• Hannah Kamath

Public Comments: Proposed Year 2022-2023 Housing Tax Credit (HTC) program documents

From the City of Minneapolis

The City of Minneapolis is preparing the 2022-2023 Housing Tax Credit (HTC) Qualified Allocation Plan (QAP) and Procedural Manual for release later this spring. The program’s purpose is to help finance the production, preservation, or stabilization of affordable rental housing projects located in Minneapolis, through the Federal HTC program. View the draft QAP and Procedural Manual. All the proposed changes (both substantive and administrative) are listed below and are noted in “track changes” mode in the draft documents. Additional context for two of the more substantive policy additions/changes is provided below.

  1. Addition of Equitable Development points

A new equitable development scoring criterion is proposed for projects that demonstrate a commitment to equity and inclusion through meaningfully involving community members most affected by housing instability and housing disparities to inform the project proposal. The proposal must also demonstrate how the project is responsive to the needs of communities most impacted by housing instability and disparities and prevent unwanted displacement. This criterion matches new scoring included in Minnesota Housing’s Qualified Allocation Plan. More information is available in Attachment 1 of the QAP.

  1. Continue evaluating cost reasonableness through use of Minnesota Housing’s Predictive Cost model and eliminate separate cost containment points that disincentivize housing production that meets important needs and goals

Cost containment remains a guiding principle, given great need for affordable rental housing and constrained resources, and continues to be incentivized, required through IRS code requirements and bond volume cap limits, and evaluated throughout project underwriting and selection. Elimination of this point category allows cost containment principles to better account for necessary factors related to City priorities of serving larger families, expanding the geographic distribution of affordable housing, increasing the energy efficiency and sustainability of housing, and supporting long term affordability by considering long term cost savings as opposed to only the cost of construction. Minnesota Housing has also moved away from this scoring criterion and is no longer publishing the cost containment benchmarks on which the City has historically relied to execute this point category.

Changes to the 2022-2023 Housing Tax Credit Qualified Allocation Plan (QAP)

  • General: A two-year QAP is proposed

  • Article VII – F: Require a minimum affordability period of 30 years and waiver of Qualified Contract requirements for new 4% HTC applications.

  • Article VII: Change minimum point threshold for 4% HTC projects to 30 points.

  • Attachment 1 - Selection Criteria - 9% Tax Credits:

  • A1 and previous A3: Combine homelessness and supportive housing scoring criteria, add minimum threshold requirements, and create a unit range

  • A2: Clarify non-profit participation language

  • Previous A9/new A8: Increase lowest point category from one to three years

  • Previous A14: Remove Cost Containment scoring criterion

  • New A13: Create new Equitable Development scoring criterion

  • Attachment 3 - Selection Criteria - 4% Tax Credits:

  • General: Reset scoring minimum threshold and add ‘has an existing City funding award’ to selection criteria priorities

  • 2: Reset long-term affordability scoring criterion for 40 or more years of affordability restrictions

  • 7: Clarify non-profit participation language

  • Previous 9: Delete Cost Containment scoring criterion

  • New 9: Create a new scoring criterion to incentivize 30% AMI and below units in 4% HTC projects

Changes to the 2022-2023 Housing Tax Credit Procedural Manual:

  • Section III – E: Delete Cost Containment category from Unacceptable Practices and create a new Displacement of Tenants in Non-HUD-Assisted Units in Acquisition/Rehabilitation Projects category.

  • Section III – new K: Permit non-awarded applicants to the Year 2022 9% NOFA the ability to use Census-tract-based maps from the Year 2022 9% NOFA for purposes of the Year 2023 9% NOFA. Census tract boundaries are expected to be updated by the Census Bureau later in 2021. An updated ACP50 map is included with the draft documents for public review.

  • Section III – new M: Reset scoring minimum threshold and add ‘has an existing City funding award’ to selection criteria priorities

  • Section IV – D: Delete language regarding project-based rental assistance from the Average Income minimum set-aside.

  • Section IV – G: Add new language prohibiting leasing of HTC units to related parties.

  • Section IV – K: Require a minimum affordability period of 30 years and waiver of Qualified Contract requirements for new 4% HTC applications. Deletion of similar reference language from prior years’ HTC Manuals.

  • Section VII – Submission Requirements: Minneapolis will transition to the 2021 Green Communities Overlay (in coordination with MN Housing) with this proposed QAP update.

Comments regarding these proposed changes are being accepted until May 2, 2021 at 4:00 p.m., CDT. Deliver written comments or e-mail to:

City of Minneapolis – CPED Residential Finance Attn: Amy Geisler 505 4th Avenue South, Suite 320 Minneapolis MN 55415 612-673-5038

Amy.Geisler@minneapolismn.gov

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