Recap of TDHCA’s QAP Adoption

Last Thursday the board of the Texas Department of Housing and Community Affairs (TDHCA) adopted the rules governing the allocation of the Low Income Housing Tax Credit Program (LIHTC) in 2011.  These rules are known as the Qualified Allocation Plan, or QAP.

Regular readers may recall we recently posted our comments regarding the Draft QAP language published in the Texas Register.

What impact did our comments have on the process?  Well, by and large, the board adopted the recommendations of staff, as presented on page 652 of the board book for the meeting.

Three of our concerns/suggestions were addressed in the staff response: (1) the substitutability of financing points with “high opportunity area” points, (2) changes to the 2010 QCP rules which increased the ability of neighborhood associations to give the “cold shoulder” NIMBY rejection for a development (staff clarified that this change was a typo in the published rules), and (3) increasing the minimum threshold score for “at-risk” developments.

The rest of the changes were rejected, although staff suggested several should be considered in the 2012 QAP.

Point by point recap of our comments and the staff response:

TxLIHIS Comment Results
1.a     High Opportunity Area points are diluted with points for a financing-oriented goal, and the items currently scored under high opportunity should be separated out into separate additive categories. Staff acted to address our concerns regarding the scoring for “Third Party Funding Outside of a QCT.”While rejecting changes for 2011, Staff suggested that making the High Opportunity points additive should be considered for the 2012 QAP


1.b    Proposed changes to 30% boost fail to improve targeting of boost. Specifically, high performing schools should be kept in the boost, and the definition of “high income” should be tightened. Staff rejected any changes to the published language.  They rejected maintaining the boost which had been available in 2010 for high quality school eligibility to the boost without comment, and suggested that changes to the definition of “high income” areas should be considered for 2012. 
1.c    Quantifiable Community Participation points are skewed against high opportunity areas Staff acknowledged that the published language contained a typographic error which disadvantaged developments for which no letter was received.  The correction of this typo partially addressed our concern regarding “cold shoulder” NIMBYism.  Our request for more aggressive changes to the scoring was not addressed, with staff deferring to the board’s direction to maintain the 2010 status quo. 
2)   Income and Rent Level changes represent an incremental improvement Language maintained in adopted rules.
3)   Signage requirement language is an incremental improvement Language maintained in adopted rules.
4)   Limits to Deferred Developer Fees are anti-competitive Staff rejected the suggested changes, stating “Additionally, Developments with higher levels of deferred developer fee are less likely to be syndicated in the current market.”The board did not respond to our oral testimony that this concern could be addressed by exempting developments with syndication commitments from the limitation.


5)   Fire sprinkler requirements should be universal. Staff rejected the suggested changes, stating “The requirement for Developments to be equipped with fire sprinklers ‘where required by local code’ was intended to address single family Developments where fire sprinklers are not mandated by local code.”The board did not respond to our request in written testimony that the rule be clarified to reflect this intent and to require sprinklers in all multifamily properties funded through the LIHTC program.


6)   Extend Marketing requirements to Farmworkers Staff rejected the suggested changes, suggesting it could result in false certifications by urban developments. 
7)   Elected official letters should be held to AFFH standard Staff rejected the suggested changes, stating, “Staff believes the legislature has spent much time contemplating the points for letters from elected officials. While a letter that violates law would be called into question staff believes it would be inappropriate to further expand on this section of the rule because of its extensive legislative history.” 
8)   The QAP should require the use of independent market analysts and appraisers Staff rejected the suggested changes.
9)   The quality of tenant services varies widely among developments with many tenant services being of poor quality. Staff rejected the suggested changes
10)  At risk developments should focus on loss of affordability of quality units, not loss of subsidy.  We recommend an increase in the minimum threshold score. “Staff concurs and recommends the increase in the minimum score across all applications and set-asides from 118 to 130 points.” 
11)  Required Rehab levels are inadequate Staff rejected the suggested changes. “Staff believes there was insufficient evidence submitted to suggest an alternative amount for rehabilitation costs per unit.” 
12)  NIMBY forces, rules and state statutes are having a negative effect on the family unit/elderly unit mix (reducing the former, increasing the latter). Staff rejected the suggested changes
13)  Failure to return tax credits should bar developer from future transactions. Language maintained in adopted rules. “Staff believes there is currently a provision in the draft QAP regarding penalties associated with returning unused credits in an untimely manner.”

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