TITLE 330. OKLAHOMA HOUSING FINANCE AGENCY

CHAPTER 36. AFFORDABLE HOUSING TAX CREDIT PROGRAM

SUBCHAPTER 1. GENERAL PROVISIONS

330:36-1-1.  Purpose

The purpose of the Oklahoma Affordable Housing Tax Credit ("OAHTC") Program is to expand the supply of new affordable rental units and rehabilitate existing rental housing for qualifying households by stimulating private investment.

330:36-1-2. Authority

The Tax Reform Act of 1986 and Section 42 of the Code authorizes the OAHTC Program. Oklahoma Housing Finance Agency ("OHFA") has been designated by the Governor as the State's allocating agency for purposes of administering the State's OAHTC Program.

330:36-1-3.1 Overview [REVOKED]

330:36-1-3.2. Scope

During each program year, Tax Credit Allocations (“TCAs”) will be made available to eligible entities for the purpose of implementing specific projects that further the stated purpose of the OAHTC Program. Eligible entities include, but are not limited to, for-profit developers, non-profits, public agencies, Native American Tribes and local governments.

330:36-1-4. Definitions

The following words and terms, when used in this Chapter, shall have the following meanings unless the context clearly indicates otherwise. Additional capitalized terms used in these Chapter 36 Rules are defined in the Code. When a conflict exists between the following definitions and the Code the Code shall control.

“Affiliate” means any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with any other Person and specifically shall include parents and/or subsidiaries of the Person who is an Affiliate of the first Person.

“Applicant” means any Person, and each Affiliate of such Person, that submits an Application to OHFA requesting a TCA pursuant to these Rules and the Application, and includes the Development owner(s) and the original or successor Applicant and each of their successors in interest in the Development, regardless as to whether any such successors in interest in the Development have obtained the approval of transfer of such interest in the Development as required by the Rules or the Application.

“Application” means an application in the form prescribed by OHFA, from time to time, in the AP, including all exhibits and other materials filed by an Applicant with OHFA in support of or in connection with the formal request by the Applicant requesting a TCA.

“Application Packet” (referred to in these Rules as the “AP”) means the Application in the form prescribed by OHFA from time to time, together with instructions and such other materials provided by OHFA to any Person requesting the same for the purpose of seeking to obtain from OHFA a TCA. OHFA will solicit public input on the Application Packet, and provide explanation of any significant changes. The AP may include definitive statements of what shall constitute Threshold Criteria, Selection Criteria, priorities, preferences, and compliance and monitoring requirements as may be authorized by or provided for in the Code and these Rules, and may include the necessary forms, instructions and requirements for Applications, environmental assessments, market studies, commitments, extensions, Carryover Allocations, Agreements, Elections, Set-asides, OHFA staff evaluation criteria for Threshold Criteria and Selection Criteria, final ranking, credit amounts, tax exempt bond financed projects, compliance monitoring, and other matters deemed by OHFA Trustees, in their complete discretion, to be relevant to the process of evaluation of Applications and the Applicants in connection with the award or denial of TCAs.

“Code” means the Internal Revenue Code of 1986, as amended, together with applicable rules and regulations, revenue rulings, notices or procedures promulgated thereunder or referred to therein or in the applicable rules and regulations.

“Consultant” means any person (which is not an owner or Affiliate of an owner of the Development) that provides professional or expert services relating to an Application, a Development, or any activities pertaining to the filing of an Application, the award of a TCA, the Carryover Allocation, or cost certification documents filings with OHFA.

“Control” (including the terms “controls”, “controlling”, “controlled by”, and/or “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction or the management and policies or any other Person, whether through an ownership interest in the other Person, by contract, agreement, understanding, designation, office or position held in or with the other Person or in or with any other Person, or by coercion, or otherwise.

“Development” means a site or sites, together with any building or buildings that are proposed, or are, to be assisted with tax credits as a single undertaking.

“Development Team” means the Applicant, Owner, Developer, property management company and the principals of each.

“Drug” for purposes of these OAHTC Program Rules, means “a controlled substance” as that term is defined in Section 102 of the Controlled Substances Act, 21 U.S.C., Section 802.

“Due Date” if a due date for submission of documents or fees falls on a weekend or a designated Federal holiday, then the due date becomes the next business day.

“Elderly” means any person sixty-two years of age or older. The sixty-two year old age limit does not apply to spouses or immediate family members for purposes of qualifying as an Elderly Development. It is intended that Elderly Developments will be occupied by at least one person sixty-two (62) years of age or older per unit to satisfy this criteria. State or Federal definitions established for other housing supersedes this definition.

“Eligible Basis” means generally the depreciable basis in the property.

“Empty Unit” means a Tax Credit unit that has never been rented.

“Hard Construction Costs” means the following types of activities, but not limited to, earthwork/sitework, on-site utilities, roads and walks, concrete, masonry, metals, carpentry (rough and finish), moisture protection, doors/windows/glass, insulation, roofing, sheet metal, drywall, tile work, acoustical, flooring, electrical, plumbing, elevators, blinds and shades, appliances, lawns & planting, fence, cabinets, carpets, and heat & ventilation.

“Homeless” means (1) lacking a fixed, regular and adequate nighttime residence; and has a primary nighttime residence that is a supervised public or private shelter providing temporary accommodations or a public or private place not ordinarily used as sleeping accommodations for human beings, OR (2) displaced as a result of fleeing violence in the home; and has a temporary residence that is a supervised public or private shelter OR (3) certified by an agency involved in regularly determining homeless status. Homeless individuals are considered homeless for a period of twenty-four (24) months from the date of move-in, according to Section 103 of the Stewart B. McKinney Homeless Assistance Act and 42(i)(3)(B)(iii)(I) of the Code.

“Large Development” means a Development with more than sixty (60) units.

“Nonprofit” means a private nonprofit organization that is organized under State or local laws; has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; is neither controlled by, nor under the direction of, individuals or entities seeking to derive profit or gain from the organization; has a tax exemption from the Internal Revenue Service under section 501(c) (3) or (4) of the Internal Revenue Code of 1986; does not include a public body; has among its purposes the provision of decent housing that is affordable to low income persons, as evidenced in its charter, articles of incorporation, resolutions or by-laws; and, has at least a one year history of providing affordable housing at the local level, and is duly qualified to do business within the State.

“Nonprofit Sponsored Development” means and refers to a proposed Development that has or will have a Nonprofit that has a Controlling interest by reason of an ownership interest in a Person that is or will be the owner of the subject Development, and has materially participated, or will materially participate (within the meaning of the Code) in the Development and operation of the Development throughout the Compliance Period.

“OAHTC” means the affordable housing tax credit provided by Section 42 of the Code.

“OHFA” means Oklahoma Housing Finance Agency. OHFA has been designated by the Governor to administer the State's OAHTC Program.

“Person” means, without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability company, limited liability partnership, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality, Community Housing Development Organization (CHDO), interlocal cooperative, or other organization of any nature whatsoever, and shall include any two or more Persons acting in concert toward a common goal.

“Phased development” means two or more properties that share certain characteristics, including but not limited to close or contiguous physical proximity to each other, similar architecture or size, common developer or development team, or common ownership or financing.

“Qualified Allocation Plan (QAP)” means these Chapter 36 Rules plus the Application Packet (AP) as defined and other materials provided by OHFA.

“Qualifying Households” means households whose annual incomes do not exceed the chosen setaside (which is either 50% or 60%) of the median family income for the area.

“Regulatory Agreement” means the written and recorded agreement between a recipient of a TCA and the allocating agency, OHFA, placing restrictive covenants upon the Development and the underlying land for a term of not less than thirty years (30) years, or such other term as may be required from time to time by provisions of the AP, these OAHTC Rules and Section 42 of the Code and the federal rules and regulations promulgated thereunder and containing other restrictions, covenants, warranties and agreements required by state, federal or local law and these OAHTC Rules.

“Review Report” means the Threshold Criteria Review and Selection Criteria Review containing the results of OHFA’s review of the Application and scoring of the Application.

“Rural Area” means any city, town, village, area or place generally considered rural by the Secretary of Agriculture (RHS) for rural housing programs.

“Rural Development” means a Development that is, or will be located within a Rural Area. RHS 538 projects are not eligible for the Rural 515 set-aside, but may qualify under other set-asides.

“Selection Criteria” means the evaluation criteria, over and above the Threshold Criteria, set out in an applicable AP, which shall be established and may be changed by OHFA from time to time in an applicable AP (using the priorities for the State as they are established from time to time under and pursuant to these Rules and the applicable AP), to determine the Development's qualifications, and which are the bases for ranking Applications and establishing a relative level of acceptability for consideration under the Rules and the applicable AP for the possibility of the award of a TCA by OHFA. Although the Selection Criteria may be given substantial weight by OHFA Trustees in deciding whether or not a particular Application and Applicant shall be awarded a TCA, the OHFA Trustees reserve the right to take into consideration such other factors as they, in their complete discretion, deem appropriate.

“Site Control” means the exercise of dominion or control over the property through the execution of a purchase, sale, or long-term lease agreement (with a lease term that exceeds the extended use period), receipt of a deed or conveyance of the Land where the development will be located, or an option to purchase the property (where the option is not revocable on the part of the seller). OHFA alone will decide if an Applicant or Owner has obtained Site Control.

“Special Housing Development(s)” means any Development specifically designed and developed for persons with Special Needs.

“Special Needs” means such targeted populations as may be designated from time to time in an Application Packet by official action of OHFA, which designations may include, but are not necessarily limited to, the homeless, the elderly, persons with mental and physical disabilities and/or disabled or handicapped persons.

“TCA” means a tax credit allocation by OHFA to a Development owner pursuant to the Code, these Rules, the applicable AP, the Application, and formal action by OHFA.

“Threshold Criteria” means the criteria set out herein and in an applicable AP, which shall be established and may be changed by OHFA from time to time in an applicable AP, to determine the qualifications of the Applicant and the owner and the Proposed Development, presented in each Application that are the minimum level of acceptability for consideration under the Rules and the applicable AP for the possibility of the award of a TCA by OHFA. Failure to timely satisfy all Threshold Criteria set out in the applicable AP shall result in the disqualification of the Application for further consideration, and shall require OHFA to not apply the Selection Criteria to the Application, and to notify the Applicant of the disqualification.

“Transitional Housing” for purposes of these OAHTC Program Rules means transitional housing for the homeless which meets the requirements of Code Section 42(i)(3)(B)(iii)

“Trustees” means the Board of Trustees of OHFA.

“Vacant Unit” means a Tax Credit unit that was last occupied by a qualified household.

330:36-1-7. National standards incorporated by reference

(a) The national standards for Development of the OAHTC Program are hereby incorporated by reference, including Code Section 42 and all federal regulations, promulgated thereunder, including, but not limited to, 26 CFR Sections 1.42-5, 1.42-6, 1.42-11, 1.42-13 and 1.42-17.

(b) Copies of Code Section 42 and applicable federal regulations may be obtained from OHFA, during regular business hours Monday through Friday 8:00 a.m. to 4:45 p.m., excluding legal holidays. They can also be accessed at www.ohfa.org.

330:36-1-9. Regulatory Agreement/Compliance Manual/Compliance with Applicable Laws

(a) Regulatory Agreement. TCA recipients (owners) must enter into a written Regulatory Agreement with OHFA. Requirements, procedures, and processes provided in the applicable Regulatory Agreement and amendments to it shall apply to Developments and the owner(s) thereof selected to receive a TCA.

(b) Compliance Manual. OHFA shall provide each owner upon request with a Compliance Manual at a cost sufficient to defray the cost of production. The Compliance Manual will also be available on OHFA’s website at www.ohfa.org.

(c) Compliance with Applicable Laws. The Applicant, the Development, the owner(s) of the Development, the Development Team and the Affiliates of each must comply with all applicable federal, state and local laws, rules, regulations and ordinances, including but not limited to, Code Section 42, and regulations promulgated thereunder, the Oklahoma Landlord Tenant Act, the Titles VI and VII of the Civil Rights Act of 1964, as amended and Title VIII of the Civil Rights Act of 1968, as amended. Neither the Applicant, the owner(s) of a Development, the Development Team nor the Affiliates of each shall discriminate on the basis of race, creed, religion, national origin, ethnic background, age, sex, familial status or disability or handicap in the lease, use or occupancy of the Development or in connection with the employment or application for employment of persons for the operation and/or management of any Development. The owner(s) of a Development will be required to covenant and agree in the Regulatory Agreement to comply fully with the requirements of the Fair Housing Act as it may from time to time be amended.

330:36-1-11. Technical assistance

OHFA will, from time to time, designate staff members who shall be available to provide OAHTC Program technical assistance regarding the Code, these Rules, the AP and their implementation and proposed Development concepts. The names of staff members designated from time to time to provide technical assistance may be obtained by contacting OHFA's Housing Development Team. Interested parties are strongly encouraged to make appointments for technical assistance sessions.

SUBCHAPTER 2. ALLOCATION PROCEDURES

330:36-2-1. TCAs distribution

(a) OAHTCs allocated annually to the State by the IRS shall be awarded to Applicants selected through a formal application process governed by the Qualified Allocation Plan (QAP). The deadline for all informal input sessions and the formal public hearing will be published by OHFA’s Staff.

(b) TCAs will be awarded according to the Act, Code, these Chapter 36 Rules, the applicable AP, and the discretion of the OHFA Trustees, by their formal action.

(c) The AP shall be made available to parties considering the filing of an Application and interested parties upon request. Requests for the AP should be directed to OHFA's Housing Development Team or accessed at OHFA’s website www.ohfa.org.

330:36-2-2. Additional Credits

(a) Applications for additional Credits on new construction developments are not allowed. Although discouraged, applications for additional credits on rehabilitation developments may be allowed, but only under extenuating circumstances not easily identifiable or ascertainable at the time of initial credit award. The OHFA Board of Trustees may award additional credits at their sole discretion. Maximum award amount cannot exceed ten percent (10%) of the original tax credit allocation amount. Applicants who have received approval of a Carryover Allocation in a prior year for a specific Development may request additional Credits for that Development. The Applicant may supplement the Applicant's prior Application; however, the Application as supplemented must:

(1) Be made by the applicable reservation cycle deadline;

(2) Be accompanied by the Application fee;

(3) Meet all Threshold requirements of the Credit Program Rules in effect as of the deadline of the reservation cycle in which the request for additional Credits is made; and

(4) Each page clearly tabbed in conformity with the current form of Application.

(b) The supplemented Application will be scored and ranked in accordance with the Credit Program Rules in effect as of the deadline of the reservation cycle in which the request is made.

(c) An additional feasibility analysis will be undertaken. The Applicant must prepare an in-depth analysis of why additional Credits are required. OHFA may request information from the Applicant's lender(s), accountants, legal advisors or financial Consultants to confirm representations contained in the Application.

(d) Neither the Applicant nor OHFA shall be required to give additional notice pursuant to 330:36-2-11 and 330:36-4-2(b)(2) of these Chapter 36 Rules if the notice requirements of the Credit Program Rules in effect as of the date of the Applicant's original filing of an Application were met.

330:36-2-3. Set-aside categories for TCAs

(a) The annual allocation of OAHTC Program tax credits made available to the State shall be divided into various set-aside categories, including but not necessarily limited to, specific set-aside categories of non-profits, rural areas, elderly, and such other categories as OHFA Trustees, in their complete discretion, may adopt from time to time for inclusion in an applicable AP. Non-profits competing in the nonprofit set aside must be, at a minimum, a fifty-one percent (51%) Controlling general partner.

(b) The amount of the State's annual allocation of credits devoted to each set-aside category will be determined by the Code, these Chapter 36 Rules and from time to time by formal action of OHFA. Specific set-aside categories and amounts for each category may be determined from time to time by formal action of OHFA and shall be set out in the applicable AP. OHFA may, in its discretion, at any time and from time to time, modify the amount of the State's annual allocation of credits devoted to any or all of each set-aside in the AP if, in the complete discretion of the OHFA Trustees, they determine that the housing needs of the State so warrant, except for the maximum ninety percent (90%) allocation limitation to those other than non-profits as required by the Code.

330:36-2-11. OHFA Development notification

OHFA shall, within fifteen (15) business days of receipt of an Application, but not less than sixty (60) calendar days prior to OHFA Trustee consideration thereof, notify, in writing, by certified mail or other form of traceable delivery system to provide proof of mailing and receipt, the Chief Executive Officer of each Local Governing Body of the jurisdiction within which the proposed Development is to be located and the official elected tribal governing body, if the Development will be located on tribal property, and the legislators who are entitled to such Notice, regarding the characteristics of the proposed Development to be located within their jurisdiction/district. OHFA Trustees shall afford not less than a thirty (30) calendar-day comment period to such Chief Executive Officers and legislators. OHFA's Trustees shall consider all comments received from such Chief Executive Officers and legislators in their deliberations concerning whether or not to award any TCA to the Applicant.

330:36-2-13. Review Report

(a) Upon completion of its review of all applications, OHFA will forward OHFA's Review Report to the contact person identified by the Applicant in the Application. OHFA will mail the Review Report by certified mail with return receipt requested mail or other form of traceable delivery system to provide proof of mailing and receipt. The Applicant must provide OHFA with any clarifying information requested therein within ten (10) business days of the date of the Report. In the event the Applicant disputes any matter contained in the Review Report, including without limitation any finding, determination, recommendation or scoring, the Applicant must respond to the Review Report in writing. Information requested by OHFA and/or the Applicant’s response must be forwarded to OHFA, postmarked no later than ten (10) business days following the date of the Review Report. Applicants are encouraged to use certified mail, Federal Express or another carrier providing a return receipt. Electronic transmissions will not be accepted.

(b) The Applicant's response to the Review Report must identify with specificity the disputed matter, finding, determination, recommendation, scoring, etc, and the Applicant's reason for disputing same, including any evidence which controverts the Review Report's determination. Any applicable statutes, rules, regulations or ordinances should be cited. Documentary evidence should be attached.

(c) OHFA will consider the Applicant's response to the Review Report prior to making its recommendations to the Trustees. The Applicant will be informed of OHFA's recommendations prior to the meeting of the Trustees where the Application is being considered.

(d) Failure to respond to staff’s Review Report in a timely manner may result in the adoption of the Review Report by the Trustees, including any recommendation contained therein to deny the Application.

(e) The Trustees will not entertain Applications for Rehearing or Reconsideration based upon any matter contained in the Review Report which could have been asserted under this subsection 330:36-2-13.

330:36-2-15. Communications with OHFA during Application Review

(a) Following submission of an Application, neither the Applicant nor any representative or affiliate of the Applicant shall contact any OHFA employee, with the exception of the Housing Development Team Leader, concerning the Application or any other Applications filed in the same cycle. This prohibition includes telephone and electronic transmissions. All communications concerning the Application must be directed to the Housing Development Team Leader, be in writing and executed by the contact person identified in the Application. Only written communications will be accepted.

(b) Upon issuance of the Review Report by OHFA, communications with OHFA shall be made in the manner and time set forth in 330:36-2-13. Failure to comply with this subsection 330:36-2-15 may result in termination of the review process and denial of the Application.

(c) OHFA reserves the right to grant or deny requests for meetings with the staff of OHFA at any time during the Application process. Any requests must be in writing.

330:36-2-16. Carryover Allocations

(a)  Code reference. Code Section 42(h)(1)(E) provides that an Allocation may be made to a Qualified Building, as defined by Section 42(h)(1)(E)(ii), which has not yet been placed in service, provided the Qualified Building is placed in service not later than the close of the second calendar year following the calendar year of the Allocation.

(b)  Carryover Allocation requests. An eligible Applicant must request in writing the approval of a carryover of an Allocation of the applicable calendar year, at a date specified in the AP. The Owner must satisfy all requirements of the Code and this section and file proof of same with OHFA, except the verifications required by 330:36-2-16(d) of the calendar year in which a Carryover Allocation is sought. The certifications and opinions required by 330:36-2-16(d) must be received by OHFA the later of the date which is one hundred eighty (180) calendar days after the date that the allocation was made or the close of the calendar year in which the allocation is made. All documents requested by OHFA must be provided by the Owner.

(c)  Carryover Allocation basis. To qualify for a Carryover Allocation, the Owner must demonstrate that the Owner's basis in the Development, the later of one hundred eighty (180) calendar days after the date of allocation or the close of the calendar year in which the Allocation is made, is more than ten percent (10%) of the Owner's reasonably expected basis in the Development.

(d)  Verification of basis. The Code requires OHFA to verify that the Owner has, by the later of one hundred eighty (180) calendar days after the date of allocation or the close of the calendar year in which a Carryover Allocation is made, incurred more than ten percent (10%) of the reasonable expected basis in the Development (Land and depreciable basis). The Owner must file with OHFA a written certification, under penalty of perjury and in the form prescribed by OHFA, certifying that more than ten (10)% has been expended, in the year in which the Carryover Allocation was made or one hundred eighty (180) calendar days later. The certification must be accompanied by a written opinion of the Owner's certified public accountant, in a form acceptable to OHFA. It must state that said certified public accountant has examined all eligible costs incurred with respect to the Development and that, based upon this examination, it is the certified public accountant's belief that the taxpayer has incurred more than ten percent (10%) of its reasonable expected basis in the Development by the close of the calendar year of the Allocation or one hundred eighty (180) calendar days later as determined in conformity with the Code and Treasury Regulations. OHFA's determination as to the satisfaction of the ten-percent (10%) requirement is not binding upon the IRS and does not constitute a representation by OHFA to the Owner or any other party to that effect.

(e)  Carryover Allocation Agreement. The Owner must submit to OHFA an executed Carryover Allocation Agreement, in a form approved by the Trustees of OHFA, in the year in which the Carryover Allocation is requested.

(f)  Notification of placed in service date. Applicant must notify OHFA within thirty (30) calendar days of the date the Development is placed in service or be subject to loss of any Allocation. Notice will consist of submission of copies of the Certificates of Occupancy for each building.

(g)  Development based Allocation. An Allocation pursuant to Code Section 42(h)(1)(F) must meet the requirements of Code Section 42(h)(1)(F), all applicable Treasury Regulations, and these Chapter 36 Rules.

SUBCHAPTER 4: DEVELOPMENT APPLICATIONS AND SELECTION

330:36-4-2. Selection of Applications for award of TCAs

(a) General. For the purpose of selecting Applications for awards of TCAs, OHFA may annually develop Threshold and Selection Criteria that conform to the Code, the OAHTC Program purposes and these Chapter 36 Rules for inclusion in the next year's AP. The number, severity, or value of any one or more of the Threshold Criteria items may be increased by adoption of an AP for a given year that contains such increased Threshold Criteria items. However, each AP must contain, as a minimum standard for approval of any Applications for the award of any TCAs, for any applicable AP, the Threshold Criteria set out herein below in this section.

(b) Minimum Threshold Criteria. Failure to meet all Threshold Requirements set forth in the AP upon initial submission of the Application will result in the Application being rejected without further review. The Threshold Criteria shall include, but are not necessarily limited to the following:

(1) Prohibition of Phased Developments. Phased Developments are permitted in MSAs only if they are described and contemplated in the original Application and if all phases contain fifty (50%) or more market rate units, or the development is part of a HUD approved revitalization plan and the financing includes HUD HOPE VI Program funding.

(2) Notice Requirements. The provisions of this subsection apply to all Applicants for a TCA, including the owners of Developments to be located on tribal property(ies). All notice requirements must be satisfied not less than thirty (30) calendar days prior to submission of an Application. Every application cycle requires notice.

(A) Written Notices. The Applicant must notify, in writing and by certified mail, the local Chief Executive Officer of the local Governing Body, Chairman of the appropriate county commissioners, state legislators within whose district the application is to be located regarding their intent to submit an application. This written notice shall serve to provide a reasonable opportunity to comment on the application. All notice requirements must be satisfied not less than thirty (30) calendar days prior to submission of an Application. Every application cycle requires notice.

(B) Additional notice requirements. If the site for the application is not located within the specific corporate limits of an incorporated town or city, but is proposed to be located within two (2) miles of an incorporated town(s) or city(ies) limits, Applicant must provide the same notice to each such town(s) and city(ies) as if the site was located within the corporate limits of each such town(s) and city(ies). All notice requirements must be satisfied not less than thirty (30) calendar days prior to submission of an Application. Every application cycle requires notice.

(C) Publication notice. Notice of an Applicant's intent to file an Application shall also be published in a newspaper of general circulation in the area wherein the Development will be located. All notice requirements must be satisfied not less than thirty (30) calendar days prior to submission of an Application. Every application cycle requires notice. At a minimum all such notices must contain the reasonably anticipated information below:

(i) the name and the legal description or street address of the proposed Development;

(ii) the names, business addresses and telephone numbers of the Applicant and the Applicant's designated contact person in regard to the proposed Development;

(iii) whether the Development is new construction, acquisition and rehabilitation and/or substantial rehabilitation;

(iv) the maximum number of units, bedroom mix, and percentage of income restricted units;

(v) the month in which the Applicant reasonably expects the Application to be considered by the OHFA Trustees for an award of a TCA;

(vi) the name, business address, telephone number and extension number of the contact person at OHFA to whom all inquiries about the hearing on the Application and the proposed Development should be directed.

(3) Market analysis. All Applicants must submit third party, independent housing market analyses conforming to the Threshold Criteria set forth in the applicable AP, demonstrating and documenting the status of the market demand for the type and number of housing units proposed to be developed. The market analysis must be prepared no more than twelve (12) months prior to the date Application is filed with OHFA.

(4) Nonprofit owners. Applicants proposing Developments under the nonprofit set-aside must demonstrate and document that the Nonprofit owner and/or Nonprofit ownership participant meet the definition of a nonprofit as defined in Section 42h(5)(C) of the Code and these Chapter 36 rules at 330:36-1-4. Applicants for nonprofit set-aside TCAs must demonstrate that the Nonprofit participant:

(A) has a fifty-one (51%) ownership interest (either directly or through a Partnership) in the Development;

(B) is at least a co-general partner, co-managing member, or a controlling stockholder, or can otherwise demonstrate ownership of, or the contractual obligation to acquire a controlling interest in the proposed Development by not later than the date the Development is substantially completed and commences business;

(C) will materially participate, on a regular basis, in the planning and construction of the Development, and in the operation and management of the Development throughout the entire compliance period pursuant to 26 CFR § 1.469;

(D) has a Board of Directors and Officers that are independent from any for-profit Development partner;

(E) is duly authorized to do business within the State; and

(F) has at least one year of housing experience in the State.

(5) Resolution of local support. Applicants must provide documentation of official local support for the Development by the jurisdiction within which the proposed Development is to be located, i.e. the Local Governing Body. The required documentation must be in the form of a resolution duly adopted by the Local Governing Body, and must be in a form that shall be subject to approval by OHFA's General Counsel. If there are any conditions in the resolution, OHFA may exercise its discretion to contact the governing body to ascertain the potential impact of the conditions. In the case of Developments to be located on tribal property, the resolution of support may be issued by the official elected tribal governing body.

(6) Capacity and prior performance. Each Applicant must demonstrate and document the degree of expertise of Applicant and owner in the use of TCAs and the Development, rehabilitation and/or conversion, management and operation of properties related to the type of the proposed Development. Applicants, Owners, and their Affiliates, including all Development team members, shall be examined in regard to their existing Developments, and the record of compliance performance within Oklahoma and other states in which the Development team members have developed or are developing affordable housing. The removal as a General Partner may be considered lack of capacity and performance. Applicants with existing Developments are ineligible for a TCA where OHFA has or receives notice of uncorrected or repeated instance of nonperformance by Applicant, owner, or any of their Affiliates, including any of their Development team, including without limitation:

(A) failure to meet and maintain minimum property standards;

(B) failure to meet and maintain any material aspect of a Development as represented in a Development Application;

(C) have been involved in uncured financing defaults, foreclosures, or placement on HUD’s list of debarred contractors;

(D) events of material uncorrected non-compliance with any Federal or State assisted housing programs within the prior seven (7) years; or

(E) the appointment of a Receiver; conviction on a felony criminal charge; or bankruptcy within the prior seven (7) years.

(7) Acquisition credits/ten-year holding requirement. Applicants requesting acquisition credits must provide an opinion of counsel, in a form satisfactory to OHFA, that the ten-year holding requirement of Code Section 42(d)(2)(B)(ii) has been met or a waiver obtained from the IRS. If an existing waiver or waiver to be granted is claimed, copy of the waiver letter or a copy of the letter indicating a waiver will be granted and is forthcoming must be included in the applicant’s Development proposal.

(8) Phase I environmental study. Applicants must submit a Phase I Environmental Assessment of the Development prepared no more than twelve (12) months prior to the date an Application is filed with OHFA. In lieu of assessment for existing RHS-financed properties to be acquired and rehabilitated, the Applicant and RHS must certify that there are no adverse environmental concerns. Any remediation requirements should be detailed and costs identified in the budget.

(9)Financial feasibility and viability. Applicants must provide a plan that demonstrates and makes commitments to the Development's financial feasibility and viability as a qualified low-income housing Development throughout the extended use period. Projects financed through the RHS programs must submit a Multiple Family Housing Obligation-Fund Analysis, Form FmHA 1944-51, or other evidence of firm commitment. Applicant must demonstrate to OHFA's satisfaction that the Applicant has financing commitments for one hundred percent (100%) of the project's total estimated construction and permanent financing. Financing rates and the terms of the commitment must have been approved by the lending institutions and the commitment conditioned only on the award of TCAs.

(10)Readiness to proceed. Applicants must demonstrate readiness to proceed in a timely manner should they be awarded a TCA. Factors that may be considered regarding Development readiness shall include but not be limited to:

(A) site control;

(B) land preparation. Applicant must provide preliminary plans or specifications for those activities commonly necessary to make a site ready for building, i.e. clearing, grading, infrastructure (streets, utilities, and the like), etc.

(C) proper zoning for the proposed Development.

(11) Public Housing Wait Lists. Each Application will be analyzed and evaluated as to the extent to which it is demonstrated that the local public housing authority documents the presence of a client waiting list for affordable housing units.

(12) Capital needs assessment. No allocations for rehabilitation will be made unless preceded by a capital needs assessment performed by a qualified independent third-party (architect, engineer, contractor, Rural Housing Services) which considers the proposed rehabilitation activities to ensure that the proposed improvements have a useful life that meets the full term of affordability based on extended use agreements.

(c) Selection criteria. The Selection Criteria shall be set forth in the appropriate AP, and shall include, but not necessarily be limited to the following:

(1) Income targeting. Each Application will be analyzed and evaluated as to the extent to which it is demonstrated therein a commitment to target lower-income populations. Points will be awarded based on the percentage of total AHTC units targeted to persons at or below fifty percent (50%) AMFI to the total number of AHTC units in the project. A sliding scale for points will be established in the annual AP.

(2) Term of affordability. Each Application will be analyzed on its ability and evaluated as to any commitments made therein in regard to serving qualified tenants for a period of time longer than the minimum required by the Code. Points will be awarded for an extension of the term of affordability beyond the minimum required by the Code and established in the annual AP.

(3) Development location and housing characteristics. Each Application will be analyzed and evaluated as to the geographic location and prevailing market conditions for the proposed Development. Examples of location and condition variables may include but are not necessarily limited to locating Developments within Difficult Development Areas, areas with rent burdens and/or Qualified Census Tracts the development of which contributes to a concerted community revitalization plan, including but not limited to HUD or RDC designated Empowerment Zones, Enterprise Communities and/or Champion Communities. For projects satisfying targeted locations, points will be established in the annual AP.

(4) Development Leverage. Each Application will be analyzed and evaluated as to the extent to which it results in tangible, cost beneficial investments or contributions to the proposed Development. Leverage shall be considered as the proportion or percentage of leverage resources to total eligible basis. Points for this criterion will be established in the annual AP.

(5) Community Support. Examples of community support include, but are not necessarily limited to: fee waivers, tax abatements, public improvements directly related to a Development, donations of property and/or materials, and other contributions of direct value to the proposed Development. Support must be directly related to the proposed project. Eligible evidence of support and points will be established in the annual AP.

(6) Development Characteristics. Each Application will be analyzed and evaluated as to commitments made therein for the provision of resident appropriate supportive amenities and services, including but not limited to: supportive services, day care, formalized resident involvement in the Development's on-going operations and management, and special on-site facilities. Services and amenities must be on-site if a Large Development; Small Developments may provide off-site or contractual services. Points available under this criterion for the resident appropriate supportive amenities and/or services will be established in the annual AP. Only services and amenities which exceed the minimum required by applicable laws, such as the ADA, will be eligible for points.

(7) Applicant/Owner Experience. Each Application will be analyzed and evaluated as to the experience of the owner in owning and successfully operating Developments in the LIHTC Program. Points available under this criterion will be established in the annual AP. This evaluation will be based on the experience of the Owner/Applicant.

(8) Management Experience. Each Application will be analyzed and evaluated as to the experience of the owner in managing or providing management for Developments in the LIHTC Program. Points available under this criterion will be established in the annual AP. This evaluation will be based on the experience of the management team members.

(9) Tenant/Special Needs Populations. Each Application will be analyzed and evaluated as to the extent to which commitments are made therein to serve Special Needs populations. Points available under this criterion will be established in the annual AP and will be based upon a percentage of units dedicated to special needs.

(10) Tenant populations of individuals with children. Each Application will be analyzed and evaluated as to the extent to which it is demonstrated that the development will provide amenities and a unit mix conducive to families/individuals with children. Points available under this criterion will be established in the annual AP. To be eligible, the market study must indicate a need for family units.

(11) Tenant ownership. Points available to applicants proposing for single family home ownership after the Compliance Period will be established in the annual AP. Applicants must submit a detailed plan which includes projections on maintenance, tenant reserve funds, etc. which will be evaluated for feasibility.

(12) Cost per unit. Each Application will be analyzed and evaluated as to the ability demonstrated therein to cost-efficiently produce the highest number of quality housing units for the TCAs requested in the Application or applied for with OHFA by the Applicant or any Affiliate of the Applicant for the same Development. Projects with the lowest Tax Credit eligible basis per unit will be given priority in the case of a tie in the final total rating scores.

(d) OHFA discretion. Not withstanding the point ranking under the Selection Criteria set forth above under 330:36-4-2(c), OHFA reserves the right and shall have the power to allocate Credits to a project irrespective of its point ranking, if such intended allocation is:

(1) in compliance with Code Section 42;

(2) in furtherance of the housing goals set forth herein, in the AP or any formally adopted resolution of the Trustees; and

(3) determined by the Trustees to be in the interests of the citizens of the State.

330:36-4-2.1. General program requirements and limitations

(a) General. [Reserved]

(b) Developer Fee limitations. The amount of allowable Developer Fees shall be limited to:

(1) Small developments. Developer Fees may not exceed eighteen percent (18%) of the Eligible Basis, excluding the Developer Fees.

(2) Large Developments. Developer Fees may not exceed fifteen percent (15%) of the Eligible Basis, excluding the Developer Fees.

(3) OHFA may, in its sole discretion, increase the Developer Fees allowable in order to create special financing incentives to meet a pressing local affordable housing need. All determinations of allowable Developer Fees shall be made in a manner consistent with the Code, IRS regulations and/or any directives of the Internal Revenue Services at the time of Allocation.

(c) Contractor Fee limitation. Allowable Contractor Fees shall be limited to:

(1) Small Developments. Total allowable Contractor fees may not exceed sixteen percent (16%) of the hard construction costs, excluding the Contractor Fees. Allowable Contractor Fees are further limited as follows:

(A) General requirements may not exceed six percent (6%) of the hard construction costs, excluding the Contractor Fees;

(B) General Overhead may not exceed two percent (2%) of the hard construction costs, excluding the Contractor Fees; and

(C) Builders Profit may not exceed eight percent (8%) of the hard construction costs, excluding the Contractor Fees.

(2) Large Developments. Total allowable Contractor fees may not exceed fourteen percent (14%) of the hard construction costs, excluding the Contractor Fees. Allowable Contractor Fees are further limited as follows:

(A) General requirements may not exceed six percent (6%) of the hard construction costs, excluding the Contractor Fees.

(B) General Overhead may not exceed two percent (2%) of the hard construction costs, excluding the Contractor Fees; and

(C) Builders Profit may not exceed six percent (6%) of the hard construction costs, excluding the Contractor Fees.

(d) Underwriting standards.

(1) Operating and replacement reserves.

(A) Minimum operating reserves must equal six months of projected operating expenses plus:

(i) debt service payments and

(ii) annual replacement reserve payments.

(B) Minimum replacement reserves should equal $200 per unit annually for new construction and $300 for rehabilitation developments.

(C) Developer guarantees or letters of credit may be accepted in lieu of operating reserves, at the discretion of OHFA. The developer must demonstrate financial capacity and liquidity. OHFA will also consider the developer's track record and the number of other guarantees outstanding.

(D) Notwithstanding the foregoing, these underwriting standards shall not apply if the project is being constructed in accordance with another federal program, such as Rural Housing 515, and such program provides for budgeting for operating and replacement reserves.

(2) Debt service coverage.

(A) Debt service coverage means the ratio of a property's net operating income to debt service obligations.

(B) The minimum acceptable debt service coverage ratio of 1.15 (1.05 in RHS properties) is required.

(3) Projections. All projections and pro-formas must contain realistic operating expense and vacancy rate projections consistent with prevailing market conditions.

(4) Cost limits. Costs per unit must be realistic and consistent with prevailing market rates. OHFA encourages cost efficient production, but will not give a preference solely for lowest construction costs.

(5) Minimum of $7,500 hard construction costs per unit for rehabilitations. No allocations for rehabilitation will be made unless a minimum of $7,500 in hard construction costs per unit will be expended.

(e) Progress reports. Progress reports must be filed by the Applicant/Owner beginning with the calendar quarter following the approval of a reservation of Credits until the Form 8609 is issued for a building. The report must contain, at a minimum, the status of site preparation and/or construction, including the percentage of completion of each building. The report must address any other requirements set forth in a Resolution of the Trustees and/or the Carryover Agreement. Within thirty (30) calendar days after the Certificate of Occupancy is issued for the last building in the project, the Owner must notify OHFA and submit a copy of the Permanent Certificate of Occupancy for each building in the Project. Remedies for violation of these provisions include those denoted at 330:36-6-3, including but not limited to return of unused tax credits.

(f) Construction time period. Construction, not including site prep work, must begin within one hundred eighty (180) calendar days of credit reservation, unless extended for cause by OHFA. Remedies for violation of these provisions include those denoted at 330:36-6-3, including but not limited to return of unused tax credits.

(g) Additional requirements. OHFA may, as it deems necessary in its sole discretion, impose additional requirements or Program limitations on any Applicant, Owner or Project. Said requirements or limitations may be set forth in a Resolution of the Trustees or in any contract between the Applicant or Owner and OHFA.

(h) Bond financed developments. Taxable or tax-exempt bond developments financed at least fifty percent (50%) with the proceeds of tax-exempt bonds subject to the private activity bond volume cap are required to comply with all requirements of these Rules except the competitive selection process. Evidence of the bond financing must be submitted at least seven (7) business days before the board meeting wherein the 4% tax credits are to be awarded.

(i) Timeliness and completeness of filings. Deadlines for filing Applications will be established in the AP. Should OHFA request additional information the deadline for filing same with OHFA will be set forth in the letter requesting same. Applicants/Owners must strictly comply with all deadlines and all filings must be complete when filed.

330:36-4-3. Fees

(a)  General. Application and TCA Fees will be used to support overall OAHTC Program delivery and operation activities. Application fees shall be calculated as follows:

(1) Application fees.

(A) for single site or contiguous site Developments consisting of one to four Units, the application fee shall be $350.00;

(B) for single site or contiguous site Developments consisting of five to fifty Units, the application fee shall be $700.00;

(C) for single site or contiguous site Developments consisting of fifty one to one hundred units, the application fee shall be $1,400.00;

(D) for single site or contiguous site Developments consisting of over one hundred units, the application fee shall be $2,800.00;

(E) for scattered sites, the application fee shall be $350.00 per site, up to a maximum of $2,800.00.

(F) For non-profit sponsored Developments the application fee shall be $350.00.

(2) Amendment fee. Any amendments to an Application, exhibits thereto or other information on file with OHFA must be accompanied by a $75.00 processing fee along with $15.00 per each supplemental page and/or each page amended. No amendments to an Application will be accepted prior to approval of a reservation unless the amendment is requested, in writing, by OHFA.

(3) Reservation fees. A non-refundable Reservation fee of two percent (2%) of the reservation amount is due within fourteen (14) calendar days of notification from OHFA of the approval of a Reservation.

(4) Allocation fee. An Allocation fee shall be paid in an amount equal to eight percent (8%) of the total Allocation, but in any event not less than $1,000.00. The Allocation fee must accompany the Allocation or Carryover Allocation request. The Allocation request will not be submitted to the Trustees for approval, nor will a Carryover Allocation Agreement be executed, nor will Form 8609 be issued unless this fee has been received by OHFA.

(5) Processing fee. A processing fee of three quarters of one percent (.75%) of the TCA must accompany the request for a final Allocation. A service fee of $100.00 must accompany the Request for Final Allocation of Credit.

(6) Regulatory Agreement filing fee. Upon approval of a final Allocation, an executed Regulatory Agreement must be submitted to OHFA and be accompanied by a check payable to the County Clerk of the county or counties in which the Development is located. The check or checks shall be in an amount sufficient to cover the filing fees of that county(ies). OHFA will provide a schedule of said fees.

(7) Compliance monitoring fees. In addition to the documentation required by OHFA, an annual compliance monitoring fee shall be paid to OHFA. The compliance fee is payable on or before January 28th for each year during the compliance period and extended use period subject to annual adjustment. If the Development includes scattered sites, a compliance monitoring fee for each site shall be paid to OHFA. If the Compliance fee is not paid within thirty (30) calendar days of the due date, then a Late Fee will be assessed. The Late Fee is equal to ten percent (10%) of the Compliance fee. Failure to remit timely payment of compliance monitoring fees may result in the filing by OHFA of a lien against the Development. The compliance monitoring fee shall be computed as follows:

(A) For Developments financed by RHS under the Section 515 or by taxable or tax-exempt bonds (and otherwise qualify under the Code) where an agreement has been entered into between OHFA and RHS or the bond issuer wherein the RHS or bond issuer agrees to provide OHFA with the required information respecting the income and rent of the tenants in the Development, the fee shall be $210.00 per Development per year, plus $3.50 per OAHTC unit per year within any building within the Development;

(B) For developments where no agreement has been entered into between OHFA and RHS or the bond issuer wherein RHS or the bond issuer agrees to provide OHFA with the required information respecting the income and rent of tenants-the fee shall be $350.00 per Development per year, plus $15.00 per OAHTC unit per year within any building within the Development.

(C) For single site or contiguous site Developments of four units or less-the fee shall be $275.00 per Development per year.

(D) For all other Developments the fee shall be $350.00 per Development, plus $15.00 per OAHTC unit per year within any building within the Development.

(8)  Additional monitoring fees. In the event of noncompliance with the Code or Regulatory Agreement or these Chapter 36 Rules requiring OHFA to conduct an examination of the owner, any building within the Development or any documentation to verify correction of said noncompliance, OHFA shall be reimbursed its costs by the Development or owner for such an examination, including an hourly rate for the OHFA examiner, not to exceed $30.00 per hour, plus any and all actual travel, lodging and per diem expenses of such examiner. Such reimbursement of expenses and costs shall be paid to OHFA within ten (10) calendar days of receipt of OHFA's statement of same.

(9) Ownership/General Partner transfer fee. In the event that the owner submits a request for approval of a transfer of ownership/general partner of the Development or any of the Buildings therein, a fee of three percent (3%) of the amount of annual tax credit allocation, but no less than $2,500.00, shall be imposed to cover OHFA's costs of handling the request. This fee shall accompany the request and shall be non-refundable.

(10) Notice costs. All costs of copies and postage costs incurred by OHFA in connection with the notification provisions contained in these Chapter 36 Rules at 330:36-2-11, Review Report at 330:36-2-13, and any occasion when OHFA incurs extra postage costs to accommodate the Applicant, (such as Resolutions and Regulatory Agreements) must be reimbursed by the Owner within ten (10) calendar days of OHFA's statement of same. Failure to do so may result in the rejection or deferral of consideration of the Application.

(11) Copies of Rules. Copies of these Chapter 36 Rules will be provided at a cost of $10.00 per copy, but can be accessed via OHFA’s website, www.ohfa.org.

(12) Copies of Credit listing. Copies will be provided at a cost of $10.00 per copy, but can be accessed via OHFA’s website, www.ohfa.org.

(13) Compliance Workshops. A $30 fee for attendance at Compliance Workshops.

SUBCHAPTER 6. PROGRAM ADMINISTRATION

330:36-6-1. Program violations and revocation.

(a) The following are violations of OAHTC Program policies and procedures and these OAHTC Program Rules:

(1) The filing of false information in an Application and/or a Development report;

(2) Failure of an Applicant or owner, as the case may be, to satisfy any of the requirements of the Code, applicable state or federal statutes, rules or regulations, these OAHTC Program Rules, or any requirements contained in the applicable AP, or any commitments made in the Application upon which the award of a TCA was based;

(3) Breach of any of the terms, conditions, obligations, covenants, warranties, or representations of the owner or Applicant contained in the Regulatory Agreement and/or the Carryover Allocation Agreement or the breach of any terms conditions, obligations or requirements set forth in any Resolution of the Trustees pertaining to the Applicant/Owner or the Development;

(4) Notice by OHFA to the owner that significant corrective actions are necessary to protect the integrity of the Development and that such corrective actions have not been, or can not be, effected within a reasonable time, in the judgment of OHFA staff;

(5) An administrative or judicial determination that the Applicant or owner has committed fraud, waste, or mismanagement in any current or prior State or federally funded project;

(6) The housing of a convicted felon or person(s) engaged in any illegal or criminal activity, including, but not limited to, prostitution, rape, incest, child abuse, or felonious assault, or engaged in any drug-related criminal activities (illegal manufacture, sale, distribution or use of a Drug, or the possession of a Drug with intent to manufacture, sell, distribute or use the Drug), if the Applicant, owner, or managers of the Development, or any of their Affiliates, have knowledge of or about, or by reasonable inquiry should have know of same. The prohibition on the housing of a convicted felon shall not apply to qualified tenants of Transitional Housing, except that the housing of a person in any Transitional Housing shall be prohibited if said person:

(A) is subject to a lifetime registration requirement under a State sex offender registration program, or

(B) has been convicted of a crime involving moral turpitude committed against women or children;

(7) From and after the date of the filing of the Application, failure to notify OHFA of any material changes effecting the proposed development, including, but not limited to, modifications to any representations contained in the Application, any amendments or modifications of the financing plan, syndicators or equity partners or any other Threshold requirement and/or changes in Development Team Members, contractors, property managers, and the like. Notification must be filed with OHFA not less than sixty (60) calendar days prior to the proposed change. Approval by the OHFA Board of Trustees is required for any changes or amendments involving the ownership or control of the Development or the Owner after the Application is filed. This would; include, but not be limited to, changes or transfers of the Development, changes or modifications of the ownership or composition of the general partner entity (i.e. addition or removal of members, partners, stockholders, etc.), any addition, substitution, withdrawal or removal of any general partner. Other amendments may be handled administratively by staff, although staff reserves the right to refer any amendments to the OHFA Board of Trustees for their consideration; or

(8) Failure to submit reports including but not limited to the timely filing of progress reports, updates, compliance reports, etc., and failure to provide OHFA with any additional information requested by OHFA within the period set forth in any request for information. Failure to pay fees when due. If payment is returned for insufficient funds, it will be deemed nonpayment and the amount to defray bank costs will be due.

(9) Little or no progress has been achieved with previous tax credit reservations approved for the Applicant or Developer or any of the Principals of either. This would include, but not be limited to: failure to meet the minimum carryover allocation requirements resulting in the return of credits; failure to place a development in service within twenty-four (24) months receiving the carryover allocation; involvement of a foreclosure or deed-in-lieu of foreclosure within the past seven (7) years.

(b) Failure to follow all required procedures throughout the allocation process could jeopardize the final allocation or result in housing credit being revoked.

330:36-6-3. Corrective and remedial actions

(a) Upon a determination by OHFA staff that a violation has occurred during the Application stage or Regulatory Agreement period, OHFA may take any one or more of the following actions when the cited violations are not corrected in a timely manner:

(1) Condition regulatory agreements;

(2) Withhold allocations of tax credits;

(3) Reduce the total amount of the tax credit award;

(4) Require the return of unused tax credits;

(5) Deny future program Applications and participation for a specified period of time as determined by OHFA;

(6) Indefinitely suspend from program participation;

(7) File an action for specific performance; and/or

(8) Notify the IRS.

(b) Additionally, OHFA shall have the right, upon discovery of facts or statements indicating possible program violations by an Applicant or owner in regard to a Development, or a proposed Development or a pending Application, or a pending TCA, to request and obtain information regarding:

(1) The administrative, planning, budgeting, management and evaluation functions, actions being taken to correct or remove the cause of the program violation(s);

(2) Any activities by an Applicant and/or owner, or by an Affiliate of either of them that are, or might be in violation or breach of the commitments made in the Application or that are, or might be, in violation of applicable laws, these Rules, the applicable AP, and/or the applicable Carryover Agreement and/or the applicable Regulatory Agreement;

(3) The ability of the Applicant and/or owner to fulfill the commitments made to OHFA in the Application and/or the applicable Carryover Agreement and/or the applicable Regulatory Agreement, in a timely manner; and

(4) Progress schedules for completing and/or performing the commitments made to OHFA in the Application and/or the applicable Carryover Agreement and/or the Regulatory Agreement in a timely manner.

(c) Prior to OHFA taking any corrective and/or remedial actions, OHFA, may, in its sole discretion, issue a notice of a show cause hearing. The Applicant and/or owner shall have ten (10) business days to appear and show cause as to why corrective and/or remedial actions should not be taken. This language shall not be construed as a limitation on the compliance monitoring and reporting requirements of the Code and these Chapter 36 Rules.

330:36-6-5. Applicant and/or owner responsibilities

(a) An Applicant and/or owner under the OAHTC Program shall be responsible for:

(b) Taking all action necessary to enforce the terms of the Regulatory Agreement against any private or public owner that fails to comply with applicable provisions of the Regulatory Agreement or any subcontract or documents resulting from it, and to recover on behalf of OHFA, all costs and expenses incurred by or on behalf of OHFA. Nothing in this subsection shall restrict OHFA's right to independently enforce the terms of the commitments made to OHFA in the Application and/or the Regulatory Agreement or in any subcontracts or documents resulting from either of them, or to recover any sums that may become due to OHFA as the result of a breach of any of the commitments made to OHFA in the Application and/or the Regulatory Agreement, or in any such subcontracts or documents.

(c) Complying with all applicable provisions of the Code, state and federal regulations, guidelines, circulars, rulings and notices, these Rules, the applicable AP, the Application, the Regulatory Agreement between the Applicant and/or Owner, and/or in any subcontracts or documents resulting from either of them, and OHFA or other Program requirements that may be released by the Internal Revenue Service or OHFA from time to time.

(d) Maintaining records and accounts, including, but not limited to, property, personnel, financial and tenant records that properly document and account for all Development funds and compliance with the tenant income certification requirements of the Code, these Rules, the applicable AP, and the Application and the Regulatory Agreement. All records required by the Code or 26 CFR1.42-5, as presently effective or as may be amended in the future, must be kept and retained by the Owner. Additional requirements of OHFA respecting said records may be included in the Regulatory Agreement. OHFA may require specific types and forms of records. All such records and accounts shall be made available upon request by OHFA for the purpose of inspection and use in carrying out its responsibilities for administration of the tax credits.

(e) OHFA may require the Applicant and/or Owner to provide special narrative and financial reports related to the elements of a written agreement in the forms and at such times as may be necessary or required by OHFA.

(f) Retaining all books, documents, papers, records, and other materials involving all activities and transactions related to the Owner's commitments to OHFA found in the Application and in the Regulatory Agreement, as required by the Code, federal regulations, the AP, the Application and the Regulatory Agreement.

(g) OHFA shall have the right to perform as many audits of any Development, from time to time, in the complete discretion of OHFA, as OHFA deems necessary or appropriate to discharge its compliance duties to the IRS in regard to each Development for which TCAs have been awarded, at least through the end of the compliance period and extended use period of the buildings and units in the Development. Audits may include physical inspection of any building in the Development, as well as a review of the records described in this subchapter. The cost of any such audit shall be borne by the Applicant and/or Owner. The audit and inspection provisions of this subsection are in addition to any inspection of OAHTC certifications, supporting documentation, or inspection of records performed pursuant to annual compliance review.

330:36-6-7. OHFA monitoring procedures.

(a) General. Section 42(m)(1)(B)(iii) of the Code mandates that state housing credit agencies monitor all placed in service tax credit projects for compliance with the provisions of Section 42. The Code also mandates that the Internal Revenue Service be notified, by the state housing agencies, of any instances of noncompliance, this includes failure to comply with the Code and federal regulations and these Chapter 36 Rules, as well as failure to pay all compliance fees in a timely manner. OHFA will also monitor for compliance with the Land Use Restriction Agreement (Regulatory Agreement) provisions which contain additional owner commitments made to secure points in the project selection process, e.g. additional low-income units or an extended low-income use period. OHFA has assembled and will make available to the project owners, a Compliance Manual explaining the OAHTC monitoring process in detail. An owner representative and a management agent representatives will be required to successfully complete a compliance training session conducted by OHFA or approved by OHFA and submit proof thereof with the first Quarterly report. OHFA will monitor the documents and certifications set forth in 330:36-6-7(b) and (c) for compliance with the Code.

(b) Record keeping and record retention provisions.

(1) The owner of a low-income housing project is required to keep records for each qualified low-income building in the project showing:

(A) The total number of residential units in the building (including the number of bedrooms and the size in square feet of each residential rental unit);

(B) The percentage of residential rental units in the building that are low-income units;

(C) The rents charged on each residential rental unit in the building (including any utility allowances;

(D) The number of occupants in each low-income unit;

(E) The low-income unit vacancies in the building and information that shows when, and to whom the next available units were rented;

(F) The annual income certification of each low-income tenant per unit;

(G) Documentation to support each low-income tenant's income certification;

(H) The eligible basis and qualified basis of the building at the end of the first year of the credit period;

(I) The character and use of the nonresidential portion of the building included in the building's eligible basis under Section 42(d) of the Code (e.g. tenant facilities that are available on a comparable basis to all tenants and for which no separate fee is charged for use of the facilities, or facilities reasonably required by the project); and

(J) Copies of all correspondence with the IRS.

(2) The owner is required to retain the records described in this section for each building in the project for at least six (6) years after the due date (with extensions) for filing the federal income tax return for that year. The records for the first year of the credit period must be retained for at least six (6) years beyond the due date (with extensions) for filing the federal income tax return for the last year of the compliance period of the building.

(c) Certification and review provisions

(1) Between the placed in service date of a building and the submission of an application for a final allocation of credits, and prior to the issuance of an 8609, OHFA may physically inspect the property. An on-site review will again be conducted within the following year as described in 330:36-6-7(c)(6) of these Rules.

(2) In accordance with Section 42(l)(1), following the close of the first taxable year in the credit period, the owner must certify to the Secretary of the Treasury:

(i) the taxable year in which such building was placed in service,

(ii) the adjusted basis and eligible basis as of the close of the first year of the credit period,

(iii) the maximum applicable percentage and qualified basis, and

(iv) the election made for the low-income targeting threshold.

This certification is accomplished by completing Part II of the 8609(s). A copy of the completed 8609(s) must also be submitted to OHFA by the end of the first period for which the Housing Credit is claimed for each building.

(3) Owners must prepare and submit a quarterly report beginning with the first full calendar quarter after the last building is Placed in Service, and for the subsequent three quarters. This report must be accompanied by copies of the Tenant Income Certifications for each tenant and new move-ins for the appropriate quarter. If a project is determined not to be in compliance with Program requirements or there is indication of possible noncompliance, OHFA, at its discretion, may require reports each quarter until compliance is demonstrated.

(4) The owner of a low-income housing project is required to certify annually, in a form prescribed by OHFA, that for the preceding 12-month period:

(A) The project met the requirements of the 20-50 or 40-60 test under Section 42(g)(I) of the Code, whichever minimum set-aside is applicable to the project, and, if the applicable to the project, the 15-40 test under Section 42(g)(4) for “deep rent skewed” projects;

(B) There was no change in the applicable fraction (as defined in Section 42(c)(1)(B))of any building in the project, or that there was a change and a description of the change;

(C) The owner has received an annual income certification from each low-income tenant and documentation to support that certification;

(D) Each low-income unit in the project was rent-restricted under Section 42(g)(2);

(E) All units in the project were for use by the general public and used on a non-transient basis (except for transitional housing for the homeless);

(F) Each building in the project was suitable for occupancy, taking into account local health, safety, and building codes (or other habitability standards), and the state or local government unit responsible for making building code inspections did not issue a report of a violation for any building or low-income unit in the project;

(G) There was no change in the eligible basis (as defined in Section 42(d)) of any building in the project, or that there was a change, and the nature of that change;

(H) All tenant facilities included in eligible basis under Section 42(d) of any building in the project, such as swimming pool, other recreational facilities, and parking areas, were provided on a comparable basis without charge to all tenants in the building;

(I) If a low-income unit in the project became vacant during the year, reasonable attempts were, or are being made to rent that unit or the next available unit of comparable or smaller size to tenants having a qualifying income before any units in the project were, or will be rented to tenants not having a qualifying income;

(J) If the income of the tenant of a low-income unit in the project increased above the limit allowed in Section 42(g)(2)(D)(ii), the next available unit of comparable or smaller size in the project was, or will be, rented to tenants having a qualifying income;

(K) An extended low-income housing commitment, as described in Section 42 (h)(6), was in effect;

(L) The project meets the additional requirements contained in the Land Use Restriction Agreements;

(M) There was no change in the Owner entity (for example, transfer of general partnership interest);

(N) If the owner received its credit allocation from a portion of the State's ceiling set-aside for projects involving “qualified non-profit organizations” under Section 42(h)(5) of the Code, the non-profit organization has materially participated in the operation if the development (within the meaning of CFR § 1.469);

(O) No finding of discrimination under the Fair Housing Act, 42 U.S.C. 3601-3619, has occurred for this project. A finding of discrimination includes an adverse final decision by a substantially equivalent state or local fair housing agency, 42 U.S.C. 361a(a)(1), or an adverse judgment from federal court; and

(P) An extended low-income housing commitment as described in Section 42(h)(6) was in effect, that an owner cannot refuse to lease a unit in a project to an applicant because the applicant holds a voucher or certificate of eligibility under Section 8 of the United States Housing Act of 1937, 42 U.S.C. 1437s.

(5) OHFA will review the owner certifications submitted pursuant to 330:36-6-7(c)(4), for compliance with the requirements of Section 42 of the Code.

(6) OHFA must and will conduct on-site inspections of all buildings in the project by the end of the second calendar year following the year the last building in the project is placed in service, and for at least twenty (20) percent of the project's low-income units, inspect the units and review the low-income certifications, the documentation supporting the certifications, and the rent records for the tenants in those units.

(7) At least once every three (3) years through the extended use period, OHFA must conduct on-site inspections of all buildings in the project and, for at least twenty percent (20%) of the project's low-income units, inspect the units and review the low-income certifications, the documentation supporting the certifications, and the rent records for the tenants in those units.

(8) The certifications and reviews of paragraphs 330:36-6-7(c)(2) and (c)(4) of these Chapter 36 Rules are required to be made at least annually until the end of the extended use period, and the certifications are to be made under penalty of perjury.

(9) The owner is required to provide to OHFA, for the first credit year, a copy of the completed Part II 8609, 8609 Schedule A and Form 8586 that is submitted to the Internal Revenue Service.

(10) The owner is required to provide to OHFA, as it occurs, copies of all correspondence with the Internal Revenue Service.

(d) Auditing provisions. OHFA has the right to perform an audit of any low-income housing project during the term of the Land Use Restriction Agreement. An audit includes physical inspection of any building in the project, as well as a review of the records described in 330:36-6-7(c)(1) of these Chapter 36 Rules. The auditing provision of this paragraph is in addition to any inspection of low-income certifications and documentation under 330:36-6-7(c)(7)of this Chapter 36 Rules.

(e) Notification of non-compliance provisions.

(1) OHFA will provide prompt written notice to the owner of a low-income housing project if OHFA does not receive the certification described in 330:36-6-7(c)(4) of these Chapter 36, or does not receive, or is not permitted to inspect, the tenant income certification supporting documentation and rent records, or discovers on audit, inspection review, or in some other manner, that the project is not in compliance with the Code or these Chapter 36 rules. The owner shall have a period of time, not to exceed thirty (30) calendar days, from the date of such notice (the “Correction Period”) to supply any missing certifications and bring the project into compliance. OHFA may extend, in its own discretion, the Correction Period for up to an additional thirty (30) calendar days for good cause.

(2) OHFA must file IRS Form 8823 Report of Noncompliance with the Internal Revenue Service no later than forty-five (45) calendar days after the end of the Correction Period whether or not the noncompliance or failure to certify is corrected. OHFA will explain on Form 8823 the nature of the noncompliance or failure to certify and indicate whether the owner has corrected the noncompliance or failure to certify. Any change in either the applicable fraction or eligible basis that results in a decrease in the qualified basis of the project under Section 42(c)(1)(A) is an event of noncompliance that must be reported under this paragraph.