Notice of Public Hearing Housing Credits
BEFORE THE DEPARTMENT OF COMMERCE OF THE STATE OF MONTANA
In the matter of the amendment of ARM 8.111.602 definitions and 8.111.603 housing credit allocation procedure.
TO: All Concerned Persons
1. On February 3, 2022, at 10:00 a.m., the Department of Commerce will hold a public hearing via Zoom to consider the proposed amendment of the above-stated rules. Interested parties may access the remote conferencing platform in the following ways:
a. Video:
https://mt-gov.zoom.us/j/88581620373?pwd=TWNReVVYbEJlV1F0RExGSnRsK2JGQT09
Meeting ID: 885 8162 0373 Password: 222280
b. Phone: Dial in by Telephone: 406-444-9999
Meeting ID: 885 8162 0373 Password: 222280
2. The Department of Commerce will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Commerce no later than 5:00 p.m., February 2, 2022, to advise us of the nature of the accommodation that you need. Please contact Bonnie Martello, Department of Commerce, 301 South Park Avenue, P.O. Box 200501, Helena, Montana 59620-0523; telephone (406) 841-2596; TDD 841-2702; fax (406) 841-2771; or e-mail docadministrativerules@mt.gov.
3. The rules proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
8.111.602 DEFINITIONS (1) and (2) remain the same.
(3) "QAP" means the board's "Housing Credit Program 2022 2023 Qualified Allocation Plan," which sets forth the application process and selection criteria used by the board for evaluation and selection of projects to receive awards for allocation of housing credits for calendar year 2022 2023. The board adopts and incorporates by reference the Housing Credit Program 2022 2023 Qualified Allocation Plan, copies of which may be obtained by contacting the Board of Housing by mail at P.O. Box 200528, Helena, MT 59620-0528, by telephone at (406) 841-2845 or (406) 841-2838, or at the board's web site www.housing.mt.gov.
(4) "QCP" or "Qualified contract process" means the board's "Qualified Contract Policy dated November 15, 2021," which sets forth the requirements and process that governs qualified contract requests by owners of housing credit projects. The board adopts and incorporates by reference the Qualified Contract Policy dated November 15, 2021, copies of which may be obtained by contacting the Board of Housing by mail at P.O. Box 200528, Helena, MT 59620-0528, by telephone at (406) 841-2845 or (406) 841-2838, or at the board's web site www.housing.mt.gov.
(4) (5) "Tax credit" or "housing credit" means the federal low income housing tax credit for owners of qualifying rental housing which meets certain low income occupancy and rent limitation requirements pursuant to 26 U.S.C. 42.
AUTH: 90-6-106, MCA
IMP: 90-6-104, MCA
REASON: The proposed amendments to ARM 8.111.602 are necessary to adopt and incorporate by reference the board's Housing Credit Program 2023 Qualified Allocation Plan (QAP) and the board's Qualified Contract Policy dated November 15, 2021.
Federal low income housing tax credits are allocated by the federal government to the states, according to their population, for allocation to particular buildings. Each state's share of federal low income housing tax credits is allocated to particular buildings under programs administered by the respective states' housing credit agencies. The Montana Board of Housing (MBOH) is Montana's housing credit agency for purposes of administering the tax credit program and allocating tax credits in the state of Montana. In Montana, the program is known as the Montana Board of Housing Credit Program. Federal law requires that tax credits allocated to the state by the federal government must be allocated by the state pursuant to a "qualified allocation plan" or "QAP."
Prior to publication of this notice, the board conducted several public meetings to consider suggestions and comments regarding the provisions of the 2023 QAP. Thereafter, at its September 13, 2021 meeting, the board considered and approved public notice and distribution of the proposed 2023 QAP. After public notice of the proposed 2023 QAP and of the opportunity for public comment was published and distributed, a public hearing on the proposed 2023 QAP was held on October 27, 2021, and written comments were also received. At its November 15, 2021 meeting, after considering all written and oral comments on the proposed 2023 QAP, staff recommendations, additional public comment and various proposed revisions in response to comments, the board approved the 2023 QAP for submission to and approval by the Montana Governor, as required by the federal tax credit statute, 26 U.S.C. § 42. Adoption of the proposed rule is contingent upon the Governor's approval of the 2023 QAP.
A copy of the 2023 QAP is available on the internet at https://housing.mt.gov or by requesting a copy from: Nicole McKeith, Board of Housing, Department of Commerce, 301 South Park Avenue, P.O. Box 200528, Helena, Montana, 59620-0528; telephone (406) 841-2048; fax (406) 841-2841; or e-mail nicole.McKeith@mt.gov.
As a condition of receiving housing credits, the project owner must execute and record restrictive covenants running with the project land which are subject to certain affordability and other requirements for the duration of a specified extended use period. At the end of the initial 15-year compliance period, federal law allows the owner to request that the board find a person, who will continue to operate the project under the restrictive covenants, to acquire the owner's interest in the project for the qualified contract amount determined according to federal law.
If the board provides a qualified offer from a proposed buyer within a one-year period, the project will remain subject to the restrictive covenants for the entire extended use period, regardless of whether the owner accepts the qualified contact. If the board does not find a qualified offer within the one-year period, the extended use period and the restrictive covenants will terminate, subject to certain tenant protections that will continue for a three-year period.
Federal laws and regulations specify certain requirements of this process, but largely leave the establishment and enforcement of processes and requirements to each state housing credit agency. Adoption of the Qualified Contract Policy is necessary to establish the board's requirements and processes for submission and processing of qualified contract requests.
The qualified contract process potentially allows the owner to remove affordability restrictions from the project before the end of the extended use period, allowing the owner to charge higher market rents and change other project characteristics designed to benefit low-income tenants. This potentially reduces the stock of affordable housing units and is contrary to MBOH 's mission to preserve and increase the availability of affordable housing.
Adoption and enforcement of a strict policy and process are necessary to protect the state's stock of affordable housing to the greatest extent possible by ensuring that affordable housing credit projects are removed from affordability only after full and strict compliance with procedures designed to ensure that an offer is received from a qualified buyer whenever possible.
The policy specifies the eligibility requirements for submission of a request, the required manner and content of a request submission, specifies the process followed for consideration and implementation of a request, and specifies the fees and expenses that must be paid by the owner. The requirements and processes in the policy are necessary to ensure that affordable housing credit projects are removed from affordability only after full and strict compliance with procedures designed to assure that an offer is received from a qualified buyer whenever possible.
8.111.603 HOUSING CREDIT ALLOCATION PROCEDURE (1) Letters of intent and applications for housing credits shall be prepared and submitted in conformance with the criteria and requirements contained in the QAP. The board's processes, criteria, and related procedures and requirements applicable to application, evaluation, and selection of projects for allocation of housing credits and for housing credit compliance are set forth in the QAP.
(2) Letters of intent and applications shall be submitted to the board on the dates specified in or otherwise designated according to the QAP. The board may extend or change any of the submission, presentation, or meeting dates or deadlines specified in the QAP if circumstances warrant, and in such event, the board will provide notice of such extension or change by posting on its web site.
(3) All projects wishing to apply for housing credits must submit a letter of intent in accordance with the requirements of the QAP.
(a) At the board's meeting in the month specified in or established in accordance with the QAP, board staff will present letters of intent to the board and the board will provide an opportunity for applicants to make a presentation regarding their projects and letters of intent and for public comment on proposed projects and letters of intent, all according to the provisions of the QAP. The board may ask questions of applicants and discuss proposed projects for purposes of assisting the board in determining which projects it will invite to submit applications and assisting applicants in presenting better applications, but such questions, answers, and discussion shall not be binding upon the board in any later award determination or other board process.
(b) After considering the letters of intent, presentations, questions and answers and discussion, the board will select those projects that it will invite to submit applications, in accordance with the provisions of the QAP. Each project so selected by the board will be deemed invited to submit an application. An application may be submitted only for a project invited by the board to submit an application and all other applications will be returned without consideration.
(4) Following submission of applications, board staff will review and evaluate each invited application for conformance with the threshold and other requirements of the QAP. Applications meeting all minimum threshold requirements and not excluded from further consideration under the QAP will be reviewed and evaluated according to all applicable QAP criteria and requirements, including but not limited to determining the amount of housing credits needed for feasibility and long-term viability, and evaluation and scoring according to the development evaluation criteria of the QAP. The points awarded to each project pursuant to the development evaluation criteria and scoring provisions of the QAP are for the purposes specified in (9), and not for purposes of ranking projects for allocation of housing credits. Following application review, evaluation and scoring, board staff may provide recommendations to the board for allocation of housing credits to qualifying projects.
(5) At the board's award determination meeting, board staff will provide application information to the board and the board will provide an opportunity for public comment on proposed projects and applications, all according to the provisions of the QAP. The board may ask questions of applicants and discuss proposed projects but there will be no applicant presentations.
(6) (2) Copies of applications and other information submitted to the board in connection with applications are available to other applicants for housing credit projects and members of the public to the extent provided and according to the procedures specified in the board's information request and release policy, available on the Department of Commerce web site at https://commerce.mt.gov/Contact/Legal https://commerce.mt.gov/.
(7) (3) At one or more regularly scheduled board meetings each year, as specified in or otherwise designated according to the QAP, the board will hear public comment and consider award of housing credit allocations in accordance with the QAP. The award of housing credit allocations is not a contested case and the award meeting is not a contested case hearing under Title 2, chapter 4, part 6, MCA.
(8) At the award determination meeting provided under (7), applicants should be available to the board to answer questions regarding their respective applications and shall be provided a brief opportunity to make comments and respond to any information presented regarding their applications.
(9) The board will select those projects to receive an award of housing credits that it determines best meet the most pressing affordable housing needs of low income people within the state of Montana, taking into consideration the selection criteria as defined in the QAP. The awarding of points to projects pursuant to the development evaluation criteria of the QAP is for purposes of determining that the projects meet at least the minimum criteria required for further consideration under the QAP and to assist the board in evaluating and comparing projects. Development evaluation criteria scoring is only one of several considerations taken into account by the board and does not control the selection of projects that will receive an award of housing credits. In addition to any other selection criteria specified in the QAP, the board may consider the following factors in selecting projects for an award of housing credits to qualifying projects:
(a) the geographical distribution of housing credit projects;
(b) the rural or urban location of the projects;
(c) the overall income levels targeted by the projects (including deeper targeting of income levels);
(d) the need for affordable housing in the community, including but not limited to current vacancy rates;
(e) rehabilitation of existing low income housing stock;
(f) sustainable energy savings initiatives;
(g) financial and operational ability of the applicant to fund, complete, and maintain the project through the extended use period;
(h) past performance of an applicant in initiating and completing tax credit projects;
(i) cost of construction, land, and utilities, including but not limited to costs/credits per square foot/unit;
(j) the project is being developed in or near a historic downtown neighborhood;
(k) the frequency of awards in the respective areas where projects are located;
(I) preserving project rental assistance or having or planning to add Section 811 units to an existing project (Section 811 units are units subsidized by the United States Department of Housing and Urban Development with available supportive services for very low income and extremely low income adults with disabilities); and/or
(m) augmentation and/or sources of funds.
AUTH: 90-6-106, MCA
IMP: 90-6-104, MCA
REASON: The proposed amendments to ARM 8.111.603 are necessary to delete material that unnecessarily duplicates provisions of the QAP. The QAP specifies the procedures and requirements set forth in the provisions proposed for deletion. Since the QAP is adopted and incorporated by reference in ARM 8.111.602(3), such material is already in rule and the deleted rule materials are duplicative and unnecessary.
4. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to the Department of Commerce, 301 South Park Avenue, P.O. Box 200523, Helena, Montana 59620-0523; telephone (406) 841-2770; TDD 841-2702; fax (406) 841-2771; or e-mail docadministrativerules@mt.gov, and must be received no later than 5:00 p.m., February 11, 2022.
5. The Office of Legal Affairs, Department of Commerce, has been designated to preside over and conduct this hearing.
6. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 4 above or may be made by completing a request form at any rules hearing held by the department
7. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.
8. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rules will not significantly and directly impact small businesses.
MONTANA BOARD OF HOUSING
Patrick E. Melby, Chair
/s/ Amy Barnes /a/ Adam Schafer
Amy Barnes Adam Schafer
Rule Reviewer Deputy Director
Department of Commerce
Certified to the Secretary of State January 4, 2022.
MAR Notice No. 8-111-192 1-1/14/22
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