| Applicant's Total Housing
Development Cost. For Competitive Housing Tax Credit Applications,
the Underwriter will adjust an Applicant's cost schedule line item
to meet program rules. Underwriter will not make subsequent adjustments
to the application to meet feasibility requirements as a result of
the initial adjustment required to meet program rules.
(1) Acquisition Costs.
(A) Land, Acquisition and Rehabilitation, Reconstruction,
and Adaptive Reuse Acquisition.
(i) For a non-identity of interest acquisition with
no building acquisition cost in basis or when the acquisition is not
part of the Direct Loan eligible cost and not subject to the appraisal
requirements in the Uniform Relocation Assistance and Act of 1970,
the underwritten acquisition cost will be the amount(s) reflected
in the Site Control document(s) for the Property. At Cost Certification,
the acquisition cost used will be the actual amount paid as verified
by the settlement statement.
(ii) For an identity of interest acquisition or when
required by the Uniform Relocation Assistance and Acquisition Act
of 1970 the underwritten acquisition cost will be the lesser of the
amount reflected in the Site Control documents for the property or
the appraised value as determined by an appraisal that meets the requirements
of §11.304 of this chapter (relating to Appraisal Rules and Guidelines).
An appraisal is not required if the land or building are donated to
the proposed Development, and no costs of acquisition appear on the
Development Cost Schedule. An acquisition will be considered an identity
of interest transaction when an Affiliate of the seller is an Affiliate
of, or a Related Party to, any Owner at any level of the Development
Team or a Related Party lender; and
(I) is the current owner in whole or in part of the
Property as of the first date of the Application Acceptance Period
or the Application Acceptance Date for Direct Loans; or
(II) has or had within the prior 36 months the legal
or beneficial ownership of the property or any portion thereof or
interest therein regardless of ownership percentage, control or profit
participation prior to the first day of the Application Acceptance
Period or in the case of a tax-exempt bond or 4% tax credit application
the Application Date.
(iii) For all identity of interest acquisitions, the
cost used at cost certification will be limited to the acquisition
cost underwritten in the initial Underwriting of the Application.
(iv) In cases where more land will be acquired (by
the Applicant or a Related Party) than will be utilized as the Development
Site and the remainder acreage is not accessible for use by tenants
or dedicated as permanent and maintained green space, the value ascribed
to the proposed Development Site will be prorated based on acreage
from the total cost reflected in the Site Control document(s) or the
appraisal, if an appraisal is required. An appraisal containing segregated
values for the total acreage to be acquired, the acreage for the Development
Site and the remainder acreage may be used by the Underwriter in making
a proration determination based on relative value. The Underwriter
will not utilize a prorated value greater than the total amount in
the Site Control document(s).
(B) USDA Rehabilitation Developments. The underwritten
acquisition cost for developments financed by USDA will be the transfer
value approved by USDA.
(C) Eligible Basis on Acquisition of Buildings. Building
acquisition cost included in Eligible Basis is limited to the appraised
value of the buildings, exclusive of land value, as determined by
an appraisal that meets the requirements of §11.304 of this chapter
(relating to Appraisal Rules and Guidelines). If the acquisition cost
in the Site Control documents is less than the appraised value, Underwriter
will utilize the land value from the appraisal and adjust the building
acquisition cost accordingly.
(2) Off-Site Costs. The Underwriter will only consider
costs of Off-Site Construction that are well documented and certified
to by a Third Party engineer on the required Application forms with
supporting documentation.
(3) Site Work Costs. The Underwriter will only consider
costs of Site Work, including site amenities, that are well documented
and certified to by a Third Party engineer on the required Application
forms with supporting documentation.
(4) Building Costs.
(A) New Construction and Reconstruction. The Underwriter
will use the Marshall and Swift Residential Cost Handbook, other comparable
published Third-Party cost estimating data sources, historical final
cost certifications of previous Housing Tax Credit developments and
other acceptable cost data available to the Underwriter to estimate
Building Cost. Generally, the "Average Quality" multiple, townhouse,
or single family costs, as appropriate, from the Marshall and Swift
Residential Cost Handbook or other comparable published Third-Party
data source, will be used based upon details provided in the Application
and particularly building plans and elevations. Costs for multi- level
parking structures must be supported by a cost estimate from a Third
Party contractor with demonstrated experience in structured parking
construction. The Underwriter will consider amenities, specifications
and development types not included in the Average Quality standard.
The Underwriter may consider a sales tax exemption for nonprofit General
Contractors.
(B) Rehabilitation and Adaptive Reuse.
(i) The Applicant must provide a scope of work and
narrative description of the work to be completed. The narrative should
speak to all Off-Site Construction, Site Work, and building components
including finishes and equipment, and development amenities. The narrative
should be in sufficient detail so that the reader can understand the
work and it must generally be arranged consistent with the line- items
on the SCR Supplement and must also be consistent with the Development
Cost Schedule of the Application.
(ii) The Underwriter will use cost data provided on
the SCR Supplement if adequately described and substantiated in the
SCR report as the basis for estimating Total Housing Development Costs.
(5) Contingency. Total contingency, including any soft
cost contingency, will be limited to a maximum of 7% of Building Cost
plus Site Work and Off-Site Construction for New Construction and
Reconstruction Developments, and 10% of Building Cost plus Site Work
and Off-Site Construction for Rehabilitation and Adaptive Reuse Developments.
For Housing Tax Credit Developments, the percentage is applied to
the sum of the eligible Building Cost, eligible Site Work costs and
eligible Off-Site Construction costs in calculating the eligible contingency
cost.
(6) General Contractor Fee. General Contractor fees
include general requirements, contractor overhead, and contractor
profit. General requirements include, but are not limited to, on-site
supervision or construction management, off-site supervision and overhead,
jobsite security, equipment rental, storage, temporary utilities,
and other indirect costs. General Contractor fees are limited to a
total of 14% on Developments with Hard Costs of $3 million or greater,
the lesser of $420,000 or 16% on Developments with Hard Costs less
than $3 million and greater than $2 million, and the lesser of $320,000
or 18% on Developments with Hard Costs at $2 million or less. Any
contractor fees to Affiliates or Related Party subcontractors regardless
of the percentage of the contract sum in the construction contract
(s) will be treated collectively with the General Contractor Fee limitations.
Any General Contractor fees above this limit will be excluded from
Total Housing Development Costs. For Housing Tax Credit Developments,
the percentages are applied to the sum of the Eligible Hard Costs
in calculating the eligible contractor fees. For Developments also
receiving financing from USDA, the combination of builder's general
requirements, builder's overhead, and builder's profit should not
exceed the lower of TDHCA or USDA requirements. Additional fees for
ineligible costs will be limited to the same percentage of ineligible
Hard Costs but will not be included in Eligible Basis.
(7) Developer Fee.
(A) For Housing Tax Credit Developments, the Developer
Fee included in Eligible Basis cannot exceed 15% of the project's
eligible costs, less Developer Fee, for Developments proposing 50
Units or more and 20% of the project's eligible costs, less Developer
Fee, for Developments proposing 49 Units or less. If the Development
is an additional phase, proposed by any Principal of the existing
tax credit Development, the Developer Fee may not exceed 15%, regardless
of the number of Units.
(B) For Housing Tax Credit Developments, any additional
Developer Fee claimed for ineligible costs will be limited to the
same percentage but applied only to ineligible Hard Costs. Any Developer
Fee above this limit will be excluded from Total Housing Development
Costs. All fees to Affiliates or Related Parties for work or guarantees
determined by the Underwriter to be typically completed or provided
by the Developer or Principal(s) of the Developer will be considered
part of Developer Fee. All costs for general and administrative expenses
for the Cont'd... |
