Affordable Housing and Tax Credit Developments in DelawareBrief Summary of The Delaware State Housing Authority’s (DSHA) Feedback to 2011 Qualified Allocation Plan (QAP) Comments

February 3, 2011by George Danneman

Here is a brief summary of Delaware State Housing Authority’s (DSHA) feedback to the 2011 Qualified Action Plan (QAP) comments, in which it provided an explanation for comments that were not  incorporated into the adopted Qualified Allocation Plan (QAP):

Preservation– When asked to reduce the hard costs/rehabilitation expenses of $50,000 per unit, Delaware State Housing Authority (DSHA) stated that it conducted an extensive study of rehabilitation costs for properties that received credits over the last five years which indicated that unit and building costs consistently exceed $50,000.

General Contractor Approval Process and Bidding Protocol– Commentators felt the bidding protocol was unnecessary.   The Delaware State Housing Authority (DSHA) explained that the bidding protocol only applies for tax credit transactions when Housing Development Fund (HDF), HOME or other state financing is requested.  The bidding process has saved the Delaware State Housing Authority (DSHA) millions of dollars and allows it to stretch scarce resources for applicants requiring GAP financing.

Basis Boost – When asked about the State Basis Boost, the Delaware State Housing Authority (DSHA) reiterated that applications cannot include the State Basis Boost in the tax credit calculation.  However, applications in a Qualified Census Tract (QCT) and/or Difficult Development Areas (DDA) can include the Federal Basis Boost.

Social Service– There were many concerns that mandating social services to be provided four times a year eliminated valuable services that weren’t required as often.   In previous years, the Qualified Allocation Plan (QAP) required regular social services.  Since then, Delaware State Housing Authority (DSHA)  further defined regular social services to mean at least four times a year to promote owners to comply with their Extended Use Agreements since they receive points for providing a certain number of social services.

Agencies that provide tax services can include this service as part of the overall social services contract with the owner.

Sites and Neighborhood Standards -Comments were received regarding the Access to Services category and the reasonableness of a 1 mile radius for rural areas.  For the 2012 Qualified Allocation Plan (QAP), Delaware State Housing Authority (DSHA) will consider modifying the radius in rural areas from a 1 mile radius to 1 ½ mile radius.

As to a question regarding how packaged Rural Development (RD) projects are scored, the Delaware State Housing Authority stated that regardless of the amount of Rural Development (RD) sites in a packaged application, 15 is the maximum amount of points for Sites and Neighborhoods.

Consultant Definition – Commentators requested more flexibility with consultant fees.  The Delaware State Housing Authority (DSHA) explained that only consultants that are a primary part of the Development Team should be listed and considered for points.   A consultant is required to receive a minimum of 25% of the Developer’s fee to ensure active involvement in the project.

Application Redundancy – A comment was received regarding unnecessary exhibits.   Exhibits denoted with an asterisk can be omitted from the application but will be due after an allocation has been made.

Community Outreach– A commentator questioned why the  Community Outreach ranking category requires a town, city, county or municipality meeting agenda to be limited to one item- the proposed development.   This requirement ensures that all participants are attending solely to discuss the proposed development.

Cost Certification – A commentator requested elimination of the 90 day time frame or an increase in the time frame for submission of the cost certification.   The Delaware State Housing Authority (DSHA) stated that the time frame is reasonable based on its experience.  In addition, the Delaware State Housing Authority (DSHA) is required to use the cost certification for the final underwriting in order to issue the IRS form 8609.  Increasing the 90 day time frame for submission of the cost certification could possibly higher the cost of the project (in the form of interest) and/or delay closing.

Non-Profit Pool – A commentator requested clarification on how proposed developments compete if they are eligible for more than one pool.  The Delaware State Housing Authority (DSHA) explained that after the highest ranked non-profit applicant wins the pool, the remaining non-profit applicants, if eligible to compete in the remaining pools, will compete in the respective pools.   If the non-profit applicant requires additional credits after receiving non-profit pool credits, they will take credits from their respective pool.

Environmental Audit and Assessment – A commentator expressed concerns over the costs of Environmental Site Assessments/Audits.  Delaware State Housing Authority (DSHA) requires either an Environmental Site Assessment (for land/new housing creation) or an Environmental Audit (for rehabilitation projects) at application to confirm that the project  does not contain environmental issues.

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