Notice of Funding Availability / Request for Proposals

Notice of Funding Availability / Request for Proposals The FY 2011 Invitation to Apply and Request for Proposals to Use Low-Income Housing Tax Credits for the Redevelopment of Loussac Manor June 29, 2010 (Amended July 28, 2010) Funding Available Under Low-Income Housing Tax Credits AFHC Corporate Receipts Project Based Housing Choice Vouchers Application Deadline: 4:30 p.m. Anchorage Local Time, October 5, 2010 For more information, contact: Daniel Delfino Alaska Housing Finance Corporation PO Box 101020 Anchorage, AK 99510-1020 907-330-8273 ddelfino@ahfc.state.ak.us 1

Table of Contents A. GENERAL INFORMATION... 3 1. PURPOSE AND GENERAL APPLICABLE PROVISIONS... 3 Applicant Training... 4 2. FUNDING AVAILABLE... 4 Detail on Funding Resources... 4 Land:... 4 Low-Income Housing Tax Credits (LIHTCs):... 5 AHFC Corporate Receipts:... 5 Project-Based Housing Choice Vouchers (PB HCVs):... 6 3. ELIGIBLE APPLICANTS... 7 4. ELIGIBLE PROJECTS... 7 5. AHFC AND DEVELOPMENT TEAM RESPONSIBILITIES... 7 Development Team Responsibilities... 7 AHFC Responsibilities... 8 6. DEADLINE FOR APPLICATION SUBMISSION... 8 7. PROPOSAL COSTS... 9 8. ACCEPTANCE OF TERMS... 9 9. MISSTATEMENTS... 10 10. SITE DESIGN AND LAYOUT... 11 11. UNIT REQUIREMENTS... 11 Project Based Housing Choice Voucher (PB HCV) Units... 11 Units without Project Based Housing Choice Vouchers... 12 12. APPLICABLE THRESHOLDS AND DEFINITIONS NOT EXPLICITLY STATED IN THIS NOFA / RFP... 12 13. LEGAL AND FINANCIAL STRUCTURE... 13 Ownership Structure... 13 Ground Lease... 13 Procurement... 13 HAP Contract... 13 14. MINIMUM REQUIRED INSPECTION STANDARDS... 13 15. CONSTRUCTION SIGNAGE... 14 16. MARKET STUDY REQUIREMENTS... 14 17. PROCUREMENT TIMELINE... 16 B. APPLICATION REQUIREMENTS... 16 1. APPLICATION FORMS... 16 2. UNDERWRITING CRITERIA... 16 Uniform Underwriting Standards for the Operating and Development Pro Forma... 17 Operating Pro Forma... 17 Development Pro Forma... 18 3. REQUIRED APPLICATION MATERIAL... 19 C. EVALUATION CRITERIA... 25 SCORING THRESHOLDS... 25 1. UTILIZATION OF PROJECT LOCATION (MAXIMUM 18 POINTS)... 27 2. PROJECT DESIGN (MAXIMUM 52 POINTS)... 27 3. PROJECT CHARACTERISTICS (MAXIMUM 22 POINTS)... 31 4. MARKET CONDITIONS (UP TO 36 POINTS)... 34 5. UNDERWRITING (45 POINTS)... 35 6. PROJECT LEVERAGING (MAXIMUM 30 POINTS)... 37 7. PROJECT TEAM CHARACTERISTICS (MAXIMUM 2 POINTS)... 40 8. JOB TRAINING PROGRAM (MAXIMUM 10 POINTS)... 41 PROJECT CHANGES & NONCOMPLIANCE WITH CRITERIA AFTER AWARD... 42 2

D. SELECTION OF PROPOSALS TO BE FUNDED & FUNDING LEVELS... 42 E. PUBLIC INTEREST DETERMINATION... 43 A. GENERAL INFORMATION 1. Purpose and General Applicable Provisions The purpose of AHFC's Greater Opportunities for Affordable Living (GOAL) program, is to expand the supply of decent, safe, sanitary, and affordable housing for occupancy by lower-income persons, families, and senior citizens. This Notice of Funding Availability (NOFA) / Request for Proposals (RFP) is the second part of a two-part application process for a local or national for-profit or non-profit development team (Applicant) to serve as the Development Entity and project owner for the redevelopment of the Loussac Manor property. Only applications / proposals from invited Development Teams will be accepted by AHFC until 4:30 p.m. (Anchorage time) on October 5, 2010. Please note that eligible applicants may only submit their full application through AHFC s online application system. This application round will be held under the Other Purposes set-aside noted in the GOAL Program Rating and Award Criteria (page 11) for Low-Income Housing Tax Credits. Per this set-aside, AHFC, at its discretion, may use the annual state tax credit cap, or portion thereof, to engage in demonstration projects that fulfill the mission of AHFC and are consistent with [the] qualified allocation plan and the requirements of 26 U.S.C. Section 42 of the Internal Revenue Service Code. Under this NOFA / RFP, Alaska Housing Finance Corporation (AHFC) may provide direct disbursements from corporate receipts, zero-interest rate loans with scheduled service and loans with deferred payment options from corporate receipts, project based housing choice vouchers (PB HCVs) and federal low-income housing tax credits (LIHTCs) to successful respondents for the redevelopment of the Loussac Manor property, in accordance with requirements established at Title 26 U.S.C. Section 42 (Low Income Housing Tax Credit Program [LIHTC]), GOAL Program Policies and Procedures, 24 CFR 983 and AHFC Standard Provisions for Award Agreements. The amount of funding received under this NOFA / RFP may not exceed the amount necessary, as determined by AHFC, to result in a financially feasible development ( subsidy layering review ). Factors to be considered in determining the amount of "necessary" NOFA / RFP funds include other funding sources committed, and any available loan program funds which could reasonably be expected to support the project based on anticipated revenue and expenses. AHFC reserves the right to adjust the applicant s projected revenue and expenses based on an underwriting review completed by AHFC. Furthermore, AHFC reserves the right to reject any application based on past or present performance of the applicant or any of its partners under any grant, contract or program administered by AHFC or any state department or federal agency. 3

If you have any questions regarding this NOFA / RFP package, including Application Instructions or Program Requirements, please refer to the AHFC web page (www.ahfc.us) or call Daniel Delfino at (907) 330-8273. If outside Anchorage, you may use AHFC s toll free number at 1-800-478-2432. Applicant Training Please contact Daniel Delfino (330-8273) regarding the application workshop which AHFC will conduct on July 15, 2010, as well as for technical assistance available from AHFC staff to assist you in applying for funding under this NOFA / RFP. The applicant training to be held on July 15, 2010 will be located at AHFC s corporate headquarters. The training will be an all day event and is mandatory for at least one member of the development team. AHFC s corporate headquarters are located at: Alaska Housing Finance Corporation 4300 Boniface Parkway Anchorage, AK 99504 2. Funding Available The following amount of funding is available through this NOFA / RFP. AHFC LIHTC s $ 2,535,000 AHFC Corporate Receipts $ 10,000,000 PB HCVs $ 60 units Land - Long Term Ground Lease $ nominal ($1) lease payment Applicants must specifically identify in the application the source and amount of LIHTC and Corporate Receipt funds being requested. Applicants must further identify what portion of AHFC corporate receipts they are requesting as soft debt with scheduled service, soft debt with deferred service, and as a direct capital infusion without any soft debt nature. By applying for funds under this NOFA / RFP, the applicant commits to following all applicable requirements. All applicants shall, in addition to materials specifically related to this NOFA / RFP, thoroughly review the "GOAL Policies and Procedures Manual," available from AHFC, for development and operational requirements which are applicable to each funding source. Detail on Funding Resources Land: Conveyance of the existing approximately 8-acre Loussac Manor site through a longterm ground lease. 4

Low-Income Housing Tax Credits (LIHTCs): Up to the entire 2011 LIHTC authority available approximately $2,535,000 in annual credits. The actual amount on credits available for Loussac Manor will depend upon: - The 2011 LIHTC authority available to AHFC. For the purpose of this NOFA / RFP, AHFC has assumed the published LIHTC authority for Alaska will equal the same small state floor amount from 2010 (zero inflation assumption). Additionally, AHFC has added to this amount the unused credit authority carried forward from the FY 2010 GOAL round. - Whether or not the selected proposal is sponsored by a for-profit or qualifying non-profit. - The Qualified Basis in the project. - Discretionary Basis Boost: Applications will be considered which request application of the discretionary basis boost authorized under the Housing and Economic Recovery Act (HERA) of 2008. Applications for the discretionary basis boost will only be approved by AHFC where at least 20 units of workforce housing are proposed and an application of the basis boost is necessary based on the sources requested and available debt carrying capacity of the project to result in a feasible project. AHFC Corporate Receipts: Applicants will be eligible to apply for AHFC corporate receipts in a combination of the following forms: (i) soft loans with scheduled service at 0% interest, (ii) soft loans with deferred payment at 0% interest, (iii) direct disbursements no repayment terms. Applicants will be required to specify in their application the portion(s), if any, of their total AHFC corporate receipt requests that fall into each of the three available request categories. Any award of corporate receipts structured as a soft loan with scheduled service or as a soft loan with deferred payments must satisfy a true-debt test from a certified public accountant performed at the equity closing or project close-out. While treated as soft debt, amounts requested and qualifying under (i) soft loans with scheduled service will be included in the Operating Pro forma of the application. The following language will be included in the soft loan documents between AHFC and the applicant for amounts requested and qualifying under (i): Payments to be made in annual installments of $[annual service amount scheduled], or payable based on 80% of the project s annual cash flow above amount required for allowances for administrative and operating expenses; replacement reserves; real estate taxes; other expenses approved by the corporation; and the debt service on the first deed of trust loan, whichever is less 5

through year 30 at which time all outstanding amounts are due. In any year in which the amount paid by the Borrower is less than the annual installment, the amount due in the immediately following year shall equal the annual installment, plus the unpaid principal due under the terms of this Note for the prior fiscal year(s), subject to the available cash flow methodology herein described. Eligible Corporate Receipts The amount of corporate receipts an applicant will be eligible to request will be based on the following formula: Eligible Corporate Receipts for Applicant Request = Total Corporate Receipts Available Total Source Adjustments Where: Total Corporate Receipts Available = $10,000,000 Total Source Adjustments = Net Credit Advantage + Net Soft Sources + Net Owner Contribution Net Credit Advantage (NCA): 501(C)(3) and 501(C)(4) organizations are eligible to request up to $253,500 in annual LIHTCs more than other applicants (i.e. those applicants ineligible for the nonprofit set-aside). Applicants applying with 501(C)(3) or 501(C)(4) designation will have a Net Credit Advantage adjustment to the Eligible Corporate Receipts based on the following formula: NCA = 10-year LIHTC value requested in excess of $22,815,000 multiplied by the anticipated equity price. Net Soft Sources (NSS): Applicants who include additional funding sources in their development budgets outside of the LIHTCs, hard debt, and corporate receipts available through this NOFA / RFP will have a Net Soft Source adjustment in an amount equal to the total Soft Sources outside of this NOFA / RFP. Net Owner Contribution (NOC): Applicants who include Owner Contributions as sources of funds in the development budget and also include a developer fee in the development budget will have a NOC adjustment equal to the Owner Contribution amount in excess of the developer fee in the project payable to the Owner. Project-Based Housing Choice Vouchers (PB HCVs): AHFC will allocate 60 PB HCVs to the project in order to provide re-housing opportunities for existing Loussac Manor public housing residents, residents of other public housing developments undergoing redevelopment, and for households on the AHFC HCV waiting list. This allocation will generate expected revenue for each PB HCV unit the project equal to the payment standard applicable to the unit size. AHFC estimates that the median income level for these HCV households is about 30% of AMI, with some households certifying to little or no income and other households near 6

the income limits for participating in the HCV program. 3. Eligible Applicants APPLICANT TYPE AHFC Corporate Receipts FUNDING TYPE LIHTCs PB HCVs 501(c)(3) or (4) Non-Profit Corporations Yes 100% of LIHTC Authority listed in Section 2 Yes Regional Housing Authorities without 501(C)(3) or 501(C)(4) designation Yes 90% of LIHTC Authority listed in Section 2 Yes Private For-Profit Developers/Organizations Yes 90% of LIHTC Authority listed in Section 2 Yes 4. Eligible Projects All project proposals must be eligible in accordance with the most recent version of the GOAL Program Policy and Procedures. A copy of the GOAL Program Policy and Procedures document is available on AHFC s website. It is critical that all applicants read this document in order to propose projects that will qualify for GOAL funding. 5. AHFC and Development Team Responsibilities Development Team Responsibilities Either directly or by designing and implementing procedures to engage others in work, the Development Team will be responsible for duties including, but not limited to, the following: Implementing an overall financing plan which maximizes the leverage of AHFC corporate receipts, tax credit equity and PB HCV rental subsidy; Identifying competitive proposals for construction and permanent financing and tax credit syndication proceeds; Preparing a market analysis update; Developing architectural plans and specifications; Obtaining all required building, construction, zoning and environmental approvals and any other federal, state and local approvals (except those that must be processed and obtained by a government entity); Arranging for all necessary financial guarantees, assurances and closings; Procuring all goods and services necessary for the successful completion of the project; Supervising site preparation and construction; 7

Providing property management services and, if proposed, resident supportive services; Ensure successful lease-up and long-term viability of the developments; and Create economic opportunities for Section 3 eligible businesses and individuals and ensure compliance with minority, women and disadvantaged business contracting requirements. Applicants are strongly encouraged to critically examine the Site and are expected to respond with an application that is responsive to the market and conducive to the successful development of the Site. The selected Development Team will be expected to complete all activities in concert with the representations made in the application and duties including, but not limited to, those noted above. The Applicant will be solely responsible for all guarantees of completion, working capital, operating deficits or tax credit compliance required by tax credit investors or lenders. AHFC will not make any guarantees on behalf of the selected Applicant. AHFC anticipates that the award agreements will provide for the Applicant to perform master planning, construction, timely acquisition of permanent and construction financing, securing investment equity, and other related activities. The award agreements shall further set forth the permanent assistance AHFC is prepared to provide the Developer, conditions on that assistance, and requirements for financial closing. AHFC Responsibilities AHFC will have various roles: potential lender, landowner, oversight for procurement, programmatic compliance during the award, development, and operations of the project, and compliance monitoring oversight with respect to the PB HCV units, workforce housing units, and low-income housing tax credit units. Elsewhere in the solicitation are references to project based voucher rental assistance and associated HUD documents governing that assistance. AHFC will maintain a site-based waiting list for families interested in resident in the new development. AHFC will also be responsible for threshold eligibility requirements for wait list placement, independent of those other factors the management entity may require; i.e. landlord references. As needed, AHFC will promptly provide a suitable number of applicant names to ensure prompt re-leasing of vacant units eligible for project based assistance. 6. Deadline for Application Submission Applications must be submitted on-line no later than 4:30 p.m. Anchorage Local Time on Tuesday, October 5, 2010. Applications may NOT be submitted via telefax, e-mail or hard copy. The official time for application submittal will be documented in the on-line application software. Applications received after the deadline will NOT be considered. 8

7. Proposal Costs All costs of responding to this NOFA / RFP are the responsibility of the applicant. 8. Acceptance of Terms By submitting an application, the applicant accepts all terms, conditions and requirements of this NOFA / RFP, and those contained in AHFC regulations, HUD regulations and Title 26 U.S.C. Section 42 as they relate to the AHFC Corporate Receipts, LIHTC, and HUD Project Based Housing Choice Voucher programs. The applicant s proposal will become part of the award, loan, or reservation agreement, whichever may be applicable, in the event the applicant is awarded program funds. The applicant will be bound by what is in the proposal, unless otherwise approved in writing by AHFC. Omission within this NOFA / RFP package of provisions found in federal and state regulations or terms and conditions of AHFC s award or loan agreement, or LIHTC reservation agreement does not nullify or in any way relieve the applicant or AHFC of responsibility for complying with all applicable Federal and/or State Program requirements. Proposals and other materials submitted in response to this NOFA / RFP become the property of AHFC and may be returned only at AHFC s discretion. Applications are public documents and may be inspected or copied by anyone after a Notice of Intent to Award Funds has been issued by AHFC. Financial statements included in the application may be considered public information unless a specific written request to restrict distribution is made by the applicant. After AHFC determines the selected development proposal under this NOFA / RFP, but before AHFC can execute any binding agreement with an applicant, AHFC will be required to undertake an environmental analysis of the proposal under the National Environmental Protection Act ( NEPA ). As part of the NEPA review, the applicant may be required to submit additional information. AHFC and / or HUD may reject proposals based on such environmental review. AHFC and / or HUD may also approve a proposal subject to the implementation of mitigation measures to satisfy environmental concerns. Failure by an applicant to agree to such mitigation measures and incorporate them into the development proposal will be grounds for rejection of an applicant s proposal. The following is a list of some rules which will apply to the scope of work required as a condition of funding under this NOFA / RFP. It is the responsibility of the applicant to seek advice as to the applicability of these rules or any others unlisted as to their relevance in the intended use Project Based Housing Choice Vouchers. Failure to adhere to federal and state laws and regulations will be the sole legal and financial responsibility of the applicant. 9

9. Misstatements 1. Sections 523 and 527 of the Public Health Service Act of 1912 2. Contract Work Hours and Safety Standards Act 3. Copeland Act 4. Flood Disaster Protection Act of 1973 5. Provisions of the Davis-Bacon Act including Little Davis-Bacon Act (AS 36.05.010, AS 36.95.010) 6. Section 504 of the Rehabilitation Act of 1973 (29 U.S.C 794), implementing regulations 24 CFR Part 8. 7. Single Audit Act Amendments of 1996 and OMB Circular No. A-133 8. State law does not allow the use of state funds in a project that is constructed with a preference in contracting based on the ethnic origin of the bidder or owner of the bidding firm. 9. The Age Discrimination Act of 1975 10. The Americans with Disabilities Act 11. The Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment and Rehabilitation Act of 1970 12. The Drug Abuse Office and Treatment Act of 1972 13. The Hatch Act 14. The Fair Housing Act 15. The Intergovernmental Personnel Act of 1970 16. The Lead-Based Paint Poisoning Prevention Act 17. Titles II and III of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 18. Title VI of the Civil Rights Act of 1964 19. Title VIII of the Civil Rights Act of 1968 20. Title IX of the Education Amendments of 1972 21. 24 CFR 983 (by incorporation, NEPA, Davis-Bacon Provisions, and other applicable cross-cutting requirements) 22. 24 CFR 982 (Tenant Criteria, Payment Standards, Housing Quality Standards, etc.) If AHFC determines that an applicant for, or recipient of, LIHTC s has made a material misstatement relating to the recipient s application for, or administration of, corporate receipts, loans, or tax credits, AHFC will, at its discretion, remove the application from any further funding consideration, or in the event that LIHTC s, corporate receipts or Project Based Housing Choice Vouchers have already been received, require the recipient to repay the funds or LIHTC s (tax credits issued by AHFC will be rescinded) to AHFC, together with accrued interest on the amount of the funds received calculated at the highest rate allowed by law from the date of funds disbursement by AHFC and potentially cancel the HAP contract for the PB HCVs. 10

10. Site Design and Layout AHFC is not proscribing specific building types for the redevelopment of the Loussac Manor site. Based upon the market assessment prepared in anticipation of this NOFA / RFP, AHFC believes that the entire 120-unit building program can be accommodated on the 8-acre site in multiple 2- and 3-story buildings of approximately 8 walk-up, gardenstyle apartments each, with tuck-under structure parking. Developers are invited to propose other building types, including elevator structures and attached townhouses, within the constraints of the project budget, zoning, and market preferences. Applicants will be required to prepare and submit a Site Plan that accommodates a minimum of 120 rental units, parking, management and community facilities, and recreation and open space. AHFC anticipates that the existing public streets on site will be vacated and that new streets and infrastructure will need to be installed as part of the redevelopment. AHFC believes that the replacement housing plan can be implemented within the existing R-2M zoning designation in compliance with land use, density, parking, height, set-back, and open space requirements. Developers are urged to carry out a preliminary zoning review as part of their site planning process. Developers are also invited to propose a building program at a density higher than that allowed by current zoning (approximately 15 DU/acre). However, if the development proposal exceeds 120 units, then the developer must show in its proposal that sufficient time is available in the project schedule for obtaining necessary entitlements. If the proposed Site Plan or Building Program will require additional entitlements, the proposed project schedule must incorporate a realistic schedule for obtaining these additional public approvals as well as an assessment of potential barriers to approval. All proposed layouts, designs and densities must be backed up by a feasible financing proposal, documentation of market demand and investor and lender confirmation of sound project underwriting. Application materials must provide a justification for the Site Design and Layout proposed in the application. 11. Unit Requirements Project Based Housing Choice Voucher (PB HCV) Units Applications must contain 60 LIHTC family rental units that will serve as replacement housing for the former residents of Loussac Manor and/or other public housing sites undergoing redevelopment and for households on the AHFC Housing Choice Voucher waiting list. These 60 LIHTC units will also be provided with PB HCV rental assistance. The proscribed PV HCV unit mix is as follows: 11

Unit Type Number of Units One Bedroom 15 Two Bedroom 20 Three Bedroom 20 Four Bedroom 5 Total 60 The above unit mix was developed based upon a review of the composition of existing Loussac Manor households, many who have expressed an interest in returning postredevelopment, and of the AHFC HCV waiting list. While the waiting list favors smaller size units, AHFC sees a need for some larger family units as replacement housing. Units without Project Based Housing Choice Vouchers Applications must also contain 60 or more family rental units that will be either LIHTConly units (no PB HCV), unrestricted market-rate units, or workforce housing units. Applicants can determine what combination, if any, of the above unit types to propose in their application. Any units identified as workforce housing units may be rented without income restrictions; however, gross rents charged for the workforce housing units may not exceed the published fair market rent. AHFC expects that LIHTC, market-rate and workforce housing units will be interspersed with and indistinguishable from the above PB HCV family units in the development. AHFC will require that all of the units PB HCV, LIHTC, market rate, workforce housing contain a similar amenity packages. All proposed unit mixes, bedroom types and amenity packages must be backed up by a feasible financing proposal, documentation of market demand and investor and lender confirmation of sound project underwriting. Market Study updates produced through information provided by the applicant must evidence a justification for the unit mixes, types and amenities proposed in the application. 12. Applicable Thresholds and Definitions not Explicitly Stated in this NOFA / RFP All applicable threshold requirements for building techniques, project design, accessibility, and tenant set-asides identified in the GOAL Program Rating and Award Criteria (aka Qualified Allocation Plan) and GOAL Program Policies and Procedures will remain in full effect for the Applications submitted in response to this NOFA / RFP. Applicants should review the GOAL Program Policies and Procedures and GOAL Program Rating and Award Criteria (both provided in the Reference Materials file located in the online application) for specific information on building standards, unit and project accessibility requirements, set-aside requirements, and compliance information related to GOAL funded projects. Unless explicitly noted to the contrary in this NOFA / RFP or subsequent addenda 12

thereto, all terms and definitions used in the GOAL Program Rating and Award Criteria and GOAL Program Policies and Procedures shall have the same meaning, application, and applicability of requirements for the purposes of this NOFA / RFP. 13. Legal and Financial Structure The following sections describe aspects of a legal and financial structure that will be used by AHFC. Ownership Structure An entity (the Ownership Entity ) that includes the Developer or its affiliate may hold title to the improvements of the new development. During construction and operations, the Developer shall have day-to-day management and operational authority of the Ownership Entity. AHFC will not participate in the Ownership Entity. However, the Developer may not sell its interest in the Ownership Entity without the express written permission of AHFC. Ground Lease AHFC will not convey its fee interest in the property but will enter into a long-term ground lease with the Ownership Entity. AHFC anticipates that the term of the ground lease will be at least 40 years or per program requirements. The amount of annual rent under the ground lease will be nominal. At the end of the term of the ground lease, the property and all improvements thereon will revert to AHFC. Procurement All procurement accomplished by the Developer on behalf of the Ownership Entity shall be completed in compliance with the Procurement Policy proscribed by AHFC. HAP Contract AHFC will enter into a 15-year Housing Assistance Payment (HAP) contract, with an option for a 15-year extension, with the selected development project. Prior to construction closing, AHFC will enter into an Agreement to Enter into a Housing Assistance Payment (AHAP) contract, which will allocate the PB HCVs to the proposed project at construction completion. Sample AHAP and HAP are provided in the Reference Materials file located in the online application. 14. Minimum Required Inspection Standards Housing that is constructed or rehabilitated must meet each of the following minimum property standards: Newly constructed or rehabilitated housing shall meet all applicable local building codes, the State s Building Code (AS 18.56.300) as implemented by 15 AAC 150.030 and Building Energy Efficiency Standard (AS 46.11.040) as implemented by 15 AAC 155.010. Housing Quality Standards (HQS) set forth in 24 CFR Part 982 13

If the Summary of Building Inspection (PUR-102) form or Building Energy Efficiency Standard Certification (PUR-101) is required (per AS 18.56.300 or AS 46.11.040, respectively), the project must be inspected and the form must be executed by a qualified inspector(s) at various stages of project development. It is the responsibility of the applicant to insure that the inspector selected is eligible to inspect the size of project proposed under state law (AS 154.090). Do not wait until the project is completed to obtain the necessary inspections and inspector signatures. This may result in requiring a destructive inspection. Instructions and forms are provided on AHFC s website: http://www.ahfc.us (see links to construction and BEES at bottom of the website page). All applicable local codes, rehabilitation standards, ordinances, and zoning ordinances must be followed. Housing that is constructed or rehabilitated must be developed by a contractor with a Residential Endorsement. All projects must meet the following minimum accessibility laws: - Americans with Disabilities Act - Fair Housing Amendments Act of 1988 - Alaska Statute AS 18.80.240 - Local Government Ordinances - Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), implementing regulations 24 CFR Part 8. 15. Construction Signage During project construction, signage shall be erected on the construction site or affixed to any structures on the site referencing project financing that bear the AHFC logo. AHFC s logo is available upon request in electronic format. 16. Market Study Requirements Applicants will be required to provide AHFC with specific information on their proposal necessary for AHFC to commission an update to the existing market assessment for Loussac Manor. Additionally, all applicants will be required reimburse AHFC for the costs invoiced by the market study firm for performing the market study update. AHFC conservatively anticipates that it will cost no more than approximately $5,000 to commission the market study update. No later than 14 business days following the application due-date, applicants will be required to submit reimbursement payment to AHFC for the market study costs. Please note: Applicants may provide the information required to commission the market study update to AHFC via email to ddelfino@ahfc.state.ak.us prior to August 27, 2010. However, applicants must provide the following information via email to ddelfino@ahfc.state.ak.us at AHFC no later than 3:30 p.m. on August 27, 2010 to initiate the market study update process (please note that emails must be less than 10 MBs in size for delivery): 14

Unit Type Total # Units Unit Size (Sq. Ft.) Garage space (Sq. Ft.) Total Unit Area: Garage + Unit Size # of 30% Median Income Set- Aside Units # of 50% Median Income Set- Aside Units # of 60% Median Income Set- Aside Units Market Rate Units Workforce Housing Units Manager Unit(s) 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom Total Units Residential Sq Footage Total Floor Area* Development Design: #Units #Buildings Detached Single Family Townhouse 2-, 3- or 4-plex Multi Family (5+) Other: Other Amenities: Units contain Washer/Dryer Appliances Units contain Washer/Dryer Hook-ups only Common Laundry with: washers and dryers Covered parking spaces: # Uncovered parking spaces: # Other amenities (list all): In addition to the information required from the tables above, applicants will also be required to provide the rent levels proposed for each bedroom type and corresponding set-aside classifications. Applicants are also required to provide AHFC with a list of all utilities which will be tenant paid. NOTE TO APPLICANTS: The completed Market Study update, commissioned by AHFC for the applicants proposal, will be incorporated into the application submittal. Any changes to the information provided through the Market Study Update, especially regarding proposed rent levels, must be approved by AHFC in writing prior to the application deadline. 15

17. Procurement Timeline The below tables provides dates applicable to this NOFA / RFP process. Any changes to the dates provided below will be communicated to all applicants via email. FY 2011 LIHTC Application / RFP for the Loussac Manor Tentative Schedule Redevelopment Issue Application Invitations for Applications / RFPs June 29, 2010 Applicant Training at AHFC Headquarters July 15, 2010 Answers to Questions Received through July 16 th, 2010 Published July 21, 2010 Deadline to Submit Market Study Update Information* August 27, 2010* Market Studies Returned to Applicants * September 13, 2010* Final Deadline to Submit Questions on Application* September 14, 2010* Final Answers to Questions on Application published* September 17, 2010* Application / Proposals Due* October 5, 2010* Notice of Intent to Award Announced* October 21, 2010* *-dates noted with asterisk were updated in the July 21, 2010 amendment B. APPLICATION REQUIREMENTS 1. Application Forms All applications must be submitted on-line to AHFC and, where required, use forms and Excel files provided by AHFC. Workbooks and application forms will be provided through the on-line application software. Any applicable limitations stated in the application materials regarding space and page numbers must be followed. 2. Underwriting Criteria Because of the presence of PB HCV financing, the project will be subject to Federal Davis-Bacon prevailing wage requirements and other HUD and crosscutting Federal requirements such as Section 3 and Environmental Review. The project will also be required to complete a Subsidy Layering Review and receive HUD approval of the disposition application. For the purposes of all units included in the applications / proposals, AHFC requests that all developers utilize the Section 8 utility allowance schedule (Anchorage AL0 MLP, dated 2/1/2010). Respondents will need to indicate in their proposals which utilities will be tenant-paid and the associated monthly utility allowance. Financial feasibility of the applications will be evaluated based upon a number of criteria, including but not limited to: The total development cost and development cost per unit; The extent to which financing assumptions seem realistic and are backed-up by supporting documentation; The amount of amortizing debt as a that can reasonably be anticipated to be carried based on the anticipated revenue sources; The proposed need for, and ability to repay, AHFC corporate receipts 16

Uniform Underwriting Standards for the Operating and Development Pro Forma Operating Pro Forma Line Item Limit Debt Coverage Ratio (DCR) on Must-Pay No lower than 1.2 of Net Operating Income Debts. Must pay debts are defined as obligations (including replacement reserve contributions) with scheduled service with accompanying default / foreclosure provisions if scheduled debt service on the No higher than 1.45 of Net Operating Income instrument is not maintained. Debt with Default / foreclosure provisions on the debt instrument that are (including replacement reserve contributions) not triggered until default / foreclosure of a senior obligation occurs do not qualify as must-pay or hard debt for the purpose of this NOFA / RFP Interest rate for must pay debt Rate disclosed on Letter of Interest from Lender or if AHFC, rate posted 1 week prior to application due-date. Repayment terms for soft debt service Consistent with representations made in application Vacancy rate assumption for all units 7% Replacement Reserve Requirement $300 per unit per year deviations from this Rents: for non-pb HCV units with LIHTC restrictions or market-rate units amount require prior approval from AHFC. Rent level identified in market study update performed by applicant less applicable utility allowance Rents: for Workforce Housing units Published Fair Market Rent less the applicable utility allowance Utility Allowance Utility Expenses Published on AHFC s website PB HCV Unit Revenue Maximum of Payment Standard for Unit Type Non-Rental Income Cannot be included in Effective Gross Income Late Fees Cannot be included as anticipated income 30 Year Pro-Forma Trending used must be 2% per year for income and 3% per year for expenses 30 Year Pro-Forma DCR for the respective financing sources must remain at 1.00 or higher for the term of the financing sources. Deferred Developer Fee Identity of Interest Payments Appraised Value AHFC Corporate Receipts If developer fee will be deferred, repayment expectation must shown through the first 12 years of project operations based on trending analysis. Capped at 7% of Effective Gross Income per line item Must be included regardless of tax method assumed. Appraised Value must be estimated using the Reconciled Market Value method If scheduled debt service is intended, the amount of scheduled debt service must be included in the operating pro forma at 0% interest. 17

Operating Expense Reserve Section 8 Reserve Construction Contingency Contractor Profit and Overhead General Requirements Developer Fee Rent-up Reserve LIHTC Basis Boost Development Pro Forma Minimum 6 months of must-pay debt and expenses (including replacement reserve contributions) Minimum 2 years of the estimated PB HCV subsidy (i.e. payment standard less tenant share of rent at imputed 30% AMI household income) OR as required by a more restrictive lender or investor with written back-up. Maximum of 10% of the construction cost line item noted in the development workbook Maximum of 10% of the construction cost subtotal noted in the development workbook Maximum of 10% of the construction cost subtotal noted in the development workbook Maximum of 15% of the total development costs, excluding the developer fee. For example: Development costs = $100,000, developer fee = $10,000. In this case, the developer fee is 10,000 / 100,000 = 10% No less than the absorption period noted in the market study using the most conservative approach. If the market study provides an absorption range of 5-10 units per month, the rent-up reserve must at minimum be set as 5 units per month. Note: Rent up reserve funds cannot be added to the budgeted operating reserve for the purposes of satisfying point #1 operating Expense Reserve Requirement. Up to 130%. Available if the basis boost is necessary for project feasibility, see Section 2 18

3. Required Application Material (I) Threshold (T) Items Each application proposal will be subject to a threshold review. An application which, in AHFC s sole opinion, has not met the required Threshold Criteria identified in this section and submitted all threshold materials, will be considered non-responsive, and may NOT be considered further in this Notice of Funding Availability cycle. AHFC reserves the right to request technical corrections to the application. Opportunities for technical corrections will not be extended for any potential corrections that would affect project scoring or otherwise qualify the application as non-responsive under the threshold criteria identified below. If an opportunity for technical correction is extended and the required information for correction is not provided by the applicant during the correction period stated in the notice of technical deficiency, the application will be deemed non-responsive and will not be considered for funding through this NOFA / RFP. Please note: With the exception of the materials requested in T-#15, all information related to the application should be formatted for print on 8 ½ by 11 inch paper. For all applicants, the Threshold Items include the following: T-#1: One (1) Signed Signatures and Certifications form. This is required for an applicant to be considered responsive to this NOFA / RFP. T-#2: A resolution of the applicant s governing body authorizing the request for funds under this NOFA / RFP to redevelop Loussac Manor. T-#3: Evidence of legal organizational status, i.e., non-profit designation letter from the Internal Revenue Service (non-profits and municipalities), authorizing legislation (Regional Housing Authorities), Certificate of Incorporation issued by the Department of Commerce (for-profit corporations), partnership agreement (if available - partnerships). If applying for more than 90% of the available LIHTC funds, a designation letter from the IRS for 501(c)(3) or 501(c)(4) status will be required or the applicant will be considered non-responsive to this NOFA / RFP. T-#4: Evidence demonstrating the Financial Feasibility of the proposed project. Both development feasibility (i.e., sources of development funds equal development costs) and operational feasibility (project revenue + other operating subsidies, if any, exceed in an acceptable amount the projects operating expenses and debt service requirements) must be evident. All applicants must complete the Loussac Manor Application Workbook (Excel file). The workbook must be submitted electronically through the on-line application and MUST be the workbook provided by AHFC. 19

Customized workbooks of the applicant and / or unapproved (by AHFC) modifications to the AHFC workbook will not be accepted. Evidence of Financial Feasibility must include: (a) Development costs verified through credible third party support of the projected development costs. Information provided by entities with an identity-of-interest relationship to the Applicant and / or Developer may not be used to qualify as credible third party support. Include bids and/or cost estimates supplied by the proposed contractor or professional construction cost estimators with experience estimating similar multi-family residential housing in Alaska. (b) (c) (d) If not already present in the Market Study update, Data which supports estimated project revenue (rent levels), vacancy rates, operating expenses, and debt carrying capability. Support for the reliability of other proposed project funding sources have been confirmed, i.e. letters of funding commitment, preliminary loan review, evidence of application for other funding sources, etc. Please note: the information requested under this section applies to permanent sources of financing and those anticipated during the construction phase. Applicants must provide letters of interest from potential investors for their proposal. At a minimum, these letters of interest must identify the following: The amount of credit the investor is willing to purchase for the applicant s project; Acknowledgement from the investor that they have been presented with the proposed unit and set-aside mix (i.e. LIHTC, Workforce Housing, Market Rate, PB HCV) included in the application workbook; The anticipated pay-in-schedule for the Investor Equity; and, The price-per-credit the investor anticipates offering for credits awarded to the project. o For the purpose of the subsidy layer review process, the credit price used by AHFC to size the LIHTC award will not exceed the highest credit price documented by the letters of interest. o AHFC reserves the right to use the documented 20

credit price it determines most reasonable for the proposal, or averages of the documented credit prices, during the subsidy layer review process. If an application for LIHTCs is received that does not contain a single letter of interest specifying the above points, the project will not be qualified as financially feasible. Consequently, if an application for LIHTCs is received without a letter of interest stating the above information, the project will be considered nonresponsive and will not be considered for funding. (e) Reasonable assurances that the project can be successfully implemented within the proposed time frame and that substantive development activity will begin within 180 days of award of GOAL funds. Substantive activities include securing financing, completion of blueprints or plans, receipt of building permits, project construction, and meeting the 10% test under Section 42. T-#5 T-#6 T-#7 The application materials must provide an employment and vendor plan detailing efforts to include Section 3 and MBE/WBE firms and employees in the design, development and construction of the new community. These plans must be provided in the format proscribed by AHFC in the online application system. A Management Plan which in AHFC s opinion adequately demonstrates the ability of the recipient to manage the proposed project. The management plan submitted must include an appropriate plan for managing the Project Based Housing Choice Voucher facet of this development. Notification of Local Government Letter All applicants for LIHTCs must notify the local government of their intent by submitting the letter provided in the on-line application software and also attaching copies of any comments received. If comments from the local government have not been received by the application due date, applicant should submit evidence the local government received the request for comments (i.e. a United States Postal Service s certified return receipt), or a copy of the letter with a received date stamp from the local government, or other such official evidence. T-#8 An Executive Summary: The Executive Summary must be formatted according to the reference file included in the on-line application 21

materials. Each of the four required headings must be included, and all bulleted points in the reference document will need to be addressed. T-#9 Affirmative Marketing Plan All applicants for GOAL funds shall adopt affirmative marketing procedures and policies for all housing produced under this NOFA / RFP, in accordance with the State of Alaska's GOAL Program Rating and Award Criteria Plan. This affirmative marketing plan shall include the following: 1. Methods for informing the public, owners and potential tenants about fair housing laws and the owner's policies regarding compliance with fair housing laws. Homeownership projects must include practices regarding equal opportunity lending practices. 2. A description of what the owner will do to affirmatively market housing assisted with funds awarded through this NOFA / RFP. 3. A description of what the owners will do to inform persons not likely to apply for housing without special outreach. Based on historical data for the HOME program, the groups least likely to apply are persons who are minorities such as Hispanic, Black, and Asian or Pacific Islander, people who have Limited English Proficiency (LEP) and persons living in rural communities in the State. 4. A description of how the owner will maintain records documenting actions taken to affirmatively market units assisted with funding through this NOFA / RFP and to assess marketing effectiveness. 5. A description of how the owner s affirmative marketing efforts will be assessed and what corrective actions will be taken where requirements are not met. T-#10 A Completed Development Team Form: A copy of this form is available in the on-line application materials. At minimum, the applicant, developer, property manager, contractor and architect must be identified. T-#11 If Proposing more than 120 units, a statement regarding the applicant s plans and timing to obtain proper zoning must be provided. At AHFC s sole discretion, plans and timing to obtain proper zoning which are deemed infeasible or impracticable will be grounds for finding the project not-feasible and by consequence, non-responsive to the NOFA / RFP. T-#12 If Proposing Supportive Facilities and / or Services, a statement regarding the applicant s plans and timing to obtain proper zoning must be 22

provided OR evidence of appropriate zoning for the proposed facilities and / or services must be included. At AHFC s sole discretion, plans and timing to obtain proper zoning for the proposed services which are deemed infeasible or impracticable will be grounds for finding the supportive facilities and / or services not-feasible. In the case of such determination, the Review Committee will not be forwarded any information to score the Supportive Facilities and / or Services proposed in the application to achieve points under the rating criteria for this NOFA / RFP. T-#13 Supplemental Information Form: Form provided with the application material must be completed for all applicants requesting LIHTCs. T-#14 Development Schedule: All applicants must complete the Development Schedule form included in the on-line application materials. All applicants must identify in their development schedule the applicable milestones for the development, including the 10% test for the Low- Income Housing Tax Credits. T-#15 Schematic Drawings of the proposed project (construction and improvement plans). At minimum, provide the following drawings: i. Color-Rendered Site Plan ii. Landscape Plan iii. Floor Plans for All Building Types and Community Facilities iv. Unit Plans for All Unit Types v. Typical Elevations for All Building Types vi. Color-Rendered Perspectives T-#16 Responsible "Bidder" AHFC must make a determination that the applicant/sponsor /owner is a responsible bidder based on AHFC s past experience with the applicant/sponsor or potential owner of the proposed project in compliance during the development or operation phases of a project. AHFC reserves the right to reject any application, or condition awards under this NOFA / RFP, based on past or present performance on any grant, contract or program administered by AHFC or any state department or federal agency. T-#17 Page Limits for Review Committee Materials Page limits for the information that will be provided to the Review Committee are stated in the online application. Applicants who include materials which exceed the page limit for the respective questions will forfeit review of all materials related to the respective page limits violated. For example, under the category Utilization of Project Location, applicants are limited to 10 pages. If an applicant includes more than 10 23