USC § 12101 credits per low-income housing unit (the "per unit credit et seq.). Applicants receiving points under this subdivision amount") of the proposed development is less than the a may not receive points under subdivision b below. (30 standard per unit credit amounts established by the points) executive director for a given unit type, based upon the number of such unit types in the proposed development. b. a. Commitment by the applicant to give a leasing (180 points multiplied by the percentage by which the preference to individuals and families with children in total amount of the per unit credit amount of the proposed developments that will have no more than 20% of its units development is less than the applicable standard per unit with one bedroom or less. Applicants receiving points credit amount established by the executive director, under this subdivision b may not receive points under negative points will be assessed using the percentage by subdivision a above. (15 points; plus 0.75 points for each which the total amount of the per unit credit amount of the percent of the low-income units in the development with proposed development exceeds the applicable standard three or more bedrooms up to an additional 15 points for per unit credit amount established by the executive a total of no more than 30 points under this subdivision b director.) a) b. The percentage by which the cost per low-income c. b. Commitment by the applicant to provide relocation housing unit (the "per unit cost"), adjusted by the authority assistance to displaced households at such level required for location, of the proposed development is less than the by the authority. (30 points times the number of certified standard per unit cost amounts established by the occupied units divided by the greater of (i) the number of executive director for a given unit type, based upon the certified occupied units or (ii) the number of units of the number of such unit types in the proposed development. proposed development) (75 points multiplied by the percentage by which the total 5. Sponsor characteristics. amount of the per unit cost of the proposed development is less than the applicable standard per unit cost amount a. Evidence that the development team principal or established by the executive director director.) principals for the proposed development has have developed at least three tax credit developments that The executive director may use a standard per square contain at least three times the demonstrated experience, foot credit amount and a standard per square foot cost qualifications and ability to perform number of housing amount in establishing the per unit credit amount and the units in the proposed development. (50 points; applicants per unit cost amount in subdivision 6 above. For the receiving points under this subdivision 5(a) are not purpose of calculating the points to be assigned pursuant eligible for points under subdivision 1a above) to such subdivisions 3c and 6 above, all credit amounts shall include any credits previously allocated to the b. Evidence that the principal or principals for the development, and the per unit credit amount for any proposed development have developed at least one tax building documented by the applicant to be located in a credit development that contains at least the number of qualified census tract or difficult development area (such housing units in the proposed development. (10 points) tract or area being as defined in the IRC) shall be

determined based upon 100% of the eligible basis of such or right of first refusal immediately after the low-income building, in the case of new construction, or 100% of the housing commitment described in 13 VAC 10-180-70 and rehabilitation expenditures, in the case of rehabilitation of give the qualified nonprofit veto power over any an existing building, notwithstanding any use by the refinancings refinancing of the development. Applicants applicant of 130% of such eligible basis or rehabilitation receiving points under this subdivision d may not receive expenditures in determining the amount of credits as bonus points under subdivision c above. (60 points; plus provided in the IRC. 5 points if the local housing authority or qualified nonprofit organization submits a homeownership plan satisfactory 7. Bonus points. to the authority in which the local housing authority or a. Commitment by the applicant to impose income limits qualified nonprofit organization commits to sell the units in on the low-income housing units throughout the extended the development to tenants whose incomes shall not use period (as defined in the IRC) below those required exceed the applicable income limit at the time of their by the IRC in order for the development to be a qualified initial occupancy of such units.) low-income development. Applicants receiving points In calculating the points for subdivisions 7(a) and (b) above, under this subdivision a may not receive points under any units in the proposed development required by the locality subdivision b below. (The product of (i) 50 points to exceed 60% of the area median gross income will not be multiplied by (ii) the percentage of housing units in the considered when calculating the percentage of low-income proposed development both rent restricted to and units of the proposed development with incomes below those occupied by households at or below 50% of the area required by the IRC in order for the development to be a median gross income; plus 1 point for each percentage qualified low-income development, provided that the locality point of such housing units in the proposed development submits evidence satisfactory to the authority of such which are further restricted to rents at or below 30% of requirement. 40% of the area median gross income up to an additional 10 points.) After points have been assigned to each application in the manner described above, the executive director shall compute b. Commitment by the applicant to impose rent limits on the total number of points assigned to each such application. the low-income housing units throughout the extended Notwithstanding any other provisions herein, any application use period (as defined in the IRC) below those required that is assigned a total number of points less than a threshold by the IRC in order for the development to be a qualified amount of 450 (375 points for developments financed with low-income development. Applicants receiving points tax-exempt bonds) points shall be rejected from further under this subdivision b may not receive points under consideration hereunder and shall not be eligible for any subdivision a above. (The product of (i) 25 points (50 reservation or allocation of credits. points for proposed developments in low-income jurisdictions) multiplied by (ii) the percentage of housing The executive director may exclude and disregard any units in the proposed development rent restricted to application which he determines is not submitted in good faith households at or below 50% of the area median gross or which he determines would not be financially feasible. income; plus 1 point for each percentage point of such housing units in the proposed development which are Upon assignment of points to all of the applications, the further restricted to rents at or below 30% of 40% of the executive director shall rank the applications based on the area median gross income up to an additional 10 points.) number of points so assigned. If any pools shall have been established, each application shall be assigned to a pool and, c. Commitment by the applicant to maintain the if any, to the appropriate tier within such pool and shall be low-income housing units in the development as a ranked within such pool or tier, if any. The amount of credits qualified low-income housing development beyond the made available to each pool will be determined by the 30-year extended use period (as defined in the IRC). executive director. Available credits will include unreserved Applicants receiving points under this subdivision c may per capita dollar amount credits from the current calendar not receive bonus points under subdivision d below. (40 year under § 42(h)(3)(C)(i) of the IRC, any unreserved per points for a 10-year commitment beyond the 30-year capita credits from previous calendar years, and credits extended use period or 50 points for a 20-year returned to the authority prior to the final ranking of the commitment beyond the 30-year extended use period.) applications and may include up to 15% of next calendar year’s per capita credits as shall be determined by the d. Participation by a local housing authority or qualified executive director. Those applications assigned more points nonprofit organization (substantially based or active in the shall be ranked higher than those applications assigned fewer community with at least a 10% ownership interest in the points. However, if any set-asides established by the general partnership interest of the partnership) and a executive director cannot be satisfied after ranking the commitment by the applicant to sell the proposed applications based on the number of points, the executive development pursuant to an executed, recordable option director may rank as many applications as necessary to meet or right of first refusal to such local housing authority or the requirements of such set-aside (selecting the highest qualified nonprofit organization or to a wholly owned ranked application, or applications, meeting the requirements subsidiary of such organization or authority, at the end of of the set-aside) over applications with more points. the 15-year compliance period, as defined by IRC, for a price not to exceed the outstanding debt and exit taxes of In the event of a tie in the number of points assigned to two or the for-profit entity. The applicant must record such option more applications within the same pool, or, if none, within the

Volume 19, Issue 2 Virginia Register of Regulations Monday, October 7, 2002 9 Proposed Regulations state Commonwealth, and in the event that the amount of consider the development to be a part of a larger credits available for reservation to such applications is development. In such a case, the executive director may determined by the executive director to be insufficient for the consider, examine, review and establish any or all of the financial feasibility of all of the developments described foregoing items as to the larger development in making such therein, the authority shall, to the extent necessary to fully determination for the development. utilize the amount of credits available for reservation within such pool or, if none, within the Commonwealth, select one or At such time or times during each calendar year as the more of the applications with the highest combination of points executive director shall designate, the executive director shall from subdivision 2(c)(ii) and subdivision 7 above, and each reserve credits to applications in descending order of ranking application so selected shall receive (in order based upon the within each pool and tier, if applicable, until either substantially number of such points, beginning with the application with the all credits therein are reserved or all qualified applications highest number of such points) a reservation of credits in the therein have received reservations. (For the purpose of the lesser of the full amount determined by the executive director preceding sentence, if there is not more than a de minimis to be permissible hereunder or the amount of credits amount, as determined by the executive director, of credits remaining therefor in such pool or, if none, in the remaining in a pool after reservations have been made, Commonwealth. If two or more of the tied applications receive "substantially all" of the credits in such pool shall be deemed the same number of points from subdivision 2(c)(ii) and to have been reserved.) The executive director may rank the subdivision 7 above and if the amount of credits available for applications within pools at different times for different pools reservation to such tied applications is determined by the and may reserve credits, based on such rankings, one or executive director to be insufficient for the financial feasibility more times with respect to each pool. The executive director of all the developments described therein, the executive may also establish more than one round of review and ranking director shall select one or more of such applications by lot, of applications and reservation of credits based on such and each application so selected by lot shall receive (in order rankings, and he shall designate the amount of credits to be of such selection by lot) the lesser of the full amount made available for reservation within each pool during each determined by the executive director to be permissible such round. The amount reserved to each such application hereunder or the amount a reservation of credits remaining shall be equal to the lesser of (i) the amount requested in the therefor in such pool or, if none, in the Commonwealth. application or (ii) an amount determined by the executive director, as of the date of application, to be necessary for the For each application which may receive a reservation of financial feasibility of the development and its viability as a credits, the executive director shall determine the amount, as qualified low-income development throughout the credit period of the date of the deadline for submission of applications for under the IRC; provided, however, that in no event shall the reservation of credits, to be necessary for the financial amount of credits so reserved exceed the maximum amount feasibility of the development and its viability as a qualified permissible under the IRC. low-income development throughout the credit period under the IRC. In making this determination, the executive director If the amount of credits available in any pool is determined by shall consider the sources and uses of the funds, the available the executive director to be insufficient for the financial federal, state and local subsidies committed to the feasibility of the proposed development to which such development, the total financing planned for the development available credits are to be reserved, the executive director as well as the investment proceeds or receipts expected by may (i) permit the applicant to modify such proposed the authority to be generated with respect to the development, development and his application so as to achieve financial and the percentage of the credit dollar amount used for feasibility based upon the amount of such available credits, development costs other than the costs of intermediaries. He provided that the available credits represent at least 70% of shall also examine the development's costs, including the feasible credit amount established by the executive developer's fees and other amounts in the application, for director and the applicant's development, as modified, will reasonableness and, if he determines that such costs or other produce at least 75% of the units and bedrooms described in amounts are unreasonably high, he shall reduce them to the application for the proposed development, or (ii) move the amounts that he determines to be reasonable. The executive proposed development and the credits available to another director shall review the applicant's projected rental income, pool. Any modifications shall be subject to the approval of the operating expenses and debt service for the credit period. The executive director; however, in no event shall such executive director may establish such criteria and modifications result in a material reduction in the number of assumptions as he shall deem reasonable for the purpose of points assigned to the application pursuant to this section. If making such determination, including, without limitation, any credits remain in any pool after accepting any criteria as to the reasonableness of fees and profits and modifications to an applicant's proposed development or assumptions as to the amount of net syndication proceeds to moving proposed developments and credits to another pool, be received (based upon such percentage of the credit dollar the executive director may for developments that meet the amount used for development costs, other than the costs of requirements of § 42(h)(1)(E) of the IRC only, reserve the intermediaries, as the executive director shall determine to be remaining credits to any proposed development(s) scoring at reasonable for the proposed development), increases in the or above the minimum point threshold established by this market value of the development, and increases in operating chapter without regard to the ranking of such application and expenses, rental income and, in the case of applications any development modified pursuant to the provisions of this without firm financing commitments (as defined hereinabove) paragraph. If necessary, the executive director may, for at fixed interest rates, debt service on the proposed mortgage developments which meet the requirements of § 42(h)(1)(E) of loan. The executive director may, if he deems it appropriate, the IRC only, reserve with additional credits from the

Commonwealth's annual state housing credit ceiling for the application for which credits were awarded in any prior credit following year in such an amount necessary for the financial year, the executive director shall determine whether the feasibility of the proposed development, or developments. applicants were related as of the date of the filing of such prior However, the reservation of credits from the Commonwealth's credit year's application or within three years prior thereto and annual state housing credit ceiling for the following year shall shall not consider any relationships or any changes in be in the reasonable discretion of the executive director if he relationships subsequent to such date. Substantial determines it to be in the best interest of the plan. In the event relationships shall include, but not be limited to, the following a reservation or an allocation of credits from the current year relationships (in each of the following relationships, the or a prior year is reduced, terminated or cancelled, the persons or entities involved in the relationship are deemed to executive director may substitute such credits for any credits be related to each other): reserved from the following year's annual state housing credit ceiling. (i) the persons are in the same immediate family (including, without limitation, a spouse, children, parents, In the event that during any round of application review and grandparents, grandchildren, brothers, sisters, uncles, ranking the amount of credits reserved within any pools is less aunts, nieces, and nephews) and are living in the same than the total amount of credits made available therein during household; (ii) the entities have one or more common such round, the executive director may either (i) leave such general partners or members (including related persons and unreserved credits in such pools for reservation and allocation entities), or the entities have one or more common owners in any subsequent round or rounds or (ii) redistribute such that (by themselves or together with any other related unreserved credits to such other pool or pools as the persons and entities) have, in the aggregate, 5.0% or more executive director may designate or (iii) carry over such ownership interest in each entity; (iii) the entities are under unreserved credits to the next succeeding calendar year for the common control (e.g., the same person or persons and inclusion in the state housing credit ceiling (as defined in any related persons serve as a majority of the voting § 42(h)(3)(C) of the IRC) for such year. members of the boards of such entities or as chief executive officers of such entities) of one or more persons or entities Notwithstanding anything contained herein, the total amount (including related persons and entities); (iv) the person is a of credits that may be awarded in any credit year after credit general partner, member or employee in the entity or is an year 2001 to any applicant or to any related applicants for one owner (by himself or together with any other related persons or more developments shall not exceed 10 15% of Virginia's and entities) of 5.0% or more ownership interest in the per capita dollar amount of credits for such credit year (the entity; (v) the entity is a general partner or member in the "credit cap"). However, if the amount of credits to be reserved other entity or is an owner (by itself or together with any in any such credit year to all applications assigned a total other related persons and entities) of 5.0% or more number of points at or above the threshold amount set forth ownership interest in the other entity; or (vi) the person or above shall be less than Virginia's dollar amount of credits entity is otherwise controlled, in whole or in part, by the available for such credit year, then the authority's board of other person or entity. In determining compliance with the commissioners may waive the credit cap to the extent it credit cap with respect to any application, the executive deems necessary to reserve credits in an amount at least director may exclude any person or entity related to the equal to such dollar amount of credits. Applicants shall be applicant or to any principal in such applicant if the deemed to be related if any principal in an applicant a executive director determines that (i) such person or entity proposed development or any person or entity related to the will not participate, directly or indirectly, in matters relating applicant or principal is will be a principal in any other to the applicant or the ownership of the development to be applicant proposed development or applicants developments. assisted by the credits for which the application is A principal is For purposes of this paragraph, a general submitted, (ii) such person or entity has no agreement or partner or other principal shall also include any person or understanding relating to such application or the tax credits entity who, in the determination of the executive director, has requested therein, and (iii) such person or entity will not exercised or will exercise, directly or indirectly, substantial receive a financial benefit from the tax credits requested in control over the applicant or has performed or will perform (or the application. A limited partner or other similar investor has assisted or will assist the applicant in the performance of), shall not be determined to be a principal and shall be directly or indirectly, substantial responsibilities or functions excluded from the determination of related persons or customarily performed by an applicant applicants with respect entities unless the executive director shall determine that to an application applications or a development developments. such limited partner or investor will, directly or indirectly, For the purpose of determining whether any person or entity is exercise control over the applicant or participate in matters related to the applicant or principal, persons or entities shall relating to the ownership of the development substantially be deemed to be related if the executive director determines beyond the degree of control or participation that is usual that any substantial relationship existed, either directly and customary for limited partners or other similar investors between them or indirectly through a series of one or more with respect to developments assisted by the credits. If the substantial relationships (e.g., if party A has a substantial award of multiple applications of any applicant or related relationship with party B and if party B has a substantial applicants in any credit year shall cause the credit cap to be relationship with party C, then A has a substantial relationship exceeded, such applicant or applicants shall, upon notice with both party B and party C), at any time within three years from the authority, jointly designate those applications for of the filing of the application for the credits. In determining in which credits are not to be reserved or are to be reserved in any credit year whether an applicant has a substantial an amount less than the amount requested in the relationship with another applicant with respect to any application (if the amount of credits to be reserved for any

application is to be so reduced, the applicant may modify shows adequate demand for the housing units to be produced the proposed development and the application to achieve by each applicant's proposed development. financial feasibility based upon the amount of the credits as so reduced; provided, however, that the credits may not be If credits are reserved to any applicants for developments reduced to less than 70% of the amount of credits which have also received an allocation of credits from prior requested in the application and may not be reduced so as years, the executive director may reserve additional credits to produce fewer than 75% of the number of units or from the current year equal to the amount of credits allocated bedrooms proposed in the application) so that such to such developments from prior years, provided such limitation shall not be exceeded. Such notice shall specify previously allocated credits are returned to the authority. Any the date by which such designation shall be made. In the previously allocated credits returned to the authority under absence of any such designation by the date specified in such circumstances shall be placed into the credit pools from such notice, the executive director shall make such which the current year's credits are reserved to such designation as he shall determine to best serve the interests applicants. of the program. Each applicant and each principal therein The executive director shall make a written explanation shall make such certifications, shall disclose such facts and available to the general public for any allocation of housing shall submit such documents to the authority as the credit dollar amount which is not made in accordance with executive director may require to determine compliance with established priorities and selection criteria of the authority. credit cap. If an applicant or any principal therein makes any misrepresentation to the authority concerning such The authority's board shall review and consider the analysis applicant's or principal's relationship with any other person and recommendation of the executive director for the or entity, the executive director may reject any or all of such reservation of credits to an applicant, and, if it concurs with applicant's pending applications for reservation or allocation such recommendation, it shall by resolution ratify the of credits, may terminate any or all reservations of credits to reservation by the executive director of the credits to the the applicant, and may prohibit such applicant, the applicant, subject to such terms and conditions as it shall principals therein and any persons and entities then or deem necessary or appropriate to assure compliance with the thereafter having a substantial relationship (in the aforementioned binding commitment issued or to be issued to determination of the executive director as described above) the applicant, the IRC and this chapter. If the board with the applicant or any principal therein from submitting determines not to ratify a reservation of credits or to establish applications for credits for such period of time as the any such terms and conditions, the executive director shall so executive director shall determine. notify the applicant. Notwithstanding anything above, the authority will treat local Subsequent to such ratification of the reservation of credits, housing authorities or qualified nonprofit organizations as the the executive director may, in his discretion and without only principal in an application in which such local housing ratification or approval by the board, increase the amount of authority or qualified nonprofit organization owns, directly or such reservation by an amount not to exceed 10% of the initial indirectly, at least 50% of the general partnership interest in reservation amount. The executive director may require the the ownership entity of the proposed development and such applicant to make a good faith deposit or to execute such local housing authority or qualified nonprofit organization, or contractual agreements providing for monetary or other wholly-owned subsidiary thereof, will purchase the proposed remedies as it may require, or both, to assure that the development at the end of the compliance period. applicant will comply with all requirements under the IRC, this chapter and the binding commitment (including, without Within a reasonable time after credits are reserved to any limitation, any requirement to conform to all of the applicants' applications, the executive director shall notify representations, commitments and information contained in each applicant for such reservations of credits either of the the application for which points were assigned pursuant to this amount of credits reserved to such applicant's application (by section). Upon satisfaction of all such aforementioned issuing to such applicant a written binding commitment to requirements (including any post-allocation requirements), allocate such reserved credits subject to such terms and such deposit shall be refunded to the applicant or such conditions as may be imposed by the executive director contractual agreements shall terminate, or both, as applicable. therein, by the IRC and by this chapter) or, as applicable, that the applicant's application has been rejected or excluded or If, as of the date the application is approved by the executive has otherwise not been reserved credits in accordance director, the applicant is entitled to an allocation of the credits herewith. The written binding commitment shall prohibit any under the IRC, this chapter and the terms of any binding transfer, direct or indirect, of partnership interests (except commitment that the authority would have otherwise issued to those involving the admission of limited partners) prior to the such applicant, the executive director may at that time allocate placed-in-service date of the proposed development unless the credits to such qualified low-income buildings or the transfer is consented to by the executive director. The development without first providing a reservation of such written binding commitment shall further limit the developers' credits. This provision in no way limits the authority of the fees to the amounts established during the review of the executive director to require a good faith deposit or applications for reservation of credits and such amounts shall contractual agreement, or both, as described in the preceding not be increased unless consented to by the executive paragraph, nor to relieve the applicant from any other director. The executive director shall, as a condition to the requirements hereunder for eligibility for an allocation of binding commitment, require each applicant to obtain a market credits. Any such allocation shall be subject to ratification by study, in form and substance satisfactory to the authority, that

Volume 19, Issue 2 Virginia Register of Regulations Monday, October 7, 2002 12 Proposed Regulations the board in the same manner as provided above with respect allocation of credits as he shall deem necessary or desirable to reservations. to allow the authority sufficient time, in the event of a reduction or termination of the applicant's reservation, to reserve such The executive director may require that applicants to whom credits to other eligible applications and to allocate such credits have been reserved shall submit from time to time or at credits pursuant thereto. such specified times as he shall require, written confirmation and documentation as to the status of the proposed Any material changes to the development, as proposed in the development and its compliance with the application, the application, occurring subsequent to the submission of the binding commitment and any contractual agreements between application for the credits therefor shall be subject to the prior the applicant and the authority. If on the basis of such written written approval of the executive director. As a condition to confirmation and documentation as the executive director any such approval, the executive director may, as necessary shall have received in response to such a request, or on the to comply with this chapter, the IRC, the binding commitment basis of such other available information, or both, the and any other contractual agreement between the authority executive director determines any or all of the buildings in the and the applicant, reduce the amount of credits applied for or development which were to become qualified low-income reserved or impose additional terms and conditions with buildings will not do so within the time period required by the respect thereto. If such changes are made without the prior IRC or will not otherwise qualify for such credits under the written approval of the executive director, he may terminate or IRC, this chapter or the binding commitment, then the reduce the reservation of such credits, impose additional executive director may terminate the reservation of such terms and conditions with respect thereto, seek to enforce any credits and draw on any good faith deposit. If, in lieu of or in contractual remedies to which the authority may then be addition to the foregoing determination, the executive director entitled, draw on any good faith deposit, or any combination of determines that any contractual agreements between the the foregoing. applicant and the authority have been breached by the applicant, whether before or after allocation of the credits, he In the event that any reservation of credits is terminated or may seek to enforce any and all remedies to which the reduced by the executive director under this section, he may authority may then be entitled under such contractual reserve, allocate or carry over, as applicable, such credits in agreements. such manner as he shall determine consistent with the requirements of the IRC and this chapter. The executive director may establish such deadlines for VA.R. Doc. No. R03-24; Filed September 16, 2002, 3:32 p.m. determining the ability of the applicant to qualify for an

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