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Type:
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Communication
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Status:
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Placed on File
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Intro date:
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4/21/2021
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Current Controlling Legislative Body:
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Title:
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Notice of hearing on and public comment period for draft of Department of Housing 2021 Low-Income Housing Tax Credit Qualified Allocation Plan
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Topic:
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CITY DEPARTMENTS/AGENCIES - Housing
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Attachments:
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1. F2021-32.pdf
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Depabtment of Housing city of chicago NOTICE OF MEETING Notice is hereby given that the City of Chicago Department of Housing ("DOH") is making available for public comment a draft of its 2021 Low-Income Housing Tax Credit Qualified Allocation Plan. Copies ofthe draft plan are available on DOH's website at cityofchicago.org/qap .
A public hearing as required by Section 42(m)(l )(A) of the Internal Revenue Code of 1986, as amended, will be held on Wednesday, April 14, 2021 at 2 p.m. Attendance at this meeting will be by remote means only. Instructions for how to attend this meeting and participate in oral public comment will also be provided at cityofchicago.org/qap .
To allow all interested individuals a reasonable opportunity to express their views, each person is to limit his/her oral remarks to a period of no longer than two minutes. If you are unable to attend this hearing, you may direct written comments to doh@cityofchicago.org . Written comments should be received by Thursday, April 15, 2021.
NOTE: City Hall is closed to the public, until a date to be determined, due to the current circumstances concerning COVID-19.
Equal Housing Opportunities Marisa Novara Commissioner Department of Housing
no w
S3 S.
LASALLE STREBT, ROOM 1000. CHICAGO. ILLINOIS 60(502
00 c?
2021 QUALIFIED
ALLOCATION
PLAN
Chicago Department of Housing
Chicago.gov/housing
Email: DOH@cityofchicago.org 312.744.4190
zozi Qualified Allocation Plan (QAP)
INTRODUCTION
A. General Information
The Low-Income Housing Tax Credit Program (the "Program") was instituted by the Tax Reform Act of 1986, as set forth under Section 42 {"Section 42") of the Internal Revenue Code of 1986, as amended (the "Code"). Section 42 authorizes local housing finance agencies to allocate Low-Income Housing Tax Credits ("Tax Credits") to qualified rental housing developments. The City of Chicago (the "City") administers the Program through its Department of Housing (the "Department').
This low-income housing tax credit qualified allocation plan (this "Plan"), as required under Section 42(m), establishes the priorities and selection criteria for the allocation of Tax Credits by the Department and administration of the Program until a subsequent allocation plan has been adopted by the City or until such time as the Program is terminated. All references to statutes and treasury regulations shall be deemed to include changes and modifications made,therein from time to time. Nonetheless, the Department reserves the right to initiate future amendments to this Plan to reflect changes instituted by law and the Internal Revenue Service (theWflS") and to reflect changes in the City's priorities and selection criteria in connection with the allocation of/Tax Credits.
The Department will evaluate applications for Tax Credits based on^requirements^of federal legislation and the Department's priorities and selection criteria. Adherence to thes'e^requirements isjnandatory. The Department is unable to provide legal or tax advice as it relates to the Program.^The^Department encourages applicants to seek counsel in matters related to the use of Tax Credits.
The following funding amounts are estimated to be the maximum-totaKamounts available for allocation, subject to City Council approval and Federal and State allocation:
Funding Resources /{ /7 '2022 2023
9% LIHTC V v/> 6,633,698 6,633,698
Volume Cap Tax Exempt Boncis-\ \\ 270,686,502* 270,686,502*
HOME // \\ \\ 8,000,000 8,000,000
AHOF \\ \ \ 6,000,000 6,000,000
CDBG \\ J / 8,000,000 8,000,000
^Annual volume cap is an estimate based on priorVears. Actual allocation is based on the City and State population. Additional volume cap may be available due to prior year carry over
The following is a list of the average allocation by funding source for projects funded by DOH since 2016. The average 9% LIHTC project selected was allocated $1.5MM in 9% LIHTC and $4.6MM in combined subordinate resources that may have included TIF, AHOF or Federal funds.
Capital Stack 9% LIHTC 4% TEB
9% LIHTC $1,544,241 N/A
MF Loan (HOME, CDBG, AHOF) $2,697,537 $2,356,027
TIF Funds $1,980,758 $2,213,684
ALL SUBORDINATE FUNDS (TIF and MF Loan) v $4,678,294 $4,569,711
To maximize the number of units created from these limited resources, the Department anticipates awards to follow prior allocation averages.
Based on these averages, the Department is optimistic about funding as many as eight (8) 9% LIHTC projects to close in 2022 and 2023.
Following long-sought changes to the 4% LIHTC program in late 2020 thatiixsthe 4% credit at 4%, the Department changed the allocation requirements to allow 4% applications to be^rolling under^ certain conditions.
Based on the available bond cap and average deal size, theNDepa/tment can process and fund up to twelve (12) 4% LIHTC only awards per year.
Projects leveraging other resources are highly encouraged
Requests for 4% allocations and additional subsidy from DOH must continue to apply through a competitive funding round. DOH expects to fund as many as four (4) 4% LIHTC applications^requesting additional financial assistance from DOH.
B. Racial Equity Impact Analysis (REIA)
In 2020, Commissioner Novara initiated a Racial Equity Impact Analysis (REIA) ofthe QAP and its community process. In addition to committing to bi-annual revisions^of the QAP and its selection processes, DOH also recognized the need to consider future revisions through ^racia^equity lens. With guidance from Chicago United for Equity (CUE) and support from Enterprise Community Parjtners^DOH gained an understanding ofthe benefits and burdens of LIHTC allocation by conducting a Racial Equity Impact Assessment (REIA) on the QAP and its processes. By conducting the REIA, DOH seeks to understand ways the QAP could be utilized to make the LIHTC allocation process and its results more racially equitable and ensure more opportunities for community wealth building.
While the full impact of the REIA process will be more fully felt in subsequent QAPs, the REIA resulted in several changes to this QAP and the Multifamily Funding Application. Detail on those changes is provided throughout this document, primarily under the DOH Selection Criteria, Section 3, and DOH Priorities and Preferences, Section 4.
Following review of the REIA, this QAP sets policy priorities and preferences that seek to do the following:
Ensure that small, newer developers of color benefit from the LIHTC program and contribute to wealth building in Black, Indigenous and People of Color ("BIPOC") communities while reducing the racial wealth gap.
Ensure LIHTC developments serve residents most in need and address the overall deficits in affordable housing and the insufficiencies in units for specific subpopulations.
Ensure marginalized residents are not unfairly screened out of the process due to arrest/conviction records, evictions, or low/no credit scores.
Ensure that residents are able to live in neighborhoods of their choice with access to resources and that developers can develop in highly resourced, amenity-rich areas.
Increase the inclusion, power, and self-determination that LIHTC residents have over their living environments.
Improve outcomes and wealth building opportunities in life for residents.
Ensure residents with disabilities and diverse language needs can live and stay in LIHTC units that accommodate their needs.
8. Ensure that residents feel safe in their homes and neighborhoods.
C. Purpose and Goals
The Department's Mission and Vision are as follows: Mission
Vision
Equitable distribution of resources across all 77 communities so thafevery Chicdgoan can choose and remain in quality
housing that's affordable, safe and healthy. ^' ^ ^
Chicago's Department of Housing expands access and choice for residents and protects their right to quality homes that are affordable, safe and healthy.
Successful applicants will receive a conditional Tax Credjt.reservatron^based on the determination that the undertaking is compatible with the goals and priorities ofthe Department:
With regard to the Department's selection critenaHand preferences referenced in this Plan, when the Department announces a Tax Credit application round, it^may elect to establish one objective or a sub-group of objectives from these selection criteria and preferences as^the sole'program objective(s) for that round.
Affirmatively Furthering the Fair Mousing Act (Title VIII of the Civil Rights Act of 1968) and Other Applicable Fair
Housing Laws <^ \^ ^
It is the policy ofthe Department to^administer/the Program affirmatively as to achieve a condition in which individuals of similar income levels in the same housmg'market area have a like range of housing choices available to them regardless of their race, color, religion, sex/gender identity, sexual orientation, disability, familial status, or national origin.
Each Owner shall pursue affirmative fair housing marketing policies in soliciting tenants and outreaching to underserved populations and those least likely apply to reside in completed Tax Credit units.
Not-For-Profit Set-Aside
In accordance with Section 42(h)(5)(A) of the Code, each calendar year, the Department will allocate a minimum of ten percent (10%) of the City's portion of the annual state housing credit ceiling (the "Credit Ceiling"), as defined in Section 42(h)(3), for projects owned, directly or indirectly, by qualified not-for-profit organizations, as defined under Section 42(h)(5)(C) of the Code.
To qualify for this set-aside, the qualified not-for-profit organization must have an ownership interest in the project, directly or indirectly, and materially participate in the development and operation of the project throughout the compliance period.
II. FEES
All fees are non-refundable. The fees set forth below will be assessed on all Tax Credit projects, except that the Department may, in its sole discretion, waive or reduce any fees or penalties imposed in connection with the Tax Credit program pursuant to its determination that such waiver or reduction is in the best economic interest of the City. In addition, there may be other fees required by the City that are not detailed in this Plan because such fees are not Tax Credit-specific fees, e.g., conduit tax-exempt bond fees, permit fees, etc. The City may adjust the amount of fees from time to time by ordinance in accordance with Section 42 and related regulations.
Application Fee
An application fee is due upon submission of an application in the amount of $1,500.00 in connection with for-profit projects and $750.00 in connection with not-for-profit projects. A for-profit project shall mean any project which does not qualify as a not-for-profit project. Application fees are due at the time the application is submitted.
Reservation Fees yy
For projects expecting to receive Tax Credits allocated from the Credit Ceiling, a reservation fee in an amount equal to five percent (5%) ofthe annual Tax Credit amount referenced in the conditional Tax Credit reservation agreement will be assessed. This fee will be due upon acceptance ofthe Department's conditional Tax Credit reservation agreement for projects expecting to receive Tax Credits allocated from the Credit Ceiling. \\,
Carryover Allocation Fee
For projects expecting to receive Tax Credits allocated fromjhe Credit-Ceiling, a carryover allocation fee of $250.00 is required for a project not placed-in-service in the year Ta^er^its^yvere^eserved, but which meets the ten percent (10%) expenditure requirement described in Section III. H.2.^Kis'feeJs>due upon submission of a request for a carryover allocation of Tax Credits, or upon thec'losing of the-f inancing for the project.
Compliance Monitoring Fee \\ /V-^T"~~~>V
Section 42 requires Tax Credit allocating.ageneies^to monitor projects for compliance with the Program requirements. These requirements apply to each,buildingJrHa project for which Tax Credits have been allocated. An annual monitoring fee of $25.00 per unit (non-Tax Credit units and Tax Credit units) will be charged to cover the cost of this compliance monitoring, annuall^oVin an aggregate amount at the time of the closing of the financing for the project.
E. Compliance Monitoring Late Fee
A penalty of $20.00 per unit (non-Tax Credit units and Tax Credit units) will be assessed for each occurrence of a late submission of compliance monitoring information.
I. TAX CREDIT RESERVATION PROCESS
A. Application Process and Funding Rounds
An application for Tax Credits shall be submitted pursuant to a competitive Tax Credit application funding round and may be submitted for a project by the entity which shall be the owner of the property for which the Tax Credits are being sought, or by a related sponsor entity acceptable to the Department in its sole discretion (the "Owner"). Public agencies may also apply for Tax Credits in connection with a project and may designate an Owner to be determined. The conditional Tax Credit reservation agreements are not assignable without the prior consent ofthe Department.
The Department will review Tax Credit applications through a two-stage application process.
By submitting an application to be considered by DOH. all applicants waive their right to submit a qualified contract.
thus maintaining affordability for the duration of the extended-use period
Applicants for 4% credits and bonds that do not meet the criteria for applying outside of a round, as listed below, should apply for funding within DOH's Multifamily Tax Credit funding round. Such projects must meet the same requirements as projects applying for Tax Credits from the Credit Ceiling and should submit the same application (DOH Multifamily finance application). The Department may permit, in its sole discretion, an Owner to submit an application for Tax Credits generated from tax-exempt municipal bonds without submitting the application pursuant to a competitive Tax-Exempt Municipal Bond application funding round process as a result of special conditions that necessitate consideration outside of a competitive funding round.
B. Funding outside of the Competitive Tax Credit Round
In deciding whether an application is eligible to be accepted for consideration outside of a competitive funding round, the Department will consider:
Projects that request Tax Credits from tax-exempt bonds, but request no other development subsidy sourced from the Department of Housing; and/or
Projects that are time sensitive as a result of other government financingifor example, but not limited to FHLB, VASH, CHA RAD, Choice, etc.) that has mandatory expenditure deadlines^that would prohibit delaying of financing
for a funding round; and/or // \ Preservation projects that are time sensitive because of an immediate loss^ofaffordable housing due to a sale, closure or as a result of dangerous and hazardous conditions,,as'determined^bVDOH.
In addition, the Department may permit, in its sole discretion, an owr^er initially applying for an allocation of Tax Credits from the Credit Ceiling for a project to subsequently reviseits-financing structure to include Tax Credits generated from tax-exempt bond financing instead of frqn^l^CredrbCeHing.
C. Stage One: Multifamily Application Submissions^ \^ ^
The first stage ofthe application process is ^competitive application funding round for all projects applying for an allocation of Tax Credits from the Credit Ceiling. The-Department will complete a preliminary assessment during stage one that evaluates the project's ability to meet:^^
Mandatory selection criteria'and preferences)required under Section 42
Department selection preferences outjined in this Plan and/or sub-groups of DOH objectives and criteria, if any
Department underwriting standards
Community Impact measures
Housing need fulfillment
Economic feasibility
Developer capacity expectations
An owner must submit to the Department an application for Tax Credits on the form provided by the Department (the "Stage One Multifamily Submissions"). Individual applications are to be completed for each project. Separate applications are not required for each building comprising part of a project. The application will request information, including, but not limited to, the parameters ofthe project, the context and impact ofthe project on the surrounding community including its relationship to plans for redevelopment ofthe community and investments planned or under way by others, quality of design, leveraging of city resources, the capacity of the development team, and the economic feasibility ofthe project. New in 2021, the application requests information that enables DOH to assess racial equity impact and identify funding priorities. The Department staff will review all applications for project readiness, completeness, project eligibility, and compliance with LIHTC and DOH selection criteria and preferences. The projects that best meet the selection criteria and preferences defined in Section III.E. - and that are determined to be shovel-ready - will be invited to proceed to stage two of the Tax Credit application process (the "Stage Two Multifamily Submissions").
The Department may issue the invitation to complete Stage Two Multifamily Submissions to applicants requesting Tax Credits up to or greater than 100% ofthe City's portion ofthe current calendar year's Credit Ceiling. The reservation of Tax Credits is based on the successful completion of Stage Two Multifamily Submissions, on a mutually agreed-upon schedule.
D. Stage Two Multifamily Application Submissions
For all projects selected to proceed beyond Stage One, the second stage of the application process will include in-depth underwriting of a project's financing, construction documentation, and information necessary to complete the legislative and closing processes.
E. Tax Credit Reservation Agreements
Upon review and approval of this documentation, the Department will prepare a conditional Tax Credit reservation
agreement. An owner who is unable to complete the Stage Two Multifamily Submissions and documentation based
on a mutually agreed-upon schedule may not receive a conditional Tax Credit reservation agreement. An owner who is
unable to complete the Stage Two Multifamily Submissions bythe opening date ofthe next competitive allocation
round will not receive a Tax Credit reservation agreement. /
Reservations of Tax Credits for Credit Ceiling projects are contingent on severak{actors including, but not limited to, the acceptability ofthe application and its supporting documentation. If a project is. approved to receive a reservation of the Department's allocated credits, the Department may reserve those Tax Credits from its current calendar year's Credit Ceiling or a future year's Credit Ceiling at its discretion. IfTax'Gredits are returned to the Department, the Department may allocate Tax Credits to the same projectwithout the project going through another competitive application funding round. The Department may open co^pet^tive^pplitation funding rounds that may be limited to one or more of its housing preference categories at its discretion?
F. Stage I and Stage II Submission requirements
The chart below provides a general sumi^arV\of'/applicati5nvdocumentation and requirements, but applicants should consult the Application and Applteation^nstructions for required submissions at each stage, as well as further information on documentation surrou^dlng.eacVs^ubmission.
Description Stage 1 Stage 2
Completed Multifamily Housing Financial Assistance Application, which includes project description, Development team/applicant information, address, evidence of site control in the name ofthe Owner or a realistic plan to obtain site control that includes a description of steps to be taken and a time frame to gain site control, unit mix, projected building rents, preliminary operating expense budget and explanation of how the project meets the Section 42 mandatory selection criteria and the City's housing needs and policy priorities. 3 hard copies submitted in 3-ring, tabbed binders and 1 electronic copy required X Final
Application Fee X
Cover letter X
Required Authorizations and forms, as well as supplementary applications (DTC and TIF), as applicable yy X Final
Supportive Services Plan Complete disclosure of the entity that will own the project, including-delineationN6f.all / / \ \ ¦ controlling ownership interests. Any Tax Credit reservation will be.null and void if there is a subsequent change in the principals ofthe intended ownership^entity described in the application, if such change is not approved by the Department\^<(^ X Final
Completed DOH Proforma and Subsidy Layering review \v\^\^^NnV> X Final
Last two (2) years of audited financial statements-and interiiVcuYrentyear financial statements of the owner, if applicable, or such'othe^entity related to the owner, as requested by the Department. <^<^ yl—-_J\) X Update
Economic Disclosure Statement(s) and Affidavit(s)/ Scofflaw Information /y \\Ns\\ Preliminary Final
Complete Architectural Plans and^pecifications^ including scope of work; dimensioned floor plans; elevations; sections; renderings; landscape and site plans; details on energy efficiency and historic preservation measures/ Preliminary Final
PowerPoint compiling design informationvfor initial design review presentations X
Completed DPD Sustainabilitv spreadsheet _2016.pdf X Final
List of lenders, equity partners and other funders' financial terms. Copies of at least 3 equity bids Letters of Interest Final commitments
Property management plan and resume X
Plan for community input X
General contractor's cost estimate and narrative description of work Estimate Final-OSS/CSS
Evidence of site control X Final
Description of Applicants experience and Developers License X
Three Credit references and authorization to review credit X
Tenant Selection Plan X Final
A strategy to minimize displacement of residents, if applicable. Preliminary Final
Letter of Consistency from the Chicago Continuum of Care Housing Expansion Coordination Committee (for Supportive Housing projects that have a Permanent Supportive Housing set-a-side of no less than 10% of the total units being developed). X
A comprehensive third-party market study that satisfies the Department's guidelines for such studies which demonstrate the housing needs of low-income individuals in the area to be served by the project and supports proposed rents and absorption assumptions. yy X
Phase 1 Environmental Audit /<^ If available X
MOPD Approval x\\^ Status/Intake Final
Most recent Real Estate Tax Bill // ^ \> X
Copy of Class 9 application, if applicable ^\\///// X
Appraisal w>-\ ^\\ If available X
Tenant Profiles (if units are occupied) \\^^?^"\!V> X
Relocation Plan and URA Screening Form (if applicable) \^/// ^ X
Heating cost disclosure information receipt//// j J \\ X
Organizational Chart —^-^/^ X Final
Applicant and Owner Docs (Articles^of incorporation, bylaws, partnership agreements, etc.) // \\ \\ X
Lease with VAWA rider and Home orsNon-HOME rider v \ / / X
\ \ II Affirmative Fair Housing Marketing Plan\ // X
Physical Needs assessment, if applicable^/ If available X
Required Insurance Certificates X
Any other documentation required by the Department Preliminary Final
Application Forms and Documentation
The Application and Application Instructions [provide links] list the documents required for each stage.
All applications must consist of a fully completed, executed original application and two (2) copies (for three total binders) of all the related supporting documentation as set forth for each application stage on the below chart. Please include one (1) complete electronic copy. Please see the Department's web site www.cityofchicago.org/DOH for the application and application instructions. Any application, and related supporting documentation, deemed incomplete at the time of the funding round submission deadline will be returned to the applicant at the sole discretion of the Department.
Owner Responsibility
I. It is imperative that the Owner submit identical budgetary information on applications to all funding sources
including lenders, syndicators, and the Department.
The Owner must advise all funding sources, including the Department, in a timely fashion as to cost or budget
changes. Delay in the Department's receipt of information may cause.delay or denial of a Tax Credit reservation.
I. Minimum Low-Income Set Aside Requirement x
In order to be a qualified low-income housing project under Sectioning), an Owner must elect one of three minimum set-aside formulas: ^
/ An application for Tax Credits is not a guarantee of receiving Tax Credits Owners should not attempt to syndicate Tax Credits without Tax Credit reservation and subsequent allocation.
At least twenty percent (20%) ofthe project units mus^eljotriTent-restricted and occupied by tenants with a total
annual household income of not more thaa-fifty^percerit (50%) ofthe area median gross income adjusted for family
size, or, // J \At least forty percent (40%) of the project^wiits musrbe'both rent-restricted and occupied by tenants with a
total annual household income/O'tnot-more than sixty percent (60%) ofthe area median gross income adjusted for
family size, or, \\ v>
Income Averaging allows a property to ser;ve households up to 80% AMI, as long as at least forty percent (40%) of the project units are rent and incbme^estricted and the average income limit for all tax credit units in the project is at or below 60% AMI. To ensure thatxthe development does not exceed its maximum income limits, DOH may require a lower average AMI as a buffer.
Designated income/rent levels may only be set at 10% increments beginning at 20% of AMI. Allowable income/rent designation levels are 20%, 30%, 40%, 50%, 60%, 70%, or 80% of AMI. The Department reserves the right to limit the number of AMI designations per property.
A minimum low-income election, once made, shall be irrevocable. An Owner may elect to address even lower income populations, or to set aside a greater percentage of units, or both. Developments serving the lowest income tenants will be given preference for Tax Credits.
J. Selection Criteria and Preferences for the Stage One Application Process
The Department has developed the following selection criteria and preferences for use in determining priority among the projects considered in connection with the Stage One Multifamily Submissions.
Each application will be reviewed based upon the selection criteria and preferences listed below. Prioritiy in selection of projects will be given to those which best meet the priorities, goals and selection criteria outlined below.
Section 42(m) Mandatory Housing Preferences
In accordance with Section 42(m), projects containing one or more of the following criteria shall be given preference for selection for Tax Credits:
serve the lowest income tenants (very-low-income households whose incomes are at or below 30% of area median gross income adjusted for family size);
are obligated to serve qualified tenants for the longest periods beyond the minimum thirty (30) year requirement; and
are located in a qualified census tract the development of which contributes to a concerted community revitalization plan.
Section 42 Mandatory Selection Criteria
In selecting projects to receive allocations of Tax Credits, in accordance with Section 42(m), the Department shall consider the following mandatory selection criteria, as it relates to each application and related project proposal:
3. DOH Primary Selection Criteria
In addition to the Projects that otherwiseNrieet Secti67r4-2(m) mandatory selection criteria, successful applicants will
project location;
housing needs characteristics; /y
project characteristics, including whether the project includes the^use of existing housing as part of a community revitalization plan;
sponsor characteristics;
tenant populations with special housing needs;
public housing waiting lists;
households with children;
projects intended for eventual tenant ownership;
the energy efficiency of the project; and
the historic nature of the project
The Department values the equitable^distribution of affordable housing across geography and market type. To achieve
this goal, and as in 2019, the Depa^rtment/Vyill evaluate each application and related project proposal in accordance with its adherence to the policies identified^as priorities in each of four "Priority Tracts."
Applicants are encouraged to submit applications based on the alignment of their proposed project with one ofthe four Priority Tracts described below.
A project should not apply under multiple priority tracts.
Projects are encouraged to address all Preferences described in the Priority Tract to the greatest extent possible. For example, projects applying in Opportunity Area tracts should focus on City owned land in highly resourced areas and creating very low-income units.
Projects addressing all the preferences take precedent over applications that do not address all the preferences.
Final decisions on any tie-breaker will be determined by the number of units with lowest incomes being served and the longest terms for affordability, up to and including permanent affordability
Priority Tract I: Opportunity Areas
Project Type Description Preference
Priority given to applications which provide housing units in high income / high-cost opportunity areas. Opportunity Areas are generally census tracts for which more than 50% of households earn more than 100% of the Chicago median income in the last three consecutive years for which data is available, and the poverty rate is less than or equal to 20% during the same period. The Department will evaluate the applicant's evidence and third-party verifiable data to determine if the project qualifies as a project iirarK Opportunity Area. //\ \ Preference for 100% affordable developments. LIHTC and DOH resources should be focused on the creation of affordable units.
Policy Priorities
Preserving Affordability. Ensure that residents are able to live in neighborhoods of their choice with access to resources and that developers can develop in highly resourced, amenity-rich areas Additional priority may/be given to \s\ developments which^have^a^significant risk of conversion to^rriarke't rate tenancy.
Very low-income units - housing units for tenant populations with special housing < needs, including accessible units, SRO units, permanent supportive housing^re-^ entry housing and units for individuals and/or families experiencing \\^ homelessness ^iority^wjll be given to projects which ^r^vjdejjnits for^the lowest income tenants, pursuant to the Sec. 42(m) ^mandatory selection criteria (very low-income^-households whose household incomes, adjusted for family size, are at ^ol/below 30% of the area median /income). Projects proposing 10% or more of units in the project to be designated for very low-income households along with a committed source of rental subsidy or underwritten so it can operate at rents affordable to the tenants.
Priority Tract II: Redevelopment Areas
Project Type Description Preference
Redevelopment Areas. Priority will be given to projects in existing Redevelopment Areas, which "contribute to a concerted community revitalization plan" (Sec. 42(m)) for the improvement of a low-mod area and leverage existing revitalization efforts. Redevelopment Areas are generally low-mod areas consisting of census tracts which have an ongoing and active comprehensive community revitalization initiative, plan, or effort; evidence ofthe revitalization initiative and/or plan should be provided by the applicant, such as (by example only, and not limited to) the location is within an INVEST South/West planning area. The Department will evaluate the applicant's evidence and data to determine if the project qualifies as a project in a Redevelopment Area. /> /\\ Additional preference will be given to projects which include a viable plan and provision for engaging a significant portion of project vendors, suppliers, subcontractors, and workers that are generally located within the same redevelopment community area.
Policy Priorities „ \Mixed use projects. Priority will be given to mixed-use projects which provide housing as well as first floor retail/commercial to provide needed neighborhood amenities. Additional priority will be provided^ projects^triat have a viable plan and/or committed partner to ^ assist with occupying the space^ithin/6 months of completion.
Income Diversity. Priority given to mixed-income projects which provide housing units for a wide range of household incomes, from 0-30% AMI. Income Averaging is encouraged. ^Rrajects thatNriclude units for both very low-income households ^mandatoryselection criteria under. Sec. 42|m))^and market rate households, with a range of household incomes between, such as (by example only, and not limited to) a project with 20% of units _> or below 30% AMI, 20% of units at 50% AMI (per 42g requirement), 20% of units at 60% AMI (60% of units for eligible basis), 20% of units at 120% AMI, and 20% of units at market would meet this selection priority. Projects proposing 10% or more of units in the project to be designated for very low-income households along with a committed source of rental subsidy or underwritten so it can operate at rents affordable to the tenants.
Priority Tract III: Transitioning Areas
Project Type
Transitioning Areas. Priority will be given to projects located in areas undergoing rapid economic and demographic change, and the resulting loss of affordable housing units.
Transitioning areas are generally those for which data shows that median rents, median household incomes, and median home sale prices have increased by at least 20% in total each over the last three consecutive years for which data is available and have lost affordable housing units as a result. The Department will evaluate the applicant's evidence and data to determine if the project qualifies'as a project in a Transitioning area
Additional preference will be given to projects which include a viable plan and provision for engaging a significant portion of project vendors, suppliers, subcontractors, and workers that are generally located within and employ workers from the same transitioning community area.
Policy Priorities
Most in need. Serve residents most in need and address the overall deficits in affordable housing and the insufficiencies in units for subpopulations
Priority will be giverHo^prbjects which provide units-that are Obligated to serve qualified tenants for tke longest periods beyondthe'minimum thirty (30).y^rTequir^ment. Section 42(m) Mandatory Selection Criteria
Very low-income units, housing units for tenant populations with special housing^ needs, including accessible units, SRO x units, permanent supportive housing, reentry housing and units for individuals and/or families experiencing homelessness.
Section 42(m) Mandatory Selection
''Criteria
/
Projects proposing 10% or more of units in the project to be designated for very low-income households along with a committed source of rental subsidy or underwritten so it can operate at rents affordable to the tenants.
Priority Tract IV: Recapitalization of Existing Affordable Housing
Project Type Description Preference
Preservation. Promote and incentivize the use of 4% LIHTC and Tax Exempt Bonds. Encourage preservation of existing buildings and disincentivize displacement. This criteria will encompass the recapitalization of existing affordable housing projects. Priority will be given to the recapitalization and preservation of existing affordable housing with an allocation of tax credits for those housing developments that currently have City of Chicago debt or a previous allocation of tax credits from a funding round that occurred at least 15 years ago.
Policy Priorities
Preserving Affordability. Ensure existing affordable housing will continue to serve current tenants. Additional priority may be given/to'' developments which have ^significant risk of conversion to market/rate\!\ tenancy. // \\ // As V
Preserving Buildings. Alleviate the negative impact that vacant and/or deteriorated buildings can have on neighborhoods, and also to encourage projects that reflect the architectural character of the surrounding community. Priority will be give^n^^ieyelopments which provide for the preservation of existing houshig"stock, including through rehabilitation^amiadaptive reuse: --^ X^V/'
4. DOH Selection Preferences and Priorities
Development Team Experience and Demonstrated Commitments to Advancing Racial Equity
The development team must show its capacity for undertaking a project and have demonstrated development experience. Property management capacity and experience must also be demonstrated.
Preference for development teams with BIPOC-led developers, professional service teams and/or service providers.
Preference for Joint ventures or Partnerships that ensure small, BIPOC-led firms and nonprofits have material participation in a manner that promotes their growth.
Partnership or development teams composed of nonprofits, Community Housing Development Organizations [CHDO], and BIPOC-led companies that cannot certify for MBE/WBE status is also encouraged.
Past Compliance with MBE/WBE, wage and hiring requirements
Owners who are affiliated with previous projects developed with Department assistance that have been or are out of compliance in a material respect, as determined in the sole discretion ofthe Department, with the City's MBE/WBE and local hiring preference ordinances, Davis-Bacon Act, Section 3 of the Housing and Urban Development Act of 1968 or with the Program or with a Department loan agreement, may be deemedJneligible for further consideration.
c. Coordination with strategic initiatives and concerted community revitalization plans like the City's ETOD Policy Plan and Invest South/West
Projects that are located along or near established public transitlines/itations and hubs, and those identified as Equitable Transit Oriented Developments (eTODs), meaning they^are^located in Transit-Served Locations (TSL), as defined in Section 17-10-0102-B as amended from time^tcTtime, of the^Chicago Zoning Ordinance and under other applicable provisions ofthe Chicago Municipal Code.
Developments located within the boundarie^ofa'oncerted community revitalization plans, such as, INVEST South/West
- an unprecedented community improvem^nttnitiatiyej^ Lori E. Lightfoot to marshal the resources,of
multiple City departments, community organjzationsrandxprporate and philanthropic partners toward 10 communities on Chicago's South and-A/VeskSides.
d. Preference for Additional Resources for Tenants and Residents
Developments that paYt^erwitha'gencies to provide financial counseling, savings programs, and other resources to encourage tenant-wealth building, or that have dedicated funding or partnerships to provide workforce development/career training programs to help tenants build skills and career pathways.
Developments that offer family supports (e.g., on-site childcare, after school opportunities, access to WIFI/computers, resource connectors, food program, etc.).
Development of supportive housing units and wrap-around services with access to social workers.
Developments that incorporate arts/local culture/services reflective ofthe community and residents
Where appropriate, developments that include community spaces, on-site services, health, and wellness spaces
e. Design Expectations
An exterior that is compatible with surrounding structures and is an architectural enhancement to the community and green space on-site appropriate for the proposed tenancy.
An exterior that meets City of Chicago design standards, including DOH's Construction Services Division Architectural/Technical Standards and DPD's Neighborhood Design Guidelines.
Developments that exceed Federal and local requirements for accessibility.
f. An efficient use of public funds and resources.
Demonstrated interest from other financing sources. , v
Evaluation of developers' 15-year exit strategy at application.
Consideration for opportunities to convert LIHTC developments to homeownership after the compliance period ends.
g. Financial feasibility
Demonstrated financial viability of the development.
The anticipated investment rate for Tax Credits to raise equity. Projects with higher net syndication proceeds available for project costs per Tax Credit dollar requested will be rated more favorably.
The Department reserves the right to both require and review multiple syndication proposals and other financial proposals.
h. Preference for marginalized residents
Developments that open units to undocumented immigrants or>mixed immigrant households. Developments that include supportive housing units with access to social workers.
I. Tax Credit Reservation Criteria
The following criteria will be evaluated upon the completion by the Owner ofthe Stage Two Multifamily Submissions:
Developments that include commitments to provide SupportivesHousing units for homeless residents through partnerships with the Chicago Continuum of Care (CoC) arid the Flexible Housing Pool (FHP). COC has a Pre-Application requirement.
1. Economic Feasibility
Continued demonstrated finanjii^feasibility^of the project.
Final construction and projected operating costs are reasonable when compared to similar projects.
Reasonable acquisition and^inteme^ialcy^cSsts^
Market study that demonstrates the need for the proposed project and supports the rents as proposed.
2. Readiness to Proceed^ s
The terms and conditions of the^commitment(s) should be clearly identified and required application/commitmentfees/Should have been paid. The financing commitment(s) should be subject only to those conditions which are under control of the Owner to meet. Owners must reasonably demonstrate the ability to commence development including a reasonable likelihood to obtain funding necessary, site control and governmental approvals in a timely manner.
Owners should be aware the project is expected to close prior to opening of the next competitive funding round. Projects that do not complete the Stage Two Multifamily Submissions prior to the next competitive funding round will not be awarded credits.
At the time of the Stage Two Multifamily Submissions, if a project is not anticipated to be placed-in-service in the year ofthe Tax Credit reservation, an Owner will be required to submit specific information on how and when the 10% expenditure requirement will be met within the applicable time period permitted for the project. This includes line items that will be expended and sources of funds to pay the expenditures. Refer to Section H.2. "Carryover Allocations" below for more information.
J. Determination of Credit Amount
Timing of Determination
The amount of Tax Credits reserved for a particular project will be limited to the amount the Department determines to be necessary to make the project financially feasible as a qualified low-income housing project. The financial determination and certifications are required to be made under the Program in connection with a Tax Credit project (i) when an Application is submitted (ii) at the time an allocation is made, and (iii) as of the date that the Department determines that the building(s) in a project is(are) placed in service and issuance of the IRS Form 8609(s) by the Department. The Department may determine not to award the full amount of Tax Credits for which a project is eligible. Also, the Department reserves the right to set per-project Tax Credit award limits.
Tax Credit Increase Requests
The Department may consider an increase of a project's award of Tax Credits any time after a Reservation of Tax Credits has been given to a project. Requests for Tax Credit increases may be made only to ensure that a project is financially feasible as determined solely by the Department^Jhe Department may, in its sole discretion, grant a request for an increase in Tax Credits, subject to^the submission ofthe following documents: narrative description of reasons for the request for additional Tax^Gredrts, the revised project budget, a cost certification from a certified public accountant ("CPA") whicfvstates thabthe CPA has reviewed the revised project budget that provides the amounts ofthe revised total eligible basisand total project costs, and both the initial and most current contractor and owner sworn statementsf>The Department may request additional items if it is deemed necessary to make the determinationsoj>whether to grant the increase in Tax Credits. If a project is approved for more credits, the Department may issue an additional Reservation Agreement and charge the standard 5% fee on the additional creditsT\^ N\
3. 30% DDA Boost Selection Standards \ (
As a result ofthe amendments made/tp-the program as a result ofthe passage ofthe 2008 Act, and at its sole discretion, the Department may aw^a Credit-Ceili.r^project a 30% basis boost if the Department determines that a project, in order to be financially feasibleTheeds the increase in Tax Credits based on the following standards. Any project whkh^sTd^signatedsjDy the Department as requiring such an increase shall be treated as being located in a difficujt/^evelopmvent areaJ>"0D4"), pursuant to Section 42(d)(5)(B)(v). The increase in the amount of Tax Credits willxbNe,the minimum amount of Tax Credits required to achieve financial feasibility, so may result in an amount less^than the'30% increased allowed by the 2008 Act. Projects generating Tax Credits from tax-exempt bond financing.and-projects located in qualified census tracts are ineligible for the DDA boost.
Projects located in high-cost "Opportunity Areas" and "Transitioning Areas" (see Chart in Sec. IIIE2 for definition), that would be financially infeasible because of unusually high development costs, including predevelopment costs, such as land acquisition costs and a necessity to quickly obtain site control, and/or infrastructure improvements. The high cost of land - and the importance of providing affordable housing in amenity rich, highly resourced areas - was called out as a priority barrier to address in the REIA.
High Costs Specific Project Components - Projects that otherwise meet Section 42(m) mandatory selection criteria and DOH selection criteria but would be financially infeasible because of unusually high development costs, such as acquisition, environmental clean-up, and/or required infrastructure improvements.
Mixed-Income Housing - Projects, especially those in "Redevelopment Areas" (see Chart in Sec. IIIE2 for definition and that otherwise meet Section 42(m) mandatory selection criteria and DOH preference criteria, but would be financially infeasible because of greater income mix, and resulting lower eligible basis for Tax Credit allocation purposes, not offset by rents and cash-flow generated from higher-income units and/or other project revenues)
Very-Low-Income Populations - Projects, especially those in "Opportunity Areas" and "Transitioning Areas" (see Chart in Sec. IIIE2 for definition), that otherwise meet Section 42(m) mandatory selection criteria and DOH preference criteria, that need the boost to be financially feasible in order to target rents to very-low-income populations in order to off-set the cost of developments.
In Lieu of Other Financing - Projects that otherwise meet Section 42(m) mandatory selection criteria and DOH preference criteria, and the Department determines (in its sole discretion) it is in the City's best interest to apply the boost to in order to allocate additional Tax Credits in lieu of other City financing sources, thereby maximizing the efficient use of public resources.
Continuum of Care (COC) and Flexible Housing Pool (FHP) Units - Projects that otherwise meet Section 42(m) mandatory selection criteria and DOH preference criteria, that need the boost to be financially feasible in order to provide supportive housing for specialized populations experiencing homelessness, such as Veterans, seniors, survivors of domestic violence, transition-aged youth, and households experiencing chronic homelessness.
K. Issuance of Tax Credit Reservations and Carryover Allocations /">
1. Approval of Tax Credit Reservation
Following the final underwriting of each project, the Depart^"ent-staff will make a recommendation to the Department's internal loan committee (the "Internal Lqan^Commiitee'%. Upon favorable action bythe Internal Loan Committee, and prior to Closing, a condjtio^na^Tax Credif reservation agreement, conditioned on continued compliance with applicable requirements, w.iH/be sent to the Owner. The Department may reserve Tax Credits for a project from either its current-calendar year's Credit Ceiling or from a future year's Credit Ceiling at its discretion. The conditionaTjax^CrediVr^servation agreement shall be deemed to be a legally binding commitment to allocate Tax cV^dTfs^fhe-c^nditional Tax Credit reservation agreement must be signed and returned with the required fee b^the^cleadlme specified in the agreement or upon closing of
the transaction. //^\\ \Tax Credits will not be reserved, or if reserved, will not be allocated to Owners who have unsatisfactory prior performance record developing multi-family affordable housing with the Department, other City agencies or departments, the Cook County Collector's Office, the State of Illinois (the "State") or federal agencies. However, if Owners have documentation satisfactory to the Department showing that they made the effort necessary to rectify their performance record and providing that they are simply waiting for a determination of compliance, such Owners may be eligible to receive a reservation and/or allocation of Tax Credits. In such circumstances, if a final determination of non-compliance is issued to an Owner prior to Tax Credits being reserved or allocated to such Owner, such Owner will not be eligible to receive a reservation or allocation of Tax Credits until such Owner shall have rectified such non-compliance to the satisfaction of the Department.
d. Tax Credits will not be reserved, or if reserved, may not be allocated to Owners who are associated with the ownership and/or management of properties that exhibit unresolved financial and/or management problems or are out of compliance, in a material respect, with Section 42 ofthe Code.
Carryover Allocations
a. If a project which received a Tax Credit reservation during a given calendar year will not be placed-in-service in that year, the Department will consider an Owner's request to make a carryover allocation of the reserved Tax Credits provided that the Owner submits a request for such carryover allocation in the time period prescribed by the Department. If the Department grants a request for a carryover allocation, the Department will allocate Tax Credits to the project by executing a carryover allocation agreement (the "Carryover Allocation Agreement"), provided that the project meets specific requirements. However, the Department is under no obligation to grant a request for a carryover allocation and reserves the right to deny such a request. The carryover allocation requirements include, but are not limited to, the following:
the expenditure by the owner of more than ten percent (10%) of the reasonably expected project basis by no later than 12 months after the carryover allocation is made.
placement of the project in service by the end of the carryover period (December 31st of the second year after the execution of the Carryover Allocation^greement).
Status Reporting ^ All Owners receiving Tax Credits must forward, in a timely^fashipn, documents and other information requested by the Department. The receipt of all informations a condition to the final allocation of the Tax Credits and the issuance of IRS Form(s) 8609. ^
Revocation of Tax Credit Reservations o^Gweellatibn^of Carryover Allocation Agreements Any project which does not show significant progress towards completion of the project to the Department's satisfaction, or any project which is^^t^^mpJIanc^with federal, State, or local laws or Department reporting requirements or ceases to qua I ify-fqr^t h e not-for-profit set-aside, if applicable, or fails to continue to meet Tax Credit criteria, may forfeit,itsxTaTcredit reservation. Failure to comply with carryover allocation requirements
may result in the allocation being deemed void and a non-compliance notice via the IRS Form 8823, "Low-
\ \ ) I
Income Housing Credit Agencies, Report of Non-Compliance," ("IRS Form 8823") will be sent by the Department
to the IRS.
IV. TAX CREDIT ALLOCATION
The Department will make a Tax Credit allocation to a project as of the date that the Carryover Allocation Agreement is executed by the Owner and the Department or at the time a project is placed-in-service via IRS Form(s) 8609. Regardless of when the Tax Credits are allocated, the Owner must provide written notification to the Department upon the project being placed-in-service.
After the project has been placed-in-service and the Owner provides the Department with requested documentation, the Department may issue IRS Form(s) 8609. Prior to issuance of this form, the Owner shall be required to provide certain documentation (as may be supplemented or changed by the Department), including, but not limited to
CPA Cost Certification (including all attachments)
Owner Certification
Managing General Partner & Equity Partner Contact Information
Architect's Certificate of Substantial Completion
Certificate of Occupancy Recorded Regulatory Agreement
Evidence of Occupancy (Rent Roll)
Executed Carryover Allocation Agreement or Tax-Exempt Bond Agreement Executed Reservation Agreement (if applicable)
Executed Election Form (if applicable)
As required under Section 42(h)(6), each Owner must enter into an extended use agreement (the "Regulatory Agreement") with the City requiring that the project will comply with the requirements of Section 42, including but not limited to, the income and occupancy restrictions. The Regulatory Agreement must be recorded in the Office of the Cook County Recorder of Deeds as a restrictive covenant on the real estate^orvwhich the Project is located.
Within 30 days after the Owner files a completed IRS Form 8609 with/theJRS, the Owner is required to submit the form to the Department's Compliance Monitoring division.
V. TAX CREDITS OBTAINED WITH TAX-EXEMPT BOND FINANCING
Pursuant to Section 42(h)(4), projects to be financed yith tax-exempt bond financing are not required to receive a Tax Credit reservation from the City's Credit Ceiling no^dothey erjter into Carryover Allocation Agreements. An Owner must submit an application and request a detersmmation-from the Department that such project satisfies the requirements for an allocation of Tax-Credits pursuant to Section 42(m)(l)(D). The following requirements will apply:
Prior to the issuance of the bonds, the Department must review the application to determine that:
the project satisfies the requirements^ this Plan;
the project satisfies the Depahr^entVunderwriting standards including project cost and fee standards; and
the amount of credits does not exceed that which is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project.
B. An Owner of a tax-exempt bond project will be required to execute an agreement with the City in connection with the allocation of the Tax Credits generated by the tax-exempt financing and a Regulatory Agreement.
C. An Owner of a tax-exempt bond project may elect the Tax Credit Rate in effect during either (i) the month in which the tax-exempt bonds were issued or (ii) the month in which such project is placed-in-service. Legislation signed into law on December 27, 2020 fixed the rate for the 4% credit at 4%. 4% tax credits issued after December 31, 2020 will qualify for the 4% floor.
VI. COMPLIANCE MONITORING REQUIREMENTS
All projects receiving Tax Credits must be monitored for compliance with Section 42 of the Code. Income and occupancy restrictions will be monitored for a total of thirty (30) years including the initial Compliance Period and the Extended Use Period. Under Section 42 regulations, the Department may retain an agent or private contractor to perform compliance monitoring. In addition, the Department may delegate all or some of its compliance monitoring responsibilities to another Tax Credit allocating agency within the State. Upon written notification by the Owner that a project has been placed-in-service, active monitoring for compliance with Section 42 will commence. The Owners are advised that compliance with the general public use requirement for Tax Credit projects requires compliance with the Fair Housing Act. An Owner's failure to comply with the Fair Housing Act will constitute non-compliance with the general public use requirement, and the Department will report such non-compliance via an IRS Form 8823. Section 42 regulations promulgated by the IRS require the Department to undertake four levels of monitoring:
Record-Keeping/Record Retention Certification • Inspection Notification
// \,
Failure by the Owner to provide the necessary information, documents-and/or access to the project for inspection can and will be construed as non-compliance. Any acts of non-compliance must be reported to the IRS via an IRS Form 8823.
A. Record-Keeping/Record Retention
The monitoring provisions require that the follpwiRgvinformaftion be collected and maintained on an annual basis, for each year in each building during a project^Gompliance Period and Extended Use Period by the Owner of a Tax Credit project. This information must be maintainedsfor at least~six_(6) years after the due date, with extensions, for filing the federal income tax return for that year. The first-yeaTVrecbrds must be retained for at least six (6) years after the due date, with extensions, for filing the^f^eranncometax return for the last year of the full compliance period. The total period of time is twenty-one (21)-years for TaxxCredijbyears prior to 1990 and at least thirty-six (36) years for Tax Credits issued after 1990, with a Regulator^ Agreement. Each project's Regulatory Agreement will state the total number of years required to keep the documentation for the Tax Credit project.
The Owner is required to keep records for each building in the project documenting the following:
Tenant files which contain basic documents such as rental applications, annual tenant income certifications, income verifications, utility allowances, and signed leases and addenda for qualified low-income units.
Documentation supporting each income certification submitted by a tenant in a qualified low-income unit. For example, a copy of the.tenant's federal income tax return, form W-2 or verification of income from third parties such as employers or State agencies paying unemployment compensation or assistance, if a tenant is receiving housing assistance payments under Section 8, the public housing authority can provide a statement to the Owner, declaring that the tenant's income does not exceed the application income limit under Section 42(g).
Monthly unit listings (rent rolls) which contain the following information: Unit number, number of bedrooms, tenant name, floor space of unit (square feet), move in date, move-out date, number of household members, gross rent including any utility allowances, such as heat, electric and cooking gas, tenant rent portion, subsidized portion, and unit status (LIHTC or unrestricted unit).
The percentage of residential rental units in the building that is qualified as low-income units under the provisions of Section 42.
For projects placed-in-service prior to 1990, the number of occupants in each qualified low-income unit if the rent is determined by the number of occupants in each unit under Section 42(g) (2).
For mixed-income projects, the qualified low-income unit vacancies in the building and information that shows when, whom, the next available market or qualified low-income units were rented.
All tenant selection documents, which are all to be available to the City or its representatives for periodic inspection. These include, but are not limited to, income verification, employment verification, credit reports, and low-income computation forms.
The eligible basis and qualified basis of each tax credit building for the first year of the credit period.
The character and use of any non-residential space, such as tenant facilities, that is included in the eligible basis.
Tenant facilities included in the eligible basis which are available to all tenants. Documents on any legal or administrative action initiated by either lower-income families, City department or private corporations, such as building code violations, violations against the fair Housing Code, foreclosures, etc.
The Department completes IRS Form 8609(s). The project owner should keep a copy of the IRS Form 8609(s) in case of an IRS audit.
B. Certification Process
All Owners of qualified low-income projects receiving an allocation of Ta'x Credits will receive the following documents from the Department to assist them in the monitoring process: record-keeping requirements, Annual Owner's Certification, and Tenant Profile Form and Tenant CertificationxForm. /*> ^
Record-Keeping Requirements
The Department's record-keeping requirement packa"ge^provides,xinNa, concise form, the specific record-keeping
information to be maintained by the Owner. It also suggests^fqrrnat for the Owner to follow in order to comply
with the monitoring regulations. ^ \\/.
Annual Owner's Certification
All Owners receiving an allocation of Tax Credits must submit the "Annual Owner's Certification" document by October 1st of each year, for the te1^r^fconforms with the low-inco^me/provisions, asNfefined in Section 42, in addition to certifying to (i) through (xii) below. A copy ofthe most recent audited financial statements and copies of any City building inspection report are required with each annual certification./The last certification must be submitted after the end of the compliance period. Failure to provide this documem>will constitute an act of non-compliance.
i. The project met the requirements of:
The 20-50 test under Section 42(g)(1)(A), the 40-60 test under Section 42(g)(1)(B), or the "Average Income" test under Section 42(g)(1)(C), whichever minimum set-aside test was applicable to the project; and
If applicable to the project, the 15-40 test under Sections 42(g)(4) and 142(d)(4)(B) for "deep rent skewed" projects;
There was no change in the applicable fraction (as defined in Section 42(c)(1)(B)) of any building in the project, or that there was a change, and a description of the change;
The owner has received an annual income certification from each low-income tenant, and documentation to support that certification; or, in the case of a tenant receiving Section 8 housing assistance payments, the statement from a public housing authority described in paragraph (b)(l)(vii) of this section. For an exception to this requirement, see Section 42(g)(8)(B) (which provides a special rule for a 100 percent low-income building);
Each low-income unit in the project was rent-restricted under Section 42(g)(2);
All units in the project were for use by the general public (as defined in § 1.42-9);
The buildings and low-income units in the project were suitable for occupancy, taking into account local health, safety, and building codes (or other habitability standards), and the State or local.government unit responsible for making local health, safety, or building code inspections did not issue a violation report for any building or low-income unit in the project.;
There was no change in the eligible basis (as defined in Section 42(d)) of any building in the project, or if there was a change, the nature of the change (e.g., a common area has become commercial space, or a fee is now charged for a tenant facility formerly provided without charge);(viii) All tenant facilities included in the eligible basis under Section 42(d) of any building in the project, such as swimming pools, other recreational facilities, and parking areas, were provided on a comparable basis without charge to all tenants in the building;
If a low-income unit in the project became vacant during the year, that reasonable attempts were or are being made to rent that unit or the next available unit of comparable or smaller size to tenants having a qualifying income before any units in the project were or will be rented to tenants not having a qualifying income;
If the income of tenants of a low-income unit in the building increase^above the limit allowed in Section 42(g)(2)(D)(ii), the next available unit of comparable or smaller size'irvthe building was or will be rented to tenants having a qualifying income; //V
An extended low-income housing commitment, the City's "Tax Credit Regulatory Agreement", as described in Section 42(h)(6) was in effect for buildings subject to Section'7108(c)(l) ofthe Omnibus Budget Reconciliation Act of 1989,103 Stat. 2106, 2308-2311), including the^ec^irement under Section 42(h)(6)(B)(iv) that an owner cannot refuse to lease a unit in the project to an applicant because the applicant holds a voucher or certificate of eligibility under Section 8 ofthe United States-Housing A^ct of 1937, 42 U.S.C. 1437f (for buildings subject to Section 13142(b)(4) ofthe Omnibus Budget Reconcilia^on^cYohl993,107 Stat. 312, 438-439); and
All low-income units in the project were used on a non.-transjent basis (except for transitional housing for the homeless provided under Section 42(i)(3j(B)(iii) or single-room-occupancy units rented on a month-by-month
3. Tenant Profile Form and Tenant Certification^Form
The Owner is required to provjde^toeach^enaritwho occupies a qualified low-income unit a Tenant Profile Form and Tenant Income Certification Form toxomplete and sign. It is the responsibility ofthe Owner to provide these forms to each tenant who occupies a qualified low-income unit, at the time of occupancy and annually, upon recertification, if required, thereafter. ln,addition, the forms are required for any new tenant replacing a previous tenant in a qualified low-income unit^These forms must be completed, signed by the tenant, and placed in the Owner's file. The Owner is responsible for reviewing all forms for completeness and correctness. Failure to provide this document will constitute an act of non-compliance.
D. Inspection
Pursuant to the applicable provisions of Section 42, the Department shall conduct on-site inspections of all buildings the low-income housing project and shall review tenant income certifications for the low-income housing project:
By the end of the second calendar year following the year the last buildings in the low-income project is placed in service; and
At least once every three (3) years thereafter. However, following the Compliance Period and during the Extended Use Period inspections will occur at least once every five (5) years.
The minimum number of low-income units for which the Department shall conduct on-site inspections and tenant income certification review-is the lesser of:
20% of the low-income units in the low-income housing project, rounded up to the nearest whole number of units-; or
the minimum ,-unit sample size set forth in the following chart
Number of low-income units in the low-income housing project Number of low-income units selected for inspection or for low-income certification review (minimum unit sample size) |1099||1099||1099||1099|
5-6|99||109|^ 6
8-9 // 7
10-11 X/\\ 8
12-13 /SV x\?
14-16 // ^ioX
17-18 << //> 11"
19-21 V/ 12
22-25 26-29 \\ S^X\V 14
30-34 ^-^ \\/X ^ 15
35-40 ) \\ 16
41-47 X< /L -^^V> 17
48-56 \N//' 18
57-67X/—xX \\ 19
68-81/ \\ V 20
82-10X\ ) ) 21
102-130 XX // 22
131-175 Vx 23
176-257 24
258-449 25
450-1,461 26
1,462-9,999 27
Units subject to inspection will be identified through a random selection process, based on all project units currently subject to monitoring
E. Notification
The Department will provide written notification by regular mail to the Owner and/or Property Manager at least fourteen (14) days prior to:
The date of impending physical inspection ofthe project
The date of pending inspection of tenant files and the Annual Owner's Certification supporting documentation retained by the Owner/Manager for qualified low-income units under the Program.
The Department will provide prompt notification to the Owner and/or Property Manager by regular mail:
Upon failure of the Owner and/or Property Manager to submit the Annual Owner's Certification, supporting documentation, rent records, or other information retained by the Owner / Property Manager for qualified low-income units under the Program;
Upon failure by the Owner to permit the City to inspect the project; or
Upon discovery by inspection or review that the project is not in compliance with the provisions of Section 42.
An Owner will be given an opportunity to cure an occurrence of non-compHaqce ("Corrective Action Period"). The Corrective Action Period will not exceed ninety (90) days from the date-fhat the\written notification was sent by the Department. The Department is required to file IRS
Form 8823 with the IRS no later than forty-five (45) days after ^he^end^of the correction period. This filing is required regardless of whether the non-compliance was satisfactorily cured\The form must explain the nature of the noncompliance and indicate whether the Owner has correctedjihe^non-compliance. However, following the Compliance Period and during the Extended Use Period the Department is"no,longer/required to file IRS Form 8823 with the IRS.
F. Liability
Compliance with the requirements ofthe P'rogram/isihe-respdnsibility ofthe Owner ofthe project allocated Tax Credits. The Department's obligation to monitor>for compliance with the requirements of Section 42 does not make the Department liable for an Owner/S'no7v;compliance.
_____ // W W
VII. OTHER CONDITIONS
The review of documents submitted to^the Department is only for the purpose of determining eligibility for Tax Credits. The allocation of any Tax Credits does not constitute a determination or representation by the Department that the particular project complies with applicable requirements of the Code and the treasury regulations there under, or with any other laws or regulations governing Tax Credits.
The Department reserves the right to reject applications and disqualify projects based on non-compliance with any federal law, State law, local law, or the submission of false or misleading information.
No agent or employee of the City will be personally liable concerning any matters in relation to the Tax Credit reservation, Tax Credits allocation or for monitoring for compliance with the Program.
[The Remainder of this Page Intentionally Left Blank.]
•Til:
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This Low-Income Housing Tax Credit Qualified Allocation Plan will be in full force and effect upon signature of the Chief Executive Officer of the City of Chicago.
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The above-referenced Low-Income Housing Tax Credit Qualified Allocation Plan has been approved and executed as
of this [ ] day of [ ; ], 2021.
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