The Arkansas Development Finance Authority (ADFA) recently issued a memo to potential 2010 applicants for Section 1602 Exchange funds that describes several new requirements for all applicants. The memo also describes the process by which ADFA will identify eligible applications for Exchange funds after the applications are received.
- The applicant must make a good faith effort to obtain the best price possible for the requested tax credits.
- If a project’s tax credits do not generate sufficient funds, applicants may request the gap between the price per credit obtained and the price per credit needed to make the project feasible, limited to $.85 per credit.
- If Exchange funds are not awarded, a project must provide evidence of alternative financing in order to be considered for an allocation of tax credits only.
- Exchange funds applicants must include $13,000 in development reserves for two years of asset management fees, in addition to the minimum required operating reserves.
- Exchange funds applicants will be assessed an underwriting fee, if approved.
- In addition to the standard letter of commitment, applicants must submit 1) a letter from an investor/syndicator stating that they were offered, and refused, to purchase the tax credits at a higher price than the price submitted, and 2) a statement that the applicant has contacted at least two other investors/syndicators who also refused the tax credits at a higher price.
- Applicants that received 2009 credits are eligible to apply for 2010 credits and Exchange funds if they return the full amount of credits allocated in 2009.
