The COVID-19 Relief Bill, signed by President Trump on December 27, 2020, establishes a permanent minimum 4 percent rate for Housing Credit developments financed by tax-exempt multifamily bonds and for acquisition costs associated with all Housing Credit developments. The new minimum 4 percent rate is effective for buildings allocated acquisition Housing Credits after December 31, 2020, and for buildings financed with tax-exempt bonds issued after December 31, 2020. OHFA recognizes that many projects in our pipeline may have the opportunity to realize more Housing Credit equity and offers the following guidance for 4% applications already in process:
2020 Bond Gap Financing Program (BGF) Projects
In response to the 4% rate fix, developers may request an extension of the final application deadline of January 7, 2021 for the 2020 Bond Gap Financing Round by contacting your assigned BGF analyst.
OHFA will allow extensions through February 1, 2021. However, extensions beyond this date will be considered by OHFA on a case by case basis and approved only if compelling need for a further extension can be demonstrated.
Increases in Housing Credit equity may be handled in the following ways:
1. Reduction/recapture of HDAP funds
2. Reduction/recapture of HDL funds
3. Increases in project scope
4. Deeper rent and income targeting
OHFA will work to review and respond quickly to requests, but please note that these requests will be processed as time permits.
4% Only Projects (without BGF)
For 4% only projects that have completed the Housing Credit review, whether or not a 42(m) letter has been issued, are eligible to realize more Housing Credit Equity so long as the tax exempt bonds have not been issued. To request re-evaluation, please call Karen Banyai, Operations Manager, at 614-752-4185.
For those projects that have already been issued a 42(m) letter, OHFA does not intend to reissue 42(m) letters. However, OHFA will accommodate requests for a supplemental letter acknowledging that the agency has performed a preliminary review and an anticipated new credit allocation amount due to the 4% rate minimum floor. The new credit allocation in the letter will be based on the locked in 4% rate and the eligible basis submitted with your final application. The final allocation amount is, as it has always been, subject to change at re-underwrite at 8609.
For those projects that have received their final underwrite, but have not yet been issued a 42(m) letter, OHFA will issue the 42(m) letter based on the locked in 4% rate and the eligible basis submitted with your final application upon request. The final allocation amount is, as it has always been, subject to change at re-underwrite at 8609.
OHFA will work to review and respond quickly to requests, but please note that these requests will be processed as staff time permits.
Things to remember
Projects that have been issued a 42(m) letter and have already issued tax exempt bonds are ineligible per the legislation.
For projects that have received Final Bond approval from the OHFA Board and the bond amount will increase due to the 4% rate lock, Board approval may be required again.
For developers whose applications proposed a developer fee of 25% for purposes of generating additional eligible basis, the developer fee must now be capped at 20%.
- All competitive, threshold and underwriting criteria are still applicable.