Page 1

 

 


Table of Contents “Accounting Challenges Related to the Exchange Program”

Welcome Letter Partners Presentation 1. TDHCA - State of the Exchange Program 2. Carryovers - 10% and 30% 3. TCEP Draw-down versus 30% carryover 4. 1602 Projects - Losses (used internally) 5. 1602 Projects - Losses (monetized) 6. Cost Segregation 7. Compliance Issues 8. Back-end Issues Presenters Cynthia Bast, Locke Lord Bissell & Liddell Tom Gouris, TDHCA Patricia Murphy, TDHCA Teresa Shell, TDHCA Chris Tomas, Reznick Group, P.C. Contact Information


TAAHP

president DAN MARKSON

l 221 E. 9th street, ste. 408 l Austin, TX 78701 tel 512.476.9901 fax 512.476.9903 taahp.org texashousingconference.org

The NRP Group

TEXAS AFFILIATION OF AFFORDABLE HOUSING PROVIDERS

November 9, 2010

immediate past president LINDA MCMAHON

Neighborhood Strategies, LLC president-elect TONI JACKSON

Coats Rose

Dear Housing Professional, Welcome to the Texas Affiliation of Affordable Housing Providers (TAAHP) Fourth Quarter Executive Management Series: Accounting Challenges Related to the Exchange Program. TAAHP continues to enhance its member services program and has recently added the Executive Management Series as one of the core pillars of the association. The TAAHP Executive Management Series is designed to encourage you to engage with your peers, contribute, and share your experiences and expertise with your affordable housing counterparts.

vice president BARRY KAHN

Hettig-Kahn vice president NICOLE FLORES treasurer GEORGE LITTLEJOHN

Novogradac & Co. LLP secretary RON WILLIAMS

Southeast Texas HFC DIRECTORS

The LIHTC housing industry is nearing the end of its first year in the Exchange Program, leaving us with little precedence or experience in developing our internal management of the Exchange funds. This session in will provide you with a wealth of information from legal and tax experts as well as from staff members of the Texas Department of Housing and Community Affairs (TDHCA) on your first year end decisions. During this session our Speakers will cover such topics as passive losses, depreciation recapture, how to structure partnership accounts and if you monetize your losses, what exit strategies you might consider with your Investor.

MAHESH AIYER

Please do not hesitate to contact me or a member of the TAAHP team with questions or comments at 512.476.9901 or info@taahp.org. I look forward to connecting with you soon.

DENNIS HOOVER

Sterling Bank SARAH ANDERSON

S. Anderson Consulting TERRI ANDERSON

Anderson Capital, LLC BOBBY BOWLING

Tropicana Building Corp.

Hamilton Valley Management, Inc. ROBERT JOHNSTON

Your Partner in Providing Affordable Housing,

National Equity Fund JUSTIN MACDONALD

MacDonald & Associates MARK MAYFIELD

Texas Housing Foundation

Jim T. Brown Executive Director “TAAHP is the leading organization of affordable housing professionals representing the affordable housing industry in Texas.”

JEFFREY SPICER

State Street Housing Advisors, L.P. JERRY WRIGHT

Dougherty & Company, LLC executive director JIM T. BROWN


[thank you partners]

taahp.org


The greatest rewards come from helping others.

In the affordable housing industry, Reznick Group feels right at home.

As a top 20 national CPA firm, we’ve been helping developers, lenders and investors in affordable housing achieve financial success for more than 30 years. By sharing our insights on low-income housing tax credits, FHA and HUD programs, and other financing opportunities, we help the affordable housing industry provide safe and decent housing for the communities that need it most. What could be more rewarding? To learn more about Reznick Group and our services for the affordable housing industry, visit: www.reznickgroup.com/affordablehousing


Affordable Housing Putting

All The Pieces Together |1|


Our Firm For more than a century, Locke Lord Bissell & Liddell LLP has had a singular focus – understanding our clients’ needs and helping them achieve their goals. Our long-established tradition of providing responsive, personal service has made us one of the nation’s top law firms, and we bring that tradition to the affordable housing industry. The attorneys of Locke Lord’s Affordable Housing Group understand the business of affordable housing and tailor their services to meet each client’s unique needs. Using a team approach, we counsel and advocate for our clients in all aspects of development, finance and ownership of affordable housing properties. Combining a strong legal foundation with a solid knowledge of the industry provides our Affordable Housing Group with unparalleled skills to serve clients effectively and efficiently.

We provide comprehensive affordable housing services to for-profit and non-profit developers, lenders, investors, housing authorities, housing finance corporations, governmental agencies, and trade associations, as well as bond issuers, underwriters and trustees. Our history of representing a variety of parties in the affordable housing industry gives us a breadth of contacts and a perspective that benefits our clients in each project we undertake.

|2|


Our Services Put the Locke Lord Affordable Housing Group to work for you on: • New construction, rehabilitation, and adaptive re-use

• Advocacy before federal, state, and local housing agencies and related bodies

• Multi-family and single family housing

• Assistance with program compliance

• Special needs housing

• Restructuring and solutions for

• Low-income housing tax credits • Year 15 and qualified contracts • Historic rehabilitation tax credits • New markets tax credits • Tax-exempt bond financing • American Reinvestment and Recovery Act • Construction and permanent loans

economic challenges • Entity formation and structuring • Environmental concerns • Local zoning and land use issues • Construction law • Fair housing and compliance issues • Dispute resolution

• HUD programs, including HOME, CDBG, and HOPE VI • Neighborhood Stabilization Program • Housing Assistance Payments contracts • Joint Ventures and public/private contracts • Local and state tax matters, including ad valorem taxation and exemptions • Public policy, including federal and state legislative action

|3|


Our Professionals Our attorneys are professionally and personally committed advocates for quality affordable housing in our nation. We devote numerous volunteer hours in our communities, in classrooms and in board rooms, to benefit the cause of affordable housing. We believe this commitment is reflected in the services we provide to our clients. The principal attorneys on our Affordable Housing Group are:

Cynthia Bast Partner and Affordable Housing Chair, Austin Cynthia Bast is nationally recognized as a preeminent attorney in the area of affordable housing and community development finance. She assists clients with complex affordable housing and community development transactions using a variety of financing tools, including low-income housing tax credits, historic rehabilitation tax credits, tax-exempt bonds, HUD programs, and other federal, state, and local resources. In addition to her transactional work, Ms. Bast actively represents clients before the Texas Department of Housing and Community Affairs and other governmental authorities, and advocates for affordable housing issues with the Texas Legislature. She counsels clients with troubled properties to find effective resolutions and advises clients with properties nearing the ends of their compliance periods. Ms. Bast is a frequent speaker at conferences across the country.

Rick Morrow Partner, Austin Rick Morrow represents for-profit and non-profit developers in connection with the acquisition, development, financing, and management of affordable housing. He has extensive experience counseling developers, lenders, and syndicators with respect to Low-Income Housing Tax Credits, HUD/FHA multi-family loans, HOME financing, HTF financing, HUD's Section 8 rental assistance programs, tax-exempt bonds, Fannie Mae and Freddie Mac multi-family loan programs, as well as other state and federal affordable housing programs. Most recently, he has been working with clients using federal stimulus funds under the TCAP and Exchange programs. Additionally, Mr. Morrow represents a variety of traditional real estate investors and developers in connection with the acquisition, development, and disposition of commercial real estate, including raw land, retail shopping centers, office buildings, multi-family, and mixed-use developments.

|4|


Our Professionals Christine Richardson Partner, Austin Chris Richardson works with developers in low-income housing tax credit transactions and HUD matters. She counsels clients with regard to change of ownership requirements of the Texas Department of Housing and Community Affairs. She works with HUD to process transfers of physical assets requests, decoupling, and assignment of mark-to-market debt. Ms. Richardson also works with non-profit organizations and governmental entities to establish and maintain ad valorem tax exemption for their properties and sales tax exemption for construction materials.

Amy Maxwell Associate, Austin Amy Maxwell has a professional background working with the legislative branch of the State of Texas. She is part of our Public Law Group, providing advocacy on a variety of matters, including affordable housing. In our Affordable Housing Group, Ms. Maxwell assists with entity formation and structuring, corporate authority matters, and ad valorem tax exemption.

Neal Rackleff Associate, Houston Neal Rackleff concentrates on affordable housing, community and economic development, and municipal and public law. His practice includes representing real estate developers in obtaining economic incentives from governmental entities through financing mechanisms such as tax abatements, tax credits, and tax increment financing. He represents non-profit agencies, governmental entities, and for-profit entities in revitalization efforts. Prior to joining our firm, Mr. Rackleff worked with the Housing Authority of the City of Houston, the City of Houston, and the Greenspoint Redevelopment Authority, Management District, and Tax Increment Reinvestment Zone on a variety of high-profile public/private partnerships to develop housing, parks, and infrastructure.

|5|


Our Professionals Michael Petersilia Partner, Dallas Mike Petersilia focuses his practice on the purchase, sale, and financing of multi-family residential rental housing developments and continuing care retirement communities, with an emphasis on properties financed with tax-exempt bonds. He represents borrowers, asset managers, public agencies, non-profits, lenders, trustees, and credit enhancers. His lender representation includes agency lenders underwriting tax-exempt bond credit enhancements for Fannie Mae and Freddie Mac, as well as lenders acquiring tax-exempt bonds for their own account. He works with securitizations of tax-exempt bond financed real properties using limited partnerships and trusts, interest rate swaps, the federal income tax aspects of tax-exempt bonds and related issues, including refundings and reissuances of tax-exempt bonds. Mr. Petersilia also has considerable experience in transactions utilizing low-income housing tax credits. He negotiates and drafts numerous partnership and limited liability company agreements and advises clients on the federal income tax aspects of such entities.

Michael Schulman Partner, Dallas Mike Schulman concentrates on public finance law. He has substantial experience serving as bond counsel to state agencies and municipalities and in conduit bond issues, as well as underwriter, trustee, credit enhancer, and borrower counsel in a wide range of public finance transactions, including mortgage revenue bonds for single family and multi-family housing.

Andrew Rooker Partner, Dallas Andy Rooker is well versed in all aspects of real estate and commercial finance law. He represents financial institutions in construction lending, permanent financing, equity financing, Fannie Mae Delegated Underwriting and Servicing Financing (DUS Loans), and workout matters throughout the country.

|6|


Our Professionals Ed Razim Partner, Houston Ed Razim provides tax counsel to non-profit organizations with regard to tax-exempt organization matters on the federal level as well as state tax exemption issues. In addition, he has experience with employee benefits and executive compensation matters.

Victoria de Lisle Partner, New Orleans Victoria de Lisle works with financial institutions, developers and investors in the acquisition, development and financing of commercial real property, leasing matters, workouts and foreclosures, construction lending, asset-based lending, mezzanine financing, bond financing, syndicated loans, and securitized financing. She works with developers and syndications with troubled tax credit properties to address the unique issues associated with affordable housing in workout. In addition, Ms. de Lisle has substantial experience with senior housing.

Direct Inquiries to:

Cynthia Bast Partner and Affordable Housing Chair cbast@lockelord.com T: 512-305-4707

This brochure is provided solely for educational and informational purposes. It is not intended to constitute legal advice or to create an attorney-client relationship. Readers should obtain legal advice specific to their enterprise and circumstances in connection with each of the topics addressed. If you would like to be removed from our mailing list, please contact us at either unsubscribe@lockelord.com or Locke Lord Bissell & Liddell LLP, 111 South Wacker Drive, Chicago, Illinois 60606, Attention: Marketing. If we are not so advised, you will continue to receive brochures. Attorney Advertising Š 2010 Locke Lord Bissell & Liddell LLP

|7|


www.lockelord.com

Atlanta 404-870-4600

Dallas 214-740-8000

Los Angeles 213-485-1500

Sacramento 916-554-0240

Austin 512-305-4700

Houston 713-226-1200

New Orleans 504-558-5100

San Francisco 415-318-8810

Chicago 312-443-0700

London 020-7327-4534

New York 212-415-8600

Washington, DC 202-220-6900

|8|


ork

w me Fra s r olo tem , C ys tes rity S a u G s, Sec ce en eter F l im nta er me d P rna an

AmeristarFence.com

O

AMERISTAR FENCE PRODUCTS

Dear TAAHP Executive Management Series Attendee, Ameristar Fence Products is pleased to be a sponsor of the Executive Management Series and part of the Texas Housing Conference. As the largest manufacturer of ornamental fencing in the world, we are pleased to assist you with an affordable, quality fence product on any of your upcoming projects. Our Montage line of products will not only meet your budgetary needs, but also balance your need for a quality fence product. Our products are made in the U.S. and meet Buy America requirements. The production of our Montage products yields up to 96% recycled steel meeting material requirements for LEED certification. Finally, our revolutionary E-Coat process covers the product inside and out, giving your fence the most complete finish available. Because of this, we protect you with a 20-year warranty against cracking, chipping, peeling, blistering and corroding. No other manufacturer can provide you such an affordable option with all of these benefits. No matter where your project resides, we have relationships with thousands of area installers, which allows us to find you multiple competitive bids on each one of your projects. Since 1982, Ameristar has proven to be a value to end users all over the world. We want to do that for you. I want to earn your business and would like the opportunity to meet with you individually. I will follow up with you in the next few weeks to see how Ameristar can help you with your new communities. Sincerely,

Jeff Turner (918) 260-3539 jturner@ameristarfence.com

PO Box 581000 · Tulsa, OK 74158 · Phone: (888) 333-3422 · Fax: (877) 926-3747 www.ameristarfence.com · E-Mail: mktg@ameristarfence.com

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Ameristar was charted a quarter-century ago to provide specialty fence products that were more affordable, but did no compromise the quality level demanded by speciďŹ ers and consumers. This could be accomplished only by complete reformation of the way fence products were being manufactured. Product design was approached from many new perspectives; maximizing high-volume productivity; increasing strength and durability; designing the ultimate level of system security promoting ease of installation: enhancing aesthetic appearance; and maintaining an environmentally friendly workplace. A new plant was designed and built to house state-ofthe-art roll-forming, metal processing and powder coating equipment. The result has boosted Ameristar to its current position as the largest manufacturer of architectural metal fence systems in the world.

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TAAHP is the leading organization of affordable housing professionals representing the affordable housing industry in Texas.

� Thursday, February 24, 2011 Texas State Capitol Legislative Conference Center 1100 San Jacinto Boulevard Austin, TX 78701

 8:30 a.m. - 9:30 a.m. Legislative Breakfast & Briefing 9:30 a.m. - 12 noon Meetings & Events

������ hosted by

Texas Affiliation of Affordable Housing Providers

12 noon - 1:30 p.m. Housing Advocates Luncheon 1:30 p.m. - 5:00 p.m. Meetings & Events Your ticket of $35/TAAHP Members and $55/General includes a Continential Beakfast and Housing Advocates Luncheon

Please RSVP by Thursday, February 17, 2011

� Statewide Elected Officials & Staff TAAHP Members National Housing Advocates Public and Private Stakeholders

RSVP Form on Reverse Side

The Texas Affiliation of Affordable Housing Providers (TAAHP) will kick off the 82nd Legislative Session with its second bi-annual Rally Day. TAAHP is the leading organization of affordable housing professionals representing the housing industry in Texas. Our goal is to bring together a coalition of housing advocates to ensure, in what promises to be a challenging legislative session, that affordable multifamily communities are being developed at the highest quality level for low to moderate income individuals and families in Texas. Through a united effort, Rally Day 2011brings together Statewide Elected Officials to discuss crucial legislative issues affecting the affordable housing industry in Texas. Join us as we share the new and changing story of affordable housing and help promote housing for all Texans. We look forward to seeing you on February 24th!

221 E. 9th Street, Ste.408 l Austin, TX 78701 tel 512.476.9901 fax 512.476.9903 taahp.org texashousingconference.org

﹒�﹒�﹒


�������� ��������|���������������������������������������������������� ���� Thursday, February 24, 2011 Texas State Capitol - Extension Legislative Conference Center (E2.002A) 1100 San Jacinto Boulevard | Austin, TX 78701 Reproduce form for additional employees, friends, and housing advocates for additional Rally Day registration opportunities.

ď?Ąď?´ď?´ď?Ľď?Žď?¤ď?Ľď?Ľď?Šď?Žď?Śď?Ż ďš™ď?°ď?Źď?Ľď?Ąď?łď?Ľď?°ď?˛ď?Šď?Žď?´ď?Łď?Źď?Ľď?Ąď?˛ď?Źď?šďšš Name _____________________________________________________ Company __________________________________________________ Title _______________________________________________________ Phone ______________________ Fax __________________________ Address ___________________________________________________ __________________________________________________________ City _______________ State ____________ Zip _________________ ď Ż

Yes, I would like to register for Rally Day 2011. Registration includes Continental Breakfast and Housing Advocates Luncheon ď Ż TAAHP Member $35

ď Ż General $55

ď?Łď?Żď?Žď?´ď?˛ď?Šď?˘ď?ľď?´ď?Ľ Support Rally Day 2011 — help underwrite the cost of food and refreshments for our Senators and Representatives. As a Contributor, you will receive special recognition in the official Rally Day 2011 Program. TAAHP appreciates your contribution of: ď Ż $1,000 ď Ż $500 ď Ż $250 ď Ż $100 Other:_______________

ď?°ď?Ąď?˛ď?´ď?Žď?Ľď?˛-ďš? ď Ż

ď?¨ď?Ľď?Źď?°ď?ľď?łď?Łď?Żď?Žď?Žď?Ľď?Łď?´ Do you have any personal relationships in the Texas Legislature? ď Ż Yes ď Ż No If yes, please list their names: 1) ___________________________________________________ 2) ___________________________________________________ 3) ___________________________________________________

ď?°ď?Ąď?šď?­ď?Ľď?Žď?´ ď Ż Check (Made payable to TAAHP) Credit Card: ď Ż American Express ď Ż MasterCard

ď Ż Discover ď Ż VISA

Name_______________________________________________ CC Number__________________________________________ Expiration Date_____________Verification Number________

Yes, I would like to become a Rally Day 2011 Partner

Signature____________________________________________

One-on-One Networking with Statewide Elected Officials and Staff

Submit registration form and payment to:

6 All-Access tickets to Rally Day 2011 Special Invitation to Your Legislator to Join You at Your Luncheon Table Logo on Event Signage, Program, Website and Email Announcements Special Partner Recognition during Luncheon Reserved Table (up to 8 people) with Signage

Mail

Texas Affiliation of Affordable Housing Providers 221 E. 9th Street, Ste. 408 | Austin, TX 78701 Email info@taahp.org Fax 512.476.9903

���������? Call the TAAHP Office at 512.476.9901 CANCELLATIONS/NO-SHOWS/REFUNDS/SUBSTITUTIONS — Registrants who cancel in writing on or before February 17, 2011, are entitled to a refund of their registration fee, minus a $15 cancellation fee. Registrants who cancel after February 17, 2011, will not receive a refund, but attendee substitutions will be allowed. Registrants and no-shows who do not cancel on or before February 17, 2011, are responsible for the full registration fee and are not entitled to a refund of their registration fee. Cancellations must be made in writing and mailed, faxed, or e-mailed to: TAAHP, 221 E. 9th Street, Ste. 408 | Austin, TX 78701, FAX 512.476.9903, e-mail: info@taahp.org. PHOTOGRAPHS — By registering for this event, I authorize the Texas Affiliation of Affordable Housing Providers (TAAHP) to photograph me at this event and use such photographs in TAAHP marketing pieces (both electronic and print). I understand that I will not be paid for giving this consent.


texas housing conference july 25 - 27, 2011 : four seasons hotel : austin, tx

call 512.476.9901 or visit texashousingconference.org


voting membership

2011 membership investment form info date______________________________________________________________ company/organization_______________________________________________ name____________________________________________________________ title______________________________________________________________ address____________________________________________________________ city_______________________________________________________________ state_____________________________zip______________________________ tel________________________________________________________________ fax________________________________________________________________ email____________________________________________________________ website__________________________________________________________

classification legal services property management/real estate services trade association vendor/supplier other:________________________________

architect/engineer/construction developer/owner housing finance corp/market analyst insurance/professional services investor/lender/syndicator

investment check (make payable to TAAHP) american express discover

mastercard

visa

credit card #_________________________________________________________ expiration date_____________________verification number_________________ name (as it appears on card)____________________________________________ signature__________________________________________________________

active membership - $550.00 Any business, firm, corporation, partnership, sole proprietorship, individual professional or other legal business entity which is involved in the affordable housing industry or provides services, supplies or equipment for the affordable housing industry and is directly interested in its welfare, complies with TAAHP Bylaws, pays current dues, and meets required membership qualifications, is eligible for active membership in TAAHP and is entitled to one vote per membership, eligibility for service on the Board of Directors, and all committees following appointment. second (non-voting) - $250.00 third (non-voting) - $100.00

non-voting membership governmental/regulatory - $150.00 Any individual associated with or responsible in any manner within the title of this category may join TAAHP after meeting the qualifications and paying dues determined by the Board of Directors. educator/student - $50.00 Any individual directly associated with an institution of higher learning and whose field of study and expertise is related to the field of affordable housing may join the Organization by meeting the qualifications and paying dues determined by the Board of Directors. Separate dues may be established for these two classifications: Educators and Student.

Federal Income Tax Notice: Membership Investments are not deductible as charitable contributions for federal incomes tax purposes; however, investments are deductible by members as an ordinary business expense. A portion of investments are not deductible as an ordinary business expense to the extent TAAHP engages in lobbying. The non-deductible portion of investments for 2010 is 10%.

A 3% processing fee will be added to all credit card transactions.

send to:

mail fax email

221 E. 9th Street, Ste. 408 Austin, TX 78701 512.476.9903 membership@taahp.org

SAVE THE DATE Texas Housing Conference July 25 - 27, 2011 Four Seasons Hotel Austin, TX texashousingconference.org

221 E. 9th Street, Ste. 408 l Austin, TX 78701 tel 512.476.9901 fax 512.476.9903 taahp.org texashousingconference.org


[presentation]

taahp.org


[TDHCA - State of the Exchange Program]

a. Summary of closed/open transactions b. Where Texas stands versus other states c. NOFA for additional funds i. Applications received ii. Other d. Remaining deadlines e. Future of 1602 program i. Federal extenders ii. TDHCA's plan for same f. Issues in the draw process – the good, the bad, the ugly i. An effective draw example ii. Common mistakes iii. Pitfalls iv. Inappropriate uses of funds v. Timing of draws


EXCHANGE PROGRAM UPDATE  ‐ AS OF NOVEMBER 4, 2010 CLOSINGS Total Exchange Awards as of November 2, 2010 Deals closed or in escrow to date Awarded deals left to close

84 84 0

100.00%

FUNDING Total Exchange dollars allocated to TDHCA from the Treasury Department

$                 594,091,928

Exchange funds committed to date (Executed Subawards)

$                 577,750,427

97.25%

Total Exchange  Subawards (Per final REA/Subawards) Exchange funds remaining (Per final REA/Subawards)

$                 577,750,427 $                   16,341,501

97.25% 2.75%

$                 176,271,340

29.67%

$                 176,271,340

30.51%

Funds drawn to date from the TOTAL Exchange Allocation to TDHCA (as of  November 3,2010 ) Funds drawn to date from the COMMITTED and CLOSED Exchange deals (as of  November 3, 2010) Total Units Closed to Date

7795


CLOSED EXCHANGE TRANSACTIONS AS OF 11.4.10

Closed Order

09 Exchange Number

1

09906

377 Villas

12.31.09

2

09918

Gardens at Clearwater

1.29.10

3

09930

Creekside Villas Senior Village

2.3.10

4

09942

Southern View Apartments

2.4.10

5

09937

Cambridge Crossing

2.12.10

6

09947

Mineral Wells Pioneer Crossing

2.15.10

80

Mineral Wells, TX

$

7

09920

Anson Park Seniors

2.22.10

80

Abilene, TX

$                         7,518,709.00

8

09926

Highland Manor

2.23.10

141

LaMarque, TX

$                       11,138,884.00

9

09949

Hampton Villages

3.4.10

76

Pampa, TX

$                       10,001,457.00

10

09976

Trebah Vilalges

3.5.10

129

Katy, TX

$                         9,392,459.00

Deal Name

Closing Date Units 76

City

Subaward Amount

Brownwood, TX

$                         5,955,888.00

80

Kerrville, TX

$                         6,989,490.00

144

Buda, TX

$                       12,055,533.00

48

Ft. Stockton, TX

$                         3,807,300.00

60

Corsicana, TX

$                         5,010,115.00 5,300,934.00

11

09952

Villages at Snyder

3.12.10

80

Snyder, TX

$                         9,277,302.00

12

09927

Carpenter's Point

3.15.10

150

Dallas, TX

$                       11,321,332.00

13

09902

Oak Tree Village

3.19.10

36

Dickinson, TX

$                         3,197,117.00

14

09931

Montgomery Meadows

3.19.10

48

Huntsville, TX

$                         4,519,862.00

15

09914

Stoneleaf at Dalhart

3.26.10

76

Dalhart, TX

$                         6,150,599.00

16

09928

Heritage Park Vista

3.26.10

140

Ft. Worth, TX

$                       10,707,151.00

17

09921

Oak Manor/Oak Village

4.7.10

229

San Antonio, TX

$                       12,171,481.00

18

09915

Jackson Village

4.26.10

96

Lake Jackson, TX

$                         8,009,337.00

19

09912

Wentworth Apartments

4.28.10

90

Atascocita, TX

$                         9,757,269.00

20

09907

Melbourn Apartments

4.29.10

110

Alvin, TX

$                       12,250,999.00

21

09967

Millie Street Apartments

5.3.10

60

Longview, TX

$                         4,800,000.00

22

09941  

Residences at Stalcup

5.4.10

92

Fort Worth, TX

$                         7,279,740.00

23

09923

Villas at Beaumont

5.7.10

36

McAllen, TX

$                         3,367,917.00

24

09946

Cedar Street Apartments

5.7.10

48

Browfield, TX

$                         3,883,800.00

25

09939

Vista Bonita Apartments

5.19.10

118

Houston, TX

$                       10,822,758.00

26

09977

Chelsea Senior Community 

5.19.10

150

Houston, TX

$                       15,066,382.00

27

09943

Leona Apartments

5.20.10

40

Uvalde, TX

$                         1,148,900.00

28

09944

Heritage Square 

5.20.10

50

Texas City, TX

$                         3,058,062.00

29

09945

Park Place Apartments

5.20.10

60

Cleveland, TX

$                         4,301,518.00

30

09973

Senior Villages at Huntsville

5.21.10

36

Huntsville, TX

$                         4,023,653.00

31

09924

Meaghan Point

5.26.10

80

Elsa, TX

$                       10,164,292.00

32

09932

Constitution Court

5.27.10

108

Copperas Cove, TX

$                         8,838,615.00

33

09981

Casa Brazoria

5.27.10

36

Clute, TX

$                         7,448,709.00

34

09990

San Gabriel 

6.2.10

76

Liberty Hill, TX

$                         6,028,000.00

35

09970

Lufkin Apartments

7.22.10

80

Lufkin, TX

$                         6,094,394.00

36

09993

Malibu Apartments

6.10.10

476

Austin, TX

$                       15,400,000.00

37

09971

Stone Hearst Seniors

6.10.10

36

Beaumont, TX

$                         4,176,653.00

38

09922

Park View Terrace

6.11.10

100

Pharr, TX

$                         9,498,011.00

39

09351

Tierra Point

6.11.10

80

Karnes City, TX

$                         8,597,850.00

40

09961

Lincoln Terrace

6.15.10

72

Fort Worth, TX

$                         7,894,851.00

41

09925

Suncrest

6.15.10

100

El Paso, TX

$                         3,362,746.00

42

09966

Turner Street 

6.16.10

60

Palestine, TX

$                         4,840,000.00

43

09934

Harris Manor

6.21.10

201

Pasadena, TX

$                         6,414,471.00

44

09994

Holland House

6.21.10

68

Holland, TX

$                         3,622,969.00

45

09963

Hacienda Del Sol

6.22.10

55

Dallas, TX

$                         8,643,534.00


CLOSED EXCHANGE TRANSACTIONS AS OF 11.4.10

46

09958

Crestmoor Apartments

6.24.10

68

Burleson, TX

$                         3,041,202.00

47

09948

Park Ridge

6.28.10

64

Llano, TX

$                         5,645,838.00

48

09354

Arrowsmith

6.29.10

70

Corpus Christi, TX

$                         3,755,601.00

49

09953

Gholson Hotel

6.29.10

50

Ranger, TX

$                         3,028,922.00

50

09905

Aurrora Meadows

6.29.10

76

Eagle Pass, TX

$                         9,642,000.00

51

09940

Crowley Fountainhead St. Charles 

6.29.10

52

Crowley, TX

$                         2,096,644.00

52

09986

Greenhouse

6.30.10

140

Houston, TX

$                       12,426,601.00

53

09982

Sierra Meadows 

6.30.10

90

Houston, TX

$                         9,104,580.00

54

09352

Heights at Coral 

7.2.10

80

Kingsville, TX

$                         5,755,096.00

55

09911

Trinity Gardens

7.7.10

76

Liberty, TX

$                         6,943,395.00

56

09983

Brazos Bend Villas

7.7.10

120

Fort Bend, TX

$                       11,555,478.00

57

09910

Lexington Apartments

7.9.10

80

Angelton, TX

$                         2,997,690.00

58

09919

Premier on Woodfair

7.9.10

408

Houston, TX

$                       10,781,101.00

59

09987

Sante Fe Seth Heritage Crossing 

7.9.10

72

Santa Fe, TX

$                         6,051,451.00

60

09357

Weslaco Apartments

7.13.10

120

Weslaco, TX

$                       10,021,149.00

61

09929

Buena Vida Apartments

7.13.10

100

Corpus Christi, TX

$                         7,532,749.00

62

09916

HVM Mid‐Town Apartments

7.14.10

54

Tomball, TX

$                         2,549,514.00

63

09917

HVM Alta Vista Apartments

7.14.10

64

Marble Falls, TX

$                         2,936,283.00

64

09968

Arbor Pines

7.20.10

76

Orange, TX

$                         6,725,114.00

65

09936

Lakeview Apartments

7.21.10

140

Tyler, TX

$                       12,169,238.00

66

09350

Tremont Apartments

7.22.10

112

Killeen, TX

$                       10,224,660.00

67

09356

Legacy Villas

7.23.10

64

Eagle Pass, TX

$                         8,100,000.00

68

09978

Floral Gardens

7.28.10

100

Houston, TX

$                       11,786,975.00

69

09913

Villas on Raiford

8.19.10

180

Carrollton, TX

$                       10,542,031.00

70

09956

Abilene Seniors Apartments

8.25.10

92

Abilene, TX

$                         8,668,329.00

71

09996

Whispering Oaks

8.27.10

24

Goldthwaite, TX

$                         1,386,205.00

72

09965

Peachtree Seniors

9.22.10

144

Balch Springs, TX

$                       14,834,619.00

73

09995

Village Place Apartments

9.30.10

32

Lorena, TX

$                         1,747,030.00

74

09997

Autumn Villas

9.29.10

16

Lorena, TX

$                             903,082.00

75

09955

Oakwood Apartments

9.29.10

48

Brownwood, TX

$                         2,123,128.00

76

09998

Prairie Village Apartments

9.30.10 ‐  Escrow

24

Rogers, TX

$                         1,279,003.00

77

09353

Hyatt Manor I and II Apartments

9.28.10 ‐  Escrow

65

Gonzales, TX

$                         2,551,331.00

78

09974

Courtwood Apts

9.30.10

50

Eagle Lake, TX

$                         2,052,965.00

79

09992

Northgate Apts and Rhomberg Apts

9.28.10 ‐  Escrow

60

Burnet, TX

$                         2,712,282.00

80

09999

Cherrywood Apartments

9.30.10

44

West, TX

$                         2,458,658.00

81

09989

Champion Homes at Bay Walk

9.28.10

192

Galveston, TX

$                       10,987,246.00

82

09901

Las Palmas Gardens Apartments

9.30.10

100

San Antonio, TX

$                         6,223,846.00

83

09903

West End Baptist Manor Apartments

9.30.10

50

San Antonio, TX

$                         3,198,456.00

84

09951

Canyons Retirement Community

10.27.10

111

Amarillo, TX

$                         7,899,892.00

REMAINING

$                      16,341,501.00

7795 0 Total

84

Closed/Escrow

84

Remaining

0

$                    577,750,427.00

$                    594,091,928.00


11/4/2010 Section 1602 - Awards to State Housing Credit Agencies (as of 7/31/10) Housing Agency Alabama Housing Finance Authority Alaska Housing Finance Corporation Arizona Department of Housing Arkansas Development Finance Authority California Tax Credit Allocation Committee Colorado Housing and Finance Authority Connecticut Housing Finance Authority DC Department Housing & Community Development Delaware State Housing Authority Development Bank of American Samoa Florida Housing Finance Corporation Georgia Housing and Finance Authority Guam Housing and Urban Renewal Authority Hawaii Housing Finance and Development Corporation Idaho Housing and Finance Association Illinois Housing Development Authority IN Housing and Community Development Authority Iowa Finance Authority Kansas Housing Resources Corporation Kentucky Housing Corporation Louisiana Housing Finance Agency MA Department of Housing & Community Development Maine State Housing Authority MD Community Development Administration Michigan State Housing Development Authority Minnesota Housing Finance Agency Mississippi Home Corporation Missouri Housing Development Commission Montana Boar Board d of Housing Nebraska Investment Finance Authority Nevada Housing Division New Hampshire Housing Finance Authority New Jersey Housing and Mortgage Finance Agency New Mexico Mortgage Finance Authority North Carolina Housing Finance Agency North Dakota Housing Finance Agency Ohio Housing Finance Agency Oklahoma Housing Finance Agency Oregon Housing and Community Services Pennsylvania Housing Finance Agency Puerto Rico Housing Finance Authority Rhode Island Housing and Mortgage Finance Agency SC State Housing Finance & Development Authority South Dakota Housing Development Authority Tennessee Housing Development Agency Texas Department of Housing and Community Affairs Utah Housing Corporation Vermont Housing Finance Agency Virgin Islands Housing Finance Authority Virginia Housing Development Authority Washington State Housing Finance Commission West Virginia Housing Development Fund Wisconsin Housing & Economic Development Authority Wyoming Community Development Authority Total

Amount Awarded $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

36,456,058 14,346,267 37,589,533 92,869,859 478,081,514 17,823,862 66,840,837 20,944,850 20,550,433 9,061,000 580,416,761 195,559,945 26,500,000 47,831,149 25,414,641 264,487,428 235,961,875 72,772,712 45,183,879 67,981,394 186,238,666 110,345,919 24,808,207 79,212,812 285,935,362 62,113,588 29,664,458 40,375,000 17,825,674 29,099,931 50,424,064 27,713,062 123,486,161 47,777,169 95,000,000 3,668,685 118,090,417 25,000,000 20,542,518 229,869,236 158,920,948 36,891,061 101,769,480 7,756,896 165,671,329 594,091,929 15,434,548 14,162,116 20,246,499 112,488,313 101,279,118 25,165,944 139,572,351 9,405,548 5,466,721,006


TDHCA EXCHANGE PROGRAM   NOTICE OF AVAILABLE EXCHANGE FUNDS  (this “NOFA”)  October 22, 2010   

NOTE:   This  NOFA  has  NOT  been  approved  or  authorized  by  the  TDHCA  Governing Board and is being presented prior to such approval to expedite  the finalization of the awarding of Exchange Funds.  It will be presented to  the  TDHCA  Governing  Board  for  ratification  AND  award(s)  at  that  board’s  meeting on November 10, 2010.     In an effort to ensure the maximum utilization  of ARRA 1602 Exchange Program funds allocated to  TDHCA are committed prior to the December 31, 2010, deadline, various options have been analyzed  and considered to allocate the remaining Exchange funds.  As of October 22, 2010, there are  $16,341,501 in Exchange funds projected to be remaining, or 2.75% of the total funds. One transaction  was not able to close on the Exchange funds prior to the September 30, 2010, closing deadline and was,  therefore, terminated. It is anticipated that it will appeal to the Board for reinstatement of its award of   $5,308,029. Should the Board approve the reinstatement of this award, the remaining funds would be  reduced to $11,033,472. The amount awarded by the Board will be determined at the November 10,  2010 Board meeting after consideration of this and any other pending appeals.    Any remaining funds are not committed on or before December 31, 2010, must be returned to the U.S.  Treasury Department. This announcement describes the process by which TDHCA will allocate remaining  Exchange Program funds.  All of the requirements included in the original Policy and Policy Supplement  remain in effect except as set forth herein.  These superseding changes will be presented to the Board  for ratification and relate chiefly to timing and prioritization.   As in the original policy, Developments  will be required to show that they are “shovel ready” and provide documentation of “good faith effort”  to syndicate the original allocation of credits.  Due to the limited time remaining, express requirements  to be able to close and expend are as specified in this NOFA.  Exchange pricing will remain as provided  for in the originally approved Exchange policy and supplement.  Staff will review and recommend  awards to the Board based first upon an applicant’s ability to close quickly and second based upon score  compared to other rural and urban eligible developments.           Page 1 of 3   


Eligibility Requirements are as follows:   1. Applicants will be assigned priority as provided in this NOFA.   Applicants must submit all  required information by November 5, 2010, to have “Priority” consideration, and  applications which are submitted after that date or, in the case of an incomplete  application, are completed after that date will be considered on a first come, first served  basis  as long as funds remain available ;   2. In order to meet the US Treasury’s “30% incurred cost” test requirement, applications will  only be considered eligible if they are an acquisition/rehab, or will be under construction by  December 1, 2010, and in either case must provide sufficient information to show they are  able to meet the US Treasury Department’s 30% incurred cost test and exchange draws may  not be funded until the 30% test has been certified as achieved;  3. Any necessary third party construction loan must be in place, or be able to close by  December 1, 2010, and documentation from the lender to that effect must be submitted  with the application;  4. Construction lender and the applicant’s closing attorney must have previously closed on an  Exchange transaction or otherwise demonstrate to the Department’s reasonable  satisfaction that unfamiliarity with the Exchange program and documents will not present a  risk of delay in closing;   5. Any  other subordinate lenders must have already closed their loans/obligations or be able  to close on or before December 1, 2010, and documentation from the lender to that effect  must be submitted with the application;  6. Exchange transactions must be able to be fully closed by December 1, 2010. TDHCA will  not close “into escrow” on these transactions. This deadline is a firm deadline and is not  anticipated  to be extended;    7. Development Owners must be able to prove up adherence to the 30% test prior to closing  and provide the required documentation showing they have met the test  by the existing  December 15, 2010, deadline;  8. Eligible transactions will be ranked by their level of application completeness and ability to  close by December 1, 2010. Thereafter, transactions will be prioritized based on their At‐ Risk set aside status and then on their original allocation score.  All rural transactions will be  ranked and scored against all other rural transactions. All urban transactions will likewise be  scored and ranked against all the other urban transactions;  9. If both urban and rural transactions are at the same level of readiness to proceed, allocation  will be to the highest scoring rural transaction first, then to the highest scoring urban  transaction and alternating in the same manner thereafter; and   10. Applicant must have an existing award of 2008, 2009 or 2010 housing tax credits.    Applications for the additional allocation of remaining TDHCA Exchange Program funding will be  accepted via the Exchange FTP accounts until 12:00pm Friday November 5, 2010; applications received 

Page 2 of 3   


by this deadline will be given “Priority” status. Thereafter, applications received will be taken and  considered on a first‐come, first‐served basis.   Exchange awards are anticipated to be awarded by the TDHCA Board of Directors at the November 10th  Board meeting. Thereafter, awards will continue to be awarded by the TDHCA Executive Director as  deemed necessary.   Attached is the original TDHCA 1602 Exchange Policy and Supplement Policy, both of which will be  adhered to with the exception that all transactions must close on the Exchange transaction on or before  December 1, 2010, and must meet the U.S. Treasury Department’s 30% Test requirement by the existing  deadline of December 15, 2010.   For questions or concerns with the preceding information, please contact the TDHCA Exchange  Administrator, Teresa A. Shell at 512.936.7834 or teresa.shell@tdhca.state.tx.us.   

Page 3 of 3   


TDHCA HTC EXCHANGE PROGRAM DEADLINES    Program Deadlines:  ¾ Exchange Subaward Closing Deadline – September 30, 2010; unless extended by the Board    ¾ 30% Test Submission Deadline – December 15, 2010 **FEDERAL DEADLINE  MUST BE MET –  TDHCA WILL NOT EXTEND THIS DEADLINE    ¾ 100% Expenditure Deadline – December 31, 2011    ¾ Return of any undisbursed funds to US Treasury Department – January 1, 2012      TDHCA Reporting Deadlines:  1602 Quarterly Progress Report Deadlines (due 5th business day following the end of each quarter):  2Q 2010:  

July 14, 2010 

3Q 2010: 

October 14, 2010 

4Q 2010: 

January 14, 2011 

And  thereafter….  TDHCA Exchange Program Monthly Status Report (due 5th business day following the end of each  month):  October’s Report:  

November 5, 2010 

November’s Report:  

December 7, 2010 

December’s Report:  

January 7, 2010 

And thereafter….   


ITEM 1 E – FUTURE OF 1602 PROGRAM   FEDERAL EXTENDERS   TDHCA’S PLAN FOR SAME     


Issues in the  draw process The good, the bad, and the ugly

Issues in the draw process • • • • •

An effective draw example Common mistakes Pitfalls Inappropriate uses of funds Timing of draws

Issues in the draw process  Effective Draw Example • Workbook with each column completed • Support documentation including but not  limited to: – Invoices – AIA signed and notarized by Architect – Inspection Progress Report with photos – Executed Draw Request Form 16.12


Issues in the draw process  Effective Draw Example

Issues in the draw process  Effective Draw Example • If the Development  Owner and Contractor are  related, each  subcontractor and their  invoice is listed separately  on the workbook

Issues in the draw process  Effective Draw Example • Cost Category, Validation Type,  and Payee are all selected • Invoice number, invoice date, requested amount and type of  work performed is listed and match with the support  documentation provided in corresponding order


Issues in the draw process  Effective Draw Example • When all Hard Cost   invoices for a specific  cost category are  totaled they equal  the amount that is  listed on the AIA (minus  any retainage) Site Work from AIA  $155,477.80 is the same as the  sum of all of the invoices  submitted and listed on the  workbook

Issues in the draw process  Effective Draw Example • So what do all the letters mean?  Great  question!  It’s the Department’s way of  verifying the invoices that have been  reviewed, approved or if the amount  requested has been modified NC – No Change Dec – Decreased Inc – Increased B – Backup (used for hard costs) NP – Not Paid

Issues in the draw process  Effective Draw Example • If an amount on an invoice or AIA varies from  the amount you are requesting on the  workbook PLEASE write a note and tell us why Example: If there are multiple funding sources and Exchange is paying a  portion of the Hard Costs and an outside source is paying the remainder


Issues in the draw process  Effective Draw Example • We will do our best to notify you of the reason why  there was an increase (yes is happens), decrease or  denial of funds for a specific invoice. If you have  questions, please refer to your invoices that we’ve re‐ uploaded to the contract system.  Below are some  sample notes you may see

Issues in the draw process Common mistakes • Mistake: (n.) A wrong action  attributable to bad judgment  or ignorance or inattention

Issues in the draw process Common mistakes • If the Development Owner and the Contractor  are related, please make sure invoices for all  sub‐contractors are listed on the workbook  and provided as backup for verification • If an invoice has been paid by the  Development Owner, the original invoice  must be submitted and the original vendor  should be listed on the workbook 


Issues in the draw process Common mistakes • Do not group multiple invoices for one vendor on one  line in the workbook.  Instead, list each invoice on a  separate line

Issues in the draw process Common mistakes • Developer fee miscalculation – The Developer fee is paid based upon percent completion as it is listed  on the executed AIA – Section 4.6 of the Subaward states: “Up to seventy‐five percent (75%)  of the Developer Fee may be disbursed in accordance with the  percentage of construction completion of the Development.  The  balance of the Developer Fee may be paid upon the later to occur of  (i) the Department’s receipt and acceptance of Cost Certification in  form and substance satisfactory to the Department, or (ii) the  reasonable determination by the Department that there are sufficient  sources of funds available after payment of all other Development  Costs to pay the balance of the Developer fee (unless in each case, the  Development Agreement or the Mortgage Loan Documents provide  for later payment). “ – Please note, the 25% is withheld from the portion of the Developer  fee that is paid through the Exchange funds

Issues in the draw process Common mistakes 1 2

3

**Taken from Draw Request Form 16.12 


Issues in the draw process Common mistakes 1

2

** Taken from  Exchange Draw  Workbook Developer  Fee Tab

3

Issues in the draw process Common mistakes $741,000 x 25% = $185,250 (amount withheld) If the TOTAL Developer fee is being paid through  Exchange, then up to $555,750 can be disbursed  before cost‐certification • $741,000 ‐ $185,250 = $555,750 In this case, only $337,500 is being drawn from  Exchange so only $152,250 can be drawn before  cost certification • $337,500 ‐ $185,250= $152,250

Issues in the draw process Pitfalls • Pitfall: (n.)  An  unforeseen or  unexpected or surprising  difficulty 


Issues in the draw process Pitfalls • All items on the checklist need to be  submitted before a draw can be  approved.  If they are not received,  your draw could potentially be moved  to the back of the queue – Down‐date endorsement – can take the title  company a few days or weeks to receive this, so please  order it when you plan to submit a draw

– AIA signed and notarized by the Architect  – Inspection report with photos – Workbook listing all invoices

Issues in the draw process Inappropriate uses of funds • Land  Acquisition

• Reserves Account • Payment for items for other Developments

Issues in the draw process Timing of draws Development  Owner submits  draw in  contract system

Lender reviews and  approves draw  in  contract system

A Five Step Process TDHCA Quality  Assurance reviews  and approves the  draw in the contract  system

Accountant contacts  Comptroller to  process and  deposit funds

TDHCA Exchange  reviews and  approves draw in  contract system


Issues in the draw process Timing of draws • After the Development Owner submits all of the  draw support, the Lender will review the  documentation on the Contract system • The Lender will verify all supporting  documentation has been submitted and the total  draw request is complete.  Lender will also  ensure no duplicate invoices have been  submitted to other sources.  Once confirmed, the  Lender will click on the “Approve without saving” button at the bottom of the draw request screen. 

Issues in the draw process Timing of draws Multiple status possibilities for  a draw Pending – awaiting Lender Approval Pending PM Approval – awaiting  TDHCA Exchange Program Approval Pending PM2 Approval – awaiting  TDHCA Quality Assurance Approval Pending Processing – awaiting  notification from Comptroller that  Accountant’s request for funds has  been received Approved – All review levels complete  and funds in route for direct  deposit

Issues in the draw process Timing of draws • TDHCA Draw review – approximately 2 weeks • Direct Deposit Funding – approximately 1  week from TDHCA final approval of draw • Warrant/Check Funding – approximately 2  additional weeks (not recommended) NOTE: These are approximate times and are  subject to change.  These estimate as based  upon the assumption that all information  received is correct and complete.   


Issues in the draw process

• For questions regarding the draw process,  please contact Lisa Fehr at  lisa.fehr@tdhca.state.tx.us or 512.936‐7833


[Carryovers - 10% & 30%]

a. What is it? Why is it needed? i. 30% Test Manual b. Deadlines c. Extensions and Penalties d. Methods for meeting the test i. Accruals ii. Developer Fee iii. Acq/Rehab iv. Stored materials e. Single-filing requirements


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% 10% Test Generally qualified buildings must be placed in service in the same year as allocation of credits. IRC §42(h)(1)(B) An exception exists for qualified buildings which are placed in service not later than the close of the second calendar year following the calendar year in which the allocation is made (carryover allocation) allocation). IRC §42(h)(1)(E) Taxpayer’s receiving carryover allocations must incur more than 10% of the reasonably expected basis in the project as of 12 months after the allocation is made. IRC §42(h)(1)(E)(ii)


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% 10% Test Reasonably expected basis is defined as adjusted basis of land and depreciable property whether or not included in eligible basis (for purposes of determining credits). dit ) R Reg. §1.42-6(b) §1 42 6(b) If a taxpayer does not meet the 10% requirement by the due date then the carryover allocation is not valid and the taxpayer will lose their allocation of low income housing tax credits. IRC §42(h)(1)(E) The purpose of the 10% test is to give evidence to the State and Federal government that the projects are progressing along at a reasonable rate.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% 30% Test With the introduction of the American Recovery and Reinvestment Act of 2009 (“2009 Recovery Act”), 2009 projects may apply for “exchange funds” to fi finance th i project. their j t P Pub. b L L. N No. 111 111-5, 5 2009 R Recovery A Act, t §1602 If a project has not fully drawn down the awarded exchange funds by 12/31/10, then a 30% test is required. required US Treasury Interim Final Rule Rule, 31 CFR Part 32.1(b)(2) For the 30% test test, the taxpayer must incur more than 30% of the reasonably expected basis in the project as of the due date specified by the TDHCA. The rules for incurred costs are identical to the 10% test rules.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% 30% Test If a project does not meet the 30% test requirements by the deadline, all exchange funds that have been draw to date must be returned to the U.S. T Treasury Department. D t t US T Treasury IInterim t i Fi Finall Rule, R l 31 CFR Part P t 32.1(a) 32 1( ) Because the government is loaning money to these projects, extra oversight is needed to make sure these funds are being used properly properly. A 30% test insures that the funds are being properly spent in a timely fashion.


Housing Tax Credit Exchange 30% Test

Multifamily Finance Division Telephone: (512) 475-3340

Director, Robbye Meyer Facsimile: (512) 475-1895

Housing Tax Credit Exchange 30% Test To:

American Recovery and Reinvestment Act of 2009 (ARRA) 1602 HTC Exchange Fund Recipients

From: Teresa A. Shell, TDHCA Exchange Administrator Date: October 7, 2010 RE:

30% Expenditure Test Deadline/Report

All developments awarded AARA Section 1602 Exchange Funds (“Exchange Funds”) disbursed by Texas Department of Housing and Community Affairs (“TDHCA”), that have not expended and disbursed all of the Exchange Funds by December 31, 2010 must have paid or incurred at least 30% of the development’s total adjusted basis in land and depreciable property that is reasonably expected to be part of the rental housing tax credit development by December 31, 2010 (the “30% Test”). If a development does not meet the 30% Test as of December 31, 2010, all Exchange Funds that have been drawn to date must be returned to the U.S. Treasury Department. Not meeting the 30% Test is considered an Event of Recapture and will result in forfeiture of the award by the Development Owner. Development Owners that have drawn 100% of the Exchange Funds by December 31, 2010 will not be required to submit documentation demonstrating the 30% Test has been met. The 30% Test documentation must be completed, executed, scanned and uploaded to the Development Owner’s 2009 Exchange FTP account no later than December 15, 2010. This is a firm deadline and will not be extended. Development Owners are encouraged to submit the report as soon as possible, especially if they have already met the 30% Test requirement. The 30% Test documentation includes the following: 1. 2. 3.

Independent Auditor’s Report Owner/Taxpayer Certification TDHCA Exchange 30% Test – Excel Document

If you have questions regarding the 30% Test, please contact Teresa A. Shell, HTC Exchange Administrator, at 512.936.7834.


Housing Tax Credit Exchange 30% Test

INDEPENDENT ACCOUNTANT’S REPORT The same [identical] language used in this template must be used in the letter submitted. If an item is not applicable, do not omit it; indicate that it is not applicable. The numbers indicated in this letter for the total development cost and costs incurred before December 31, 2010 should be the same as the numbers reflected in the latest REA Underwriting Evaluation. If you are required to certify an amount as of a specific date, confirm that the date is consistent in all documents where it appears. The letter must include the parenthetical references that are in this template, such as (the “Department”) and (the “Owner”). However, replace the terms that are italicized with the actual names that the terms reference. If there are any questions about the letter’s contents or execution, contact the Exchange Program Administrator, Teresa A. Shell at (512) 936.7834. (To be submitted under accounting firm's letterhead) Date: To: Texas Department of Housing and Community Affairs 221 East 11th Street Austin, Texas 78701 and ___________________________ (the “Owner”) (Owner Address) (Owner City, State, Zip) RE: Housing Tax Credit Carryover Allocation Name of the Development (the “Development”): TDHCA Number: (TDHCA Number of the Development): Name of the Development Owner: We have audited the accompanying TDHCA Subawardee Report of Expenditures (“30% Test”) of the Owner of _________________________________ (the “Development”) as of _(state month, day and year), which is the “Effective Date” of this letter. The 30% Test is the responsibility of the Owner and the Owner’s management. Our responsibility is to express an opinion on the 30% Test based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 30% Test is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 30% Test. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the 30% Test. We believe that our audit provides a reasonable basis for our opinion. The accompanying 30% Test was prepared in conformity with the accounting practices prescribed by the Internal Revenue Service under the accrual method of accounting and by the Texas Department of Housing and Community Affairs (the “Department”), which is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the 30% Test, referred to above presents fairly, in all material respects, costs incurred for the Development as of December 31, 2010, on the basis of accounting described above. In addition to auditing the entries in the 30% Test, we have, at your request, performed certain agreed-upon procedures, as enumerated below, with respect to the Development. These procedures, which were agreed to by the Owner and the Department, were performed to assist you in determining whether the Development has met the 30% Test in accordance with U S Treasury Interim Final Rule, 31 CFR part 32.1 (published in the Federal Register on August 31, 2009) and Treasury Regulation Section 1.42-6. These agreed-upon procedures were performed in accordance with standards


Housing Tax Credit Exchange 30% Test

established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the specified users of the report. Consequently, we make no representations regarding the sufficiency of the procedures below either for the purpose for which this report has been requested or for any other purpose. We performed the following procedures: i We calculated, based on estimates of total development costs provided by the Owner, the Development’s total reasonably expected basis, as defined in Treasury Regulation Section 1.42-6, to be $_________. i We calculated the reasonably expected basis incurred by the Owner to be $_________. i We calculated the percentage of the development fee incurred by the Owner to be ___% of the total development fee. i We compared the reasonably expected basis incurred to the total reasonably expected basis of the Development, and calculated that ____% had been incurred. i We determined that the Owner uses the accrual method of accounting, and has not included any construction costs in carryover allocation basis that were not properly accrued. i Based on the amount of total reasonably expected basis listed above, for the Owner to meet the 30% test in accordance with the U. S. Treasury Interim Final Rule, 31 CFR Part 32.1 (published in the Federal Register on August 31, 2009) and Treasury Regulation Section 1.42-6, we calculated that the Development needed to incur at least $___________ of costs on or before December 31, 2010. As of the December 31, 2010, costs of at least $___________ had been incurred, which is approximately _______% of the total reasonably expected basis of the Development. We were not engaged to, and did not perform an audit of the Owner’s financial statements or of the Development’s total reasonably expected basis. Accordingly, we do not express an opinion on the two items just named. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Owner and the Owner’s management and for filing with the Department and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes.

Signature of Principal of Firm

Date

Printed or Typed Name & Title , City

State

Contact Person for questions about this report: Phone #

Facsimile #:


Housing Tax Credit Exchange 30% Test

DEVELOPMENT NAME:

EXCHANGE #:

The undersigned , “the Owner/Taxpayer”) hereby certifies to the Texas Department of Housing and Community Affairs (“TDHCA”) that the amounts shown in the TDHCA Subawardee Report of Expenditures document submitted herein and in verification thereof are true and correct, and that the Owner/Taxpayer anticipates expending more equal to or more than 30% of the Owner/Taxpayer’s reasonably expected basis in the above project, as required by U.S. Treasury Interim Final Rule, 31CFR Part 32.1 (published in the Federal Register on August 31, 2009) and the applicable Treasury Regulations promulgated thereunder (the “Regulations”).

I UNDERSTAND THAT REVIEW AND APPROVAL BY THE AUTHORITY OF THE CERTIFICATION OF 30% EXPENDITURE IS NOT BINDING UPON THE INTERNAL REVENUE SERVICE AND DOES NOT CONSTITUTE A REPRESENTATION OR WARRANTY FROM THE AUTHORITY TO THE OWNER/TAXPAYER THAT THE 30% REQUIREMENT HAS BEEN OR WILL BE MET OR THAT ALL BASIS ITEMS HAVE BEEN PROPERLY INCLUDED FOR FEDERAL TAX PURPOSES, AND THAT THE BURDEN OF COMPLIANCE WITH THE CODE AND THE REGULATIONS IS THE RESPONSIBILITY OF THE OWNER/TAXPAYER.

The undersigned represents and warrants that he/she has the power to execute, deliver and accept the terms of this Agreement, to enter into the transactions contemplated by this Agreement, and that the acceptance and performance of this Agreement have been duly authorized by all necessary and proper corporate and other action.

OWNER/TAXPAYER: BY: Signature

Printed Name and Title Date:


TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS Section 1602: Cash Assistance to States for Low‐Income Housing Projects  in Lieu of Low Income Housing Credits Subawardee Report of Expenditures as of December 31, 2010

For the Section 1602 Program, state housing agencies are required to report to Treasury each subawardee’s disbursement rate as of the close of business  December 31, 2010.  This form is filled out by the subawardee to assist the state housing agencies with their reporting requirement.

Please fill in the five items of information below for your subaward and sign the certification.    1. Name of Project: 2. Exchange Program Number:  3. Development Owner's Name:

XYZ APARTMENTS  09XXX XYZ DEVELOPMENT ENTITY, LP

3. Indicate your overall method of accounting as either cash or accrual:

Overall method of accounting means the method regularly used by the  subawardee to determine how income and expenses are reported for  federal income tax purposes, either the cash‐method or accrual‐method.

3. Total amount paid/incurred by close of business  December 31, 2010: 

$                                                3,500,000.00 

This is the amount included in the adjusted basis for which the subawardee  has supporting documentation to demonstrate that those costs were  paid/incurred (depending on the accounting method). The costs may be  paid/incurred from any source of project funding, whether 1602 funds,  equity, or other sources. Paid applies only to subawardees who use the cash‐method of accounting.   A cost is paid when the subawardee makes a payment to a third party.

Incurred applies only to subawardees who use the accrual‐method of  accounting.  A cost is generally incurred when 1) the fact of the liability is  fixed, 2) the amount of the liability is determinable with reasonable  accuracy, and 3) the economic performance test (see Treas. Regs. §1.461‐4)  has been met with respect to the cost.

4. Total Adjusted Basis: 

$                                             10,000,000.00 

This is the dollar amount of all costs of the development in land and  depreciable property that is reasonably expected to be part of the low‐ income housing project.  It is determined in accordance with the Internal  Revenue Code and applicable regulations, including Treasury regulation  1.42‐6(b)(2). 5. Percent paid/incurred: 

35.00%

This is #3 divided by #4.  NOTE: Percent of total adjusted basis paid/incurred – is found by dividing  the costs the subawardee paid/incurred by COB 12/31/2010 by the total  adjusted basis and changing the decimal to a percent. The calculation is  carried to four decimal places and cannot be "rounded up".  For example,  0.2968 would be shown as 29.68% and would NOT pass the 30% test  requirements.

DEVELOPMENT OWNER CERTIFICATION:  Under penalty of perjury, I declare that I have examined the information above and, to the best of my knowledge , it is true, correct, and complete.  I declare that I  am an authorized official for the subawardee who is  authorized to submit this information on behalf of the subawardee. Name Title Phone  Email Signature  Date signed


Housing Tax Credit Exchange Program Schedule of Events As of May 12, 2010 Deadlines for applicants that have NOT closed and have requested the June 30, 2010 extension.  If an applicant requested an extension and paid the $2,500 fee, then no additional fee must be paid at this time.  Further, if the deal is closed by June 30, 2010, the $2,500 fee will be refunded.

Tax Credit  Year Closing Deadline 10% Deadline 2007 / 2008 6/30/2010 8/31/2010 2009 6/30/2010 12/1/2010

Commencement of  Substantial  Construction  Deadline 8/31/2010 12/1/2010

50% Completion 8 months from closing 8 months from closing

Placement in  Service 8/31/2011 12/31/2011

Deadlines for applicants that closed the Exchange funds after March 31, 2010 but before May 31, 2010, the  deadlines  should be as follows:

Tax Credit  Year Closing Deadline 10% Deadline 2007 / 2008 5/31/2010 7/31/2010 2009 5/31/2010 12/1/2010

Commencement of  Substantial  Construction  Deadline 7/31/2010 12/1/2010

50% Completion 8 months from closing 8 months from closing

Placement in  Service 7/31/2011 12/31/2011

Deadlines for applicants that closed the Exchange funds prior to March 31, 2010.

Tax Credit  Year Closing Deadline 10% Deadline 2007 / 2008 3/31/2010 5/31/2010 2009 3/31/2010 12/1/2010

Commencement of  Substantial  Construction  Deadline 5/31/2010 12/1/2010

50% Completion 8 months from closing 8 months from closing

Placement in  Service 3/31/2011 12/31/2011

NOTE:  Any extension requests beyond these blanket extensions approved by the Board and listed above will only  be considered on a case by case basis and may subject 2010 or future competitive applications to a 20% reduction  in overall score.


ITEM 2 C – CARRYOVERS, 10% AND 30%   EXTENSIONS AND PENALTIES    REFER TO THE APPROPRIATE YEAR QAP 


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Accruals and other items utilized for incurred costs – Purchase of land – must have the following • Purchase agreement • Final executed settlement statement • Warranty deed • Proof of title insurance • Third Party Appraisal (if purchased from related party) – Accounting fees • Prior year tax return preparation fees (if applicable) • 10% test and 30% test preparation fees


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Accruals and other items utilized for incurred costs (cont.) – Architect and Engineering fees • Must have contracts specifying contract price and services to be performed and invoices showing percent or amount of fees incurred and earned – Appraisals, A i l M Market k t St Studies di & E Environmental i t lC Costs t • Must have invoices showing amount of fees incurred and earned – Legal fees • Fees F for f syndication, di ti partnership t hi organization, i ti and d regarding di credits dit are NOT includable • Fees regarding purchase of land, building permits, zoning, etc. are includable as they relate to purchase/construction of building


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Accruals and other items utilized for incurred costs (cont.) – Building permits and impact fees • Must have invoice of costs incurred and proof of payment • Developer Fee – Industry standard is to generally include 20% of the total developer fee – To include the 20%, the Development Agreement must state that a certain amount or the 20% will be considered earned as of the specified date or if certain t i conditions diti are mett – If proof exists that over 20% of the developer fee has been paid AND earned, then more than 20% can be included if reasonable amount


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Developer Fee (cont.) – One method to determine if reasonable amount has been incurred and earned is to use the percentage of hard costs incurred in relation to the amount of developer fee earned • For example, if 35% of hard costs are incurred then it is reasonable to determine that 35% of the developer fee has been earned • Acquisition of Existing Buildings – Need same required land documentation for purchase of building – Must have appraisal segregating land appraised value – Acquired buildings are included as costs only if rehabilitated per §42


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Stored material purchases – Without a General Contractor contract • Required to have the following documentation in order to include as incurred costs – Storage Agreement between supplier and project owner specifying th materials the t i l mustt be b on hand, h d id identified, tifi d and d segregated t d iin th the warehouse. – Itemized materials purchase order invoiced to the project owner – Proof of 10% down payment and remaining 90% financed on a promissory note – Non-refundable insurance policy on stored materials showing project owner o e as be beneficiary e ca y


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Methods for meeting the tests • Stored material purchases (cont) – With General Contractor contract • Need AIA construction invoice that lists the project owner, the contractor, and the amount of materials stored to date • Must also include itemized list of all materials stored to date


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

Carryovers – 10% and 30% Single-filing Requirements TDHCA encourages submitting the 30% Test opinion before the deadline if all possible, especially if the project has already met the 30% Test requirements. Pursuant to TDHCA, if a project with exchange funds has met the 30% Test spending requirements by December 1, 2010, then the Development Owner may submit just the 30% Test opinion and not have to submit a 10% Test opinion by the December 1, 2010 deadline (see below). If the Development Owner has not submitted a 10% Test package package, the Development Owner needs to submit the package with all of the 10% Test package requirements, but can replace the tab that has the 10% Test opinion with the 30% Test opinion.


[TCEP Draw-down vs. 30% Carryover]

a. Developer fee b. Other items (including reserves) c. Timing of December draws


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover TCEP Draw-down If a development owner draws down 100% of the exchange funds by December 31, 2010, they will not be required to submit documentation demonstrating the 30% Test has been met. US Treasury Interim Final Rule, 31 CFR Part 32.1 Unlike the 30% test, which does not require the costs incurred be purchased with exchange funds, the TCEP requires that exchange funds be used to pay for eligible costs of the development. de elopment Accordingly, the amount of each draw request must be limited to the amount of pay y costs actually y incurred by y the development p owner at moneyy needed to p the time of the draw request.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover TCEP Draw-down • TDHCA will not make any payments to the Development Owner for costs that: – are p prohibited under § §1402 and § §1602 of the 2009 Recoveryy Act,, and anyy other rules, regulations, guidelines or notices published by the IRS or Treasury; – are not in accordance with the terms of the Tax Credit Exchange Program Subaward Agreement (“Agreement”) between the Development and TDHCA; – were requested and/or incurred after termination of the Agreement; – were requested during the occurrence and continuation of an Event of Default; or – were requested and/or incurred less than sixty (60) Business Days prior to December 31, 2011, or as may be extended in the discretion of TDHCA if, and only to the extent that, the expiration date for funding subawards of Exchange Funds set forth in § §1602(d) ( ) of the 2009 Recovery y Act is extended beyond y December 31,, 2011.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover Developer Fee • Up to seventy-five percent (75%) of the developer fee may be disbursed in accordance with the percentage of construction completion of the development. • The balance of the developer fee may be paid upon the later to occur of – (i) TDHCA’s receipt and acceptance of Cost Certification in form and substance satisfactoryy to TDHCA, or – (ii) the reasonable determination by TDHCA that there are sufficient sources of funds available after payment of all other development costs to pay the balance of the developer fee (unless, in each case, the development agreement or the mortgage loan documents provide f later for l t payment) t)


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover Other Items –

Reserves • The required reserve accounts except for the Replacement Reserve account, shall not be funded with Exchange Program Funds – However, to the extent that amounts have been disbursed to the development owner or the developer in payment of fees or for reimbursements of previously paid expenditures, such amounts may be used to fund reserve accounts as permitted by TDHCA and unless otherwise prohibited under §1402 and §1602 of the 2009 Recovery Act, and any other rules, regulations, guidelines or notices published by the IRS or Treasury.

– Escrows • Not allowed


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover Other Items – Prepaids • As long as the prepaids are non-refundable and not for prospective future needs – Predevelopment loans • To the extent loan proceeds were used to pay for eligible development costs – Construction loans • To the extent loan proceeds were used to pay for eligible development costs – Seller-financed loans on acquisition of land and/or buildings • Only the acquisition of the building is allowed • Land L d iis iineligible li ibl


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

TCEP Draw-down vs. 30% carryover Timing of December Draws TDHCA may disburse exchange funds to recipients in 2011 provided an award of exchange funds has been made to the recipient on or before December 31, 2010 and the recipient has, by the close of 2010, met the requirements of the 30% Test TDHCA will not disburse any funds to the development owner for costs that were requested and/or incurred less than 60 business days prior to December 31 2011 31, 2011, as such date may be extended in accordance with ยง1602(d) of the 2009 Recovery Act.


[1602 Projects - Losses (used internally)]

a. Tax characteristics b. Capital account c. Example d. Real Estate Professional rules e. Bonus depreciation


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Tax Characteristics Although exchange funds are usually received as a grant, some states structure the funds as forgivable loans, which are treated as grants for tax purposes. Exchange funds are excluded from the gross income of recipients and are exempt from taxation. IRS Notice 2010-18 Furthermore,, exchange g funds that are used in a q qualified low-income building g are not federal grants for purposes of §42(d)(5)(A) do not otherwise reduce the depreciable or LIHTC eligible basis of the building. IRC §42(i)(9)(B) as amended by 2009 Recovery Act §1404; Notice 2010-18


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Capital Account Partners in a LIHTC development receiving exchange funds will not be taxed on the received funds, but will receive capital account credit for their distributive share of the exchange funds (similar to treatment to an allocation of taxexempt income) income). If a partner was in the partnership during the time the partnership received all of the exchange fund, the partner will be allocated its full share of tax�exempt income from those disbursements and the resulting increase in its capital account in i the h partnership. hi Th The calculation l l i off this hi allocation ll i iis controlled ll d b by IRC Section 704(a) and the partnership agreement. If there was a change in ownership among the partners during the year, the allocation would need to pass a cursory inspection under IRC Section 706(d) 706(d), which requires that allocations must be in accordance with the varied interests of the partners during the taxable year.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Example #1 Partnership ABC is formed on January 1, 2010, for the purpose of developing an affordable housing project. ABC applies for exchange funds from the state housing agency (“Agency”) and receives an award of $6 million. ABC is required to submit construction receipts to the Agency for reimbursement, and subsequently submits receipts i t off $1 million illi per month th starting t ti A Aprilil 1 1, 2010 th through hS September t b 1 1, 2010 and d receives exchange funds of equal amount from the Agency in those months. Partner A is a 99% owner of ABC for the entire taxable year. The project places in service in November 2010 and generates $200,000 in operating losses (including depreciation) for 2010. Assuming $0 beginning capital account, A’s capital account at December 31, 2010 is i as ffollow: ll Partner A’s Capital Account Beginning

$

Tax‐Exempt Income from Exchange Funds (99% of $6 Million)

5,940,000

Operating Losses (99% of $200,000) Ending 

0

(198,000) $

5 742 000 5,742,000


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Example #2

Same facts as example #1 except that there is a change of ownership on May 1, 2010, and Partner D is the new 99% owner. Partner P t A would ld receive i 99% off the th $1 million illi iin ttax-exemptt income i ffrom the th exchange funds disbursed prior to the change in ownership. Partner D would receive the additional 99% share of the $5 million in tax-exempt i income ffrom th the remaining i i exchange h ffunds d di disbursed b d after ft th the change h iin ownership, plus 99% of the operating losses from the time the project was placed in service through the end of the year.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Real Estate Professional Rules Losses from passive activities (activities which you do not “materially participate”) cannot be deducted against nonpassive activity income. Similarly, credits from passive activities cannot be used to reduce taxes on nonpassive activity income. IRC §469(a) For purposes of the passive activity loss rules, rental real estate activities are automatically treated as passive activities, even if the owner “materially participates” in their management and operations. As a result, tax losses from rental realty cannot be deducted against nonpassive income. IRC §469(c)(2); §469(c)(4) However, there is an exception for real estate professionals. If you qualify as a real estate professional, your rental real estate interests are not automatically treated as passive activities if you materially participate in the rental real estate activity. Therefore, the activity will not be treated as passive, and you will be entitled to deduct losses from that activity ti it against i t nonpassive i income. i IRC §469(c)(7) §469( )(7)


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Real Estate Professional Rules The taxpayer qualifies as a real estate professional if: (1) the taxpayer ta pa er o owns ns at least one interest in rental real estate (Reg (Reg. §1.469-9(b)(6)), §1 469 9(b)(6)) (2) more than one-half of the personal services the taxpayer performs in trades or business during the tax year are performed in real property trades or businesses in which the taxpayer materially participates (IRC §469(c)(7)(B)(i)), and (3) the tax payer performs more than 750 hours of service during the tax year in real property trades or business in which the tax payer materially participates participates. IRC §469(c)(7)(B)(ii)


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Real Estate Professional Rules If the taxpayer meets all three tests, then there are seven material participation tests that are applied to each rental real estate activity to determine whether p or nonpassive. p If the taxpayer p y p passes one of the each activityy is passive following seven tests as stated in Reg. §1.469-5T, IRS accepts that as establishing material participation in an activity. Personal services performed as an employee does not count unless a taxpayer owns 5 percent or more of the activity. IRC § 469(c)(7)(D)(ii) • For instance, according to the IRS, if the taxpayer works full-time for a construction or property management company, but does not own any of th company, the the th taxpayer t is i nott a reall estate t t professional. f i l Additionally, Additi ll each of qualifying taxpayer’s interest in rental real estate is treated as a separate activity unless the taxpayer elects to treat all interest in rental real estate as a single activity.


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Real Estate Professional Rules In determining whether a taxpayer material participates in a rental real estate activity, work that the taxpayer preformed in a management activity is taken into account only to the extent that it is performed in managing the taxpayer’s taxpayer s own real estate interest. Reg. §1.469-9(e)(3)(ii) A closely held C corporation meets qualifying taxpayer requirements if more than 50% of its gross receipts (not including portfolio income) for the tax year are derived from real property trades or businesses, as defined by IRC §469(c)(7)(C), in which the corporation materially participates. Reg. §1.4699(c)(2)


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Bonus Depreciation and §179 Expensing The recently enacted Small Business Jobs Act of 2010 includes a wide-ranging assortment of tax changes generally affecting business, including two significant changes that allow for faster cost recovery of business property. §179 Expensing Changes: – For tax years beginning in 2010 and 2011, the $250,000 limit is increased to $ $500,000 and the investment ceiling to $ $2,000,000. IRC §179(b)(1)(B); §179(b)(2)(B) as amended by Small Business Jobs and Credit Act of 2010 §2021 – For property placed in service in any tax year beginning in 2010 or 2011, the up-to$500,000 of property that can be expensed can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property). IRC §179(f) as amended by Small Business Jobs and Credit Act of 2010 §2021


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (used internally) Bonus Depreciation and §179 Expensing Bonus Depreciation Changes: − The new law extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (2011 for certain property) Specifically Specifically, the timely acquisition requirement is satisfied if the property is acquired by the taxpayer either • (1) after Dec. 31, 2007 and before Jan. 1, 2011, but only if no written binding contract for the acquisition was in effect before Jan. 1, 2008, or; • (2) under a written binding contract entered into after Dec. 31, 2007 and before Jan. 1, 2011. IRC §168(k)(2)(A)(iii) as amended by Small Business Jobs and Credit Act of 2010 §2022(a)(2) – For a taxpayer manufacturing, constructing or producing property for its own use, the timely acquisition requirement is treated as met if the taxpayer began the manufacture, construction or production after Dec. 31, 2007 and before Jan. 1, 2011 IRC §168(k)(2)(E)(i) as amended by Small Business Jobs and Credit Act of 2010 §2022(a)(2)


[1602 Projects - Losses (monetized)]

a. Further subsidy to project i. Deferred Developer fee pay-down ii. Additional project uses b. Timing c. Partnership Agreement issues i. Pay-in ii. Cash flow iii. Year 15 buy-out iv. Economic Substance d. TDHCA process for admiing new partners


PRESENTED TO

TAAHP - Texas Affiliation of Affordable Housing Providers

1602 Projects – Losses (monetized) Timing Why it is important that investors are in the project as the TCEP funds are drawn down? From previous Example #1 and #2, a partner is not entitled to a full allocation of tax�exempt income, with a consequent boost in capital accounts, unless it has been admitted as a partner in the partnership prior to the date when exchange f d income fund i h has b begun tto b be recognized i d as iincome. The earlier the new partner becomes a partner in the partnership the higher its allocation of income attributable to the exchange funds will be. Please note any admission of a new partner in the partnership must be approved by TDHCA.


Partnership Agreements • May look very similar to partnership agreements with tax credit syndicators • Capital Contributions – Based upon percentage of tax losses allocable to purchaser during compliance period – A portion is paid upon admission, the balance may be paid at cost certification – Upward or downward adjusters may be applicable. May be an adjuster if there is a recapture of Exchange funds. – Take a collateral interest in the purchaser’s interest to secure future payment 1

Partnership Agreements • General Partner restrictions and covenants – Purchaser may have approval rights for material actions – Customary representations, warranties, and covenants, including environmental representations – Compliance obligations

• Standard General Partner removal provisions 2

Partnership Agreements • Reports – Annual budget – Annual audit – Tax return – Notices of material events (default notices, compliance notifications, etc.) – Construction draws

3

1


Partnership Agreements • Economics – Generally, a partnership must have “economic substance” in order for the allocations to partners to be respected. In other words, partnership allocations cannot be structured simply for tax avoidance. – Codification of “economic substance” doctrine in Code Section 7701(o), effective March 2010 – Failure to establish economic substance may result in loss of tax benefits and penalty 4

Partnership Agreements • Economics – What does it mean to have “economic substance”? • The transaction changes in a meaningful way (apart from federal income tax effects) the taxpayer’s economic position; and • The taxpayer has a substantial purpose for entering into the transaction (apart from federal income tax effects)

– This gives rise to an investor sharing in 10% of the cash flow, etc. 5

Partnership Agreements • Economics – What does “economic substance” mean for a tax credit transaction? – Joint Committee on Taxation “Technical Explanation of the Revenue Provisions of the ‘Reconciliation Act of 2010,’ as amended, in combination with the ‘Patient Protection and Affordable Care Act’” Footnote 344

6

2


Partnership Agreements •

Economics – If the realization of the tax benefits of a transaction is consistent with the Congressional purpose or plan that the tax benefits were designed by Congress to effectuate, it is not intended that such tax benefits be disallowed. See, e.g., Treas. Reg. sec. 1.269-2, stating that characteristics of circumstances in which an amount otherwise constituting a deduction, credit, or other allowance is not available are those in which the effect of the deduction, credit, or other allowance would be to distort the liability of the particular taxpayer when the essential nature of the transaction or situation is examined in the light of the basic purpose or plan which the deduction, credit, or other allowance as designed by the Congress to effectuate. Thus, for example, it is not intended that a tax credit (e.g., section 42 (lowincome housing credit), section 45 (rehabilitation credit), section 48 (energy credit), etc.) be disallowed in a transaction pursuant to which, in form and substance, a taxpayer makes the type of investment or undertakes the type of activity that the credit was intended to encourage.

7

Partnership Agreements • Economics – Notice what the footnote does not specifically cover: • Treatment of related items in a tax credit transaction (such as losses and deductions) • Whether Section 1602 Exchange falls under the category of Section 42 tax credits

8

Partnership Agreements • Economics – What does this mean for selling the losses? • Different tax counsel have different opinions about the impact of the “economic substance doctrine” in Exchange transactions • This may impact the waterfalls for cash flow and sale or refinancing proceeds

9

3


Partnership Agreements • Economics – Typical waterfalls for cash flow or sale/refinancing proceeds may be: • • • • •

Asset Management Fee to purchaser Partner loans Developer Fee General Partner Fee 90% to General Partner; 10% to purchaser

10

Partnership Agreements • Back End – Prohibition against sale during the compliance period, without purchaser’s consent – Option for General Partner to buy out purchaser (see Back End discussion to come) – Put for purchaser to choose to sell its interest to General Partner for a minimal amount

11

4


ITEM 5 D – 1602 Projects – Losses (monetized)  TDHCA PROCESS FOR ADMITTING NEW PARTNERS    REFER TO THE CURRENT YEAR QAP 


[Cost Segregation]

a. Background b. Example c. Bonus Depreciation


What is a cost segregation study? ƒ ƒ ƒ ƒ ƒ ƒ

Engineering-based analysis used to accelerate depreciation deductions and defer tax Classification of costs into correct MACRS recovery periods – Typically 5, 15 and 27.5 years for Residential property Comprehensive breakdown between real property and tangible personal property Framework for correct depreciation schedules Recognized by the IRS as an accepted procedure Both hard and soft costs are allocated

Why is a cost segregation study beneficial? ƒ ƒ

Accelerate depreciation deductions (income tax) Defer tax

Who benefits from a cost segregation study? ƒ ƒ ƒ

Commercial real estate owners Residential rental property owners Tenants

What is the application to 1602 Projects? ƒ ƒ ƒ

Projects that are primarily funded by Section 1602 dollars do not require a tax credit investor Developers may become the sole or primary investors in their own deals Benefits of depreciation losses may now flow through to developers – Losses may offset income from other sources, including developer fee income – Losses may be carried back 2 years and forward 2 (special rule for 2008 and 2009 losses allows a 5 year carryback period)

What is the value of depreciation losses? ƒ ƒ ƒ

A cost segregation study increases the value of those losses whether a developer holds or sells the losses interest in a Section 1602 deal. Roughly $.035 per depreciation dollar for a developer if utilized personally Roughly $0.10-12 per depreciation dollar if monetized

When is a cost segregation study performed? ƒ

Ideal time is at certificate of occupancy


Case Study ƒ 320 Unit Garden Style Apartment Community ƒ $20MM Depreciable Basis ƒ Placed in service February 2009

   

Case Study Depreciation Illustration: CSS Performed for Year Placed in Service $2,000,000 $1,800,000 $1,600,000 $1,400,000 After CSS $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000

2034 2035 2036

2028 2029 2030 2031 2032 2033

2021 2022 2023 2024 2025 2026 2027

2015 2016 2017 2018 2019 2020

2009 2010 2011 2012 2013 2014

$0

Year


Case Study Depreciation Illustration: CSS Performed for Year Placed in Service Depreciation Based On Cost Segregation Study Total Depreciation Before CSS

Year

5-Year

15-Year

Total Depreciation after CSS

27.5-Year

Additional Depreciation

Additional Taxes Deferred

NPV

2009

636,400

560,000

180,000

432,752

1,172,752

536,352

187,723

187,723

2010

727,200

896,000

342,000

494,496

1,732,496

1,005,296

351,854

331,937

2011

727,200

537,600

307,800

494,496

1,339,896

612,696

214,444

190,854

2012

727,200

322,560

277,200

494,496

1,094,256

367,056

128,470

107,866

2013

727,200

322,560

249,480

494,496

1,066,536

339,336

118,768

2014

727,200

161,280

224,280

494,496

880,056

152,856

53,500

39,978

2015

727,200

0

212,400

494,496

706,896

(20,304)

(7,106)

(5,010)

2016

727,200

0

212,400

494,496

706,896

(20,304)

(7,106)

(4,726)

2017

727,200

0

212,760

494,496

707,256

(19,944)

(6,980)

(4,380)

2018

727,400

0

212,400

494,632

707,032

(20,368)

(7,129)

(4,220)

2019

727,200

0

212,760

494,496

707,256

(19,944)

(6,980)

(3,898)

2020

727,400

0

212,400

494,632

707,032

(20,368)

(7,129)

(3,755)

2021

727,200

0

212,760

494,496

707,256

(19,944)

(6,980)

(3,469)

2022

727,400

0

212,400

494,632

707,032

(20,368)

(7,129)

2023

727,200

0

212,760

494,496

707,256

(19,944)

(6,980)

(3,087)

2024

727,400

0

106,200

494,632

600,832

(126,568)

(44,299)

(18,484)

2025

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(32,061)

2026

727,400

0

0

494,632

494,632

(232,768)

(81,469)

(30,255)

2027

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(28,534)

2028

727,400

0

0

494,632

494,632

(232,768)

(81,469)

(26,926)

2029

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(25,395)

2030

727,400

0

0

494,632

494,632

(232,768)

(81,469)

(23,964)

2031

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(22,602)

2032

727,400

0

0

494,632

494,632

(232,768)

(81,469)

(21,328)

2033

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(20,116)

2034

727,400

0

0

494,632

494,632

(232,768)

(81,469)

(18,982)

2035

727,200

0

0

494,496

494,496

(232,704)

(81,446)

(17,903)

2036

454,600

0

0

309,128

309,128

(145,472)

(50,916)

(10,558)

Total

20,000,000

2,800,000

3,600,000

13,600,000

20,000,000

0

0

619,437

94,075

(3,342)

     

Case Study Depreciation Illustration: CSS Performed for Year Placed in Service

Summary of Results

Year

w/out CSS

w/ CSS

NPV

1

636,400

1,172,752

187,723

5

3,545,200

6,405,936

912,455

10

7,181,400

10,114,072

934,098

15

10,817,800

13,649,904

916,546

* NPV savings calculated using a 35% tax rate and 6% discount rate.

 


[Compliance Issues]

a. 8609s i. Multiple building projects ii. Deadline for minimum set-aside iii. Commencement of compliance period iv. Ongoing compliance monitoring and recapture


Compliance and Exchange 8609 elections and Recapture

• Compliance is intended to be the same – “Any such subaward with respect to any qualified  low‐income building shall be made available in the  same manner and shall be subject to the same  limitation (including rent, income, and use  restrictions on such building) as an allocation of  housing credit dollar amount allocated by such  State housing credit agency under section 42…”

• So… – – – – – –

Student rules the same Income the same Rent restrictions Utility Allowances UPCS Reporting etc

• All the same. TDHCA has great compliance  training. You should go. Visit calendar section of  www.taa.org


8609 elections • Completed 8609 sent to TDHCA instead of IRS. • Proposed compliance rules require submission  30 days after released by TDHCA • Complete Lines 7, 8b, 9b, 10a, 10c and 10d of  Part II

• Line 7: Eligible Basis of Building – Determined as of the close of the end of the first  year of the credit period (which you will elect on  line 10a)

• Line 8(b) Are you treating this building as  part of a multiple building project for  purposes of section 42? – If you mark yes, must identify how you are  grouping the buildings. – Answer impacts minimum set aside requirements,  if households can transfer. Could also impact  income limits and recertification requirements 


Line 9(b): For market–rate units above the average quality standards of  low‐income units in the building, do you elect to reduce eligible basis by  disproportionate costs of non‐low income units under section 42(d)(3)(B) – Talk to your CPA for an explanation; too complicated to explain here. – To your benefit to answer yes 

Matters only if you have market rate units, and they cost more to  construct than your low‐income units, (but not more than 15% more)

Leave blank if: – No market rate units – Market rate units do not cost more to build or – Market rate units cost more than 15% of the cost of low income units

• Line 10(a) Elect to being credit period the  first year after the building is placed in  service – If you mark yes: • Minimum set aside must be met by 12/31 of year  following placed in service • Eligible basis will include costs incurred through 12/31  of year following placed in service • Compliance period won’t start until 1/1 of year  following placed in service

• Line 10(a) Elect to being credit period the  first year after the building is placed in  service – If you mark no: • Minimum set aside must be met by 12/31 of year  placed in service • Eligible basis will include costs incurred through 12/31  of year placed in service • Compliance period starts 1/1 of year placed in service


• Line 10(c): Elect minimum set‐aside  requirement  – Mark 40/60

• Line 10(d): Elect deep rent skewed project  – Consider making this election if your market rents  are expected to be more than two times your low  income rents. – If you want to do this, 15% of your low income units  must be at the 40% income and rent levels. – Households do not go over income until their income  exceed 170% (instead of 140%) of AMI. – See 142(d)(4)(B)

• Recapture: – Occurs if applicable fraction falls below: • Percentage of 1602 funds that comprise the eligible  basis of the building OR • Minimum set aside (40% at 60%)

• Unless…


• Your applicable fraction is less than your 1602  percentage.  • If so recapture occurs if applicable fraction  falls below applicable fraction stated in LURA

• Example – Project’s eligible basis: $13,537,000 – Exchange Award amount: $11,000,000 – The 1602 percentage: 81.25%  ($11,000,000/$13,537,000) – Project is one building with 100 same sized units

• Scenario 1: Applicable fraction is 100%  – Project not potentially subject to recapture unless  20 units are determined to be out of compliance.

• Scenario 2: Applicable fraction is 75% – Project potentially subject to recapture if 1 unit is  out of compliance


• Mixed income exchange properties: – If you’re applicable fraction in any building is less  than your 1602 percentage, consider requesting  an amendment to your LURA to redistribute the  market rate units on your property to avoid this  risk.

Calculating recapture You “earn” your exchange award each year your  property is in compliance.  In a recapture event, the amount owed is the  full award minus 1/15 for each full year of  compliance.

• Example: ‐$11,000,000 exchange award ‐Recapture event identified in year 3 ‐$11,000,000/15 years= $733,333 x 2 yrs  compliance= $1,466,666 Recapture liability= $9,533,334


• Properties not subject to recapture if  noncompliance corrected in a timely manner. • Go to training to avoid noncompliance


[Back-end Issues]

a. Year 15 – Investor buy out i. Price ii. Possible mechanisms A. Capital contribution and Capital Call B. Double the price with 50% due in year 15 C. Fair market value based on 15-year cash projection with reserve b. Right of first refusal c. Qualified contract i. Texas statutory limitations ii. Pricing d. TDHCA option i. 704b impact


Back End Issues • When you have a loss investor – Option for buying out the investor • Must an option be for fair market value? • If so, are there other strategies for removing the investor without a significant cash requirement? – Increase the capital contribution – Property needs assessment capital call – Base fair market value on 15-year cash flow projection

– Put for the investor to retire its interest

1

Back End Issues • Right of First Refusal – Tex. Govt. Code Section 2306.6726 – LURA

2

Back End Issues • Right of First Refusal – Takes two years to go through the process – Two years do not start until the owner notifies TDHCA of an intent to sell – Earliest possible date to notify TDHCA is Day One of Year 14

3

1


Back End Issues • Right of First Refusal – During the two year period, a sale can be made only: • Pursuant to a right of first refusal • At the 42(i)(7)(B) price (i) the principal amount of outstanding indebtedness secured by the building (other than indebtedness incurred within the 5-year period ending on the date of the sale to the tenants), and (ii) all Federal, State, and local taxes attributable to such sale 4

Back End Issues • Right of First Refusal – First six months - CHDO – Second six months – any qualified non-profit organization or tenant organization – Second year – TDHCA or any qualified nonprofit organization or tenant organization – Any proposed purchaser must be approved by TDHCA 5

Back End Issues • Right of First Refusal – Proposed purchaser must consummate transaction within 120 days of acceptance of right of first refusal – If the property has not been sold through this mechanism at the end of the two-year period, the restriction is eliminated and the owner can sell to anyone

6

2


Back End Issues • Right of First Refusal – Questions – Is a bona fide offer required to trigger the right of first refusal, or is this really intended to be an option? – Will TDHCA assist in finding a buyer? Will it maintain a database of potential purchasers?

7

Back End Issues • Qualified Contract Texas Government Code Section 2306.185(c) The department shall require that a recipient of funding maintains the affordability of the multifamily housing development for households of extremely low, very low, low, and moderate incomes for the greater of a 30-year period from the date the recipient takes legal possession of the housing or the remaining term of the existing federal government assistance. In addition, the agreement between the department and the recipient shall require the renewal of rental subsidies if available and if the subsidies are sufficient to maintain the economic viability of the multifamily development. 8

Back End Issues •

Qualified Contract Section 42(h)(6)(F) Qualified contract For purposes of subparagraph (E), the term “qualified contract” means a bona fide contract to acquire (within a reasonable period after the contract is entered into) the nonlow-income portion of the building for fair market value and the low-income portion of the building for an amount not less than the applicable fraction (specified in the extended low-income housing commitment) of— (i) the sum of— (I) the outstanding indebtedness secured by, or with respect to, the building, (II) the adjusted investor equity in the building, plus (III) other capital contributions not reflected in the amounts described in subclause (I) or (II), reduced by (ii) cash distributions from (or available for distribution from) the project.

9

3


Back End Issues • TDHCA Option – Option to acquire a limited partner interest of 10-20% – Applies so long as the LURA is outstanding – Intended to assure TDHCA receives notice of any transfer and an opportunity to approve the purchaser and ensure long-term affordability

10

Back End Issues • TDHCA Option – Applies to transfers to non-affiliates – Does not apply to foreclosure – Exercisable for 90 days after receipt of notice – Purchase price is $100

• Query: Does IRS permit this? See IRS FAQ response 3g. • Would TDHCA receive any distribution upon liquidation? 11

4


[presenters]

taahp.org


CYNTHIA L. BAST, ESQ.

100 CONGRESS AVENUE, SUITE 300 AUSTIN, TEXAS 78701 512-305-4707 (DIRECT PHONE) 512-391-4707 (DIRECT FAX) cbast@lockelord.com

Law.A partner in the Austin office of Locke Lord Bissell & Liddell LLP, Cynthia Bast is nationally recognized as a preeminent attorney in the area of affordable housing finance. She leads her firm's Affordable Housing Section, assisting clients with complex affordable housing and community development transactions using a variety of financing tools, particularly the low-income housing tax credit. Over the past 19 years, she has worked on hundreds of transactions developing affordable housing in Texas and other states. She participates extensively in rule-making and administrative issues with the Texas Department of Housing and Community Affairs and assists with legislation on important issues in affordable housing. Cynthia is actively working on American Recovery and Reinvestment Act financing. Within her firm, Cynthia serves on the Associate Orientation and Development Committee, reflecting her interest in mentoring young lawyers. She previously served on the firm's Women's Initiative, Diversity Committee and the Recruiting Committee for the Austin office. Cynthia is a past chair and current board member for Texas Community Building With Attorney Resources, a pro bono project providing free legal services to community-based nonprofits working to improve low-income communities. She received that organization's Volunteer of the Year Award in 2002 and in 2003 and was recognized for outstanding pro bono service by the Travis County Women Lawyers Association. Previously, she was a board member and chair for Artists' Legal and Accounting Assistance, another pro bono project providing free legal and accounting services to lowincome artists and arts organizations. She received a B.A. in Economics, magna cum laude, and an M.B.A. from the University of Tulsa and a J.D., with honors, from The University of Texas School of Law. She is a frequent speaker and writer on matters related to affordable housing and has been a guest lecturer at The University of Texas School of


THOMAS J. GOURIS

221 EAST 11TH STREET AUSTIN, TEXAS 78701 512-475-1470 (DIRECT PHONE) 512-469-9606 (DIRECT FAX) tom.gouris@tdhca.state.tx.us

Tom Gouris is the Deputy Executive Director of Housing Programs for the Texas Department of Housing and Community Affairs. Over the past two years, Mr. Gouris has been responsible for development and implementation of nearly $1 Billion stimulus program funding with the Neighborhood Stabilization Program, the Tax Credit Assistance Program and the Tax Credit Exchange Program in addition to the Department’s ongoing housing development programs. Over the last 13 years with the Department, he has overseen the underwriting and made funding recommendations for over 1,200 multifamily transactions totaling over $10 Billion in transactional volume utilizing Housing Tax Credit, HOME, CDBG, Texas Housing Trust Fund, Section 8 Mark-to-Market, and tax-exempt mortgage revenue bond programs. Mr. Gouris was previously a lending re-engineering consultant with Alex Sheshunoff Management Services, Inc. and a real estate workout manager with Bank One in Texas. Mr. Gouris has spoken extensively at housing and tax credit conferences across the country and has been a guest lecturer at Southwestern University and Texas A & M University. Education: B.A., Economics and International Relations – University of Wisconsin – Madison Masters of Business Administration – University of Texas at Austin


PATRICIA MURPHY

221 EAST 11TH STREET AUSTIN, TEXAS 78701 512-475-3140 (DIRECT PHONE) patricia.murphy@tdhca.state.tx.us

Patricia Murphy received a bachelor’s degree from Boston College in 1992. She has been with the compliance division of the Texas Department of Housing and Community Affairs since 1995. In her current position as Chief of Compliance and Asset Oversight Patricia has oversight for the long term compliance of the Housing Tax Credit, Tax Exempt Bond, HOME, and State Housing Trust Fund programs.


TERESA SHELL, CCIM

221 EAST 11TH STREET AUSTIN, TEXAS 78701 512-936-7834 (DIRECT PHONE) 512-475-0764 (DIRECT FAX) teresa.shell@tdhca.state.tx.us

Teresa Shell currently serves as the Housing Tax Credit Exchange Administrator for the Texas Department of Housing and Community Affairs. Ms. Shell brings her knowledge and experience of commercial real estate fund management, commercial real estate finance, institutional investments and Low Income Housing Tax Credit syndication in order to administer the new HTC Exchange program. Ms. Shell is responsible for placing and managing approximately $594mm as part of the American Recovery and Reinvestment Act (AARA – Section 1602) for the US Treasury Department. Prior to TDHCA, Ms. Shell served as the Chief Executive Officer for Sendero Real Estate Advisors, LLC, where she oversaw the day-to-day business of the firm, fostered investor relations, monitored fund management and ensured regulatory compliance. Ms. Shell also served as the Chief Compliance Officer for the firm. Prior to Sendero, Ms. Shell served as the Director of Portfolio Management for the Texas Permanent School Fund Real Estate Portfolio ("PSF") for the Texas General Land Office. As such, she was responsible for the design, implementation and execution of an institutional-quality, commercial real estate investment management policy. Ms. Shell's implementation of this policy and program was a new endeavor for the PSF/GLO and is similar to that of any like-type institutional quality real estate investment funds. Ms. Shell was responsible for the fiduciary oversight of approximately $600mm of assets-under-management, timely and appropriate investment of an annual income of approximately $500mm and placement of approximately $300mm of historical cash reserves with both external Fund Managers and commercial real estate investments sourced by internal staff. Previously Ms. Shell served as the Director of Fund Management for MMA Financial Advisory Services, an operating company for MuniMae (NYSE: MMA). In this role, she was responsible for managing approximately $3.5b of assets under management, consisting primarily of multi-family commercial real estate investments within the MMA REIT, Group Trust and a Direct Placement portfolio. Ms. Shell previously served as a Trustee for the MMA REIT and Group Trust as well as MMA's Asset Management Division Director and Loan Servicing Division Director. After several years of national and international commercial real estate engagements as a consultant with Ernst & Young LLPs Real Estate Advisory Services, Ms. Shell developed and managed real estate portfolios for private family trusts funds, partnerships and joint ventures consisting primarily of high net-worth individuals. Prior to joining Ernst & Young, LLP, Ms. Shell traded futures and options contracts in the natural gas transportation market for Koch Industries. Ms. Shell holds the Certified Commercial Investment Member (CCIM) designation, the Series 65 License and is a licensed Texas Real Estate Broker. Ms. Shell earned a BBS in Finance and Real Estate from Texas A&M University.


CHRISTOPHER N. THOMAS, CPA

100 CONGRESS AVE, STE. 1000 AUSTIN, TEXAS 78701 512-499-1408 (DIRECT PHONE) 512-449-1409 (DIRECT FAX) chris.thomas@reznickgroup.com

Chris Thomas is a Principal in the Firm’s Tax Practice. At Reznick Group, Mr. Thomas is responsible for providing domestic tax, financial accounting and tax consulting services to individuals, corporations and partnerships in a multitude of industries. He is also responsible for federal and state compliance with partnership tax allocation requirements; tax planning and tax compliance reviews for partnerships and corporations, with a focus on low-income housing tax credit projects and real estate developers. Mr. Thomas has broad knowledge of and experience in the areas of multifamily and commercial real estate, cost certifications and carryover allocations and passive activity rules. His clients include major publicly-held Fortune 100 companies, non-profit housing organizations, and experienced developers across the United States. Mr. Thomas also leads the firm’s Cost Segregation Study practice. His efforts in this area include obtaining increased depreciation deductions to achieve significant tax savings. Also, Cost Segregation Studies have been utilized to increase investor yields and current cash flow. As a Principal in the Austin Tax Department, Mr. Thomas’ duties involve the planning, supervision and review of tax compliance matters for a substantial number of individual, partnership and corporate tax clients. He also has considerable experience dealing with Federal and State tax authorities. Mr. Thomas also serves as a member of the University of Texas McCombs School Of Business, Advisory Council for the Department of Accounting. Education: B.S., Business Administration, Accounting – University of Central Florida (cum laude) Masters in Taxation – University of Central Florida Professional Affiliations: American Institute of Certified Public Accountants Florida Institute of Certified Public Accountants Georgia Society of Certified Public Accountants Texas Society of Certified Public Accountants


[contact information]

taahp.org


[contact information]

Ameristar Fence Products P.O. Box 581000 l Tulsa, OK 74158 tel 888.333.3422 fax 877.926.3747 ameristarfence.com

Locke Lord Bissell & Liddell, LLP 100 Congress Ave, Suite 300 l Austin, TX 78701 tel 512.305.4700 fax 512.305.4800 lockelord.com

Reznick Group, P.C. 100 Congress Ave, Suite 480 l Austin, TX 78701 tel 512.499.9100 fax 512.499.9101 reznickgroup.com

Texas Dept. of Housing and Community Affairs 221 E. 11th Street l Austin, TX 78701 tel 512.475.3800 fax 800.733.5120 tdhca.state.tx.us.com

taahp.org


texas affiliation of affordable housing providers

board of directors: 2010 - 2011 officers President Dan Markson (10) The NRP Group 111 Soledad, Ste. 1220 San Antonio, TX 78205 T: 210.487.7878 F: 210.487.7880 dmarkson@nrpgroup.com ---------------------------------------------Immediate Past President Linda McMahon (11) Neighborhood Strategies LLC 4460 St. Andrews Blvd Irving, TX 75038 T: 214.596.9162 F: N/A lindasmcmahon@gmail.com ---------------------------------------------President Elect Toni Jackson (11) Coats Rose 3 Greenway, Ste. 2000 Houston, TX 77046 T: 713.653.7392 F: 713.890.3928 tjackson@coatsrose.com ---------------------------------------------Vice President Barry Kahn (13) Hettig-Kahn Development, Co. 5325 Katy Freeway, Ste. One Houston, TX 77007 T: 713.871.0063 F: 713.871.1916 bkahn@hettig-kahn.com ----------------------------------------------

directors Vice President Nicole Flores (12) City Real Estate Advisors 6209 Ledge Mountain Drive Austin, TX 78731 T: 317.808.7193 nflores@ cityrealestateadvisors.com

Mahesh Aiyer (12) Sterling Bank 919 Milam, Ste. 550 Houston, TX 77002 T: 713.507.4933 F: 713.217.7780 mahesh.aiyer@ banksterling.com

---------------------------------------------Treasurer George Littlejohn (10) Novogradac & Company LLP 11044 Research Blvd., Bldg. C, Ste. 400 Austin, TX 78759 T: 512.340.0420 F: 512.340.0421 george.littlejohn@ novoco.com ---------------------------------------------Secretary Ron Williams (11) Southeast Texas Housing Finance Corp. 11111 S. Sam Houston Pkwy. East Houston, TX 77089 T: 281.484.4663 ext. 108 F: 281.484.1971 rwilliams@sethfc.com ----------------------------------------------

Sarah Anderson (12) S. Anderson Consulting 1305 E. 6th, #12 Austin, TX 78702 T: 512.554.4721 F: 512.231.8580 sarah@ sarahandersonconsulting.com

Terri Anderson (13) Anderson Capital, LLC 347 Walnut Grove Ln Coppell, TX 75019 T: 972.567.4630 F: 972.462.8715 Terri_L_Anderson@msn.com Bobby Bowling (13) Tropicana Building Corp. 4655 Cohen El Paso, TX 79924 T: 915.821.3550 F: 915.821.3556 bbowling4@aol.com

“TAAHP is the leading organization of affordable housing professionals representing the affordable housing industry in Texas.”

221 E. 9th Street, Ste. 408 l Austin, TX 78701 l tel 512.476.9901 l fax 512.476.9903 l taahp.org l texashousingconference.org


directors

ex-officio

Dennis Hoover (12) Hamilton Valley Mgmt., Inc. P.O. Box 190 Burnet, TX 78611 T: 512.756.6809 F: 512.756.9885 dennishoover@ hamiltonvalley.com

Edwina Carrington (1999) Reznick Group, P.C. 100 Congress Ave., Ste. 480 Austin, TX 78701 T: 512.494.9100 F: 512.494.9101 edwina.carrington@ reznickgroup.com

Robert Johnston (11) National Equity Fund P.O. Box 835727 Richardson, TX 75083 T: 972.342.6621 F: N/A rjohnston@nefinc.org

Mike Clark (10) Alpha-Barnes Real Estate Svc 12720 Hillcrest, Ste. 400 Dallas, TX 75230 T: 972.643.3205 F: 972.503.7569 mclark@alpha-barnes.com

Justin MacDonald (11) MacDonald & Associates 2951 Fall Creek Kerrville, TX 78028 T: 830.257.5323 F: 830.251.3168 tjmacdonald@ macdonald-companies.com

JOT Couch (02) Texas Inter-Faith 3131 West Alabama, Ste. 300 Houston, TX 77089 T: 713.526.6634 ext. 22 F: 713.526.7019 jcouch@ti-f.org

Mark Mayfield (13) Texas Housing Foundation 1110 Broadway Marble Falls, TX 78654 T: 830.693.4521 F: 830.693.5128 mmayfield@txhf.org

Dick Kilday (00) Kilday Realty Corp. 1717 Saint James Pl., Suite 150 Houston, TX 77056-3421 T: 713.914.9400 F: 713.914.9439 rrkilday@kildayrealtycorp.net

Jeffrey Spicer (12) State Street Housing Advisors, L.P. 5843 Royal Crest Dr. Dallas, TX 75230 T: (214) 346-0707 F: (214) 346-0713 jspicer@ statestreethousing.com

Granger MacDonald (07) MacDonald & Assoc., Inc. 2951 Fall Creek Kerrville, TX 78028 T: 830.257.5323 F: 830.251.3168 gmacdonald@ macdonald-companies.com

Jerry Wright (11) Dougherty & Company LLC 410 East 5th Street, Ste 112 Austin, TX 78701 T: 512.708.1555 F: 612.235.3356 JWright@ doughertymarkets.com

Diana McIver (06) DMA Development Co., LLC 4101 Parkstone Heights Dr., Ste. 310 Austin, TX 78746 T: 512.328.3232 ext. 165 F: 512.328.4584 diana@mciver.com

John R. Pitts (09) John R. Pitts P.O. Box 27130 Houston, TX 77227 T: 713.552.1854 F: N/A john@johnrpitts.com Mike Sugrue (10) Solutions Plus! 1302 South 3rd, Ste. 105 Mabank, TX 75147 T: 903.887.4344 F: 903.334.4355 msugrue@hotmail.com

Past Presidents of TAAHP 2009 - 2010: Linda McMahon, Neighborhood Strategies LLC 2008 - 2009: Mike Sugrue, Solutions Plus! 2007 - 2008: Mike Clark, Alpha-Barnes Real Estate Services 2006 - 2007: Granger MacDonald, MacDonald & Associates 2005 - 2006: Diana McIver, DMA Development Co., LLC 2004 - 2005: Jerry Wright, Dougherty & Company LLC 2003 - 2004: Mike Lankford, Lankford Interests, LLC 2002 - 2003: Chris Bergman, TCR Affordable Housing, Inc. 2001 - 2002: JOT Couch, Texas Inter-faith Supportive Services 2000 - 2001: Sally Gaskin, SGI Ventures, Inc. 1999 - 2000: Dick Kilday, Kilday Realty Corp 1998 - 1999: Edwina Carrington, Reznick Group, P.C.

221 E. 9th Street, Ste. 408 l Austin, TX 78701 l tel 512.476.9901 l fax 512.476.9903 l taahp.org l texashousingconference.org

Accounting Challenges Related to the Exchange Program  

TAAHP 4th Quarter Executive Management Series - Accounting Challenges Related to the Exchange Program

Accounting Challenges Related to the Exchange Program  

TAAHP 4th Quarter Executive Management Series - Accounting Challenges Related to the Exchange Program

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