Good afternoon Program Participants and Other Interested Parties,

THDA staff is aware that construction costs have risen significantly since original applications were submitted for 2018 Low-Income Housing Credit (“LIHC”). THDA staff expects to recommend to the THDA Board of Directors at the January 29, 2019, that, among other provisions, an amount of 2019 LIHC, as determined by THDA in its sole discretion, be allocated to help mitigate the impact of rising costs on 2018 LIHC developments. Further, THDA staff is aware that the availability of income averaging would be of benefit to 2018 LIHC developments for which an IRS form 8609 has not been filed with the IRS, so the actions described below will also provide an option for income averaging. Collectively, the proposal to mitigate the impact of rising construction costs and the proposal to provide the option for income averaging are referred to as the “Relief Recommendation”.

Anticipating that many investors would prefer to have all LIHC allocated to a development be from the same year, the Relief Recommendation will include provisions allowing any 2018 competitive LIHC allocation recipient or any recipient of a 42(m) letter for noncompetitive LIHC, to exchange 2018 LIHC for 2019 LIHC, either to avail themselves of an opportunity to use income averaging or to request additional 2019 LIHC due to construction cost increases, as determined by THDA in its sole discretion to be appropriate.

The Relief Recommendation will include provisions that any 2018 competitive LIHC allocation recipient or any recipient of a 42(m) letter for noncompetitive LIHC electing to make this exchange (“2018 LIHC Exchange Allocations”) will be subject to the following conditions (without limitation):

  1. The THDA 2019-2020 Low-Income Housing Credit Qualified Allocation Plan (“2019-2020 QAP”) will apply rather than the 2018 QAP; and
  2. Income Averaging may be available, subject to submission of additional documentation and information, as THDA determines, in its sole discretion, to be necessary; and
  3. The deadline to place in service will remain December 31, 2020; and
  4. The ability to request consideration under the THDA Qualified Contract process must be waived; and
  5. The syndication transaction must be closed no later than September 30, 2019; and
  6. The 2018 to 2019 LIHC exchange transaction will not be counted as a Significant Adverse Event for purposes of the 2019-2020 QAP.

Further details will be released after the first of the year. Stakeholders will have several opportunities to comment on the proposal before the Board of Directors meeting on January 29, 2019.

THDA staff reserves the right, at any time, to withdraw the Relief Recommendation or to modify it in any way THDA staff determines, in their sole discretion, to be appropriate or to change the timing of presentation of the Relief Recommendation to the THDA Board of Directors. Sending this information does not constitute any representation about any item that may be included, excluded, or modified with regard to the Relief Recommendation or about any action the THDA Board of Directors may take in connection with the Relief recommendation. The Relief Recommendation, as described herein or as may be modified by THDA staff, is subject to action by the THDA Board of Directors, which may include, without limitation, rejection of the Relief Recommendation or modification of the Relief Recommendation.

Thank you,

Ed Yandell
Interim Director
Multifamily Programs