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Home My WebLink About2021/10/19-Attachments-IR 21-10694 - 2022 Tax Credit Policy.Proposed ChangesINFORMAL REPORT TO CITY COUNCIL MEMBERS No. 21-10694 ypRTEkt ok rays To the Mayor and Members of the City Council October 19, 2021 Page 1 of 3 SUBJECT: CITY OF FORT WORTH 2O22 TAX CREDIT POLICY: PROPOSED CHANGES This Informal Report describes the proposed changes to the City's Tax Credit Policy that will be brought forward for final consideration and approval in November. The purpose of the policy is to provide criteria for affordable housing developers requesting a Resolution of Support or Resolution of No Objection from the City Council to submit with their applications for Competitive (9%) and Noncompetitive (4%) Housing Tax Credits (9% HTCs and 4% HTCs, respectively) to the Texas Department of Housing and Community Affairs (TDHCA). Tax Credits are used as a financing tool for developments that offer affordable housing and are critical to the financial feasibility of these developments. 9% HTCs offer more equity for a development which make them much more competitive than 4% HTCs. Each year TDHCA implements a Qualified Allocation Plan (QAP) which outlines the scoring criteria for 9% HTC applications. The draft 2022 QAP states that 9% HTC applications can receive 17 points for a Resolution of Support from the governing body of the municipality in which the development is sited. Resolutions of No Objection from the governing body are worth 14 points. The draft 2022 QAP also provides that 9% HTC applications can receive one additional point for a commitment of development funding from the city or county in which the development is located. Documentation of development funding must include a letter from a city or county official stating the jurisdiction will provide a loan, a grant, reduced fees or contribution of other value for the benefit of the development. Once this letter is submitted to TDHCA, it cannot be withdrawn. One point is often the difference between a development being awarded 9% HTCs or not, so every point is vital for applicants. Unlike the 9% HTC program, TDHCA's approval of a 4% HTC application is tied to a checklist rather than the scoring of an application and there is only one type of resolution that can be provided —a Resolution of No Objection. A public hearing by the City Council is required by TDHCA for a developer to obtain a Resolution of No Objection from the Council. There is no provision for a commitment of development funding under the 4% HTC program. The 4% HTC program is coupled with the Multifamily Bond Program so the bonds finance at least half of the cost of the project. The proposed 2022 Policy continues most of the same significant policy requirements as prior years: • A severely low-income set aside -10% total units of 0-30 Area Median Income (AMI) • Public meeting with impacted neighborhoods • Notifications to council member, school district, Neighborhood Services, and impacted neighborhoods • Waivers considered for unit mix due to pre-existing conditions - Land Use Restriction Agreement (LURA), Housing Assistance Payment contract (HAP), etc. Considered for a Resolution of Support (9%) if meets the required unit set- asides (10% at 80 AMI & 10% 0- 30 AMI) and is located in one of the following: • A TDHCA defined "opportunity area" (good schools, near jobs, near transit) • A City defined mixed -use growth center (urban village,) • A City or federal designated revitalization area (TIF, NEZ) • Choice Neighborhood Initiative neighborhood ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 21-10694 ypRTE7�tI i ti e `o iF 4 r rn 115,3 To the Mayor and Members of the City Council October 19, 2021 Page 2of3 SUBJECT: CITY OF FORT WORTH 2O22 TAX CREDIT POLICY: PROPOSED CHANGES The proposed 2022 Policy has the following recommended changes: Changes For 9% Prolects 10% of total units must now be set aside for households at 80% or above (AMI). • Market rate requirement removed These projects normally do not command "true" market rate rents, and thus must be discounted. Additionally, market rate units are not eligible to receive the tax credit equity, thus creating larger gaps and the need to request soft funding from the city, or tax exemptions. • Revitalization letter will only be provided to the extent TDHCA awards points for such letter • If revitalization letter would receive points and more than 1 proposal is located in a defined revitalization area, the proposal which exceeds the required unit set asides and has superior amenities will receive a letter Considered for a Resolution of No Obiection if project meets the required unit set asides, but is not located in one of the defined areas above Changes For 4% Prolects • Market rate requirement removed These projects normally do not command "true" market rate rents, and thus must be discounted. Additionally, market rate units are not eligible to receive the tax credit equity, thus creating larger gaps and the need to request soft funding from the city or tax exemptions. • In 2020, TDHCA waived the requirement for public hearings for 4% applications due to COVID-19. However, TDHCA has recently terminated the waiver and a hearing is once again required. Chanees For All Proiects: • Required neighborhood information session reduced from two to one • Proposers may apply for City/HFC funding in conjunction with the application for a Resolution of Support/No Objection • Award for City/HFC funding of 9% proposals will be in descending order and based on final TDHCA scoring Award for City/HFC funding of 4% proposals will be evaluated individually and at the time of application Proposals with existing City/HFC commitments will be excluded from the funding application process (e.g., CNI) ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 21-10694 PRTFA Vf;',� e s ti e `o w r�rA 1@70L Tentative timeline To the Mayor and Members of the City Council October 19, 2021 Page 3of3 SUBJECT: CITY OF FORT WORTH 2O22 TAX CREDIT POLICY: PROPOSED CHANGES October 20, 2021 HTC Developer Forum October 22, 2021 Deadline to submit Developer Questions/Comments October 29, 2021 Answers to Developer Questions/Comments Posted to Website November 2, 2021 Presentation of Proposed 2022 HTC Policy at Council Work Session November 9, 2021 November 17, 2021 Council Consideration & Approval of Proposed 2022 HTC Policy Deadline to submit notifications (45 days ahead of submittal) December 24, 2021 Deadline to host at least 1 neighborhood information session December 31, 2021 1 Deadline to submit application to Neighborhood Services January 3, 2022 TDHCA deadline for developer pre -applications January/February 2022 Presentation of Staff recommendations at City Council Work Session February 2022 City Council consideration & approval of resolutions March 1, 2022 TDHCA deadline for developer applications June 2022 TDHCA releases list of projects eligible for tax credit award Late July 2022 TDHCA makes final award decisions We intend to include an appropriate M&C on the November 9 Council agenda requesting approval of the 2022 City of Fort Worth Tax Credit Policy. If you have questions about this information, please contact Victor Turner, Director of Neighborhood Services, at 817-392-8187. David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS