Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Rule 109.00.17-001 - Guidelines for Reserving Volume Cap for Mulit-Family Housing Bonds

Current through Register Vol. 49, No. 6, June, 2024
109.04.2-VI Fees.
A. APPLICATION FEE. A Five Hundred Dollar
		  ($500) non-refundable application fee is payable at the time an application is
		  submitted to ADFA. Applications submitted without the application fee will be
		  considered incomplete,
B. ISSUANCE
		  FEE (ADFA ISSUES ONLY), A one-time fee of 0.5%, based on the principal amount
		  of bonds issued, is payable at the bond closing for bonds with a maturity date
		  of five (5) years or less,
An annual fee of 0.125%, based on the principal amount of bonds
			 issued, is payable on October 1 of each year the bonds remain outstanding for
			 bonds with a maturity date in excess of five (5) years.
C. LOW-INCOME HOUSING TAX CREDITS ("LIHTC")
		  FEES.
1. RESERVATION OF CREDIT FEE. A
		  non-refundable reservation fee of One Hundred Dollars ($100) per low-income
		  unit will be required at the bond closing.
2. AWARD OF CREDIT FEE. An award of credit
		  fee of One Hundred Fifty Dollars ($150) per low-income unit will be required at
		  the time the credits are awarded (at issuance of IRS Form 8609).
3. COMPLIANCE/MONITORING FEE. A compliance
		  and monitoring fee of six percent (6%) of the amount of annual credits is
		  required to be paid at the time the credits are awarded (at issuance of IRS
		  Form 8609). In addition, a monitoring fee of $50 per low-income housing tax
		  credit unit inspected will be owed to the Authority following any on-site
		  compliance and monitoring inspection conducted by the Authority during the
		  extended period following the close of the 15-year compliance period.
Summary of Proposed Rule
The purpose of the proposed rule is to allow the issuance of
			 short-term bonds for the development of affordable, multi-family residential
			 rental developments. It is necessary because short-term bonds are the only
			 financially feasible vehicle that can generate the equity needed to
			 rehabilitate affordable rental complexes which have more than seventy-five (75)
			 units. ADFA's Housing Department is allocated roughly $30 million in volume cap
			 each year for the issuance of tax-exempt multi-family bonds. ADFA has not
			 issued multi-family bonds in nearly a decade. The cause for the lack of
			 issuances is existing language in the Guidelines that restricts the use of
			 multi-family bonds only for permanent financing. This language was incorporated
			 into the Guidelines when market conditions caused high demand for tax-exempt
			 private activity bond volume cap. The current market conditions are starkly
			 different. There is little demand for tax-exempt bonds; therefore, little
			 demand for tax-exempt multi-family bonds for the purposes of permanent
			 financing, This means the tax-exempt private activity bond volume cap for
			 Arkansas has gone untapped.
The proposed rule addresses two items. First, it removes language
			 that restricts the use of multi-family bonds only for permanent financing.
			 Second, it provides for a new issuance fee structure if a bond's maturity date
			 is five years or less. Adopting this proposed rule will allow ADFA to issue
			 short-term bonds. These bonds will be outstanding for the duration of the
			 construction/reconstruction period and subsequently paid off by the
			 applicant,