Virginia Administrative Code › Title 13 - HOUSING › Agency 10 - VIRGINIA HOUSING DEVELOPMENT AUTHORITY › Chapter 180 - RULES AND REGULATIONS FOR ALLOCATION OF LOW-INCOME HOUSING TAX CREDITS › Section 13VAC10-180-70 - Allocation of credits

Current through Register Vol. 40, No. 24, July 15, 2024
At such time as one or more of an applicant's buildings or an
				  applicant's development which has received a reservation of credits is (i)
				  placed in service or satisfies the requirements of § 42(h)(1)(E) of the
				  IRC and (ii) meets all of the preallocation requirements of this chapter, the
				  binding commitment and any other applicable contractual agreements between the
				  applicant and the authority, the applicant shall so advise the authority, shall
				  request the allocation of all of the credits so reserved or such portion
				  thereof to which the applicant's buildings or development is then entitled
				  under the IRC, this chapter, the binding commitment and the aforementioned
				  contractual agreements, if any, and shall submit such application,
				  certifications (including an independent certified public accountant's
				  certification of applicant's actual cost and an independent certified public
				  accountant's certification of the general contractor's actual costs), legal and
				  accounting opinions, evidence as to costs, a breakdown of sources and uses of
				  funds, pro forma financial statements setting forth anticipated cash flows, and
				  other documentation as the executive director shall require in order to
				  determine that the applicant's buildings or development is entitled to such
				  credits as described above. The applicant shall certify to the authority the
				  full extent of all federal, state and local subsidies which apply (or which the
				  applicant expects to apply) with respect to the buildings or the
				  development.
As of the date of allocation of credits to any building or
				  development and as of the date such building or such development is placed in
				  service, the executive director shall determine the amount of credits to be
				  necessary for the financial feasibility of the development and its viability as
				  a qualified low-income housing development throughout the credit period under
				  the IRC. In making such determinations, the executive director shall consider
				  the sources and uses of the funds, the available federal, state and local
				  subsidies committed to the development, the total financing planned for the
				  development as well as the investment proceeds or receipts expected by the
				  authority to be generated with respect to the development and the percentage of
				  the credit dollar amount used for development costs other than the costs of
				  intermediaries. He shall also examine the development's costs, including
				  developer's fees and other amounts in the application, for reasonableness and,
				  if he determines that such costs or other amounts are unreasonably high, he
				  shall reduce them to amounts that he determines to be reasonable. The executive
				  director shall review the applicant's projected rental income, operating
				  expenses and debt service for the credit period. The executive director may
				  establish such criteria and assumptions as he shall then deem reasonable (or he
				  may apply the criteria and assumptions he established pursuant to
				  13VAC10-180-60
				  ) for the purpose of making such determinations, including criteria as to the
				  reasonableness of fees and profits and assumptions as to the amount of net
				  syndication proceeds to be received (based upon such percentage of the credit
				  dollar amount used for development costs, other than the costs of
				  intermediaries, as the executive director shall determine to be reasonable for
				  the proposed development), increases in the market value of the development,
				  and increases in operating expenses, rental income and, in the case of
				  applications without firm financing commitments (as defined in
				  13VAC10-180-60
				  ) at fixed interest rates, debt service on the proposed mortgage loan. The
				  amount of credits allocated to the applicant shall in no event exceed such
				  amount as so determined by the executive director by more than a de minimis
				  amount of not more than $100.
Prior to allocating credits to an applicant, the executive
				  director shall require the applicant to execute and deliver to the authority a
				  valid IRS Form 8821, Tax Information Authorization, naming the authority as the
				  appointee to receive tax information. The Forms 8821 of all applicants will be
				  forwarded to the IRS, which will authorize the IRS to furnish the authority
				  with all IRS information pertaining to the applicants' developments, including
				  audit findings and assessments.
Prior to allocating the credits to an applicant, the
				  executive director shall require the applicant to execute, deliver and record
				  among the land records of the appropriate jurisdiction or jurisdictions an
				  extended low-income housing commitment in accordance with the requirements of
				  the IRC. Such commitment shall require that the applicable fraction (as defined
				  in the IRC) for the buildings for each taxable year in the extended use period
				  (as defined in the IRC) will not be less than the applicable fraction specified
				  in such commitment and which prohibits both (i) the eviction or the termination
				  of tenancy (other than for good cause) of an existing tenant of a low-income
				  unit and (ii) any increase in the gross rent with respect to such unit not
				  otherwise permitted under the IRC. The amount of credits allocated to any
				  building shall not exceed the amount necessary to support such applicable
				  fraction, including any increase thereto pursuant to § 42(f)(3) of the IRC
				  reflected in an amendment to such commitment. The commitment shall provide that
				  the extended use period will end on the day 15 years after the close of the
				  compliance period (as defined in the IRC) or on the last day of any longer
				  period of time specified in the application during which low-income housing
				  units in the development will be occupied by tenants with incomes not in excess
				  of the applicable income limitations; provided, however, that the extended use
				  period for any building shall be subject to termination, in accordance with the
				  IRC, on the date the building is acquired by foreclosure or instrument in lieu
				  thereof unless a determination is made pursuant to the IRC that such
				  acquisition is part of an agreement with the current owner thereof, a purpose
				  of which is to terminate such period . In addition, such termination shall not
				  be construed to permit, prior to close of the three-year period following such
				  termination, the eviction or termination of tenancy of any existing tenant of
				  any low-income housing unit other than for good cause or any increase in the
				  gross rents over the maximum rent levels then permitted by the IRC with respect
				  to such low-income housing units. Such commitment shall contain a waiver of the
				  applicant's right to pursue a qualified contract. Such commitment shall also
				  contain such other terms and conditions as the executive director may deem
				  necessary or appropriate to assure that the applicant and the development
				  conform to the representations, commitments and information in the application
				  and comply with the requirements of the IRC and this chapter. Such commitment
				  shall be a restrictive covenant on the buildings binding on all successors to
				  the applicant and shall be enforceable in any state court of competent
				  jurisdiction by individuals (whether prospective, present or former occupants)
				  who meet the applicable income limitations under the IRC.
In accordance with the IRC, the executive director may, for
				  any calendar year during the project period (as defined in the IRC), allocate
				  credits to a development, as a whole, which contains more than one building.
				  Such an allocation shall apply only to buildings placed in service during or
				  prior to the end of the second calendar year after the calendar year in which
				  such allocation is made, and the portion of such allocation allocated to any
				  building shall be specified not later than the close of the calendar year in
				  which such building is placed in service. Any such allocation shall be subject
				  to satisfaction of all requirements under the IRC.
If the executive director determines that the buildings or
				  development is so entitled to the credits, he shall allocate the credits (or
				  such portion thereof to which he deems the buildings or the development to be
				  entitled) to the applicant's qualified low-income buildings or to the
				  applicant's development in accordance with the requirements of the IRC. If the
				  executive director shall determine that the applicant's buildings or
				  development is not so entitled to the credits, he shall not allocate the
				  credits and shall so notify the applicant within a reasonable time after such
				  determination is made. In the event that any such applicant shall not request
				  an allocation of all of its reserved credits or whose buildings or development
				  shall be deemed by the executive director not to be entitled to any or all of
				  its reserved credits, the executive director may reserve or allocate, as
				  applicable, such unallocated credits to the buildings or developments of other
				  qualified applicants at such time or times and in such manner as he shall
				  determine consistent with the requirements of the IRC and this chapter.
The executive director may prescribe (i) such deadlines for
				  submissions of requests for allocations of credits for any calendar year as he
				  deems necessary or desirable to allow sufficient processing time for the
				  authority to make such allocations within such calendar year and (ii) such
				  deadlines for satisfaction of all preallocation requirements of the IRC the
				  binding commitment, any contractual agreements between the authority and the
				  applicant and this chapter as he deems necessary or desirable to allow the
				  authority sufficient time to allocate to other eligible applicants any credits
				  for which the applicants fail to satisfy such requirements.
The executive director may make the allocation of credits
				  subject to such terms as he may deem necessary or appropriate to assure that
				  the applicant and the development comply with the requirements of the
				  IRC.
The executive director may also (to the extent not already
				  required under
				  13VAC10-180-60
				  ) require that all applicants make such good faith deposits or execute such
				  contractual agreements with the authority as the executive director may require
				  with respect to the credits, (i) to ensure that the buildings or development
				  are completed in accordance with the binding commitment, including all of the
				  representations made in the application for which points were assigned pursuant
				  to 13VAC10-180-60 and(ii) only in the case of any buildings or development
				  which are to receive an allocation of credits hereunder and which are to be
				  placed in service in any future year, to assure that the buildings or the
				  development will be placed in service as a qualified low-income housing project
				  (as defined in the IRC) in accordance with the IRC and that the applicant will
				  otherwise comply with all of the requirements under the IRC.
In the event that the executive director determines that a
				  development for which an allocation of credits is made shall not become a
				  qualified low-income housing project (as defined in the IRC) within the time
				  period required by the IRC or the terms of the allocation or any contractual
				  agreements between the applicant and the authority, the executive director may
				  terminate the allocation and rescind the credits in accordance with the IRC
				  and, in addition, may draw on any good faith deposit and enforce any of the
				  authority's rights and remedies under any contractual agreement. An allocation
				  of credits to an applicant may also be cancelled with the mutual consent of
				  such applicant and the executive director. Upon the termination or cancellation
				  of any credits, the executive director may reserve, allocate or carry over, as
				  applicable, such credits in such manner as he shall determine consistent with
				  the requirements of the IRC and this chapter.
An applicant that demonstrates a legitimate change in
				  circumstances or delay beyond their reasonable control, as determined by the
				  authority, may return a valid reservation of prior years' tax credits between
				  October 1 and December 31 and receive a reservation of the same amount of
				  current or future year tax credits. The authority must determine that the
				  applicant is capable of completing and placing the development in service
				  within the time required by the IRC for such current or future year tax
				  credits. However, none of the principals in the development for which credits
				  are returned and refreshed may be a principal in an application the following
				  calendar year and the applicant must waive the right to a qualified contract,
				  if applicable. The executive director may waive the one-year nonparticipation
				  provision if the executive director determines that the delay in completing the
				  development is materially due to the failure of a governmental entity or agency
				  within a reasonable period of time to take an action necessary for the
				  applicant to complete the development, despite the applicant's good faith best
				  efforts to complete the development.
Statutory Authority: §
											36-55.30:3
					 of the Code of Virginia.