Home » 2008 Issues » February 13, 2008 » HCR-46-07-00002-A Qualified Allocation Plan for the Allocation of Low-Income Housing Credits
HCR-46-07-00002-A Qualified Allocation Plan for the Allocation of Low-Income Housing Credits
2/13/08 N.Y. St. Reg. HCR-46-07-00002-A
NEW YORK STATE REGISTER
VOLUME XXX, ISSUE 7
February 13, 2008
RULE MAKING ACTIVITIES
DIVISION OF HOUSING AND COMMUNITY RENEWAL
NOTICE OF ADOPTION
I.D No. HCR-46-07-00002-A
Filing No. 52
Filing Date. Jan. 29, 2008
Effective Date. Feb. 13, 2008
Qualified Allocation Plan for the Allocation of Low-Income Housing Credits
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of sections 2040.1–2040.14 of Title 9 NYCRR.
Statutory authority:
Executive Order No. 135, dated Feb. 27, 1990 as continued by Executive Order No. 5, dated Jan. 1, 2007; U.S. Internal Revenue Code, section 42(m); and Public Housing Law, section 19
Subject:
State of New York's qualified allocation plan for the allocation of low-income housing credits and regulations for the allocation of New York State low-income housing tax credits.
Purpose:
To amend the process by which DHCR reviews Federal low-income housing credit applications and State low-income housing tax credit applications, and utilizes selection criteria, and increase consistency with Federal statutes.
Substance of final rule:
9 NYCRR Part 2040 is amended as follows:
1. Alphabetize defined terms.
2. Amend the definition of “adjusted project cost” to clarify it, and delete an unnecessary reference to “approved total project cost”.
3. Delete the definitions of the unused terms “approvable costs of a community service facility”, “approved total project cost”, “gross syndication proceeds”, “operating subsidy reserve” and “public offerings”.
4. Amend the definition of “code” to provide a current citation to Section 42 of the Internal Revenue Code (“IRC”).
5. Add a new defined term “compliance period” to provide a plain language definition of this term, eliminating the need to reference the IRC.
6. Define “extended use period” to provide a plain language definition, eliminating the need to reference the IRC.
7. Add a new defined term “high acquisition cost project” which applies to projects which have acquisition costs above 25% of total development cost and clarifies DHCR's discretion to limit the amount of the developer's fee so that a high acquisition cost does not automatically elevate the developer's fee unreasonably.
8. Add a new defined term “HTFC”, an acronym for the Housing Trust Fund Corporation.
9. Add a new defined term “local non-profit organization” to clarify the non-profit participation that will qualify for scoring points.
10. Amend the definition of “operating deficit guarantee” and amend section 2040.3(g)(2)(ii) to clarify DHCR's operating deficit guarantee requirements.
11. Add a new defined term “persons with special needs” to specify those persons for which LIHC-assisted units may be specially targeted.
12. Amend the definition of “preservation project” to eliminate the requirement that these projects be in a crisis situation or be part of a community revitalization plan; and to clarify the commencement of the 30 year period during which the proposed rehabilitation must be sufficient.
13. Add a new defined term “primary market area”.
14. Add a new defined term “qualified low-income housing project” to provide a plain language definition of this IRC term.
15. Add a new defined term “supportive housing” to specify DHCR's requirements for a project to be considered supportive housing and therefore eligible for a possible set-aside of Credit.
16. Add a new defined term “visitability” with a corresponding new threshold requirement which incorporates a minimum accessibility standard into the Proposed Rule to assist households with elderly and disabled persons.
17. Revise language at section 2040.3(d)(1) regarding DHCR's process for providing a project with an initial award of Credit to clarify existing policy.
18. Revise language at section 2040.3(d)(2) to clarify DHCR's current process for issuance of a carryover allocation.
19. Replace references to Internal Revenue Service (IRS) Form 8609 with the term “final credit allocation.”
20. Eliminate the threshold requirement at section 2040.3(e)(3) that all local governmental approvals required for the project have been obtained. An applicant will have to have initiated the process of securing all necessary governmental approvals and demonstrate that the project is eligible to obtain such approvals.
21. Revise the experience requirement at section 2040.3(e)(6) to clarify that all parties involved in the project must have the requisite experience to develop and operate the proposed project.
22. Require that, at the time of application, the project developers, owners, and managers are not in default of their obligations to any governmental agency pertaining to similar projects.
23. Delete the threshold requirement that there be no change in the project's ownership structure as proposed prior to the issuance of the final credit allocation, eliminating potential ambiguity in the existing rule because section 2040.6(b) permits such changes with the approval of DHCR.
24. Delete the threshold requirement formerly at section 2040.3(e)(10) that the amount of annual credit requested does not exceed $20,000 per unit.
25. Revise the threshold requirement at section 2040.3(e)(9) (formerly at section 2040.3(e)(11)) to clarify that the per project and per unit caps will be specified in DHCR's annual Notice of Credit Availability (“NOCA”).
26. Revise the threshold requirement at section 2040.3(e)(10) to clarify that the “comprehensive market study of the housing needs of low-income individuals in the area …” required by the IRC, must be conducted by professionals pre-approved by DHCR.
27. Clarify that it is the number of bedrooms in a unit (not merely the size of the units) that must be appropriate for the type of occupancy proposed.
28. Add a new threshold requirement at section 2040.3(e)(14) regarding accessibility standards for persons with mobility impairments.
29. Make changes to correspond to the changes made to the term “preservation project”, and replacement of that term with “high acquisition cost project”.
30. Add a new threshold requirement at section 2040.3(e)(17) which eliminates the owner's right, after 15 years of low-income operation, to request a “qualified contract”, requiring DHCR to find a non-profit buyer willing to continue to operate the project under the requirements of the Program. This gives project owners the option to commit to a regulatory period of a minimum of 30 years or to commit to sell the project to the tenants.
31. Add a new threshold requirement which requires all projects to incorporate certain “green building” standards including: utilizing Energy Star appliances, light fixtures and heating systems; water usage and energy efficiency measures; passive radon-reduction if necessary; and, lead-safe work practices.
32. Reorganize section 2040.3(f), “project scoring and ranking criteria” so that the criteria “are listed in descending order according to the relative weight given …” as stated in the section.
33. Delete the “housing needs” scoring criteria at section 2040.3(f)(1) and replace it with a new scoring criteria “community impact/revitalization”, which better measures the need in a locality for the type of housing proposed.
34. Delete the “efficiency of credit use” scoring criteria at section 2040.3(f)(2) and replace it with “financial leveraging”. The proposed scoring provision eliminates DHCR's awarding of Credit based on the “amount of credit requested for the project.” The financial leveraging criteria will award points to the extent other financing sources are utilized to minimize the use of DHCR/HTFC resources, and based upon the amount of credit requested per unit adjusted for unit size.
35. Delete the scoring provision “regulatory period” and replace it with a new criteria “long term affordability.” The former provision provided scoring points for projects providing a regulatory period of a minimum of 30 years, which DHCR has made a threshold requirement. This new provision will encourage long-term project affordability by providing points to projects which commit to a minimum regulatory period of longer than 30 years.
36. Add a new scoring criteria “green building”. This new scoring criteria will provide an incentive for projects financed with Credit to reduce energy and resource consumption, minimize environmental impacts, and utilize Credit to remediate sites in need of environmental remediation.
37. Amend the “energy efficiency” scoring criteria to provide points for receiving financing through the New York State Energy Research and Development Authority's (“NYSERDA”) Multifamily Building Performance Program or the New York State Energy Star Labeled Homes Program, or demonstrating that the project will meet comparable energy efficiency standards.
38. Add a new scoring criteria “fully accessible and adapted, move-in ready units” to provide additional points for projects designed to serve the growing population of persons with mobility, vision and hearing impairments.
39. Delete the “tenant buy-out plan” scoring criteria.
40. Amend the “project amenities” scoring criteria to: modify some criteria, and increase point value and the number of amenities for which points will be given including: Energy Star (or equivalent) air conditioning; laundry facilities or washer/dryer hookups, and dishwashers; discounted broadband internet access; community room; on-site management office; outdoor recreational area and garden space; and computer lab.
41. Amend the “project readiness” scoring criteria so that it better gauges project readiness.
42. Revise the “participation of local tax exempt organizations” scoring criteria formerly at 2040.3(f)(8) and replace it with a renamed scoring criteria “participation of non-profit organizations” to conform the criteria more closely to the wording and requirements of the IRC, reduce the number of points from 5 to 4, and clarify the levels of participation for which points will be awarded.
43. Amend the “special needs” scoring criteria to replace the term “special populations” with the term “persons with special needs”, and to add the requirement that projects receiving scoring points submit a “comprehensive service plan” to ensure that persons with special needs are provided with needed services.
44. Add a new scoring criteria “mixed income” to provide 3 points for projects which reserve at least 15 percent of total project units for households earning more than 60 percent of area median.
45. Add a new section “set-asides” which compliments and clarifies DHCR's right to allocate credit to projects which further the State's housing goals.
46. Amend section 2040.3(g)(2)(ii) to recognize that changes in the low-income housing industry have led to the ownership of projects by limited liability companies. The section is also amended to eliminate the statement that the amount of the developer's fee and the method for funding the operating deficit guarantee shall be established at the credit reservation or binding agreement stage.
47. Amend section 2040.3(g)(2)(iii) to eliminate an apparent inconsistency and to clarify that the developer's fee is an allowable cost that may be reduced where an identity of interest has been found, effecting no substantive change.
48. Sunset the regulations regarding projects which are financed by tax-exempt bonds subject to the Private Activity Bond Cap in anticipation of delegating processing to the New York State Housing Finance Agency.
49. Update the rule's Freedom of Information Law reference.
50. Amend section 2040.9(c) to correct a typographical error to confirm the Existing Rule to the IRC's requirement, and DHCR's practice, of conducting inspections in a manner which will not give project owners notice of what units, or what year's records, will be inspected.
51. Amend the scoring section of 9 NYCRR section 2040.14(d) and add a general allocation policy section and a set-aside section in order to coordinate, to the extent possible, the scoring mechanisms, general allocation policies and the set-aside policies for both the LIHC and SLIHC programs.
52. Additionally, DHCR made a number of minor typographical corrections and formatting changes to sections of the Existing Rule for consistency and grammatical reasons.
Final rule as compared with last published rule:
Nonsubstantive changes were made in sections 2040.2(s), (u), 2040.3(c), (e), (f) and 2040.14(d).
Text of rule and any required statements and analyses may be obtained from:
Arnon Adler, Division of Housing and Community Renewal, 38-40 State St., Albany, NY 12207, (518) 486-3305
Summary of Revised Regulatory Impact Statement
1. Statutory Authority:
Executive Order Number 135, dated February 27, 1990, which was continued in full force and effect by Executive Order Number 5, dated January 1, 2007, authorizes the Commissioner of the Division of Housing and Community Renewal (“DHCR”) to administer New York State's annual allotment of federal low-income housing tax credits. U.S. Internal Revenue Code (“IRC”) Section 42(m) provides that Low-Income Housing Credit (“LIHC” or “Credit”) must be allocated pursuant to a “qualified allocation plan” (“QAP”) approved by the Governor. The LIHC program promotes housing for households earning up to 60 percent of the area median income.
Public Housing Law Article 2-A (the “Act”) created the New York State Low-Income Housing Tax Credit Program (“SLIHC”). The Act authorizes DHCR to allocate New York State tax credits to those who invest in the development of eligible housing for households earning up to 90 percent of area median income, and to promulgate rules and regulations necessary to administer the program.
2. Legislative Objectives:
The LIHC and SLIHC programs were enacted to promote housing that is affordable to persons meeting the applicable income eligibility criteria.
3. Needs and Benefits:
The changes to the existing rule (“Existing Rule”) which would be made by this proposed rule (“Proposed Rule”) will amend 9 NYCRR, Part 2040 to:
1. Clarify the definitions and DHCR policies and procedures.
2. Delete unused terms.
3. Update references to IRC Section 42 and the Freedom of Information Law.
4. Provide plain language definitions of IRC terms.
5. Add a new term “high acquisition cost project”.
6. Define “local non-profit organization” and specify non-profit participation that qualifies for scoring points.
7. Amend the rule to account for project ownership by limited liability companies.
8. Define “persons with special needs” to specify those persons for which LIHC-assisted units may be specially targeted.
9. Amend the definition of “preservation project” to eliminate the requirement that these projects be in a crisis situation or be part of a community revitalization plan; and clarify the 30 year rehabilitation sufficiency requirement.
10. Define “primary market area”.
11. Define “supportive housing” to specify DHCR's requirements for a possible set-aside of Credit.
12. Eliminate the threshold requirement that all local governmental approvals required for the project have been obtained in response to concerns that this disadvantaged worthwhile projects.
13. Require that project participants are not in default of governmental agency obligations pertaining to similar projects.
14. Delete the requirement that there be no change in the project's ownership structure prior to the final allocation of credit.
15. Delete the threshold cap of $20,000 per unit because it is too restrictive. This cap will now be specified in DHCR's annual Notice of Credit Availability (“NOCA”).
16. Specify that the IRC required “comprehensive market study” be conducted by professionals pre-approved by DHCR.
17. Require design features accommodating persons with mobility impairments.
18. Make changes to the term “preservation project”, which correspond to the new term “high acquisition cost project”.
19. Require a minimum 30 year regulatory period in recognition of the State's need to preserve affordable housing.
20. Require certain energy efficiency and environmental “green building” standards and provide scoring points for additional “green building” measures.
21. Replace the “housing needs” scoring criteria with “community impact/revitalization”, which better measures a locality's need for the housing proposed.
22. Replace the “efficiency of credit use” scoring criteria with “financial leveraging”, awarding points to the extent DHCR financing is minimized.
23. Amend the “energy efficiency” scoring criteria to provide points for participation in certain programs involving financing from the New York State Energy Research and Development Authority or demonstrating that the project will meet comparable energy efficiency standards.
24. Add a new scoring criteria “fully accessible and adapted, move-in ready units” to encourage projects designed to serve persons with mobility, vision and hearing impairments.
25. Delete the “tenant buy-out plan” scoring criteria which was criticized as impractical for many projects.
26. Amend the “project readiness” scoring criteria so that it better gauges project readiness.
27. Amend the “persons with special needs” scoring criteria to ensure that persons with special needs are provided with appropriate services.
28. Replace the “participation of local tax exempt organizations” scoring criteria with “participation of non-profit organizations” to conform the criteria more closely to the IRC's wording and requirements and to reduce the point value.
29. Add a “mixed income” scoring criteria to encourage projects which reserve units for households earning over 60 percent of area median income to minimize concentrations of poverty.
30. Amend the “project amenities” scoring criteria to encourage projects which provide additional quality of life amenities.
31. Add a new section “set-asides” which clarifies DHCR's right to allocate credit to projects which further the State's housing goals.
32. Amend section 2040.3(g)(2)(ii) to recognize ownership of projects by limited liability companies and to eliminate the statement that the amount of the developer's fee shall be established at the credit reservation or binding agreement stage.
33. Sunset the regulations regarding projects which are financed by tax-exempt bonds subject to the Private Activity Bond Cap in anticipation of delegating processing to the New York State Housing Finance Agency.
34. Amend the SLIHC program's “project scoring and rating criteria”, and add a general allocation policy section and a “set-aside” section, in order to coordinate, to the extent possible, the scoring mechanisms, general allocation policies and the set-aside policies, for both the LIHC and SLIHC programs.
35. Additionally, DHCR made a number of minor typographical corrections and formatting changes to sections of the Existing Rule for consistency and grammatical reasons.
4. Costs:
(a) Costs to State Government.
There will be no costs to state government because of the proposed amendments to the rule. DHCR will administer the LIHC and SLIHC programs with existing staff and resources.
(b) Costs to local government.
None.
(c) Cost to private regulated parties.
The changes made by the Proposed Rule should result in no increased costs to regulated parties. Any increase in development costs should be offset by the Credit allocated to the project.
5. Local Government Mandates:
None.
6. Paperwork:
The rule requires the filing of application and supporting documentation to establish eligibility for an allocation of the federal tax credits.
7. Duplication:
None.
8. Alternatives:
The alternative to the Proposed Rule is the Existing Rule which does not adequately address the Division's need to clarify its definitions, and strengthen and broaden its scoring criteria to meet more programmatic goals. Specifically:
1. The alternative to deleting definitions of unused terms, and alphabetizing defined terms, is to fail to make the rule more readable.
2. The alternative to revising the definition of “code” is the existing outdated reference.
3. The alternative to defining “high acquisition cost project” and the corresponding threshold criteria is to allow developer's fees to be based on the cost of purchasing existing housing.
4. The alternative to defining “local non-profit organization” and “primary market area” is to fail to respond to the need for more specificity.
5. The alternative to defining “persons with special needs” is to leave the term undefined.
6. The alternative to amending the definition of “preservation project” is the current definition, which hampers efforts to preserving existing housing.
7. The alternative to defining “supportive housing” and reserving the right to set-aside Credit for such housing is to fail to clarify the basis of the State's discretion to provide additional housing opportunities for persons with special needs.
8. The alternative to providing a definition of “visitability” and adding the corresponding threshold criteria (section 2040.3 (e)(14) of the Proposed Rule) is to fail to ensure that Credit-assisted housing is accessible to elderly persons and persons with mobility impairments.
9. The alternative to revising section 2040.3(d)(1), regarding the issuance of a binding agreement in order to facilitate attainment of financing, is to fail to set forth the general purpose of a binding agreement.
10. The alternative to amending the provision allowing a carryover allocation, despite the failure of the owner to expend 10 percent of the owner's reasonably expected basis, is the current text which indicates that DHCR will continue to make judgment calls regarding carryover allocations, and risk the loss of Credit.
11. The alternative to deleting the reference in section 2040.3(d)(2), setting forth developer fee limits in the carryover allocation, is to retain this provision; IRC requirements make the eliminated timeframe unnecessary.
12. The alternative to eliminating the requirement that all local governmental approvals have been obtained is the current requirement which makes it difficult to develop worthwhile projects.
13. The alternative to revising the experience requirement is to retain the current text which can be misinterpreted.
14. The alternative to amending section 2040.3(e)(8) is the current text which allows parties to participate in the Credit program despite having failed to properly develop or run similar projects.
15. The alternative to eliminating the requirement forbidding changes in the project's ownership is the current text, which creates ambiguity because section 2040.6(b) allows such changes with DHCR approval.
16. The alternatives to eliminating the per unit cap of credit allocations to $20,000 are not practical, therefore DHCR has determined that the cap should be set forth in the annual NOCA.
17. The alternative to amending the marketing study requirement is to fail to provide needed specificity.
18. The alternative to extending the minimum regulatory period is to fail to provide for the preservation of affordable housing.
19. The alternative to adding “green building” threshold requirements is to fail to promote conservation.
20. The alternatives to the “community impact/revitalization” criteria which replaces “housing needs” include the failure to amend the criteria to better measure the need for the type of housing proposed.
21. The alternative to revising the “efficiency of credit use” scoring criteria, now “financial leveraging”, is the current text which hampers the development of worthwhile projects.
22. The alternative to amending the “energy efficiency” scoring criteria is to delete the current text because its components have been made threshold requirements.
23. The alternative to including the “fully accessible and adapted, move-in ready units” scoring criteria is to fail to promote affordable housing designed to serve persons with physical impairments.
24. The alternative to amending the “project amenities” scoring criteria is to fail to encourage projects providing desirable amenities.
25. The alternative to amending the “project readiness” scoring criteria is to fail to better gauge project's readiness to proceed.
26. The alternative to amending the former “participation of local tax exempt organizations” scoring criteria is the current section which has been criticized as over-emphasized. The amendment also ensures compliance with IRC requirements.
27. The alternative to the amendments to the “special needs” scoring criteria is the current text, which does not sufficiently address special needs.
28. The alternative to adding the “mixed income” scoring criteria is to fail to provide an incentive for minimizing concentrations of poverty.
29. The alternative to adding the “set-asides” section is to fail to provide for the special priorities for which DHCR may show a preference or reserve Credit.
30. The alternative to amending section 2040.3(g)(2)(iii) is the current text, which might create ambiguity.
31. The alternative to adding 2040.4(f) is to have DHCR, instead of the New York State Housing Finance Agency, process applications for projects which are financed by tax-exempt bonds subject to the Private Activity Bond Cap, with which the Housing Finance Agency has greater experience.
32. The alternative to amending the SLIHC program's scoring criteria, and adding a general allocation policy section and a set-aside section is to retain the current text which would be inconsistent with the proposed changes to LIHC regulations.
9. Federal Standards:
This Rule does not exceed the minimum standards of the federal government for the LIHC or SLIHC programs.
10. Compliance Schedule:
Not applicable. The rule changes will affect only those who apply to DHCR for allocations of Credit after the amendments to the rule are effective.
Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
Insubstantial changes to text of rule as previously submitted with DHCR's Notice of Proposed Rulemaking have had no impact on the validity of the statements made in the Rural Area Flexibility Analysis, Regulatory Flexibility Analysis, or the Job Impact Statement submitted at that time. The changes will not impose any adverse impacts on small businesses, local governments, public or private entities in rural areas, jobs or employment opportunities. Therefore DHCR has not submitted a revised Rural Area Flexibility Analysis, Regulatory Flexibility Analysis, or Job Impact Statement.
Assessment of Public Comment
2040.2(u):
Comments: Recommendations ranged from lowering the percentage of LIHC-assisted units to 15% to raising it to 40%. Commentators sought clarification regarding the required content of comprehensive service plans. Commentators also questioned how they could satisfy DHCR requirements if the local service agencies already serving persons with special needs are unwilling to enter into a project-specific agreement. Several commentators asked if developers could also be the service provider for the project. In addition, commentators questioned whether the comprehensive service plan required by the proposed QAP would trigger the New York State Department of Health's Assisted Living Residences regulation. Additional commentators expressed concern about securing rental or operating assistance for certain target populations which require supportive housing but do not qualify for subsidies. It was further recommended that DHCR should consider the viability of funding social services from project operating income.
Response: Recognizing that the higher, 30% LIHC-assisted unit standard should prove to be a more effective model for supportive housing development, DHCR has revised the QAP accordingly. Experienced service providers are very familiar with the specific elements that must be included in a comprehensive service plan. The role of local service agencies can be memorialized in various types of agreements with the housing developer. DHCR does not believe, nor does it intend, that all LIHC-assisted projects serving frail elderly persons must comply with the Assisted Living Residences regulation proposed by DOH. It is DHCR's understanding that there are a number of rental subsidy programs available for persons with special needs. DHCR will maintain its requirement that supportive services may not be funded from project operating income, since this could potentially threaten the financial and physical viability of the project through its extended use period. Further, DHCR has no objection to permitting developers to also provide supportive services if such an arrangement meets the requirements of the definition.
2040.3(e)(18):
Comments: Clarification of this threshold requirement was requested.
Response: Clarification has been provided in DHCR's Green Building Criteria Reference Manual. DHCR has concluded, however, that it would be helpful to revise the wording of this section to provide additional clarification regarding the requirements for use of energy efficient appliances, light fixtures and heating systems.
2040.3(f)(1):
2040.14(d)(1):
Comments: Commentators expressed concern that projects might not qualify for the maximum points provided due to the project's location or the primary market area, while others were opposed to the substitution of this section for the previous scoring criteria “Housing Needs”.
Response: One purpose of the proposed criteria was to provide a scoring incentive for different types of projects facing potentially conflicting affordable housing market conditions and levels of local support. In recognition of the importance of providing a scoring incentive to projects which can secure local support, DHCR will reinstate (iv) from the deleted “Housing Needs” criteria and provide four five point options to get a maximum of fifteen points.
2040.3(f)(9):
2040.14(d)(9):
Comments: Concerns were raised that participation in NYSERDA's program required a significant upfront investment which is only reimbursed if the project is funded.
Response: DHCR proposes revising this provision to provide a more realistic opportunity for projects to participate in the NYSERDA program by demonstrating the project is eligible for, will participate in, and will meet NYSERDA's standards.
2040.3(f)(13):
2040.14(d)(13):
Comments: Commentators expressed concern that providing two points for the lower level of non-profit organization participation penalized smaller non-profits. Other commentators indicated that the scoring criteria excluded locally-based non-profit organizations which do not perform housing-related services and/or non-profits which have not previously served the primary market area or county in which the project is located.
Response: DHCR considers it important to recognize and encourage the higher level of participation by local non-profit organizations by providing more points for these projects. DHCR agrees that non-profits who are not locally-based, or do not provide housing-related services, can also play an important role in project development and management. Accordingly, this scoring item has been revised to provide such non-profits with one point.
2040.3(f)(15):
2040.14(d)(14):
Comments: Commentators sought clarification on certain aspects of the scoring criteria.
Response: DHCR will provide necessary guidance via its website and technical assistance. DHCR has determined it would be beneficial to broaden the project amenity for outdoor space by replacing the word “patio” with “recreational area”.
2040.2(s):
Comments: Commentators expressed concern that this definition excluded an additional income test allowable by the Internal Revenue Code.
Response: The QAP will be revised to provide for this additional income test.
2040.3(c):
Comments: Commentators questioned whether DHCR intended to change its fee processing requirements, given that the proposed revision did not reflect DHCR's current policy in this regard.
Response: No such change in policy was intended, therefore this provision has been revised.
2040.3(e)(15):
Comments: Commentators indicated that the proposed change to the current language could be interpreted as extending the acquisition cost limitation from rehabilitation projects to new construction.
Response: In order to avoid any such misconception, DHCR will revert to the language of the current QAP.
2040.2(j):
2040.3(g)(2)(ii):
Comments: Commentators stated that the risk factors were too vague.
Response: The current proposed high acquisition cost definition and developer's fee provision provide a description of those factors involved in an assessment of the project owner's risk in developing a high acquisition cost project. Prospective applicants have the opportunity to seek technical assistance prior to application submission.
2040.2(p):
Comments: Commentators recommended adding additional categories of persons with special needs.
Response: Several categories of persons recommended for inclusion are already accommodated in the definition. For those categories of persons not included, DHCR has conducted extensive research and has found that the need for such additional designations is unwarranted.
2040.3(f)(12):
Comments: Commentators recommended that the provision be revised to provide additional scoring points to projects serving higher percentages of persons with special needs, and encourage independent living by awarding points to projects based solely on whether the project would give preference to persons with special needs and not based on the delivery of services to those persons.
Response: The provision of additional points for projects proposing higher percentages of units for persons with special needs is not necessary at this time, since DHCR is already providing other incentives for such projects. Projects targeting persons with special needs who do not require extensive on-site services are not required to provide such services in order to qualify for points under this incentive.
2040.2(q):
Comments: Commentators expressed concern that retaining the requirement that a preservation project “averts the loss of affordable housing” would exclude Rural Development Section 515 or other current LIHC-financed projects.
Response: By removing the requirement that projects be carried out pursuant to a workout plan or revitalization plan in the proposed QAP, projects will not have to wait until they are rendered uninhabitable or are no longer economically viable in order to access LIHC. The kinds of projects described in the comments could meet the “averts the loss of affordable housing” provision and qualify as a preservation project.
2040.2(v):
2040.3(e)(14):
Comments: Commentators expressed concern that this standard would conflict with the design standards and building code requirements of individual municipalities. Some supportive housing advocates stated that the design requirements would result in overly large bathrooms in supportive housing units that are generally quite small. It was further noted that the visitability standard was ambiguous and required clarification.
Response: The amended QAP clarifies that visitability standards do not apply when they are irreconcilable with federal, state or local statutes, regulations, ordinances or codes. It is a misconception that visitability requires design of an overly large bathroom. Technical assistance is also available prior to application submission to assist prospective applicants.
2040.3(f)(6):
Comments: Commentators stated that the proposed plan should not require development of these units in advance without regard to the needs and preferences of the individual tenants who will ultimately occupy them, recommending instead that the plan require applicants to establish a reserve to finance the specific adaptations requested by incoming tenants.
Response: While the creation of an adaptation reserve might meet the needs of individuals who have the luxury of waiting until a unit is adapted to meet their needs, many cannot wait the weeks or possibly months necessary to make a unit accessible and move-in ready.
2040.3(e)(3):
Comments: Additional clarification was requested in regard to the significance of the proposed change to this threshold eligibility requirement.
Response: The new terminology and standard provide a broader opportunity for projects to meet threshold eligibility by recognizing all approvals may not have been obtained by the time of initial application.
2040.3(f)(11):
Comments: Mixed comment was received in regard to the proposed reduction of points and de-emphasis of project readiness as a factor in scoring.
Response: DHCR believes de-emphasizing project readiness will increase the competitiveness of difficult to develop, but needed affordable housing projects.
2040.3(f)(2):
Comments: Commentators requested clarification of how the maximum of 13 points would be apportioned between the different elements of this provision, and how DHCR would determine the dollar value of a donation of land/building or a long-term lease provided at a nominal amount.
Response: DHCR will score a number of these elements based on their cumulative contribution to the financing of a project, while continuing to separately assess those elements which have not changed from the current QAP. Donations and leases provided at nominal amounts will be scored based on the difference between the market value of the donation or lease and the nominal amount paid by the applicant.
2040.2(h):
2040.3(e)(17):
Comments: Commentators requested various changes to the proposed definition of extended use period, and suggested that the threshold eligibility period of 30 years be increased to 50 years.
Response: In reference to the request to utilize the definition and threshold eligibility requirement to mandate a 50 year term of affordability, DHCR does not wish to make this a threshold eligibility requirement for all LIHC projects. The proposed definition of extended use period is a verbatim repetition of language in Section 42(h)(6)(D) of the Code.
2040.3(f)(4):
Comments: Concerns were expressed that the new criteria were vague and potentially expensive to implement. Commentators noted that this scoring incentive may disadvantage suburban and rural projects, and stated that the submission of a surface water management plan should not be required at time of application. The feasibility of incorporating photovoltaic panels into projects located in upstate New York was also questioned.
Response: DHCR does not believe that these scoring criteria will increase development costs significantly, believing instead that this change offers opportunities to reduce operating costs. DHCR also believes that the points assigned to this incentive are appropriate given the need to incorporate sustainable development measures and environmentally sound materials and construction techniques into affordable housing. Projects in both suburban and rural communities have an opportunity to score highly under this incentive based on other available options. DHCR has not requested that applicants provide a completed surface water management plan at the time application; they must only commit to provide a surface water management plan at that time. Finally, DHCR believes the use of photovoltaic panels in many areas of the State is feasible and can significantly reduce the operating costs of affordable housing.
2040.3(e)(10):
Comments: It was recommended that DHCR coordinate its market study requirements with those of the Rural Development's 515 Leveraged Loan Program.
Response: DHCR will continue to accept the market study required by Rural Development.
2040.3(f)(14):
Comments: Concern was expressed that the requirements of the Code present compliance difficulties for mixed income projects.
Response: DHCR recognizes that Code requirements can present compliance challenges for the renting of the next available unit in a LIHC-assisted project. DHCR provides an additional incentive for mixed income projects through its New York State Low-Income Housing Tax Credit Program.
Comments were also received concerning provisions of the QAP for which no change has been proposed, as well as recommendations for new QAP provisions. Since these comments are not germane to the proposed amendments to the QAP, DHCR will review these recommendations at a later date to determine whether additional amendments may be beneficial in the future.
