HCR-37-09-00006-A Low-income Housing Credit Qualified Allocation Plan
2/24/10 N.Y. St. Reg. HCR-37-09-00006-A
NEW YORK STATE REGISTER
VOLUME XXXII, ISSUE 8
February 24, 2010
RULE MAKING ACTIVITIES
DIVISION OF HOUSING AND COMMUNITY RENEWAL
NOTICE OF ADOPTION
I.D No. HCR-37-09-00006-A
Filing No. 96
Filing Date. Feb. 09, 2010
Effective Date. Feb. 24, 2010
Low-income Housing Credit Qualified Allocation Plan
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of Part 2040 of Title 9 NYCRR.
Statutory authority:
Executive Order No. 135, dated February 27, 1990, as continued by Executive Order No. 9, dated June 18, 2008; U.S. Internal Revenue Code, section 42(m); Public Housing Law, section 19
To amend threshold criteria and application scoring utilized in the allocation of low-income housing credits.
Text of final rule:
9 NYCRR Part 2040 is amended as follows:
Subdivisions (k) through (v) of section 2040.2 are renumbered as subdivisions (l) through (w), respectively.
A new subdivision (k) of section 2040.2 is adopted to read as follows:
(k) Historic building shall mean a structure that meets one of the following criteria:
(1) it is listed on the New York State or National Register of Historic Places, either individually or as a contributing building to a historic district; or
(2) it has been issued a Determination of Eligibility by the Keeper of the National Register of Historic Places; or
(3) it has been identified as a contributing building to a Local Historic District that has been certified by the Keeper of the National Register of Historic Places as substantially meeting the National Register Criteria for Evaluation; or
(4) it has been issued a State Historic Preservation Officer opinion or certification that the building is eligible to be listed on the National Register of Historic Places, either individually or as a contributing building to a historic district.
Subdivision (a) of section 2040.3 is amended to read as follows:
(a) Funding rounds. The division[, no later than January of each year,] will publish at least annually in the State Register a notice of credit availability which informs applicants of submission dates and deadlines for future funding rounds.
Subdivision (c) of section 2040.3 is amended to read as follows:
(c) Processing fees. The division shall charge an application fee of $[2000]3000, due at the time of application. A credit allocation fee of [six]eight percent of the first year credit allocation amount is due at the time of request for the issuance of carryover allocation. Not-for-profit applicants (or their wholly-owned subsidiaries) which will be the sole general partner of the partnership/project owner or sole managing member of the limited liability company/project owner may request and be approved to defer payment of fees until the time of carryover allocation.
Subdivision (e)(15)(i) of section 2040.3 is amended to read as follows:
(i) it is a preservation project (as defined at section 2040.2 ([q]r) of this Part); or
Subdivision (e)(18) of section 2040.3 is repealed and a new subdivision (e)(18) is adopted to read as follows:
(18) The project must meet the following green building measures:
(i) select native or non-invasive new trees and plants that are appropriate to the site's soil and microclimate;
(ii) where indicated by local conditions: for new construction, install a passive radon-reduction system to be activated should tests confirm the presence of radon gas in the building; or, for rehabilitation projects, install passive radon-reduction measures to be activated should tests confirm the presence of radon gas in the building upon completion; and
(iii) for properties built before 1978, use lead-safe work practices during renovation, remodeling, painting and demolition.
A new subdivision (e)(19) of section 2040.3 is adopted to read as follows:
(19) Projects must meet an energy efficiency standard, acceptable to DHCR, beyond that required by applicable building codes, and shall include the following energy efficiency measures:
(i) new heating systems must utilize Energy Star heating equipment or the equivalent which will produce the same or comparable energy efficiency or savings;
(ii) all new lighting fixtures must be Energy Star labeled or, at a minimum, provide equivalent energy efficiency, with the exception of light fixtures located in basements or storage areas;
(iii) new plumbing fixtures must be of a water-conserving type;
(iv) daylight sensors or timers on outdoor lighting must be installed to maximize energy efficiency;
(v) appliances that are labeled Energy Star, including refrigerators and other appliances, must be utilized to the greatest extent possible.
Subdivision (f)(1)(iii) of section 2040.3 is amended to read as follows:
(iii) the project is part of a comprehensive community revitalization plan which includes the use or reuse of existing buildings, which may include the historic rehabilitation of existing buildings, and addresses employment, educational, cultural [and] or recreational opportunities within the community (5 points);
Subdivision (f)(4) of section 2040.3 is repealed and a new subdivision (f)(4) is adopted to read as follows:
(4) Green building (maximum of 8 points).
Green building consists of three major components: mandatory criteria (required to qualify for points); standard green building criteria (points awarded for compliance); and green measures beyond the standard criteria (additional points awarded for compliance after meeting the standard criteria).
(i) Mandatory criteria (must satisfy all):
(a) submission of a green development plan outlining an integrated design approach for the operation and development of the project;
(b) a surface water management plan; and
(c) a green building operation plan that includes a manual prescribing proper building maintenance, a handbook and an orientation program for tenants and residents which provides information and training on the proper operation of relevant green features.
(ii) Standard green building criteria (up to 6 points total). Scored to the extent the project includes:
(a) smart growth principles including location and neighborhood fabric measures (up to 3 points);
(b) a Phase I Environmental Site Assessment (1 point);
(c) healthy living environment measures, which promote the use of non-toxic materials and improves indoor air quality (up to 3 points).
(iii) Green measures beyond the standard criteria (2 points). Scored to the extent the project meets the minimum standard criteria in (ii) above and includes at least one of the following green building measures:
(a) project is located on a brownfield, grayfield or adaptive reuse site;
(b) installation of an acceptable renewable energy system that will provide at least 10 percent of the project's estimated electricity; or
(c) utilization of various building products and techniques beneficial to the environment.
Subdivision (f)(6) of section 2040.3 is amended to read as follows:
(6) Fully accessible and adapted, move-in ready units ([6]up to 5 points). Scored on whether:
(i) at least 5 percent (rounded up to the next whole number) of the project units are fully accessible and adapted, move-in ready, which includes a roll-in shower, for person(s) who have a mobility impairment and the unit(s) will be marketed to households with at least one member who has a mobility impairment; and at least 2 percent (rounded up to the next whole number) of the project units are fully accessible and adapted, move-in ready for person(s) who have a hearing or vision impairment and the unit(s) will be marketed to households with at least one member who has a hearing or vision impairment ([3] 2 points); or
(ii) the percentages of units meeting the requirements of subparagraph (i) of this paragraph are equal to or exceed 10 percent and 4 percent (rounded up to the next whole number) respectively (a minimum of two units each)([6]5 points).
Subdivision (f)(9) of section 2040.3 is amended to read as follows:
(9) Energy efficiency (5 points). Scored to the extent the applicant demonstrates that, if approved for a credit reservation by the division, [it] the project will be eligible for, will participate in, and will meet the energy efficiency standards of the New York State Energy Research and Development Authority Multifamily Building Performance Program or the New York Energy Star Labeled Homes Program or, [if the project is not eligible to participate in the aforementioned programs,]the applicant demonstrates that, if approved for a credit reservation by the division, the project will meet [comparable]enhanced energy efficiency standards acceptable to the division that provide energy efficiencies and operational cost savings above what is required under section 2040.3(e)(19).
Subdivision (f)(12) of section 2040.3 is amended to read as follows:
(12) Persons with special needs (5 points). Scored if[:] the project will give preference in tenant selection to persons with special needs, with priority being given to such persons who have served in the armed forces of the United States for a period of at least 6 months (or any shorter period due to injury incurred in such service) and have been thereafter discharged or released therefrom under conditions other than dishonorable, for at least 15 percent of the LIHC-assisted units and whether the persons with special needs will be served by supportive services as evidenced by a comprehensive service plan and an agreement or commitment in writing with an experienced service provider.
Subdivision (f)(13)(iii) of section 2040.3 is amended to read as follows:
(iii) whether a non-profit organization that does not qualify as a local non-profit organization under section 2040.2([m]n), or its for-profit wholly owned subsidiary, has a defined and substantive role in the development or management of the project through the extended use period (1 point).
Subdivision (f)(15) of section 2040.3 is renumbered as subdivision (f)(16) and amended to read as follows:
([15]16) Project amenities (maximum of 2 points). Scored to the extent the project provides any of the following (1 point each):
(i) access to discounted broadband internet service to each residential unit;
(ii) on-site Energy Star appliances or equivalent in common laundry facilities, or washer/dryer hookups in each residential unit;
(iii) Energy Star central air-conditioning or the equivalent that will produce comparable energy efficiency or savings;
(iv) an outdoor recreational area or garden space;
(v) Energy Star dishwashers or the equivalent that will produce the same or comparable energy efficiency or savings in each residential unit and the community kitchen, if any; [and/]or
(vi) a computer lab equipped with Energy Star or equivalent computers and equipment, with a minimum of one computer for every 20 residential units.
A new subdivision (f)(15) of section 2040.3 is adopted to read as follows:
(15) Historic nature of project (up to 3 points). Scored on whether:
(i) the project includes the rehabilitation of a historic building (2 points);
(ii) the applicant demonstrates that the project will include a building that will be eligible for, and the applicant will seek, a federal tax credit for the rehabilitation of historic buildings (1 point).
Subdivision (a) of section 2040.6 is amended to read as follows:
(a) Information requests. Requests for information made under the Freedom of Information Law, must be in writing, and may be mailed to DHCR's Office of Legal Affairs, 38-40 State Street, Albany, New York 12207, or e-mailed to FOIL@[dhcr.state.ny.us]nysdhcr.gov.
Subdivision (b)(2)(ii)(b) of section 2040.8 is amended to read as follows:
(ii)(b) after initial income certifications have been completed for all units in a project, the certification required by this subparagraph shall not be required for projects in which 100 percent of the [if a waiver of the annual income recertification has been obtained for the project from the U.S. Internal Revenue Service (the "IRS") and a copy of the recertification waiver has been attached to the annual certification required by this section. The division shall not provide a statement in support of an owner's application for a recertification waiver to the IRS that each] residential [rental] units are LIHC qualified [in the building was a] low-income units, [under section 42 of the code at the end of the most recent credit period for the building, if the division has] unless: (1) DHCR has determined that the project is not in compliance with the provisions of this low-income housing credit qualified allocation plan, the code or the regulatory agreement required by section 2040.5 of this Part; (2) DHCR has notified the project owner of the event(s) of noncompliance; and (3) the project owner has not documented correction of, or otherwise resolved, the noncompliance to the satisfaction of the division;
Subdivision (c) of section 2040.14 is amended to read as follows:
(c) Funding rounds. A notice of credit availability will be issued annually by the DHCR [within six months of] following enactment of statute providing credit allocation authority. Such notice shall remain in effect until such time as the SLIHC credit allocation authority is expended or expired.
Subdivision (d)(1)(iii) of section 2040.14 is amended to read as follows:
(iii) the project is part of a comprehensive community revitalization plan which includes the use or reuse of existing buildings, which may include the historic rehabilitation of existing buildings, and addresses employment, educational, cultural [and] or recreational opportunities within the community (5 points);
Subdivision (d)(4) of section 2040.14 is repealed and a new subdivision (d)(4) is adopted to read as follows:
(4) Green building (maximum of 8 points).
Green building consists of three major components: mandatory criteria (required to qualify for points); standard green building criteria (points awarded for compliance); and green measures beyond the standard criteria (additional points awarded for compliance after meeting the standard criteria).
(i) Mandatory criteria (must satisfy all):
(a) submission of a green development plan outlining an integrated design approach for the operation and development of the project;
(b) a surface water management plan; and
(c) a green building operation plan that includes a manual prescribing proper building maintenance, a handbook and an orientation program for tenants and residents which provides information and training on the proper operation of relevant green features.
(ii) Standard green building criteria (up to 6 points total). Scored to the extent the project includes:
(a) smart growth principles including location and neighborhood fabric measures (up to 3 points);
(b) a Phase I Environmental Site Assessment (1 point);
(c) healthy living environment measures, which promote the use of non-toxic materials and improves indoor air quality (up to 3 points).
(iii) Green measures beyond the standard criteria (2 points). Scored to the extent the project meets the minimum standard criteria in (ii) above and includes at least one of the following green building measures:
(a) project is located on a brownfield, grayfield or adaptive reuse site;
(b) installation of an acceptable renewable energy system that will provide at least 10 percent of the project's estimated electricity; or
(c) utilization of various building products and techniques beneficial to the environment.
Subdivision (d)(7) of section 2040.14 is amended to read as follows:
(7) Fully accessible and adapted, move-in ready units ([6]up to 5 points). Scored on whether:
(i) at least 5 percent (rounded up to the next whole number) of the project units are fully accessible and adapted, move-in ready, which includes a roll-in shower, for person(s) who have a mobility impairment and the unit(s) will be marketed to households with at least one member who has a mobility impairment; and at least 2 percent (rounded up to the next whole number) of the project units are fully accessible and adapted, move-in ready for person(s) who have a hearing or vision impairment and the unit(s) will be marketed to households with at least one member who has a hearing or vision impairment ([3] 2 points); or
(ii) the percentages of units meeting the requirements of (i) above are equal to or exceed 10 percent and 4 percent (rounded up to the next whole number) respectively (a minimum of two units each)([6]5 points).
Subdivision (d)(9) of section 2040.14 is amended to read as follows:
(9) Energy efficiency (5 points). Scored to the extent the applicant demonstrates that, if approved for a credit reservation by the division, [it] the project will be eligible for, will participate in, and will meet the energy efficiency standards of the New York State Energy Research and Development Authority Multifamily Building Performance Program or the New York Energy Star Labeled Homes Program or, [if the project is not eligible to participate in the aforementioned programs,]the applicant demonstrates that, if approved for a credit reservation by the division, the project will meet [comparable]enhanced energy efficiency standards acceptable to the division that provide energy efficiencies and operational cost savings above what is required under section 2040.3(e)(19).
Subdivision (d)(10) of section 2040.14 is amended to read as follows:
(10) Persons with special needs (5 points). Scored if the project will give preference in tenant selection to persons with special needs, with priority being given to such persons who have served in the armed forces of the United States for a period of at least 6 months (or any shorter period due to injury incurred in such service) and have been thereafter discharged or released therefrom under conditions other than dishonorable, for at least 15 percent of the DHCR-assisted units and whether the persons with special needs will be served by supportive services as evidenced by a comprehensive service plan and an agreement or commitment in writing with an experienced service provider.
Subdivision (d)(14) of section 2040.14 is renumbered as subdivision (d)(15) and amended to read as follows:
(1[4]5) Project amenities (maximum of 2 points). Scored to the extent the project provides any of the following (1 point each):
(i) access to discounted broadband internet service to each residential unit;
(ii) on-site Energy Star appliances or equivalent in common laundry facilities, or washer/dryer hookups in each residential unit;
(iii) Energy Star central air-conditioning or the equivalent that will produce comparable energy efficiency or savings;
(iv) an outdoor recreational area or garden space;
(v) Energy Star dishwashers or the equivalent that will produce the same or comparable energy efficiency or savings in each residential unit and the community kitchen, if any; [and/]or
(vi) a computer lab equipped with Energy Star or equivalent computers and equipment, with a minimum of one computer for every 20 residential units.
A new subdivision (d)(14) of section 2040.14 is adopted as follows:
(14) Historic nature of project (up to 3 points). Scored on whether:
(i) the project includes the rehabilitation of a historic building (2 points);
(ii) the applicant demonstrates that the project will include a building that will be eligible for, and the applicant will seek, a federal tax credit for the rehabilitation of historic buildings (1 point).
Final rule as compared with last published rule:
Nonsubstantive changes were made in section 2040.3(c), (e)(19), (f)(4), (9) and (12).
Text of rule and any required statements and analyses may be obtained from:
Arnon Adler, Division of Housing and Community Renewal, 38-40 State Street, Albany, New York 12207, (518) 486-3305, email: aadler@nysdhcr.gov
Revised Regulatory Impact Statement
1. Statutory Authority:
Executive Order Number 135, dated February 27, 1990 (as continued by Executive Order Number 9, dated June 18, 2008) authorizes the Division of Housing and Community Renewal's ("DHCR") Commissioner to administer New York State's annual allotment of federal low-income housing tax credits ("Credit"). U.S. Internal Revenue Code ("IRC") Section 42(m) requires that Credit be allocated pursuant to a "qualified allocation plan" ("QAP"), which DHCR promulgates as a rule. The 2009-2010 State Budget authorizes DHCR to collect fees for Credit program administration ("LIHC Program").
Public Housing Law Article 2-A (the "Act") created the New York State Low-Income Housing Tax Credit Program ("SLIHC Program"). The Act authorizes DHCR to allocate New York State tax credits to those who invest in eligible housing, promulgate rules necessary to administer the SLIHC Program, and also provides that IRC Section 42 shall apply to the SLIHC Program. 9 NYCRR Sections 2040.1 - 2040.13 provide the framework for LIHC Program administration, and 9 NYCRR Section 2040.14 provides the framework for SLIHC Program administration.
2. Legislative Objectives:
Both the LIHC and SLIHC Programs were enacted to encourage private investment in housing that is affordable to low-income persons. The LIHC Program authorizes states to allocate Credit to owners of low-income housing which meets IRC section 42 requirements.
The most significant difference between the LIHC and SLIHC Programs is that LIHC Program is for housing for households earning up to 60 percent of the area median income ("AMI"), while the SLIHC is for housing for households earning up to 90 percent of AMI.
3. Needs and Benefits:
The changes to the existing plan ("Existing Rule") made by the proposed rule ("Proposed Rule") would amend 9 NYCRR, Part 2040 to:
(1) Add a defined term "historic building" at section 2040.2(k) to clarify the type of structure which qualifies for points under the new "historic nature of project" scoring category at 2040.3(f)(15). The federal Housing and Economic Recovery Act of 2008 amended the IRC, mandating that states' QAPs have this selection criterion. This will provide incentives for projects which include rehabilitation of a historic building and leverage funding through a federal historic tax.
(2) Revise, at section 2040.3(a), "funding rounds" to clarify DHCR's policy for publishing annual notices of credit availability.
(3) Revise, at section 2040.3(c), "processing fees" to increase the application fee from its current level of $2,000 to $3,000 while maintaining the current deferral from certain not-for-profit applicants, and to raise the credit allocation fee for successful applicants from six percent of the first year credit allocation to eight percent. This provision will enable DHCR to retain much of its current revenue in administering the Credit Program to counter a reduction in fees related to a decrease in overall credit allocation authority in 2010 from the previous two years.
(4) Revise the citation at section 2040.3(e)(15)(i) to reflect the new ordering of definitions.
(5) Delete current threshold green building requirements at section 2040.3(e)(18) and replace with DHCR's current mandatory green building standards. Also, move other current green building provisions to the energy efficiency threshold requirements section (2040.3(e)(19) of the Proposed Rule) as described in Paragraph 6 below.
(6) Add a new threshold requirement at section 2040.3(e)(19) requiring projects to incorporate energy efficiency standards beyond that required by applicable building codes. This provision provides the flexibility to adjust standards to accommodate constantly evolving industry energy efficiency standards, as well as building code provisions, without future rule revisions. This section also incorporates previous "green building" threshold requirements more appropriate to an energy efficiency category, such as Energy Star or, at a minimum, equivalent energy efficient systems, appliances and lighting fixtures, water-conserving fixtures, and sensors or timers on outdoor lighting. Due to rising energy costs and their impact on project viability and rents, the fact that, over the last two years, most applications incorporated many or all these measures, and that most of these requirements are industry standards, DHCR has determined that these standards should be threshold requirements. DHCR anticipates that either there will continue to be no additional costs incurred, as most projects already incorporate these measures, or that additional costs will be offset by operational cost savings and by the Credit allocated.
(7) Amend the "community revitalization plan" scoring criteria at section 2040.3(f)(1)(iii) replacing the term "and" with "or," to enable projects which are part of such plans to score points if the plan addresses community employment, educational, cultural or recreational opportunities, without addressing all these factors. The amended criteria better measures the need for the type of housing proposed, and recognizes that most locally adopted planning documents do not address all these factors.
(8) Revise the "Green building" scoring criteria at section 2040.3(f)(4) to clarify DHCR's current implementation of this provision, and to reflect a reduction in scoring points from the current total of ten to a maximum of eight points. The revised provision clarifies which green building criteria must be satisfied prior to being evaluated for scoring points, which must be addressed to qualify for six of the 8 points available, and which additional measures will qualify for the remaining two points. The revised criteria also set forth the point values associated with specific criteria. The six point standard building criteria has been modified to allow applicants multiple access to obtaining the points by retaining 2 three point criteria as well as a one point option. A few participants at the April 2009 roundtable discussion held with affordable housing industry representatives believed these criteria adversely impacted the rural projects. This revision shows that both rural and non-rural projects can qualify for points competitively. The two point reduction in scoring points is necessary in order to partially reallocate points to the new scoring criteria "historic nature of project" at section 2040.3(f)(15) in the Proposed Rule. The reduction of points in this category will also serve to reinstate the points for the "long term affordability" scoring criteria at 2040.3(f)(5) (which provides points for projects maintained as qualified low-income housing for periods of more than 30 years) for which DHCR previously proposed a reduction from seven to five points. DHCR is proposing this modification in the Proposed Rule in response to substantive public comment received which opposed the proposed reduction in points at 2040.3(f)(5). DHCR believes that the minimal reduction in points in the "Green building" scoring criteria will not negatively affect the incentive for seeking these scoring points and that the number of projects which will propose green building measures in future application funding rounds will continue to increase.
(9) Amend the "fully accessible and adapted, move-in ready units" scoring criteria at 2040.3(f)(6) to reduce points from six to five. DHCR determined that the reduction will not adversely affect the incentive for projects to include these units for persons with mobility or hearing/vision impairments, or the number of such units proposed. DHCR will reallocate the point to the "historic nature of the project" criterion at 2040.3(f)(16) in the Proposed Rule.
(10) Amend the "energy efficiency" scoring criteria at section 2040.3(f)(9), which provides an incentive to incorporate energy saving measures beyond the threshold requirements of the Rule, by either involving the expertise and financial resources of NYSERDA or meeting other enhanced energy efficiency standards that provide energy efficiencies and operational cost savings without NYSERDA participation. The revised language recognizes that demonstrating eligibility to participate in the NYSERDA Programs or demonstrating that the project will meet other enhanced energy efficiency standards may be costly and need not be fully explored until after the DHCR has approved funding and issues a credit reservation.
(11) Add to the "persons with special needs" scoring criteria at 2040.3(f)(12), a provision that projects qualifying for points under this existing category should provide a first preference for such persons who have served in the armed forces of the United States and meet other noted criteria. This modification is proposed in response to public comment received in regard to the Proposed Rule. This provision does not affect the scoring under these criteria.
(12) Revise the citation at section 2040.3(f)(13)(iii) to reflect the new ordering of definitions.
(13) Amend the "project amenities" scoring criteria at 2040.3(f)(16) (formerly 2040.3(f)(15)) clarifying that each of the six provisions is worth one point and that projects may obtain two points maximum. Essentially unchanged, the amended criteria clarify that: access to discounted internet service must be provided to each apartment; Energy Star, or equivalent, appliances can be in common laundry facilities or washer/dryer hook-ups in each apartment; Energy Star, or equivalent, dishwashers must be in each apartment and in any community kitchen; and, a resident's computer lab must be equipped with Energy Star, or equivalent, computer equipment, minimum of one computer for every 20 apartments.
(14) Amend 2040.6(a) to include DHCR's new email address for Freedom of Information Law purposes.
(15) Revise section 2040.8(b)(2)(ii)(b) to provide that certifications of tenant income subsequent to initial income certification, will not be required if all the project's units are LIHC qualified low-income units, to comport with the federal Housing and Economic Recovery Act of 2008, which amended the corresponding provision of the IRC.
(16) Delete and replace SLIHC section 2040.14(c) "funding rounds" to mirror the LIHC revision described in paragraph 2 above and 2040.14(d) "project scoring and rating criteria" as described in paragraphs 6 through 11 in order to coordinate, to the extent possible, the scoring mechanism for both the LIHC and SLIHC Programs.
4. Costs:
(1) Costs to State Government.
There will be no costs to state government because of the proposed amendments to the Existing Rule. DHCR will continue to administer the LIHC and SLIHC Programs with existing staff and resources.
(2) Costs to local government.
None.
(3) Cost to private regulated parties.
The changes made by the Proposed Rule should result in no increased costs to regulated parties. Any increase in costs which result from "energy efficiency" requirements will be offset by the Credit allocated to the project, and cost savings.
5. Local Government Mandates:
None.
6. Paperwork:
The rule requires the filing of an 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 to retain the Existing Rule which does not adequately address DHCR's need to clarify its funding process and scoring criteria, and to revise its scoring criteria to meet new federal requirements. Specifically:
(1) The alternative to defining "historic building" at section 2040.2(k) and adding the "historic nature of project" scoring criteria at section 2040.3(f)(15) of the Proposed Rule is to fail to comply with a 2008 amendment to the IRC which requires this project selection criterion.
(2) The alternative to revising section 2040.3(a) is to retain the existing provision, which does not correctly indicate the timeframe for DHCR's issuance of a notice of credit availability.
(3) The alternative to increasing the processing fees in section 2040.3(c) is retain the current application and credit allocation fee structure, which would result in an overall decrease in revenue to the State Treasury due to a reduction in the State's overall credit allocation authority at a time when the State can ill afford further budgetary reductions in revenue. There is no practical alternative to correcting section 2040.3(e)(15)(i) to reflect the new order of the definition of "preservation project" at 2040.2(q).
(4) The alternative to replacing section 2040.3(e)18 is to retain the current text, which does not sufficiently reflect DHCR's current mandatory green building standards and includes provisions more appropriate to new section 2040.3(e)(19) "energy efficiency standards".
(5) The alternative to adding the "energy efficiency" threshold requirements at 2040.3(e)(19) is for the state to fail to incorporate these practices into the Existing Rule, and, as a result, fail to require measures which are needed to ensure affordability, long term viability and energy efficient operation of Credit projects, and conserve energy and water.
(6) The alternative to amending the "community revitalization plan" scoring criteria at section 2040.3(f)(1)(iii) is the current text, which made it virtually impossible for projects to qualify for scoring points. The proposed amendment recognizes that it is sufficient for a project to be part of a comprehensive community revitalization plan which addresses at least one of the community "quality of life" factors referenced in the criteria since most such local plans do not address all of them.
(7) The alternative to revising the "green building" scoring criteria at 2040.3(f)(4) is the current text, which does not clearly denote which mandatory green building criteria must be addressed for projects to qualify for the scoring points and the specific point values associated with the criteria. The language in the Existing Rule required prospective project applicants seeking these scoring points to obtain guidance outside the Rule and raised unwarranted concerns that the criteria adversely affected the competitiveness of rural projects. The alternative to providing multiple options for obtaining the six points under standard green building criteria is to eliminate the points associated with one of the three criteria in this category, which are all desirable green building goals DHCR wishes to continue to encourage. In addition, the alternative to reducing the overall points available under this criteria is to obtain the points for "historic nature of project" at 2040.3(f)(15) of the Proposed Rule from another scoring provision which, as articulated in public comment, would serve as a detriment to the program and its prospective applicants.As noted directly above, the alternative to reducing the number of scoring points for "fully accessible and adapted, move-in ready units" scoring criteria at 2040.3(f)(6) is to fail to provide a sufficient scoring incentive for the new required scoring criteria at 2040.3(f)(15) in the Proposed Rule.
(8) The alternative to amending the "energy efficiency" scoring criteria at section 2040.3(f)(9) is to retain existing text which requires applicants, some with limited financial resources, to incur substantial costs prior to application, and which also fails to provide applicants seeking these points with the option of energy efficient projects that do not include NYSERDA's involvement.
(9) The alternative to amending the "persons with special needs" scoring criteria at section 2040.3(f)(12) is the current text which fails to respond to substantive public comment received, since the current text does not reference the need to assist persons who served in the armed forces of the Unitied States who otherwise meet the parameters of this category.
(10) The alternative to amending (section 2040.3(f)(15)of the Existing Rule) the "project amenities" scoring criteria (section 2040.3(f)(16) of the Proposed Rule) is the current text which does not provide clear guidance regarding DHCR's requirements for accessing these points or the point values associated with the criteria.
(11) The alternative to amending section 2040.6(a) is the current text which contains an incorrect DHCR e-mail address for Freedom of Information requests.
(12) The alternative to revising section 2040.8(b)(2)(ii)(b) regarding tenant income certifications is to retain the current text, which would fail to address a recent amendment to the IRC.
(13) The alternative to deleting and replacing section 2040.14(c) "funding rounds" and 2040.14(d) "project scoring and rating criteria" is to retain the current SLIHC funding round and program scoring criteria which would then not track the proposed changes to the LIHC Program, nor the changes required by IRC amendments.
9. Federal Standards:
This Rule does not exceed the minimum standards of the federal government for the LIHC Program or the SLIHC Program.
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.
Revised Regulatory Flexibility Analysis
The Division of Housing and Community Renewal has found that the proposed amendments to the rule at 9 NYCRR Part 2040 (the "Proposed Rule") will have no negative impact on small businesses. DHCR sought and utilized the advice of persons who represent small businesses in order to ensure that the Proposed Rule would have no negative impact on small businesses. Prior to drafting the Proposed Rule, DHCR held a roundtable discussion with participants from around the State. The invitees included for-profit and not-for-profit housing developers, attorneys and credit syndicators. No participant expressed an opinion indicating that any of the roundtable's discussion topics, which included project-related fees, would adversely affect small businesses. Based upon the roundtable, its prior experience in the allocation of Credit to projects which utilize small business services, and the nature of the amendments, DHCR does not anticipate that the Proposed Rule will have any adverse impact on small businesses or local government.
Revised Rural Area Flexibility Analysis
The Division of Housing and Community Renewal (DHCR) has found that the proposed amendments to the Rule at 9 NYCRR Part 2040 will not impose any adverse economic impact on rural areas or reporting, recordkeeping, or other compliance requirements on public or private entities in rural areas. The changes to the existing Rule which would be made by the proposed amendments impose no further requirements in rural areas, will not impose additional compliance costs on persons/entities which are located in rural areas, and will have no other adverse impacts on rural areas. While one change in the existing Rule will require the payment of project-related fees as an additional capital cost on such persons/entities, the cost of such fees are payable from the capital and equity financing received.
Prior to drafting the Proposed Rule, DHCR held a roundtable discussion with members of the affordable housing industry who have been active in the Credit program. The invitees included for-profit and not-for-profit housing developers from regions throughout the State, attorneys and credit syndicators. No invitee expressed an opinion indicating that the roundtable discussion items, which included the topic of project-related fees, would adversely affect rural areas. DHCR's experience with the Low-Income Housing Credit Program and the nature of the amendments are such that no such impact should be anticipated.
Revised Job Impact Statement
The Division of Housing and Community Renewal has found that the proposed amendments to the Rule at 9 NYCRR Part 2040 will have no adverse impact on jobs and employment opportunities. DHCR's experience with the Low-Income Housing Credit Program and the nature of the amendments are such that no adverse impact should be anticipated. The proposed Rule's retention and improvement of existing requirements and incentives regarding energy conservation, green buildings, the minimization of adverse environmental impacts and the addition of a new incentive for the rehabilitation of historic buildings may result in an increase in jobs in related industries.
Assessment of Public Comment
Section 2040.3(e)(19):
Comments:
It was recommended that high efficiency commercial lighting be permitted for use in residential units, as well as common areas, since such lighting can be both more energy efficient than Energy Star labeled lighting fixtures and less expensive.
A second commentator suggested that the provision be revised to allow for other lighting fixtures which provided for equivalent energy efficiency, stating that the provision as previously proposed was too specific and would be "technology-limiting" in an industry which has been undergoing rapid change and improvement.
Another commentator stated that developers might respond to this requirement by not providing any lighting fixtures at all in bedrooms or living rooms due to the additional cost.
Response:
DHCR agrees with the first two comments and is revising this provision to permit the use of light fixtures which are Energy Star labeled or, at a minimum, provide equivalent energy efficiency. Such wording accommodates the utilization of high efficiency commercial grade lighting fixtures, and other new products which might be developed by this ever-changing industry.
However, DHCR's recent experience in requiring energy efficiency lighting fixtures in residential units does not support the contention that developers will avoid putting such lighting fixtures in living rooms and bedrooms to save money.
Section 2040.3(f)(4):
Comments:
One commentator suggested that the 10 points allotted to this scoring category be reduced and allotted to certain other categories.
Another commentator recommended that DHCR consider direct incentives for projects developed in close proximity to public transit, add the "reuse of existing buildings" as an additional green measure beyond the standard criteria and consider separate green building scoring categories for new construction and rehabilitation/preservation projects due to the likelihood that rehabilitation/preservation projects would not score as well as new construction projects using the same green building scoring items.
Response:
DHCR agrees that the 10 points allotted to this scoring category is more than sufficient in encouraging projects to incorporate green building measures. Therefore, DHCR is reducing this scoring category by two points and reallocating them consistent with other agency priorities.
DHCR does not deem it necessary to revise this scoring category to provide direct incentives for projects developed in close proximity to public transit since they already qualify for scoring points. In addition, DHCR does not believe that a separate green building scoring provision is necessary for rehabilitation/preservation projects, since these projects already qualify for other incentives, including a preservation project set-aside. Similarly, projects supported by a comprehensive community revitalization plan which include the "reuse of existing buildings" already qualifies for up to five scoring points in a different scoring category in the QAP.
Section 2040.3(f)(5):
Comments:
DHCR received comments which objected to the contemplated reduction of the points available under this scoring provision from 7 to 5 points.
Alternatively, commentators suggested that DHCR make long term affordability a threshold eligibility requirement.
Response:
DHCR is retaining long term affordability as a scoring category, but will raise its value back to the current level of 7 points.
Section 2040.3(f)(9):
Comments:
Commentators who have developed energy efficient affordable housing and/or have sought to participate in the aforementioned New York State Energy Research and Development Authority (NYSERDA) programs indicated that they have encountered difficulties with these programs. Specifically, one commentator indicated that NYSERDA funding under the Multifamily Building Performance Program has been indefinitely suspended. In light of this situation, the commentator questioned what "comparable" energy efficiency standards a project would need to meet to qualify for scoring points under this provision.
Another commentator asked what would occur if a project, upon completion, failed to meet the pertinent NYSERDA program standard by some small degree and whether the developer would be deemed by DHCR to be in default of its LIHC regulatory agreement.
Response:
Energy efficient development is crucial to reducing the amount of energy consumed by our housing developments and has the additional effect of lowering the operational costs of these projects. Since 2008, DHCR has recognized the programs administered by NYSERDA as the best means to achieve this goal, especially in light of the funding then available under the programs.
In light of the program funding suspension, and other concerns by participating developers, DHCR agrees it is necessary to make additional clarifications to the proposed QAP to accommodate projects meeting enhanced energy efficiency standards that provide energy efficiencies and operational cost savings above what is required in the QAP's threshold eligibility requirements.
It is further noted that the current Request for Proposals delineated specific comparable energy efficient strategies to supplement the NYSERDA option. DHCR's intent is to allow housing developers additional options to achieve the goal of developing energy efficient projects and securing scoring points. These options were also articulated at DHCR's regional application workshops in November 2009. In addition, DHCR's regional offices are continuing to provide technical assistance, in conjunction with architectural staff, in regard to the alternate standards.
In reference to the concern about a default under the DHCR LIHC regulatory agreement, DHCR understands that NYSERDA program participation at the outset of project development does not insure a housing development will meet the NYSERDA standard upon completion. Therefore, it is highly unlikely DHCR will determine a project which marginally fails to meet the NYSERDA standard to be in default of its LIHC regulatory agreement. Indeed, in its recent experience with funded projects which proposed to meet the NYSERDA standard and subsequently failed, DHCR did not assess any significant penalties against the development team or deem the project to be in default. Rather, DHCR architectural staff worked jointly with the development teams to identify areas in which some energy efficient measures could still be utilized to the betterment of the project and its ultimate tenants.
Section 2040.3(f)(12):
Comments:
Commentators suggested that DHCR increase the number of points available under this category. Another commentator requested that DHCR document in the QAP that projects compliant with a federal fair housing court order in Westchester County receive points. Commentators also recommended including veterans among the categories of persons served for which projects could qualify for these scoring points.
It was also proposed that DHCR make every effort to assure that in projects located in New York City, such units be targeted to persons with special needs who are homeless or otherwise eligible under the joint state-city New York New York III supportive housing initiative.
Response:
DHCR agrees it is very important to assist veterans with special needs in obtaining affordable housing in recognition of their service to our nation. Therefore, DHCR is revising the persons with special needs scoring provision to add language indicating that projects which qualify for these points will provide a priority for veterans.
In reference to the comment regarding the federal fair housing court order in Westchester County, DHCR will continue to take this request under consideration, but is not prepared to revise the QAP on this basis.
In regard to the recommendation that the QAP address the current availability of scoring points for projects serving households eligible under the joint state-city New York New York III supportive housing initiative, DHCR has determined that such a change is not necessary since the scoring instrument already accommodates such projects.
Section 2040.3(f)(6):
Comments:
One commentator disagreed with the proposed one point overall reduction (from 6 to 5 points) in this category, which DHCR has proposed to partially accommodate the federally mandated scoring incentive for historic rehabilitation projects, due to concern it would decrease the interest of prospective applicants in proposing accessible units.
Another commentator disagreed with the standard of accessibility required to qualify for points, proposing either that DHCR award points for fully adaptable, rather than fully accessible units, or to provide the points for projects incorporating "Universal Design" features.
A third commentator indicated that some project designs, like that of rehabilitation or historic preservation projects, do not lend themselves well to roll-in showers and suggested DHCR add language permitting a "tub with bench or equivalent" to qualify a project for points.
A fourth commentator stated that too many scoring points are associated with this section and that fully adapting units in advance of tenants renting the units can create difficulties, since individual tenants have more specific needs. It was suggested that units be adapted after project completion, at the cost of the project owner, based on the needs of the new tenant.
Response:
DHCR believes that the provision of 5 points under this category continues to provide a sufficient incentive and reward to prospective applicants seeking to serve tenants with mobility and hearing/vision impairments by providing fully adaptable units. Based on its experience in the two years since this provision was first put forth in the QAP, DHCR has determined that the scoring provision as worded has been successful in serving the needs of such tenants by providing needed fully adaptable units which include a higher level of physical accessibility than may be required by building codes and other regulations. Therefore, DHCR does not wish to adopt a different standard, or provide a more questionable post-construction adaptation approach which it would not be able to adequately regulate, at this time. Also, nothing precludes a project owner from incorporating different adaptability standards, though it might not qualify for scoring points.
Furthermore, DHCR recognizes that this scoring provision may not be suitable for all projects, including some rehabilitation and historic preservation projects. In its provision of technical assistance to applicants, DHCR reminded sponsors that this is an option (not a mandatory requirement) and it that should only be selected if there is a specific need for these dwelling units in the community in which the project is located.
Section 2040.3(f)(15):
Comments:
One commentator expressed concern that providing a scoring incentive for historic rehabilitation will reduce the number of units assisted by the LIHC program since the costs associated with the development of these units is higher than that of other projects.
Response:
DHCR agrees that the rehabilitation of historic projects often has a higher per unit development cost than other types of projects. However, it is noted that these types of projects are eligible for additional equity financing through the provision of federal and/or state historic tax credits, which can assist in meeting the higher cost of these projects without excessive utilization of DHCR's LIHC program.
In addition, the federal Housing and Economic Recovery Act of 2008 required that state housing credit allocation agencies, such as DHCR, provide a preference for such projects.
Section 2040.3(f)(16):
Comments:
One commentator stated that central air-conditioning does not work in projects serving low-income households since such tenants can ill-afford the higher utility costs associated with central air-conditioning.
Response:
DHCR agrees that energy efficient central air-conditioning may not be advisable in all LIHC projects due to affordability, geography or other concerns. For this reason, since 2008, DHCR has provided this QAP scoring provision as an option which a project may utilize to secure Project Amenities scoring points. Projects need address only two of the six options to secure the maximum of two available points, or one of six to obtain one point.
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.
