Tax Credit Assistance Program (“TCAP”)

1. ADFA’s TCAP Application has been accepted by HUD.
2. $20,463,053 available for 2007, 2008 and 2009 LIHTC “awardees.”
3. “Awardee” defined to include those development owners publicly announced by Board of Directors as receiving a reservation of tax credits.
4. Does not include those development owners who returned their tax credits prior to enactment of ARRA.
5. Apply by application as provided by ADFA.
6. Award of TCAP funding based on: a) Certification to timeline that verifies development will expend 100% of TCAP funds no later than November 15, 2010; b) Final Score received during original round with 2008 amended to match 2007 criteria with award to highest final score; c) 5 points for requesting “additional” tax credits i. Total amount of tax credits to be allocated cannot exceed $600,000 or $625,000, if applicable. ii. “Additional” tax credits do not include previously allocated credits or 2009 credits awarded or “swapped” in lieu of 2009 credits iii. Commitment will be for at least $.50 per credit
7. Eligibility for TCAP: a) 2007, 2008, and 2008 awardees b) Must retain minimum amount of $1,000 in annual federal low-income housing tax credits, or $10,000 in the aggregate. i. Cannot be “Disaster” credits only. ii. Can be “swapped” 2009 credits. iii. Must place in service in accordance with year of allocation of “retained” tax credits. iv. If “retain” (swap for) 2009 tax credits, required to adhere to 2009 QAP including Minimum Design Standards – Universal Design requirements. c) Maximum amount of award is $500,000
   1. Applicants requesting maximum amount of TCAP - $500,000 – will be eligible to request additional HOME funds not to exceed $900,000. d) Applicant must provide official evidence, e.g., building permit; construction permit, that can begin construction within 120 days of commitment of funding e) Applicant must certify that the development’s buildings will be placed in service in accordance with Section 42 of the IRC.
8. Commitment and Expenditure deadlines: a. Within 90 days of selection, the Authority will complete environmental reviews on the selected developments; b. Within 30 days of environmental clearance, the Authority will enter into a written agreement with the recipient committing payment of the TCAP award based on the following: i. Recipient’s agreement that TCAP funds will be awarded in the form of a loan, secured by mortgage, amortized over the term of the development’s affordability period as selected in the recipient’s tax credit application, to be payable monthly based on one-half surplus cash (to be defined), with a balloon payment of the balance at the end of the affordability period; ii. Recipient’s agreement that a covenant binding ownership and its successors will be recorded restricting the development property by those TCAP program

requirements and crosscutting federal grant requirements required by Notice CPD-09-03. Those requirements will be separately identified in the covenant;1. iii. Recipient's agreement that TCAP funds may only be used for capital investment. Capital investment will be defined to mean costs included in 'eligible basis' (not including 30% basis boost), except costs associated with the construction, acquisition or rehabilitation of a swimming pool(s), under Section 42 of the Internal Revenue Code;

2. iv. Recipient's agreement that costs incurred or expended prior to entry of the agreement are not eligible for TCAP funding.

3. v. Recipient's agreement that it will not incur or expend costs for TCAP funding prior to the completion of a pre-construction conference between the recipient and the Authority and the issuance of a 'Notice to Proceed' by the Authority;

4. vi. Recipient's agreement that it will incur or expend 'eligible' costs based upon the following timeline:

1. A. Within 90 days of 'Notice to Proceed' – 25% of TCAP award;

2. B. Within 180 days of 'Notice to Proceed' – 50% of TCAP award;

3. C. Within 270 days of 'Notice to Proceed' – 75% of TCAP award;

4. D. No later than November 15, 2010 – 100% of TCAP award;

5. vii. Recipient's agreement that failure to meet the deadline requirement of subsections b(vi)(A), b(vi)(B), or b(vi)(C), above, will require the recipient to set-aside an equivalent percentage, i.e., 25%, 50%, or 75%, of its developer's fee into escrow. Said amount will be payable to the developer in equal annual payments over 15 years following placement in service of the development;

6. viii. Recipient's agreement that failure to meet the deadline requirement of subsection b(vi)(D), above, will result in the de-obligation, i.e. non-payment of any remaining TCAP funds, plus recapture of all TCAP funding previously awarded to the recipient;

7. ix. Recipient's agreement that payment of TCAP funds will be based upon a schedule set forth in the agreement after on-site inspections by the Authority and receipt of, at a minimum, the following:

1. A. Receipts or invoices of costs incurred or expended;

2. B. Certification by certified public accountant that the costs incurred or expended, as presented, constitute 'eligible basis' under Section 42 of the Internal Revenue Code; and

3. C. Number of jobs created and retained during the period for which costs were incurred or expended; and

8. x. Recipient's agreement that failure to place all buildings in the development in service in accordance with Section 42 will result in the recapture of all TCAP funding awarded to the recipient.

9. xi. Recipient's agreement that the provisions of 26 U.S.C. § 42(h)(6)(E)(ii) -- 3-year tenant protections in event of foreclosure -- will apply to the development.- • Distribution of recaptured TCAP funds.

1. a. Recaptured TCAP funds will be offered, in the order of the highest score, to any applicant that had previously applied for TCAP funds but did not receive the amount applied for due to a lack of TCAP funding.

2. b. The maximum award of \$500,000 will apply to the award of recaptured TCAP funds.

3. c. The commitment and expenditure timelines of Section b(vi) above will apply. Dependent upon the date of recapture, the Authority will have the discretion to set timelines different from those set forth in Section b(vi) above. However, any timelines determined by the Authority will be set to ensure compliance with

commitment and expenditure timelines imposed by the American Recovery and Reinvestment Act of 2009 and Section IV.C of Notice CPD-09-03.

1. All commitment and expenditure timelines will be tracked and reported to HUD in IDIS

Section 1602 Grants in Lieu of Tax Credits (“Exchange Program”)

1. Available to developments placed in service after December 31, 2008.
2. Acquisition costs for existing building(s) not eligible for Exchange Subaward if placed in service before January 1, 2009.
3. Acquisition basis cannot include value of cash reserves
4. Apply by application as provided by ADFA. ADFA will have application form ready no later than June 26, 2009.
5. Must have requested at least $100,000 in TCAP funding
6. a) Which means must retain minimum amount of $1,000 in annual federal low-income housing tax credits, or $10,000 in the aggregate
7. b) Can be “swapped” 2009 credits
8. Cannot receive Exchange Subaward if allocated “additional tax credits.”
9. Can only be used to replace equity lost from ORIGINAL APPLICATION
10. Cannot exceed eligible basis costs not including 30% basis boost.
11. TCAP plus Exchange funds cannot exceed eligible basis costs not including 30% basis boost.
12. Must place in service in accordance with year of allocation of “retained” tax credits.
13. Required to adhere to 2009 QAP including Minimum Design Standards – Universal Design requirements
14. Applicant must provide the following:
15. a) Written statement from most recent investor/syndicator submitted to ADFA which indicates that the investor/syndicator has rescinded its previous equity commitment to the applicant.
16. b) Written statement from nationally recognized investor/syndicator indicating that the investor/syndicator has been contacted by the applicant and rejected an offer to purchase any/all of the tax credits offered.
17. c) Sworn statement by applicant that:
    1. i. In addition to the investor/syndicator identified above, the applicant has contacted two additional nationally recognized investors/syndicators and they have rejected the purchase of any tax credits allocated to the applicant
    2. ii. Each investor/syndicator contacted has made no offer/counter-offer to purchase credits allocated at any per credit price.
18. d) Applicant must provide official evidence, e.g., building permit; construction permit, that can begin construction within 120 days of commitment of funding
19. e) Applicant must certify that the development’s buildings will be placed in service in accordance with Section 42 of the IRC.
20. f) Subaward will be in the form of a grant payable after costs incurred or expended.
21. Must execute agreement with ADFA prior to disbursement that sets forth:
22. a) All Section 1602 program requirements;
23. b) Section 42 requirements;
24. c) Provides for recapture of funds when:
    1. i. Failure to place in service in accordance with Section 42; or
    2. ii. Percentage of low-income units falls below percentage of Exchange Subaward; or

iii. Number of units falls below minimum set-aside A. No partial recapture -- All or nothing on recapture amount B. One unit out of compliance does not trigger recapture iv. Recapture exposure amount decreases 6.67% for each full year of compliance d) Requires recipient to provide the following information prior to any payment of Exchange Subaward: i. Name of recipient entity ii. Name of development iii. Brief description of development iv. Location of project: city/county/State/zip code v. Number of construction jobs created vi. Number of construction jobs retained vii. Number of non-construction created viii. Number of non-construction jobs retained ix. Number of total housing units newly constructed x. Number of total housing units rehabilitate xi. Number of low-income housing units newly constructed xii. Number of low-income units rehabilitated e) Recipient's agreement that it will incur or expend "eligible" costs based upon the following timeline: i. Within 90 days of "Notice to Proceed" – 25% of Exchange award; ii. Within 180 days of "Notice to Proceed" – 50% of Exchange award; iii. Within 270 days of "Notice to Proceed" – 75% of Exchange award; iv. No later than November 15, 2010 – 100% of Exchange award; f) Recipient's agreement that failure to meet the deadline requirement of subsections e(i); e(ii); e(iii), above, will require the recipient to set-aside an equivalent percentage, i.e., 25%, 50%, or 75%, of its developer's fee into escrow. Said amount will be payable to the developer in equal annual payments over 15 years following placement in service of the development; g) Recipient's agreement that failure to meet the deadline requirement of subsection e(iv), above, will result in the de-obligation, i.e. non-payment of any remaining TCAP funds, plus recapture of all TCAP funding previously awarded to the recipient;

• Must incur or expend 100% of Exchange Subaward by November 15, 2010.

2009 Applications

• Will be based upon 2009 application • Made before September 30, 2009 • 2009 applicants will be awarded tax credit remaining after the 2007 and 2008 outstanding developments have been awarded additional tax credits and Exchange/Subaward ➤ Based upon the highest score • Following a reservation of the tax credit award, if any TCAP, Exchange/Subaward, or HOME funds remain available, applicants will be given an opportunity to request such funding with the highest scoring development receiving priority • Criteria for eligibility of TCAP and Exchange funds will be same as set forth above for the 2007 and 2008 awardees

Amendments

The above guidance is subject to change as necessary to administer the TCAP and Section 1602 Grants in Lieu of Tax Credit Programs in accordance with state and federal requirements.