mhdc developer’s guide · 2015-07-09 · management company certification ... requesting the...

MHDCDEVELOPER’SGUIDEForMultifamilyPrograms

2016

MHDC2016Developer’sGuide

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TableofContents

Introduction..............................................................................................................................................1

RentalProductionCycle........................................................................................................................1

MHDCFundingSources.........................................................................................................................2 LowIncomeHousingTaxCredits.................................................................................................................2 HOMELoansandGrants...................................................................................................................................4 FundBalanceLoans............................................................................................................................................4 RiskShareInsurance..........................................................................................................................................4 Tax‐ExemptBonds..............................................................................................................................................5 AffordableHousingAssistanceProgram...................................................................................................6 CommunityInitiativesFunding.....................................................................................................................6

ApplicationInformation.......................................................................................................................6 NoticeofFundingAvailability........................................................................................................................6 TheApplication.....................................................................................................................................................6 ApplicationDeadline..........................................................................................................................................7 SubmittinganApplication................................................................................................................................7 PublicHearings.....................................................................................................................................................7

HousingPriorities...................................................................................................................................8 NonprofitInvolvementSet‐asidePriority.................................................................................................8 SpecialNeedsPriority(eligiblefor30%boostineligiblebasis).....................................................9 Service‐EnrichedHousingPriority(eligiblefor30%boostineligiblebasis).........................15 PreservationPriority(eligiblefor30%boostineligiblebasis)....................................................18 Minority‐OwnedBusinessEnterprise(“MBE”)/Women‐OwnedBusinessEnterprises(“WBE”)Priority................................................................................................................................................19 PropertyDispositionPriority......................................................................................................................20 CompliancePeriodandAffordabilityPriority......................................................................................20 50%AMIPriority..............................................................................................................................................20 WorkforceHousing(eligiblefor30%boostineligiblebasis).......................................................21 TransitOrientedDevelopment(TOD)(eligiblefor30%boostineligiblebasis)...................21 RedevelopmentPlan........................................................................................................................................21 High‐OpportunityArea...................................................................................................................................21 GeographicRegion...........................................................................................................................................22 DevelopmentCharacteristics.......................................................................................................................22 MarketCharacteristics....................................................................................................................................24 DevelopmentTeamCharacteristics..........................................................................................................26 FinancialFeasibility.........................................................................................................................................26 CommunityImpact...........................................................................................................................................28

ApplicationReview..............................................................................................................................28 InitialReview......................................................................................................................................................28


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PrimaryDocumentationReview................................................................................................................30 SecondaryDocumentationReview...........................................................................................................30 SiteReview..........................................................................................................................................................30 CompetitiveReview.........................................................................................................................................31

ApplicationForms,Exhibits,andDigitalMedia........................................................................31 RentalHousingProgramsApplication.....................................................................................................32 ApplicationFee..................................................................................................................................................32 DevelopmentNarrativeandQuestionnaire...........................................................................................33 SiteReviewInformation................................................................................................................................33 MarketStudy.......................................................................................................................................................34 PreliminaryFinancingCommitments......................................................................................................35 SiteControl..........................................................................................................................................................38 PublicOfficialContactVerificationorSupportLetters.....................................................................39 StatutorilyRequiredDocumentation.......................................................................................................40 HousingPriorityDocumentation...............................................................................................................41 ZoningLetter......................................................................................................................................................41 ArchitecturalItems..........................................................................................................................................41 SustainableHousingInformation..............................................................................................................43 RelocationandExistingMultifamilyOperationsData.......................................................................43 HomeownershipPlan......................................................................................................................................44 PHAApprovedUtilityAllowances.............................................................................................................45 DeveloperandGeneralPartnerInformation........................................................................................45 ManagementCompanyCertification........................................................................................................46

ApplicationUnderwritingStandards............................................................................................46 Sources..................................................................................................................................................................47 Debt ....................................................................................................................................... 47 ConstructionLoans .............................................................................................................. 47 PermanentLoans ................................................................................................................. 48 Amortization ........................................................................................................................ 48 DeferredDeveloperFee ...................................................................................................... 48 IncomeFromOperationsDuringConstruction ................................................................. 49 EligibleBasis ........................................................................................................................ 49 CreditPricing ....................................................................................................................... 50 HistoricCredits .................................................................................................................... 51 AHAPCredits ........................................................................................................................ 51

Uses.........................................................................................................................................................................51 MaximumDevelopmentCost .............................................................................................. 51 ContractorFees .................................................................................................................... 51 Developer+ConsultantFees .............................................................................................. 52 MHDCLoanFees .................................................................................................................. 54 ConstructionInspectionFee ............................................................................................... 54


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AppraisalFee ........................................................................................................................ 54 ConstructionCostAnalysis ................................................................................................. 54 ConstructionLaborCosts .................................................................................................... 55 ConstructionLoanInterest ................................................................................................. 55 Contingency .......................................................................................................................... 55 TaxCreditFee ...................................................................................................................... 55 TaxCreditMonitoringFee .................................................................................................. 55 AHAPFee .............................................................................................................................. 55 SyndicationCosts ................................................................................................................. 56 OperatingReserve ............................................................................................................... 56 ReplacementReserve .......................................................................................................... 56 Debt‐ServiceReserve ........................................................................................................... 56 OtherUses ............................................................................................................................ 56

ProjectIncome...................................................................................................................................................56 Rents ..................................................................................................................................... 56 Other/CommercialIncome ................................................................................................. 56 IncomeTrending .................................................................................................................. 57 Vacancy ................................................................................................................................. 57

MaximumIncome/MaximumRents.......................................................................................................57 OperatingExpenses.........................................................................................................................................57 ExpenseTrending ................................................................................................................ 57 ReplacementReserves ........................................................................................................ 57

ApplicationApproval..........................................................................................................................58 StandardsofConduct......................................................................................................................................58 CommissionApproval.....................................................................................................................................59

Pre‐ConditionalReservation............................................................................................................59 OwnershipEntityOrganizationalDocuments:.....................................................................................60 PropertyInformation......................................................................................................................................61

ConditionalReservation....................................................................................................................61

FirmCommitment................................................................................................................................61 FirmCommitmentExhibits..........................................................................................................................62

CarryoverAllocation...........................................................................................................................70 CarryoverAllocationAgreement................................................................................................................70

10%Test..................................................................................................................................................71 10%TestRequiredDocumentation..........................................................................................................71 10%TestDeadline...........................................................................................................................................71

ConstructionLoanClosingGuidance.............................................................................................71


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KeyMilestonesintheConstructionLoanClosingProcess..............................................................72 LoanClosingChecklistDueDiligenceRequirements........................................................................73 MHDCLoanDocuments.................................................................................................................................75

ConstructionPhase..............................................................................................................................76 Pre‐ConstructionConferences....................................................................................................................77

ConstructionLoanDisbursements.................................................................................................77 RequestingtheInitialAdvanceofMortgageProceeds......................................................................77 RequestingAdvanceofMortgageProceedsduringConstruction................................................78 ProcessingtheAdvanceofMortgageProceedsduringConstruction.........................................78 ConstructionRetainage..................................................................................................................................79 StoredMaterials................................................................................................................................................79 ChangeOrders....................................................................................................................................................79 Escrows.................................................................................................................................................................80 RequestingtheFinalAdvanceofMortgageProceeds........................................................................80 LatentDefects.....................................................................................................................................................80

Conversion/PermanentLoanClosing...........................................................................................80 ConversionRequirements.............................................................................................................................81 PermanentLoanClosingProcessandRequirements........................................................................81

FinalAllocation/CostCertification................................................................................................82 RequiredFinalAllocationDocumentation.............................................................................................82

ComplianceReporting........................................................................................................................84 AnnualReporting..............................................................................................................................................84

AssetManagement...............................................................................................................................86 LeaseUp................................................................................................................................................................87 ProgramComplianceInspections..............................................................................................................88 DeficiencyResolutionsandPenaltiesforNon‐Compliance............................................................90 Non‐ComplianceFees......................................................................................................................................90 AffordableHousingAssistanceProgram(AHAP)................................................................................90 ManagementCompanySet‐upatApplication/FirmCommitment..............................................92 OwnershipChange/TransferofPhysicalAssets(TPA)....................................................................92 ManagementCompanyChange...................................................................................................................93 ManagementCompanyFeeIncrease........................................................................................................94 OccupancyDataSubmissionGuidelines..................................................................................................94 RentIncreaseGuidelines...............................................................................................................................94

WorkforceEligibility...........................................................................................................................96 Policy......................................................................................................................................................................96 ComplianceGuidance......................................................................................................................................98 ComplianceRequirements............................................................................................................................98


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ContractLanguage............................................................................................................................................99

WorksiteSafetyandOSHATraining............................................................................................100

TransientEmployerRequirements.............................................................................................100

PrevailingWage..................................................................................................................................101 Introduction.....................................................................................................................................................101 Workers.............................................................................................................................................................101 WageRatesandPayrollProcessing.......................................................................................................101 Reporting...........................................................................................................................................................104 Inspections.......................................................................................................................................................105 UnderpaymentsandCorrections............................................................................................................106 AdditionalInformationandGuidance...................................................................................................106

Homeownership.................................................................................................................................106 DeterminingSalesPrice..............................................................................................................................111 AdditionalHOMERules...............................................................................................................................113

CommunityHousingDevelopmentOrganizations.................................................................114 FormationandStructure............................................................................................................................114 RelationshiptoFor‐ProfitEntities..........................................................................................................115 Capacity/Compliance...................................................................................................................................115 MHDCCertificationRequirements.........................................................................................................115

MBE/WBEInitiative...........................................................................................................................117 MBE/WBEDefinitions.................................................................................................................................117 Purpose..............................................................................................................................................................119 SummaryofProgram...................................................................................................................................119 ParticipationStandard.................................................................................................................................120 MBE/WBEPriority........................................................................................................................................120 Certification/DefinitionofMBE/WBECompanies..........................................................................121 ApplicationforMHDCFunding................................................................................................................121 FirmSubmission............................................................................................................................................121 GoodFaithEfforts..........................................................................................................................................121 CalculationofParticipationRate.............................................................................................................122 CostCategories...............................................................................................................................................124 MBE/WBEComplianceResponsibilities..............................................................................................125 RecordKeeping...............................................................................................................................................126 Reporting...........................................................................................................................................................126 Non‐Compliance.............................................................................................................................................126

Section3.................................................................................................................................................127 Introduction.....................................................................................................................................................127 Definitions.........................................................................................................................................................127


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Section3Purpose..........................................................................................................................................129 MHDCPolicyStatement..............................................................................................................................129 Section3Coordinator..................................................................................................................................130 Section3Meeting...........................................................................................................................................131 Section3ContractingOpportunityGoals............................................................................................131 EmploymentandTrainingOpportunityGoals..................................................................................131 FormalSection3Plan..................................................................................................................................132 ComponentsofaSection3Plan...............................................................................................................132 ImplementationStrategies........................................................................................................................133 CertificationofSection3Residents.......................................................................................................134 CertificationofSection3BusinessConcerns.....................................................................................134 TechnicalSupportandMonitoring.........................................................................................................135


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IntroductionThisDeveloper’sGuidetoMHDCMultifamilyPrograms(“Developer’sGuide”)isareferencedocument fordevelopers,owners,andalldevelopment teammembers. MissouriHousingDevelopment Commission (“MHDC”) staff has compiled general and administrativeguidance on MHDC’s multifamily programs throughout the application,reservation/commitment,constructionloanclosing,construction,carryoverallocation,finalallocation, permanent loan closing, and operational stages. The Developer’s Guide is acomplement to the Qualified Allocation Plan (“QAP”) andmay be updated from time‐to‐time,atMHDC’sdiscretion.Anytermnotdefinedhereinshallhavethedefinitiongiven intheQAP.

MHDC’s Rental Production Multifamily Programs encompass financing tools for thedevelopment of affordable housing which include federal low‐income housing tax credit(“FederalLIHTC”)andstatelow‐incomehousingtaxcredits(“StateLIHTC”and,collectivelywiththeFederalLIHTC,“LIHTC”),HOMEloanandgrantfunds,MHDCFundBalanceloans,andRiskShareInsurancecoupledwithtaxexemptbonds.DevelopersmayalsoutilizeotherMHDCprogramssuchastheAffordableHousingAssistanceProgramandMissouriHousingTrustFundforfinancingadevelopment.

All MHDC forms or documents referenced in this Developer’s Guide can be accessed athttp://www.mhdc.com/rental_production/index.htm. If you cannot find a form ordocumentpleasecontacttheDirectorofRentalProductionorSeniorUnderwriter.

RentalProductionCycleRentalProductionMultifamilyPrograms followanannual fundingcyclewhichstartswiththe issuance of the QAP. The QAP sets forth the program guidelines concerning theapplication review and approval process and the reservation and allocation of LIHTC.Following public hearings, the QAP is presented to the Commission for approval with aNotice of Funding Availability (“NOFA”) which establishes the approximate amount offundingavailableforeachprogramandthedeadlineforapplicationsforsuchfunding.

Applications receivedprior to theNOFAdeadlineare reviewedaccording toPrimaryandSecondarythresholdsandselectioncriteria,asdescribedintheQAP.Staffinvitescommentoneachapplicationthroughthenotificationofpublicofficialssoonafterapplicationreceipt.Public hearings are held in four locations throughout the state. Evaluation criteria,underwriting review, and site inspection are utilized by staff to formulate a list ofrecommended applications. The Commission then reviews and approves a final list ofproposalsforfunding.

Following Commission approval, an underwriter is assigned to each development and aConditionalReservationforfinancingisissuedwithineightweeksofCommissionapproval(“Conditional Reservation”) to establish the documentation required and timeline toproceed toward Firm Commitment. During this time, developers submit environmentalreviews, finalize plans and specifications/scopes of work, receive construction bids, andprepareduediligenceforMHDCstaff’sreviewandapproval.Developersareencouragedtocomplete the Firm Submission process as early as possible to minimize the effects ofinclementwinterweatheronconstructionprogress.MHDCstaffestablishesadeadlineforFirm Submission to assure the approved funding is being utilized and accessed in anexpeditious manner. The Underwriting, Legal, Architecture, Mortgage Credit, Asset


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Management,HOME,CommunityInitiativesandTaxCreditteamsexaminetheinformationsubmitted with Firm Submission and consolidate comments and requirements. Once adevelopment has demonstrated firm and appropriate budgets, supplied all requireddocumentation,showedareadinesstoproceed,andreceivedapprovalfromeachreviewingdepartment,theunderwriterissuesaFirmCommitmentand,if9%Creditswereawardedtothedevelopment,thetaxcreditdepartmentissuesaCarryoverAllocationAgreement.Oncethe Firm Commitment is fully executed, the development can proceed to closing. Pre‐closing documentation is prepared and submitted by the development team. Upon thesatisfactionofallMHDCclosingrequirements,theloan,taxcredit,grant,and/orRiskShareInsurancedocuments,asapplicable,areexecutedandthefinancingisclosed.

Duringtheconstructionphase,MHDCstaffmonitorsconstructionprogressthroughon‐sitereviews, the receipt of progress reports from developers, the receipt of architect fieldreports, and the processing of draw requests from developments receiving MHDCconstructionloanfinancing.

Developmentsreceiving9%Creditsmustcompletecertainsteps todemonstrateprogressandcompliancewithIRS‐requireddeadlines.TheCarryoverAllocationprocessconfirmsthedevelopment continues to satisfy the requirements of Section42 of the InternalRevenueCode(“Code”)andcanretainthereservationof9%Credits.Attheendofconstruction,alldevelopmentsmustfileacostcertificationwithMHDCwhichcertifiestheactualcostsofthedevelopment according to specific program guidelines. The certification is necessary todetermine the final approved amounts of the Federal LIHTC, State LIHTC, and/orpermanent MHDC financing. Developments with construction/permanent financing mustsubmit final documentation to convert the loan from the construction phase to thepermanentphase.DevelopmentswithacommitmentforMHDCpermanent‐onlyfinancingmustsubmitfinaldocumentationforapprovalandproceedtocloseonthepermanentloan.Developmentsthatreceivedanallocationoftaxcreditsmustsubmitfinaldocumentationforapprovaltoreceive8609(s)andMissouriEligibilityStatement(s),ifapplicable.

Aslease‐upcommencesandtheconstructionphasetransitionstotheoperatingphase,eachdevelopmentbeginsarelationshipwithMHDCAssetManagement.Criticaltothelong‐termviability of a development is its success in leasing and retaining residents and complyingwith the various restrictions imposed by each financing program. At this point in thedevelopmentstage,theRentalProductionteamspasstheoversightofthedevelopmenttotheAssetManagementteams.

MHDCFundingSources

LowIncomeHousingTaxCreditsThe State ofMissouri allocates two sources of LIHTC, State and Federal. There are twotypesofStateLIHTCandFederalLIHTCavailableinMissouri,the“9%Credit”andthe“4%Credit.”

9%Credit

ForpurposesofthisDeveloper’sGuideandtheQAP,thecumulativeamountofbothState and Federal 9% Credits MHDC can allocate for any calendar year shall beknown as the “Annual 9% Credit Authority.” Developments applying for anallocationundertheAnnual9%CreditAuthorityreceivewhatiscommonlyknown


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as the 9%Credit. The9%Credit includes any70%present value credit and any30% present value credit for qualified existing buildings which also will use the70%presentvaluecredit.

ThetotalamountofFederal9%CreditavailableinanyoneyearisspecifiedbytheCodein§42(h)(3)(C),andisknownasthe“StateHousingCreditCeiling.”TheStateHousingCreditCeilingisgenerallyequaltothesumofthefollowing:

i.PerCapitaCredits.CalculatedbasedonthestatepopulationandthepercapitaratesetbytheIRS.

ii. Carry Forward Credits. ShouldMHDC be unable to allocate all allotted 9%Creditsinanyoneyear,theunusedcreditswillbecarriedforwardforallocationinthesucceedingyear.

iii.ReturnedCredits.CreditsthatarereturnedfromdevelopmentsthatreceivedanallocationinpreviousyearsmaybemadeavailableforallocationintheyearthecreditsarereturnedorthesucceedingyearifreturnedafterSeptember30.

iv.NationalPoolCredits.IfMHDCisabletoallocatetheentireamountofFederal9%Credits available in any one year,Missourimay receive additional creditsfromthepoolofcreditsreturnedbyotherstates(“NationalPool”),ifavailable.

The State LIHTCwas established by the State Tax Relief Act (§135.350 et seq. ofChapter135oftheMissouriRevisedStatutes)(“StateTaxReliefAct”)andprovidesthat anydevelopment eligible foraFederalLIHTCallocation is eligible foraStateLIHTCallocation.TheamountofStateLIHTCauthorizedforadevelopmentcannotexceed the Federal LIHTC amount and the amount of State LIHTC available inproportiontotheFederalLIHTCavailablemaybereducedbythestate legislature,makingany allocation subject to change in theauthorizing statute. For anygivendevelopment, MHDC, in its sole discretion, may choose not to allocate any StateLIHTCorStateLIHTC inanamountupto the imposedstatutory limit,as itdeemsnecessaryforthefinancialfeasibilityofthedevelopment.

The anticipated amount of the Annual 9% Credit Authority for Missouri will beannouncedintheNOFAtoprecedetheapplicationround.

4%Credit

Under §42(h)(4) of the Code, developments financed with tax‐exempt privateactivitybondvolumecap(“BondDevelopments”)maybeeligibletoreceivethe“4%Credit.” The 4% Credit includes the 30% present value credit for federallysubsidized buildings that feature eligible basis financed by any obligation, theinterestonwhichisexemptfromfederaltaxandany30%presentvaluecreditforthequalifiedexistingbuildingsofBondDevelopments.

WhiletheNOFAdoesnotestablishaceilingorannualauthorityfortheFederal4%Credit,theamountofState4%CreditsavailableforBondDevelopmentsiscurrentlycappedat$6millionperfiscalyear. Consistentwiththe9%Credit,theamountofState 4% Credits may be reduced by the state legislature, making any allocationsubject to change in the authorizing statute. MHDC, in its sole discretion, maychoosetoallocatenoState4%CreditsorState4%Credits inanamountuptotheimposed statutory limit, as it deems necessary for the financial feasibility of thedevelopment.


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HOMELoansandGrantsEachyear,MHDCreceivesanallocationof federally fundedHOMEFundswhichprovideafinancingsourceforseveraleligibleactivitiesthatincreasethesupplyofaffordablehousingfor low and very low income persons (“HOME Funds”). These activities include theacquisition and rehabilitation or new construction of rental housing. As HOMEAdministrator for the State ofMissouri,MHDC uses a portion of its annual HOME Fundsallocationtofinancerentalproductionataverylowinterestrate,whichresultsinrentsthatareaffordabletolow‐incomefamilies.

TheamountofHOMEFundsavailableforfinancingeachyearwillbereflectedintheNOFAthataccompaniestheQAP.

HUDpublishedaFinalRule in theFederalRegisteron July24,2013 toamend theHOMEProgram regulations. These amendments to the HOME regulations represent the mostsignificant changes to theHOMEProgram in seventeen (17)years.TheFinalRulewillbeenforcedonallMHDCprojectsfundedwithHOMEfundsasrequiredbylaw.InformationonthenewHOMERulecanbefoundat:https://www.onecpd.info/.AdditionalguidanceisontheMHDCwebsite.PleaserefertoMHDC’sHOMEProgramGuideforadditionalinformation.

FundBalanceLoansMHDC,aspartofitsannualbudgetingprocess,mayallocateaportionofitsFundBalancetoprovide construction and permanent financing on tax credit developments (“FundBalance”). The amount of Fund Balance available is determined annually and will bereflectedintheNOFAthataccompaniestheQAP.

If Fund Balance is used as a loan, itmust always be in a first position, have aminimuminterestrateasreflectedintheNOFA,anda1%loanoriginationfeewillbecharged.

RiskShareInsuranceSection 542(c) of the Housing and Community Development Act of 1992 offers apartnership between the Department of Housing and Urban Development (“HUD”) andHousing Finance Agencies (“HFAs”) to provide affordable housing opportunities for thehousing needs of various communities (“Risk Share Insurance”). This program providesnewindependentinsuranceauthoritythatisnotundertheNationalHousingAct.

UnderthisprogramtheHFAentersintoaRisk‐sharingAgreementwithHUDbycontractingto reimburse HUD for a portion of the loss from any defaults that occur while HUDinsuranceisinforce.

There are three levels of HUD approvals for Risk‐Sharing commitments (from HUDhandbook4590.01Rev‐1):

LevelI

Approvaltooriginate,service,anddisposeofmultifamilymortgageswheretheHFAuses itsownunderwriting standardsand loan termsandconditions, andassumes50‐90percentoftherisk(incrementsof10percent).

LevelII

Approvaltooriginate,service,anddisposeofmultifamilymortgageswheretheHFAuses underwriting standards and loan terms and conditions approved by HUD.


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Thereare twosub‐levelsunder this level:onewhere theHFAassumesat least25percentoftherisk,theotherwheretheHFAassumes10percentor25percent,attheHFA’soption,oftherisk.

CombinedLevelsI/II

For HFAs that plan to use Level I and Level II processing, the underwritingstandards and loan terms and conditions to be used on Level II loans must beapprovedbyHUD,asdescribedabove.

MHDChasbeenapprovedbyHUDatLevelIwitha50/50splitofrisksharingforlossfromanydefault.

TheRisk‐ShareInsuranceprogramprovidescreditenhancementtodevelopmentproposalsinatimeliermannerthantheregularFederalHousingAdministration(“FHA”)multifamilyinsuranceprograms.MHDCprovides thisprogram toBondDevelopmentproposals, uponrequest, on a case‐by‐case basis after a review ismade to determine the proposal’s longtermfinancialviability,amongothersalientfactors.

IfRisk‐ShareInsuranceisused,suchloanmustalwaysbeinthefirstposition. MHDCwillchargea1%loanoriginationfeeontheentireconstructionloanamountandanother1%forthepermanentloanamount.Anupfrontannual½%MortgageInsurancePremium(“MIP”)pertwelve(12)monthsofconstructionisdueatinitialloanclosing. A½%MIPisdueontheoutstandingmortgagebalanceafterconversionandcontinuingthroughoutthetermoftheloan.

Tax‐ExemptBondsUnder§42(h)(4)oftheCode,BondDevelopmentsmaybeeligibletoreceivethe4%Credit.Thedevelopmentmusthavereceivedanallocationofprivateactivitybondcappursuantto§146oftheCodeandprincipalpaymentsonthebondsmustbeappliedwithinareasonableperiod to redeem thebonds. 4%Creditsareallowed for thatportionof adevelopment’seligiblebasisfinancedwithtax‐exemptbonds.If50%ormoreofadevelopment’saggregatebasisissofinanced,thedevelopmentisentitledto4%Creditsforuptothefullamountofthequalifiedbasis.

There is no minimum or maximum amount of Federal 4% Credits available each year.However,BondDevelopmentsarerequiredbytheCodetoapplythroughtheHousingCreditAgency foranallocationof4%Creditsand for adetermination thedevelopment satisfiestherequirementsoftheQAP. Althoughtheproposaldoesnothavetocompeteforcreditsfrom the State Housing Credit Ceiling, applicants must submit an application during theposted NOFA period, are required by Section 42(m)(1)(D) of the Code to satisfy therequirements for an allocation of Federal LIHTCs under the QAP, and are also subject toMHDC’scompliancemonitoringrequirements.

MHDCstaffwillreviewtheapplication,determinewhetherthedevelopmentiseligibleandmeetstherequirementsoftheQAP,andmakeaninitialdeterminationofthedevelopment’s4% Credit amount. At the close of the NOFA period, the Commission will approve therecommendationandrankingofsuccessfulapplicationsforpriorityintheconsiderationfora private activity bond allocation by theMissouri Department of Economic Development(“DED”).


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AffordableHousingAssistanceProgramTheAffordableHousingAssistanceProgramhousingproductiontaxcredit(“AHAPCredit”)is used as an incentive for Missouri businesses and/or individuals to participate inaffordablehousingproduction.Thisstatetaxcredit isearnedbyaneligibledonorforthedonation of cash, equity, services, or real/personal property to a non‐profit community‐basedorganizationforthepurposeofprovidingaffordablehousingassistanceactivitiesormarketratehousingindistressedcommunities.TheAHAPCreditisgovernedbyMissouriRevisedStatutes32.105,32.111,32.112,32.115,32.120,and32.125.

TheAHAPCreditisaone‐timecreditthatcanbeallocatedtoaneligibledonorforupto55%of the total value of an eligible donation. There are two types of AHAP tax credits: (1)Production credits for donations related to construction, rehabilitation, and rentalassistanceactivities,and(2)OperatingAssistancecreditsfordonationsthathelpfundtheoperating costs of the non‐profit organization. The program offers $10 million inProductioncreditsand$1millioninOperatingAssistancecreditsannually.TheamountofthecreditsavailablemaybereducedbyLegislativeaction.

CommunityInitiativesFundingTheCommunityInitiativesDepartmentisresponsibleforadministeringstateandfederalgrantprogramsusedforavarietyofhousingactivitiesincluding,butnotlimitedto,rentalassistance,utilityassistance,emergencyassistance,operations,homerepairandconstruction.Eachprogramhasitsownuniqueeligibilitycriteria.Formoreinformationabouthowtheseprogramscanworkcollaborativelywithaffordablehousingprojects,pleasecontacttheCommunityInitiativesManager.

ApplicationInformationThissectionexplains theapplicationprocess forMHDC funding, includingMHDC’sreviewprocess, application of underwriting standards, and priorities for funding. This sectionshouldbereviewedcloselywhenconsideringorcompletinganapplicationforfunding.

NoticeofFundingAvailabilityTherewill be, at aminimum, one Notice of Funding Availability (“NOFA”) for 2016. AnyNOFAwill indicate the fundingtypes, fundingamounts,andapplicationdeadlines for thatparticular round.TheNOFA, theQAP, and thisDeveloper’sGuidedescribeandclarify theprocedures, priorities and expectations for each application and applicant for MHDCfunding.ShouldaquestionarisethatcannotbeansweredbytheNOFA,QAP,orDeveloper’sGuide,pleasecontactMHDC’sDirectorofRentalProductionorSeniorUnderwriter.

TheApplicationAn“Application”forpurposesofthisDeveloper’sGuideandtheNOFAisdefinedas:(1)anelectronic application, (2) one tabbed, three‐ring binder with all required exhibits andoriginalsignatures,whererequired, (3)digitalmediawithelectronicexhibits,and(4) theappropriateapplicationfee.TheMHDCFIN‐125willidentifyexhibitstobesubmittedinthethree‐ring binder and exhibits to be submitted digitally. Three‐ring binder and digitalmediaexhibitnamesmustmatchtheFIN‐125exhibitnames.


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Applicantsrequestingtaxcreditsmustindicatewhethertheyareseekingthe9%Creditorthe 4% Credit (for Bond Developments). MHDC reserves the right to consider anyApplicationfor4%Creditsforapotentialallocationof9%Creditsiftheproposalmeetstherequirements and competes successfully with other 9% Credit Applications in theevaluationprocessandalsoreservestherighttoevaluatea9%CreditApplicationfor4%Credits.Ifyouwishtohaveaproposalconsideredforboth9%Creditsand4%Credits,youmust provide complete and separate Applications for each credit type, structuredappropriately (“Dual Proposal”). A Dual Proposal is essentially a submission of twoApplicationsforthesamesite(s).MHDCwillnotacceptmorethanoneApplicationforanysite(s)utilizingthesametypeoftaxcredit.Forexample,a9%Creditfamilyproposalanda9%Creditelderlyproposalforthesamesite(s)willnotbeconsidered.A9%Creditelderlyproposalanda4%Credit familyproposal(orviceversa)willbeconsidered. IfmorethanoneApplicationisreceivedforasiteoracollectionofsitesutilizingthesametypeofcredit,the first Application received will be accepted and any subsequent applications will berejected.

ApplicationDeadlineTheApplicationdeadlinefor2016Round1isSeptember4,2015andissubjecttochangeshouldtheNOFAneedtoberevisedormodified.Round2,ifavailable,willbeannouncedatalaterdatebyissuanceofanewNOFA.Applicationsreceivedaftertheapplicabledeadlinewillnotbeconsidered,noexceptionswillbemade.

SubmittinganApplicationThe complete applicationand the requiredmaterialsmustbe receivedatMHDC’sKansasCityofficelocatedat920MainStreet,Suite1400,KansasCity,MO64105bytheapplicableNOFAdeadline.

Duetothecompetitivenatureofthefundingprograms,itisintheapplicant’sbestinteresttoprovidethemostcompleteandaccuratedocumentationpossible.TheApplicationgivesstaff a first impression of a proposed site. Poorly prepared Applications will notdemonstrate a strong competitive proposal and may give staff reason to question thecapacity or ability of the development team. Early submittals are encouraged but do notreceivepreferentialtreatment.

PublicHearingsIn compliancewith program requirements,MHDC staffwill send notification to the chiefexecutiveofficerofthelocaljurisdiction,thestatesenator,andstaterepresentativeforthedistrictoftheproposeddevelopment,andtheexecutivedirectorofthelocalpublichousingauthorityforallapplications.Thosenotifiedwillbegivenanopportunitytocommentontheproposeddevelopment.MHDCstaffwillconsiderthecommentsandmaycontactthe localjurisdictionforadditionalinformation.

MHDCstaffwillalsopublishanoticeinaregionalnewspaperrequestingpubliccommentoneach application. Public hearings will be held in St. Louis, Kansas City, Springfield, andColumbiatoaffordthepublicanopportunitytocommentonproposeddevelopments inagivenregion.SpecificdatesandtimesforsuchpublichearingswillbepublishedinregionalnewspapersandontheMHDCwebsite.


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To be included in the evaluation process, all communication from the public must bereceivednolaterthanthedateofthefinalpublichearing.

HousingPrioritiesMHDChascreatedhousingprioritiestohighlightandencouragethetypesofdevelopmentthatwill bestmeet the Commission’smission. The priorities are not a substitute for theselection criteria and Applications that qualify for one or more of the priorities are notassuredapproval.Applicationsarereviewedasacompletepackageandallselectioncriteriaand review stages are considered. Applications that meet one or more of the housingprioritieswillbegivenextraconsiderationandareencouraged,butqualifyingforahousingpriority cannotovercomeotherdeficiencies in theApplication, suchas aweakmarketorpoorfeasibility.

QualificationforanyofthehousingprioritiesisatthesolediscretionofMHDC.Submittingthe proper documentation will qualify an Application for consideration for priority.However, the quality of that documentationwill determine if theApplicationmeets suchhousingpriority.

Applicationsseekingapriorityunderoneormoreof thepriorities listedbelowmuststillsatisfyallotherselectioncriteriaandsuccessfullycompeteagainstotherApplications.

NonprofitInvolvementSet‐asidePrioritySection42(h)(5)(A)oftheCodestatesthatnotmorethan90%oftheStateHousingCreditCeiling can be allocated to developments that do not involve a qualified nonprofitorganization.Thisiscommonlyknownasthe“nonprofitset‐aside”andappliesonlytothe9%Credit.MHDCwillgivepriority toApplications that involveaqualifiednonprofituntilthe10%requirementhasbeenmet (“LIHTCNonprofitPriority”).At itsdiscretion,MHDCmaycontinuetogivepriority toproposals that involvequalifiednonprofitsafter the10%requirementhasbeenmet.

Section42(h)(5)(C)oftheCodedefinesaqualifiednonprofitorganizationas:

1. A501(c)(3)or(c)(4)nonprofitorganization;

2. Havinganexpressedpurposeof fostering low‐incomehousing (thispurposemustbe expressed in the organization’s articles of incorporation; if it is not, theApplicationwillnotbeconsideredforthispriority);

3. Onethatwillownaninterest inthedevelopmentandmateriallyparticipateinthedevelopmentandoperationofthedevelopmentthroughouttheCompliancePeriod(material participation is defined in §469(h) of the Code as “involved in theoperationsoftheactivityonabasiswhichisregular,continuousandsubstantial.”);and

4. Isnotaffiliatedwith,norcontrolledby,afor‐profitorganization.

HOMEregulationsdictatethat15%ofHOMEFundsmustbeloanedorgrantedtoqualifiedCommunityHousingDevelopmentOrganizations(“CHDO”)(“HOMENonprofitPriority”;theLIHTCNonprofitPriorityandHOMENonprofitPriorityshallbereferredto,collectively,asthe“NonprofitPriority”).Certain legal,organizational,andotherrequirementsapply foranonprofitorganizationtoqualifyforCHDOstatus(24CFRPart92.2).Ifthedevelopmentis


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seeking HOME Funds under the CHDO set‐aside, the nonprofit entity must be the solegeneralpartner(inthecaseofalimitedpartnership)orsolemanagingmember(inthecaseofalimitedliabilitycompany)oftheownershipentitytoqualify.

DevelopmentswantingtobeconsideredfortheNonprofitPrioritymustfullycompletetheapplicableApplicationsectionsandtheFIN100AddendumandprovidethefollowingitemswiththeApplication:

1. Nonprofitorganization’sCertificateofIncorporation;

2. ArticlesofIncorporationandBy‐Laws,includingallamendments(mustdescribetheorganization’spurposeoffosteringlow‐incomehousing);

3. Missouri Certificate of Good Standing dated within thirty (30) days of theapplication due date. An official certificate may be obtained from the MissouriSecretary of Stateweb site for a nominal fee. A screen print of the search screenindicating the status of an entity is not a certification and is not an acceptabledemonstrationofgoodstanding;

4. IRSletterevidencingnonprofitstatus;

5. MHDC Nonprofit Questionnaire completed, executed and including all relevantattachments, such as a list of the board members and the most recent auditedfinancialstatement;and

6. CHDORecertificationFormR‐100(ifapplyingundertheHOMENonprofitPriority)withallattachments.

Thenonprofitmustbeinvolvedintheownershipaseitherageneralpartnerorco‐generalpartnerandmustmateriallyparticipate(withintheInternalRevenueCodeSection469(h))in the development and operation of the housing development throughout the tax creditcomplianceperiod.

SpecialNeedsPriority(eligiblefor30%boostineligiblebasis)Developmentsprovidinghousingopportunitiesforpersonswithspecialneedsarestronglyencouraged.Proposalscommittingtoaspecialneedsset‐asideofnolessthan10%oftotalunits,uptoamaximumof100%oftotalunits,willreceiveapreferenceinfunding(“SpecialNeedsPriority”).MHDCwillendeavortosetaside33%ofFederalLIHTCandStateLIHTCfor 4% Credits and 9% Credits for developments containing units qualifying under theSpecialNeedsPriority,outsideof geographic regionpercentages, subject to thequalityofthe special needs proposals received and their ability to meet selection criteria andunderwritingrequirementsdescribedintheQAP.

Applicationssubmittedwithspecialneedsunitsmustinclude$1,000perspecialneedsunitas a payment to the SpecialNeedsHousingReserve Fundwhichhas been establishedbyMHDC. Thisreservewillbe fundedatconstructioncompletionwhenotherreserve fundsare normally funded. These funds will be held by MHDC and used, as necessary, totemporarily assist specialneedsproperties thathaveexperiencedunforeseenoperationalissues (forexample, the lossof rentalassistance). Deposits to theSpecialNeedsHousingReserve Fund are intended for use for all special needs properties and are intended toreplacetheneedforeachpropertytoestablishaseparatespecialneedsreserve.GuidelinesfortheApplicationanduseofreservefundsarepostedontheMHDCwebsite.


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A personwith special needs is a personwho is: (a) physically, emotionally ormentallyimpaired or suffers from mental illness; (b) developmentally disabled; (c) homeless,including survivors of domestic violence and sex trafficking; or (d) a youth aging out offostercare.

Adevelopmentwithaspecialneedsset‐asidecannotgivepreferencetopotentialresidentsbaseduponhavingaparticulardisabilityorconditiontotheexclusionofpersonswithotherdisabilitiesorconditions.Applicantsmustsubmitdocumentationdemonstratingtheyhaveobtained commitments from a Lead Referral Agency which will refer special needshouseholds qualified to lease targeted units and from local service agencies which willprovide a network of services capable of assisting each type of special needs populationdefined below. A “Lead Referral Agency” is a service provider agency that will providetenants and services to the community through the later of (i) the completion of theCompliancePeriod, (ii) thecompletionof theaffordabilityperiod inconjunctionwithanyMHDC loan (including any applicable HOME affordability periods). The Lead ReferralAgencyshoulddemonstratetheabilitytoservethetargetedspecialneedspopulation.

Developments wanting to be considered under the Special Needs Priority must fullycomplete the applicable Application sections and provide the following with theirApplication:

1. A draft referral and support agreement with the Lead Referral Agency. Theagreementmustincludethenumberoftargetedunits,responsibilitiesoftheowner,propertymanager,andLeadReferralAgency;

2. ALeadReferralAgencyexperiencedescription,detailingitsabilitytoprovideaccessto support services for the identified population, and its capacity to maintainrelationships with the managing agent and community service providersthroughout the Compliance Period. The description should include the agencymissionandyearsofexperienceworkingwiththeidentifiedpopulation;

3. A marketing plan demonstrating how the development will be affirmativelymarketedtopersonswithspecialneeds,thescreeningcriteriathatwillbeused,andthewillingnessof all parties tonegotiate reasonable accommodations to facilitatetheadmittanceofpersonswithdisabilitiesintothedevelopment;

4. Documentation of local supportive services appropriate to each type of specialneedspopulation;

5. Anaffordabilityplanaddressingthetypeofrentalassistanceorrentstructurethatmaybeutilizedtomakespecialneedsunitsaffordabletospecialneedshouseholdswithextremelylowincome;and

6. Adetailedservicesbudgetdetailingboththesourcesandusesforcostsassociatedwiththeimplementationofservicesforthespecialneedspopulationbeingtargeted(FormSNH‐103).

PersonswithSpecialNeedsDefinition

Persons with special needs are those whose condition or circumstances qualifyunderoneofthefollowingcategories:

1. A person who has a physical, mental, or emotional impairment which isexpected to be of long‐continued and indefinite duration, substantially


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impedeshisorherabilitytoliveindependently,andisofsuchanaturethatsuchabilitycouldbeimprovedbymoresuitablehousingconditions.

2. Apersonwhosuffersfrommentalillness.

3. A person who has a developmental disability, which is a severe, chronicdisabilitythat—

a. Isattributabletoamentalorphysicalimpairmentorcombinationofmentalandphysicalimpairments;

b. Islikelytocontinueindefinitely;

c. Results insubstantial functional limitations in threeormoreof thefollowing areas of a major life activity: self‐care, receptive andexpressive language, learning, mobility, self‐direction, capacity forindependentliving,andeconomicself‐sufficiency;and

d. Reflectstheperson’sneedforacombinationandsequenceofspecial,interdisciplinary,orgenericcare,treatmentorotherserviceswhichareof lifelongorofextendeddurationandareindividuallyplannedandcoordinated.

4. ApersonwhomeetstheHUDdefinitionofhomeless,whichcanbefoundonHUD’sHomelessAssistancewebsite(portal.hud.gov/hudportal/homeless).

5. Ayouthagingoutof foster care at theageof eighteen (18)orolderwhentheirfostercarecasecloses.Fostercareplacementsinclude:licensedfosterfamily homes, relative provider homes, group homes, emergency shelters,residential facilities, child care institutions, pre‐adoptive placements, orindependentlivingplacements.

“Youth” is defined as someone between the ages of eighteen (18) andtwenty‐four (24) or a legally emancipatedminor. This includes youth thatare homeless, have run away, aged out of the foster care system, and/orexitedthejuvenilejusticesystem.

Thespecialneedsresidentcanbeeitheranadultoryouthwhoisamemberofthehousehold.

TargetedUnitsDefinition

Targetedunitsarethoseunitssetasidefortenancybypersonswithspecialneeds.Targeted unitsmust be rented to households referred to the development by theLeadReferralAgency.Incalculatingthenumberoftargetedunitsthatmustbemadeavailable, owners and managers must always round up to the next unit.DevelopmentsreceivingaConditionalReservationmustsubmitandreceiveMHDCstaff’sapprovalofafinalreferralandsupportagreementwiththeFirmSubmissionprocess.

The Lead Referral Agency must be an agency that coordinates a range of localdisability and homeless services agencies to develop a collective process forreferringandmakingtheirservicesavailabletoqualifiedresidents.ALeadReferralAgencyactsasthepointofcontactwithpropertymanagementthroughthelaterof(i) the completion of the Compliance Period, or (ii) the completion of theaffordability period connected to any MHDC loan on the development, and


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represents the local services system in dealings with management of thedevelopment. The Lead Referral Agency might serve a particular special needsgroup butmarketing and referralsmust be inclusive of personswith all types ofdisabilitiesorspecialneeds.

LeadReferralAgencyRole

ALeadReferralAgencywill:

1. Designate a point of contact to receive notices from the propertymanagementcompanywhenatargetedunitisavailable.

2. Maintain a level of communication with other service providers andproperty management to ensure that tenancy issues are handled andsupportiveservicesareavailabletotenants.

3. Maintain and regularly update a list of eligible special needs householdsinterestedinapplyingfortargetedunits.

4. Help arrange tenant‐based rental assistance for eligible special needshouseholds who do not already have assistance through their casemanagementservices.

5. Uponnotificationareservedunitisavailable,selectthehouseholdatthetopof the list waiting for that unit type and communicate to their serviceprovideratargetedunitisavailable.

6. Submit a standard letter of referral to property management, which willthen process the referred household’s application for tenancy using thesamescreeningcriteriaappliedtoallotherresidentsofthedevelopment.

7. Participateinthelocalcontinuumofcare.

DevelopmentOwnerRole

Thedevelopmentownerwill:

1. Agree that any special needs housing commitment will be established,implemented, and kept in compliance with the Fair Housing Act, asamended, the Architectural Barriers Act of 1968, the Americans withDisabilitiesAct,andanyotherlocal,state,andfederalnondiscriminationoraccessibilitylaws,regulations,orrequirements.

2. Agreethatthetargetedunitswillnotbesegregatedwithinthepropertyandthatthetargetedunitmixwilldependontheneedsofreferredhouseholds.

3. Agreetoprovidereasonableaccommodationforspecialneedshouseholdsinthetenantapplication.

4. Assure that the targeted units remain available to eligible special needspersons through the referral process for the entirety of the complianceperiod.

PropertyManagementCompanyRole

Thepropertymanagementcompanywill:


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1. Notify theLeadReferralAgencyof available targetedunitswithina timelymanner. At initial lease‐up, this notification must occur ninety (90) dayspriortotheearlierof(i)theanticipatedreceiptofacertificateofoccupancy,or(ii)whenmarketingbegins.Duringongoingoperations,themanagerwillnotifytheLeadReferralAgencyuponreceiptofnoticeof intenttovacateatargetedunit.

2. WorkwiththeLeadReferralAgencytocoordinatethefirstcontactwiththespecial needs household and their services provider to initiate theapplicationprocess.

3. Collaboratewiththereferredhousehold’sservicesprovider,asappropriateand applicable, to address the household’s needs for assistance atapplication,accessibilityaccommodations,orassistanceduringtenancy.

4. Use the Lead Referral agency as their main point of contact to ensurecommunity supports are made available to tenants in the targeted units,however,tenancywillnotbecontingentonparticipationinservices.

5. Notify the Lead Referral Agency in a timelymanner of issues or concernsthatmayadverselyaffectthetenancyofthehousehold.

Althoughthedevelopment’spropertymanagermayagreetoassistthehouseholdinotherways,itisintendedthehouseholdrentingatargetedunithasthesamerightsandresponsibilitiesaseveryotherresidentinthedevelopment.

ProgrammaticRequirements

DevelopmentsmustmeetthefollowingcriteriatobeconsideredundertheSpecialNeeds Priority during Application evaluation and to maintain its commitment tospecialneedspopulationsthroughthedesign,construction,andoperationsprocess:

1. The development cannot give preference to potential residents based onhavingaparticulardisabilityorcondition to theexclusionofpersonswithotherdisabilitiesorconditions.

2. Thedevelopmentmustmeettheneedsoftargetedtenantsthroughaccesstosupportiveservices,transportation,proximitytocommunityamenities,etc.Ifservicesarenotprovidedon‐site,transportationtooff‐sitelocationsmustbemadeavailable. Servicesmustbeprovidedand/or coordinatedby localservice agencies appropriate to the needs of personswith varied types ofdisabilities. Since service providers are often specialized, relationshipsshouldbecultivatedwithseveraltypesofagenciestoensureserviceswillbeavailableforthedifferenttypesofspecialneedshouseholdsthatmayresideatthepropertyatonetime.Serviceprogramsshouldbedesignedtostressresidentialstabilityandindependence.

3. Specialneedsresidentscannotberequiredtoreceiveservicesfromonlyoneparticular service provider nor can they be required to participate insupportiveservicesasaconditionoftenancy.

4. Special needs properties operated as transitional housing, nursing homes,lifecarefacilities,ordormitoriesarenoteligiblefortaxcredits.

5. Developments meeting the criteria for the Special Needs Priority may begiven “difficult development” status. This allows MHDC to increase the


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eligible basis by 30% if the developer can demonstrate that the propertyowner will provide services to enhance the residential stability andindependence of special needs residents. The determination of theapplication’squalification toreceiveaboostwillbedetermined inMHDC’ssolediscretion.

6. In mixed‐population developments, targeted units cannot be segregatedwithin the property or be distinguishable in any way from non‐targetedunits(beyondthepresenceofaccessiblefeaturesorassistivetechnology, ifnecessary).

7. Thedevelopmentisencouragedtoincludecommunityspaceappropriatetotheneedsofthepopulationsbeingserved.

8. Rehabilitationdevelopmentswithspecialneedsset‐asideunits,thenumberof units designed and constructed in accordance with universal designprinciplesmustbeequaltoorgreaterthanthepercentageofspecialneedsunits.

9. Some special needs households may have disabilities that require anaccessible unit,while othersmay have disabilities that are not physical innature.Similarly,somehouseholdsthatareindependentandapplyfornon‐targetedunitsmayneedan accessibleunit. Therefore, accessibleunits arenot required to be held open during lease‐up in mixed‐populationdevelopments but should be made available whenever possible to anyhouseholdrequiringaccessibility.

10. TherolesofownerandpropertymanagershouldbeseparatedfromtheroleofLeadReferralAgency/primaryserviceprovider,aseachtypeofentityhasanexpertiserelativetotheLIHTCprograminthecaseoftheformerandtotheserviceof specialneedspopulations in thecaseof the latter.However,entitiesthathaveanexemplaryhistoryoffunctioninginallthreerolesinthecontext of a similarly‐situated LIHTC development may be considered byMHDCstaffattheirdiscretion.]

11. Personswith special needsmust be referred to the property by the LeadReferral Agency to be eligible to be qualified for a targeted unit. SuchpersonsmusthavearelationshipwiththeLeadReferralAgencyatthetimetheyapplyforhousing.

12. Rents should be as affordable as possible to special needs households.Affordability can be accomplished through project‐based or tenant‐basedsubsidies.Residentsshouldpaynomorethan30%oftheirincometowardsrent plus utilities or they will be considered rent burdened. The LeadReferral Agency is responsible for coordinating tenant‐based rentalassistance with service providers or governmental agencies, whenevernecessary and possible. In the absence of project‐based or tenant‐basedassistance, the owner should consider other methods to ensure rents areaffordabletospecialneedshouseholdsbelow50%AMI.Theproposalmustidentify the strategies thatwill ensure residents arenotpayingmore than30%oftheirincometowardsrentplusutilities.


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13. Apropertywithmixed populationsmust screen all referred special needsapplicants using screening criteria established for all applicants at thedevelopmentaccordingtostateandfederalFairHousinglaws.

14. LeasesforresidentsofLIHTCdevelopmentsmustmeettheminimumleaseperiod andother requirements prescribedby the LIHTCprogram and anyotherapplicablefederalorstatefundingprograms.Leasesforspecialneedsresidents in mixed‐population developments cannot be more restrictivethanleasesexecutedwithotherresidentsofthesameproperty.

15. Duringandafterlease‐up,LeadReferralAgencyreferralsmustbemovedinfirst regardless of chronological order of the general waiting list until alltargeted units are occupied with referrals. Management cannot have apreference for referrals with a Section 8 voucher. During lease‐up,properties which are not 100% special needs are required to hold thenumberofdesignatedspecialneedsunitsforaperiodofninety(90)daysforleasestopersonswithspecialneeds.Aftertheninety(90)dayperiodtheseunitscanbeleasedtothegeneralpopulationmeetingthepropertiesleasingcriteria. As units become vacant, theymust be held open for a period ofthirty (30) days or until the number of required special needs units havebeen leased. After the thirty (30)dayperiod theymaybe leased to otherqualifiedtenants.

16. For preservation properties and other developments occupied duringconstruction,theownerisnotberequiredtodisplaceanycurrentresidentsbut isrequiredtocomplywiththetargetedunitcommitmentasunitsturnoverandbecomeavailableforvacancy,solongassuchcompliancedoesnotcauseaneventofnoncomplianceunderotherapplicablelawsorregulationsunderwhichadevelopmentisoperatedorisreceivingfederalsubsidy.

17. The LIHTC LURA will incorporate the number of special needs unitscommitted at application andwill be reviewed for compliance throughoutthelaterof(i)thecompletionoftheCompliancePeriod,(ii)thecompletionoftheaffordabilityperiodconnectedtoanyMHDCloanonthedevelopment,(iii)thecompletionoftheHOMEaffordabilityperiod(ifapplicable).

Questionsregardingaproposal’seligibilityundertheSpecialNeedsPriorityshouldbe directed to the MHDC Director of Rental Production and MHDC CommunityInitiativesManagerpriortotheapplicationdeadline.

Service‐Enriched Housing Priority (eligible for 30% boost ineligiblebasis)Service‐Enriched Housing enhances the connection between affordable housing andsupportiveservices.MHDCrecognizestheadvantagesofsupportivehousingtoindividuals,communities and on public resources. To encourage more comprehensive housingenvironmentsforvulnerablepopulations,proposalsofferingsignificantservicestailoredtothetenantpopulationwillreceiveapreferenceinfunding(“Service‐EnrichedPriority”).Tobe considered under this priority, a development must target a specific population.Examplesinclude,butarenotlimitedto:

1. Elderlyhouseholds;

2. Individualswithchildren;


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3. Formerlyhomelessindividualsandfamilies;

4. Individualswithphysicaland/ordevelopmentaldisabilities;

5. Individualsdiagnosedwithmentalillness:and/or

6. ChildrenofTenants.

Theapplicantshoulddemonstrateithasextensiveexperiencewithprovidingsocialservicesforthepopulationinquestion.Iftheapplicantdoesnothaveexperiencewiththespecifiedpopulation, it should have commitment(s) from a service provider(s) that does have thenecessaryexperience.Anycommitmentsshouldrununtilthelaterof(i)thecompletionofthe Compliance Period, (ii) the completion of the affordability period connected to anyMHDC loan on the development (including any HOME affordability periods). Failure todeliveronexpectationswillimpactfuturefundingdecisionsandcouldresultinterminationofreservationsorcommitments. Iftheownerdeterminesaparticularprogramofferedaspart of the committed services is not meeting the needs of the resident population, theownermustreplaceitwithanotherappropriateservice.

Developments wanting to be considered under this priority must fully complete theapplicableApplicationsectionsandprovidethefollowingwiththeApplication:

1. Adetailedsupportiveservicesplanexplaining the typeofservices tobeprovided,whowillprovidethem,wheretheywillbeprovided,howtheywillbeaccessedbytenants, and how they will be funded. The plan should also include, but is notlimited to, localdata tosupport theneeds forservices for the targetpopulation,adescriptionof how thedevelopmentwillmeet theneedsof the tenants, includingaccess to supportive services, transportation, and proximity to communityamenities.Itispreferableservicesbeonsiteorneartheproposeddevelopment;

2. Aproject‐specificservicesbudgetwhichincludesabreakdownofbothsourcesandusesthatmustincludethecostofaservicecoordinator;

3. Letters of intent from service providers anticipated to participate in thedevelopment’sservicesprogram;and

4. A detailed description of the agency’s experience providing social services to thetarget population, including if the agencypreviously received LIHTC for a ServiceEnrichedproperty.

Depending on the population served, additional information may be required. MHDCreserves the right to request further documentation before determining if a particularapplicationqualifiesfortheService‐EnrichedPriority.

To qualify for the Service‐Enriched Priority, a proposal must have a defined population,demonstrate the services are adequate for the population, and have a source of funding.Servicesneedtobesubstantialandnottypicalofastandarddevelopment.Forexample,anelderlydevelopmentwhichofferstransportationtoresidents forshoppingonceaweekisencouraged,butitisnotsufficienttoqualifyforthepriorityifitistheonlyserviceoffered.

The Service‐Enriched Priority designation will be determined in the sole discretion ofMHDC.Theexpectationsandlevelofservicesnecessaryforqualificationforthepriorityarehigh.However,MHDCencouragesservicesbeprovidedtotenantsofalldevelopments.

9% Credit developments that qualify for the Service‐Enriched Priority are eligible fordesignation as a difficult‐to‐develop area. This designation allows an increase in eligible


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basis of 30%. The designationwill only bemade if necessary for financial feasibility andwithinallrequirementsoftheQAPandtheCode.

Applicants seeking designation under the Service‐Enriched Priority must providesubstantialresidentservicesappropriatetothepopulationservedbythedevelopment.Thepropertymustemploystaffdedicatedtoprovidingsocialservices(servicecoordinator)orcontractwithaserviceagencytoprovideaservicecoordinator.Thepurposeoftheservicecoordinatoristodirecttheserviceprogram,providecoordinationofserviceswithagenciesandotherserviceproviders,andworkwithresidentstoidentifyprogrammaticneeds.Theservicecoordinatormustworkattheproperty.

The supportive service planmust demonstrate the applicant’s commitment to provide asignificant number of services and activities appropriate to the resident population. Thesupportiveserviceplanmustdetailtheservicedeliveryplantospecificallyaddresshowtheapplicantplanstoengagetheresidentpopulationinsupportservicesforthedurationofthecomplianceperiod.LocaldatatosupporttheneedforservicesforthetargetpopulationwillenhancethequalityoftheServiceEnrichedapplication.Allservicesmusthaveanidentifiedservice provider evidenced by a commitment letter from that provider and mustdemonstrate how the property will continue to fund the service program through theService Enriched Priority Term. Sources of funding in future yearsmay include incomefromoperationsorverifiablepublicgrants and funds. The servicesmustbeprovidedonsiteandona regular schedule.Belowareexamplesof services fromwhich thedevelopercan select. The more services provided that are tailored to the needs of the targetpopulationwillreflectmorefavorablyontheApplication’ssupportiveservicecommitment.

MHDC, in its sole discretion, will determine whether the number and type of servicesproposedaresignificantenoughfortheapplicationtomeettherequirementsoftheService‐EnrichedPriority.

1. Familyproperties–exampleofservices:

a. regularly‐heldresidentmeetings;

b. after‐schoolprogramsforchildren;

c. financialliteracycoursesforadults;

d. ParentsasTeachersprogramofferedthroughthelocalschooldistrict;

e. creditand/orbudgetcounseling;

f. lifeskillsorjobapplicationtraining,;

g. nutritionclasses;

h. domesticviolencesurvivorsupportandcounseling;

i. computerlaborcomputercheck‐outprogram;

j. foodpantry;

k. daycareservices;

l. collegepreparationcounseling;

m. clothescloset;and

n. library.

2. Seniorproperties–exampleofservices:


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a. regularly‐heldresidentmeetings;

b. transportationtoshoppingandmedicalappointments;

c. nutritionclasses;

d. enrichment classes such as seminars on health issues, prescription drugs,Medicare,theinternet;

e. coordinationwithanagencythatprovidesassistancewithpayingbillsandbalancingcheckbooks;

f. annualhealthscreenings;

g. assistancepreparingaVialofLife;

h. AmericanRedCrossI’MOKprogram;

i. exerciseprogramsuchastheArthritisFoundationExerciseProgram;

j. monthlycommunityactivities(i.e.,potluckdinners,holidayevents,bingo);

k. accesstofitnessequipment;

l. foodpantryoraccesstoamobilefoodpantryifavailable;

m. housekeeping;and

n. computerlaborcheck‐outprogram.

Services provided to seniors must be mindful of the varied needs and desires of anindependentseniorpopulationascomparedtoamoreelderlyandfragilepopulation.

The Applicationmust include the proposed annual budget. MHDC staffwill approve theannualbudgetatFirmCommitment.

PreservationPriority(eligiblefor30%boostineligiblebasis)The preservation of existing affordable housing will receive a preference in funding(“PreservationPriority”).

To qualify for the Preservation Priority a development must meet at least one of thefollowingand,ifreceivingFederalHistoricCreditsand/orStateHistoricCredits,mustwaivetheright tooptoutof theLIHTCprogram foranadditional fifteen (15)yearsbeyond theCompliancePeriod.

1. Have and continue to use, if possible, project‐based rental assistance and/oroperatingsubsidy;

2. Have a loan made prior to 1985 from any of the following loan programs: HUD202/811,221(d)3or(d)4,236orUSDARD515;

3. ParticipateinHUD’sMark‐to‐Marketrestructuringprogram;or

4. HaveapreviousallocationofLIHTCsinwhichthefirstyearoftheCreditPeriod(asdefinedin§42(f)(1)oftheCode)was1999orearlierandbeinorhavecompletedthefinalyearoftheCompliancePeriodforallbuildingsinthedevelopment.

TobeconsideredunderthePreservationPriority,thefollowingmustbeincludedwiththeApplication:


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1. Copies of all loan notes and regulatory agreements encumbering the property,includinganymodificationsthereto;

2. A copy of any project‐based income or operating subsidy agreements and rentschedules,includingbothoriginalandmodifiedsubsidyagreementsorcontracts;

3. Audited financial statements for the development covering the threemost recentyears;

4. IfthedevelopmenthasHUDorMHDCfinancingorissubjecttoaLIHTCLURAoranMHDCRegulatoryAgreement, a letter fromHUDorMHDC indicating theneed forpreservation(If theproposedpreservationdevelopmenthasaRD loan,pleasesee‘5.’below);

5. If the proposed development includes USDA‐RD financing, the application mustincludealetteraddressedtoMHDCfromtheRDStateOfficestating(1)RDsupportfortheproposal,and(2)thattheapplicanthasmetwitheithertheRDStateOfficeorArea Specialists prior to preparing/submitting the application to MHDC. Thepurposeof themeeting is togoover theentirestructureof theproposalwithRD,including, but not limited to, a discussion of the proposed scope ofwork, CapitalNeedsAssessment(“CNA”),financingstructure,rentscharged,operatingbudget,thepotential amount of additionalRD requiredReplacementReserves, and any otherunique feature or complexities pertaining to the development proposal. It isrecommendedthatapplicantssupplyRDwithacopyofthe“as‐is”CNApriortothismeeting;and

6. Aphysicalneedsassessment(orforRDproposals,an“as‐is”CNAthatmeetsUSDA‐RDrequirements).

If adevelopmentdoesnothave aHUDorRD loanorproject‐based rental assistanceandrequiresa letter fromMHDC indicating theneed forpreservation,a letterwillbegrantedonly after an inspection of the property byMHDC.Requests for the letter and inspectionmustbemadetotheDirectorofAssetManagement.

Developments not eligible for the Preservation Priority but that do contemplate theacquisition and rehabilitation of existing housing are encouraged and given extraconsideration.

Minority‐Owned Business Enterprise (“MBE”)/Women‐OwnedBusinessEnterprises(“WBE”)PriorityThispriorityisonlyavailabletodevelopmentswithmorethansixunits.

Apreferenceinfunding(“MBE/WBEPriority”)willbegiventoanapplicationthatreflects:

a) A MBE/WBE developer, a developer group that includes a MBE/WBE,and/oraDeveloperMentor/Protégérelationship(asdefinedbelow);or

b) MBE/WBE participation percentages significantly greater than theMBE/WBEParticipationStandard(asdefinedbelow)forbothhardandsoftcosts.

TheMentor/ProtégéRelationshipmustbedesignedtosupport,promote,anddeveloptheknowledge,skill,andabilityoftheMBE/WBEprotégéinamannerintendedtoassistinthegrowthanddevelopmentoftheMBE/WBEasadeveloper.


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Applicantsseekingapreferenceunderparagrapha)abovemustprovideacomprehensiveutilization plan signed by the owner/developer detailing the role of, and functions to beperformed by, the MBE/WBE. The roles and functions of the MBE/WBEmust be thosetypically performed by the owner/developer. Applicants must also submit proof ofMBE/WBE certification with the application. Applicants seeking a preference underparagraph b) above must provide a comprehensive utilization plan signed by theowner/developerdetailinghowtheapplicantintendstosignificantlyexceedtheMBE/WBEParticipationStandard.

Applicants seeking the MBE/WBE Priority must include a history of MBE/WBEparticipationwiththeApplication.

PropertyDispositionPriorityApplicants may compete for the purchase of real estate owned by MHDC (“PropertyDisposition Priority”). The Application must propose an acquisition/rehabilitationtransaction thatwill be evaluatedon itsmerits according to the selection criteria and itsability todemonstratepotential long‐termsuccessasanaffordablehousingdevelopment.TheApplicationservesasboththecompetitivebidtopurchasetheassetandtheapplicationfor financing to fund the property’s acquisition and renovation. Therefore, multipleApplications for the same property may be submitted by different development teamscompetingfortheopportunitytopurchaseit.

To qualify for the Property Disposition Priority, the property must be listed publicly byMHDCasrealestateownedandavailableforcompetitivebid.Applicationfeesandmarketstudyrequirementswillbewaivedforapplicantssubmittingproposalsunderthispriority.

Tobeconsideredunderthispriority,thefollowingmustbeincludedwiththeApplication:

1. Asignedoptioncontractrepresentingtheapplicant’soffertopurchasetheMHDC‐held property on theMHDC option contract form. TheMHDC formwill bemadeavailableontheMHDCwebsiteinconjunctionwithanyMHDC‐ownedrealpropertythatispubliclyposted.

2. AnyothercertificationsordocumentsrequiredbyMHDCandmadeavailableontheMHDCwebsiteinconjunctionwiththelistingofanyMHDC‐ownedrealproperty.

CompliancePeriodandAffordabilityPriorityMHDCencouragesdevelopmentsprovidingqualityhousingwithlowaffordablerentsforanextendedperiodoftime. Asaresult,apreferenceinfundingwillbegiventoapplicationsthatagreeinadvancetowaivetherighttooptoutoftheLIHTCprogramattheendofthefifteen (15)‐yearCompliancePeriod andmaintain thedevelopment as affordablehousingfor a minimum of 30 years (“Extended Use Priority”). This priority is not available todevelopmentswithhistoriccreditsorsingle‐familyhomes.

50%AMIPriorityApreferenceinfundingwillbegiventoapplicationsthatsetasideatleast25%oftotalunitsto households earning less than or equal to 50% of area median income (“50% AMIPriority”). Rentsforhouseholdsearninglessthanorequalto50%ofareamedianincomemustbeatleast15%lessthanrentsactuallychargedtohouseholdsearningupto60%of


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area median income. This priority is not available to developments with project‐basedrentalassistance.

WorkforceHousing(eligiblefor30%boostineligiblebasis)Developments in counties with a median income less than the 2015 statewide medianincome(asestablishedandpublishedbyHUD)areeligibleforthebasisincrease,providedthat20%ofthetotalunitsinthedevelopmentaresetasideforhouseholdsearningbetween60%and80%(workforceunits)oftheareamedianincome. Rentsinthe60%‐80%unitsshouldbedifferent than taxcredit rents in thedevelopment. The intent is tocapture thehouseholds thatare justover the taxcredit income limitsbutstillhaveaneed forqualityaffordablehousing.Thepublishedincomelimits foreachdevelopment’scountystillapplyandmustbeusedfordeterminingresidenteligibility.

Transit Oriented Development (TOD) (eligible for 30% boost ineligiblebasis)Thefollowingcriteriawillbeconsideredinthedeterminationofadevelopment’sabilitytomeetthedefinitionofaTOD:

a. Thedevelopmentmustbelocatedwithin1,750feetofatransitstop.

b. Themaster development planmust include a balancedmix of uses, providingresidentstheabilitytolive,work,andshopinthesameneighborhood.

c. Transitserviceatthestopmustbefrequent(every15‐30minutes).

d. The transit service must offer increased mobility choices and good transitconnections.

e. Themasterdevelopmentmustincludesignificantretaildevelopment.

f. Themasterdevelopmentmustincludeamixofhousingchoices(rentalandfor‐sale,affordableandmarket‐rate).

g. Thedevelopmentmustincludeamixoftransportationchoices,includingbikingandwalking.

RedevelopmentPlanApplicationswhichareapartofaredevelopmentplanwhichhasbeenapproved/adoptedbyalocalgovernmentwillreceiveapreferenceinfunding.Theapplicationmustincludealetterfromthelocalauthorizingofficialthatdevelopmentintheapplicationisapartoftheredevelopmentplan.

High‐OpportunityArea5. MHDC encourages affordable housing developments in high‐opportunity areas by

targeting communities that meet the following criteria: access to high‐performingschool systems, transportation and employment; aswell as being located in a censustract with 15% or lower poverty rate. Developments that meet these criteria willreceive a preference in funding. Please refer to the Market Study Guidelines whichspecifieshowdataoneachofthesecriteriaistobecollected.


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SelectionCriteriaWhile the housing priorities above list the types of developments that receive extraconsideration,theselectioncriteriabelowindicatewhatfactorsareusedinmakingfundingrecommendations.TheselectioncriteriaincorporatebothMHDCprioritiesandthefederalpreferences and selection criteria described in §42(m)(1)(B)(ii) and §42(m)(1)(C) of theCode. Because not every development fits into the same category or serves the samepopulation,certaincharacteristicshavedifferentmeaningsandhavedifferentinfluenceonthe overall evaluation of each proposal. Despite this inherent difficulty presented by thevaried applications received, MHDC strives to apply the selection criteria in the mostconsistentandrationalwaypossible.

GeographicRegionAnattemptwillbemadetoallocate theStateHousingCreditCeilingacross thestateonapopulationproportionatebasisadjustedannually,withthestatedividedintothefollowingareas:

1. St.LouisRegion‐33%:Jefferson,St.Charles,St.LouisCityandSt.Louiscounties.

2. KansasCityRegion‐19%:Cass,Clay,Jackson,Platte,andRaycounties.

3. OutStateRegion‐48%:Allothercounties.

MHDCwillmakeitsbestefforttoreserveLIHTCsintheabove‐listedmanner,butgiventheneeds of individual deals and the strength of applications in each region, it may not befeasible for final approvals to achieve the exact geographic distribution. MHDC is notobligatedtoapprove100%oftheFederalLIHTCsavailableifitdeemstherearenotenoughworthy applications competing for the credits. Parts of the state officially declared adisasterareabythegovernormaybedesignatedaTargetedArea,asdeterminedonacase‐by‐case basis by the Commission, permitting MHDC to give special consideration todevelopmentsthatassistinprovidingaffordablehousingtopeopleaffectedbythedisaster.IntheeventofsuchadeterminationbytheCommission,anoticeannouncingtheTargetedAreadesignationwillbepostedwiththeNOFAatwww.mhdc.com.

TheabovepercentagesdonotapplytoBondDevelopments.

DevelopmentCharacteristicsThefollowingcharacteristicswillbereviewedclosely:

TenantPopulation

ItisimportantMHDCfunddevelopmentsofferingqualityaffordablehousingtothepopulations that need it in the locations where it is needed. Items givenconsiderationwithregardtotheintendedtenantsinclude:

1. Tenant populations with special housing needs, such as persons withphysical and/or developmental disabilities, homeless individuals andfamilies, the elderly, and other under‐served and/or at‐risk populations.This list is not an exhaustive list of special needs populations. Applicantsthatfeeltheyareservingaspecialtenantpopulationshouldexplainsointhedevelopmentnarrative;

2. Individualswithmentalillness;


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3. Individualsonpublichousingwaitinglists;

4. Individualswithchildren;

5. Youthagingoutoffostercare;

6. Developmentsservingthelowest‐incometenants;and

7. Thequantity,quality, andsuitabilityof servicesprovidedoroffered to thetenants.Servicesneedtobepopulation‐appropriate,andapplicantsshouldmakeclearwhatserviceswillbeoffered.

Itisimportanttherestofthedevelopment’scharacteristicsareappropriatefortheintended tenant population. The intended population will impact how the otherselectioncriteriaareevaluatedandshouldalwaysbekeptinmindwhenstructuringanyMHDCdevelopment.

DevelopmentSizeAllapplicationssubmittedforconsiderationarelimitedtofifty(50)affordableunitsinaproposal.Exceptionsmayinclude,butarenotlimitedto,applicationsproposinga:

1. Mixed‐incomedevelopment;2. Developmenttoreplaceexistingpublichousingand/orsubsidizedhousing3. Developmentwhereatleast25%oftheunitsaresetasideasSpecialNeeds

housingunits;4. Developmentthatincludesservicedenrichedhousingfeatures;5. Developmentthatpreservesexistingaffordablehousing;6. Developmentthatispartofamunicipalredevelopmentplan;or7. Seniorhousingdevelopment.

Type

Thetypeofdevelopmentbeingproposedisanimportantcharacteristicandaffectshowtheotherselectioncriteriaareapplied.DevelopmentswillbeevaluatedonhowtheycontributetothegoaloftheQAPandthemissionofMHDC.Developmentsfallintoatleastoneofthefollowingtypes:

1. Newconstruction;

2. Historicrehabilitation/adaptivereuse.AnydevelopmentthatwillutilizetheFederaland/orStateHistoricRehabilitationCreditwillbeconsideredtobeahistoric deal. Developments that will use the historic credit and arecurrentlybeingusedashousingwillbeconsideredbothhistoricdealsandacquisition/rehabs. Developments that feature historic rehabilitation andsomeadditionalnewconstructionwillgenerallybeconsideredhistoricdealsbutwillbeevaluatedonacase‐by‐casebasis;

3. Acquisition/rehabilitation of existing housing. Acquisition/rehabilitationincludes both preservation developments and any other housingdevelopmentthatfeaturesexistingtenants;or

4. Developmentsintendedforeventualtenantownership.Forthepurposesofthis Developer’s Guide and the 2016 NOFA, developments intended foreventualtenantownershipappliesexclusivelytosingle‐familyhomes.


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Regardlessof type,developmentsobligating themselves to servequalified tenantsforthelongestperiodoftimearegivenextraconsideration.

Site

EachsitewillbereviewedbyMHDCstafftodeterminetheoverallsuitabilityofthesite for affordable housing and for the intended population. Site reviews willconsider:

1. Marketability, or the likelihood that the site and improvements will beacceptedbythetargetpopulation;

2. Presenceofenvironmentalissuesandconcerns;

3. Neighborhoodcharacteristicsandlanduses;

4. Proximitytoappropriateamenitiesandservices;

5. Needforrehabilitation,ifapplicable;and

6. Accessintoandoutofthesiteandparking.

Design

1. The design of each development will be examined closely to assess itsappropriateness for the site, themarket, and the population being served.The followingwill be taken into accountwhen evaluating the application:Placementofbuildingsonthesite;

2. Developmentamenities;

3. Typeandqualityofmaterials;

4. Energyefficiencyandoverallsustainability;

5. Conditionandsuitabilityofstructuresbeingreused;

6. Scopeofworkforrehabilitationorrenovation;

7. Population appropriate design features (for example, interior and exteriorcommonspaces,storagespace,accessibility,adaptability,etc.);

8. Exteriordesignaestheticsthatblendwellwiththesurroundingarea;and

9. UniversalDesignFeatures

MarketCharacteristicsItisimportantthedevelopment’scharacteristicsareappropriateforthemarketinwhichitislocatedPleaserefertotheMarketStudyGuidelinesforfurtherguidance.Thefollowingwillbeanalyzedforeachproposal:

DevelopmentLocation

Where a development is located affects almost all of the other selection criteria.Importantconsiderationsforlocationinclude,butarenotlimitedto:

1. New construction and conversion proposals must meet the followingcriteria:


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a. Thedevelopment shall not be locatedwhere the total of publicallysubsidizedhousingunits(asdefinedintheMarketStudyGuidelines)equalmore than20%ofallunits located in thecensus tractwherethe developmentwill be located.Note: Theproposedunits are notincludedinthe20%thresholdonlytheunitsthatpresentlyexist;

b. IftheproposeddevelopmentislocatedintheKansasCityorSt.LouisRegion, it shall not be locatedwithin a one (1)mile radius of anydevelopmentthat:

(a)hasbeenapprovedforStateLIHTC,FederalLIHTC,HOME,orFund Balance funding through MHDC within the previous two(2)fiscal‐yearfundingcycles;and(b)islessthan90%leased‐upatthetimeofapplicationsubmission.

Exceptionstotheprevioustwocriteriamayinclude,butarenotlimitedto,applicationsproposinga:

Mixed‐incomedevelopment; Developmenttoreplaceexistingpublichousingand/or

subsidizedhousing; Developmentwhereatleast25%oftheunitsaresetasideas

SpecialNeedshousingunits; Developmentthatincludesservicedenrichedhousing

features; Developmentthatpreservesexistingaffordablehousing; Developmentthatispartofamunicipalredevelopmentplan;

or Seniorhousingdevelopment.

2. Location in a qualified census tract that will contribute to a concertedcommunityrevitalizationplan;

3. Whetherexistinghousingisusedaspartofacommunityrevitalizationplan;

4. Locationinacommunitywithdemonstratednewemploymentopportunitiesandaprovenneedforworkforcehousing;

5. Infillofexistingstableneighborhoods;and

6. Commission‐designatedTargetedAreas.

HousingNeeds

Developmentsmustaddresstheaffordablehousingneedsoftheregionandlocalitywhere they will be located. Important considerations regarding market needinclude:

1. Numberandgrowthofthepopulationandintendedtenantpopulationinthemarketarea;

2. Comparability,condition, rents,andoccupancyofotheraffordablehousingdevelopmentsinthemarketarea;

3. Comparability, condition, rents, and occupancy, of market rate housing inthemarketarea;


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4. Capture rate for the proposed development, calculated by dividing thenumberofproposedunitsbythenumberofqualifiedhouseholds;and

5. Housingneedsofthespecialneedspopulation.

Noapplicationproposingthedeliveryofnewunitswillbeapprovedifitisdeemedby MHDC to adversely impact any existing MHDC development(s), exist in aquestionablemarket,orcreateexcessiveconcentrationofmultifamilyunits.

DevelopmentTeamCharacteristicsA development team’s experience with affordable housing, MHDC, and the type ofdevelopmentbeingproposedareimportant.Thefollowingdevelopmentteammemberswillbe evaluated: developer(s), general partner(s), management agent,syndicator(s)/investor(s), contractor, architect, sustainable design team, consultant(s),LeadReferralAgency forspecialneedshousing,andserviceprovider forservice‐enrichedhousing.

Evaluations will assess the experience, performance, financial strength, and capacity tocompletetheproposeddevelopmentinatimelyandefficientmanner.

Itemsconsideredwillinclude,butarenotlimitedto:

1. Numberofaffordabledevelopmentscompleted;

2. Occupancyofdevelopmentsownedand/ormanaged;

3. Numberofdevelopmentsintheplanninganddevelopmentstages;

4. Performance,quality,andconditionofpreviously‐completeddevelopments;

5. Previousandoutstandingcomplianceissues;and

Theproposedgeneralpartner,developer,andgeneralcontractorwillbeassessedfortheircapacitytosuccessfullymanagethepredevelopment,closing,construction,andlease‐upoftheproposeddevelopment, inaddition topreviously‐approveddevelopmentscurrently inthosestagesofdevelopment.

Developmentteammembersnot ingoodstandingwithMHDCor itsprogramswillnotbeapprovedforfunding.AllidentitiesofinterestbetweenmembersofthedevelopmentteammustbedocumentedtoMHDC’ssatisfaction.Thisincludes,butisnotlimitedto,identitiesofinterestbetweenanytwoormoredevelopmentteammemberssuchasdeveloper,generalpartner(s), syndicator(s), investor(s), lender(s), architect(s), general contractor,subcontractor(s),attorney(s),managementagent,etc.

FinancialFeasibilityApplicationswillbeevaluatedtodeterminefinancialfeasibilityandviabilitythroughouttheCompliance Period using the assumptions provided by the applicant (“Feasibility andViabilityDetermination”).MHDCwillevaluate:

Sources

All developments must demonstrate sufficient sources are available to assurefeasibility.Fornon‐MHDCsources,acommitmentletterfromtheproposedproviderindicatingtheamountandtermsoffinancingmustbeincludedwiththeapplication.Thetypeoffinancingandthesourceofallfinancingwillbetakenintoconsideration.


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Uses

Developmentcostsmustbereasonableandcompetitiveforthetypeofdevelopmentandlocationbeingproposed.Sourcesandusesmustbalance.

Income

Rents must be appropriate for the market and affordable for the intendedpopulation. Rents must meet the requirements of the various financing sourcesproposedintheapplicationand,ataminimum,mustmeettherequirementsoftheCodetobeeligibleforaLIHTCallocationundertheQAP.Normally,taxcreditrentsshould be at least 15% less than market rents for the same unit type. In rareinstances, area market rents may be depressed due to deteriorating conditions.Therefore,areamarketrentscouldbe lessthantaxcreditrents. Ifadevelopmentincludesbothtaxcreditandmarketunits,thetaxcreditunitrentsmustbeatleast15% lower thanmarket unit rents. This does not apply to special needs housingproperties. Other sources of income that are undocumented may not be used todeterminefeasibilityorthesizeofMHDCdebt.

Expenses

Operatingexpensesmustbeadequate,reasonable,competitive,andappropriateforthemarketandtypeofdevelopmentbeingproposed.

Long‐TermViability

Operatingprojectionsmustindicatethedevelopmentisviableforthegreaterof(i)theentireCompliancePeriod,or(ii)thetermofanyMHDCfinancing.

Timing

Thetimingofduediligence, financingcommitments,andregulatoryapprovalswillbeconsideredwhenassessinganapplicant’sability toproceed.Considerationwillbegiventoapplicantsthatdemonstratetheycanproceedinatime‐frameconsistentwith the requirements of the Code or, for Bond Developments, the allocationprocessestablishedbytheMissouriDepartmentofEconomicDevelopment.

InvestmentPotential

Proposals will be evaluated for their potential to attract investors to the FederalLIHTCandStateLIHTC,ifapplicable,basedon:

1. ThepotentialamountofFederalLIHTCandStateLIHTC,ifapplicable;

2. Thesizeoftheproposeddevelopment;

3. Themarket;

4. Theexperienceandstrengthofthedevelopmentteam;and

5. Financialfeasibility.

The strength and previous performance of all investors will be taken intoconsiderationduringthefeasibilityreview.


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MHDCwillnotallocateacreditamountexceedingtheamountnecessarytoassuredevelopment feasibility.Guidance forwhatmaybe consideredappropriate canbefoundintheunderwritingstandardsbelow.

CommunityImpactMHDCseekstoallocatefundingtodevelopmentsthatappropriatelyandefficientlyimprovetheircommunities.Impactwillbeinfluencedby:

ElectedOfficialandCommunitySupport

Community support should highlight the importance of the development to thecommunityandtheimpactitwillhave.

CatalyticEffect

Developments that will successfully encourage further development orredevelopmentinthecommunityareencouraged.Thisincludesdevelopmentsthatare part of a larger community redevelopment effort or part of a concertedcommunityrevitalizationplan.

CommunityNeeds

Howaproposalwilladdresstheneedsofthepopulationandcommunityitintendsto serve is important. The existing stock of affordable housing and demographictrends in the area will influence the needs of the community and ability of theproposaltomeetthoseneeds.

ApplicationReviewUnless an application is rejected during one of the stages, applications submitted inresponsetoaNOFAwillundergoeachofthefivestaffreviewstagesdescribedbelow.Ifanapplication is rejected during the Initial, Primary Documentation, or SecondaryDocumentation Review, a written explanation will be provided to the applicant. Anapplication checklist, application forms, and program guides can be found atwww.mhdc.com(throughtheRentalProductionlink).

InitialReviewTheInitialReviewwillbeconductedtodetermineiftheapplicantanditsapplicationmeetthefollowingrequirements:

OrganizedApplication

EachApplicationmustbesubmittedinathree‐ringbinderandorganizedwithtabsaccording to the MHDC FIN‐125. Applications that are not organized will beeliminated from further consideration. A complete application consists of (1) anelectronicapplication(alinkwillbeprovidedonMHDC’swebsite),(2)onetabbed,three‐ringbinderwithallrequiredexhibitsandoriginalsignatures,whererequired,(3)digitalmediacontainingelectronicexhibits,and(4)theappropriateapplicationfee. The MHDC FIN‐125 will identify exhibits to be submitted in the three‐ringbinderandexhibits tobesubmitteddigitally. Three‐ringbinderanddigitalmedia


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exhibitnamesmustmatchtheFIN‐125exhibitnames. Acceptable formsofdigitalmediainclude,butarenotlimitedto,aCD‐R,DVD,oraUSBflashdrive.MHDCstaffhas the right, in its solediscretion, towaive an exhibit requirementon a case‐by‐case basis upon the reviewof a formalwaiver request submitted by an applicantpriortotheapplicableNOFAdeadline.

GoodStandingwithMHDC

Anymember of the development team that is the owner or general partner of aLIHTC development currently in noncompliance due to site audits or a failure tocomplywiththeowner’sreportingrequirementswillbedeniedparticipationintheNOFA. In addition, any development team member not in compliance or goodstanding with any other MHDC programwill be similarly denied participation. IfMHDClearnsthatanyprincipalinvolvedwithaproposeddevelopmenthasseriousand/or repeated non‐performance or non‐compliance issues in Missouri or anyotherstatebeforeorafter the timeofapplication, theapplicationwillberejected.Prior performance considered may include, but is not limited to, progress madewith a previous Conditional Reservation Agreement, Firm Commitment, closing,costcertification,developmentcompliance,paymentoffees,and/orviolationoftheMHDCWorkforceEligibilityPolicy.

PleasecontactMHDCstaffpriortosubmittalifyouareunsurewhetheryouoryourdevelopmentteammembersareingoodstanding.

ConsistentwithCodeRequirements

TheproposalmustmeetalltherequirementssetforthintheCodeandallrelevantU.S.Treasuryregulations,notices,andrulings.

ConsistentwithFairHousingRequirements

ThesubmittedproposalmustmeetalltherequirementsofTheFairHousingActof1968,asamended.

Consistent with Internal Revenue Service Memorandum ofUnderstanding

MHDCandtheIRShaveexecutedaMemorandumofUnderstanding(“IRSMOU”)toimprovetheadministrationoftheFederalLIHTC.UnderthetermsofthisIRSMOU,all developers must complete IRS Form 8821 (Rev. 8‐2008), Tax InformationAuthorization,asaconditionofconsiderationforanallocationof9%Creditor4%Credit.Anexecuted IRSForm8821 for thedeveloperandallkeyprincipalsof thedeveloperandgeneralpartnershipmustbeincludedaspartoftheapplication.

ConsistentwithTaxCreditAccountabilityAct

Under the provisions of the Tax Credit Accountability Act (R.S.Mo. 135.800‐135.830), all developers/applicants must complete all necessary forms andreportingrequirementsduring thereservationprocess, theallocationprocessandforaperiodofthreeyearsfollowingtheissuanceofStateLIHTCbyMHDCtocomplywiththeprovisionsoftheStateTaxReliefAct.AlldevelopersmustcompleteMDORForm 8821 (Rev. 11‐2007), Missouri Department of Revenue Authorization ForReleaseofConfidentialInformation,asaconsiderationfortheallocationoftheState


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LIHTC. MHDC will obtain tax clearance for the developer/applicant from theMissouriDepartmentofRevenueat thetimeofapplication. Shouldthedeveloper,general partner, or any key principal be found to have outstanding tax liens ordelinquenttaxes,forfederalorstatetaxes,therelatedapplicationwillberejected.

TheInitialReviewwillbeperformedinconjunctionwiththePrimaryandSecondaryDocumentationreviews(describedbelow).IfatalaterdateitisdiscoveredthatanapplicationdoesnotmeetoneoftheInitialReviewrequirements,itwillberejectedor,iffundshavebeenreserved,thatreservationmaybeterminated.

PrimaryDocumentationReviewAllprimarydocumentsmustbecomplete, fullyexecuted,andsubmittedbytheapplicableapplication deadline. An exact list of documents can be found on the MHDC FIN‐125. Amissingprimarydocument,documentsindraftform,ordocumentsmissingsignatureswillresultinApplicationrejection.

MHDC may be forced to allow corrections to primary documentation but this will beallowed only in rare circumstances. Applicants should expect that if they turn in anApplicationmissingprimarydocumentation,itwillberejected.

SecondaryDocumentationReviewAll secondary documentation must be submitted by the application deadline to receivefurther consideration. If six or more secondary review documents are missing orincompleteatthetimetheapplicationissubmitted,theapplicationmayberejected.Iffiveor fewer secondary documents are missing or incomplete at the time the application issubmitted, theapplicantwillbenotified inwritingofdeficient itemsandadatebywhichdeficienciesmustbecured (“CureDate”). If the requesteddocumentsarenot receivedbythe Cure Date, the applicationwill be rejected. The FIN‐125 contains an exact list of therequired documentation and the exhibit discussion below further explains therequirements.

It is expected, but not guaranteed, that notification regarding secondary documentationdeficiencies and the Cure Date will be emailed within ten (10) business days of theapplicationduedateestablishedintheapplicableNOFA.

If the Initial, Primary Documentation, and Secondary Documentation reviews aresuccessfullypassed,anapplication isdeemedcompleteandwillbeconsidered for furtherreview.

SiteReviewDuringtheapplicationreviewprocess,MHDCstaffwillconductareviewofeachproposedsite(s).Eachproposedsitelocationmusthaveasignpostedonit.Thesignmustbeatleast2’ X 3’, include the developer’s name, and state it is aMHDCproposedproject. The signmust face a road surrounding the site and the font sizemustbeeasily readable from theroad. The site selected for the development is a critical component of the application.MHDCevaluatesthefollowingitems:

1. Ingressandegress;

2. Visibilityformarketingpurposes;


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3. Proximitytogroceries,pharmacies,restaurants,publicparks,etc.;

4. Potentialnoiseconcernsfromnearbyhighways,airports,etc.;

5. Potentialfloodplainissues;

6. Existenceofwetlandsareas;

7. Potentialhabitatforendangeredspecies;and

8. Competitionwithotherhousingdevelopmentsintheimmediatearea;and

9. Needforrehabilitation,ifapplicable.

Thesesiteconsiderationsarenotasubstituteforanenvironmentalreportbutaremeanttoalert MHDC staff to potential concerns and the results play an important role in theCompetitiveReview.

Vacantlandpresentsachallengeinidentifyingthelocationofaproposedsite,particularlyinruralareasandpre‐constructionphasesubdivisions.MHDCrequiresapplicantsplaceasign on the property clearlymarking the location. Subject to timing and availability, staffreserves theright tocontactapplicants tomeet themat thesite foraphysical inspection.Contactwithanapplicantdoesnot indicateeithera favorableornegativeresponsetotheapplicationorchoiceofasite.

If a rehabilitation proposal, MHDC staff expects to be able to enter existing buildings toinspectproposedscopeofwork.

CompetitiveReviewOnce an application has gone through the Initial, Primary Documentation, SecondaryDocumentation, and Site Review stages and is considered complete to MHDC staff’ssatisfaction,itwillundergoaCompetitiveReview(“CompetitiveReview”).TheCompetitiveReview uses the established housing Priorities, selection criteria, and underwritingstandardstodeterminerecommendationsforfunding.Allfactorsareconsideredandthoseapplicationsdeemed,atthesolediscretionofMHDC,tobestmeetthegoalsofMHDCwillberecommendedtotheCommissionforformalapproval.

ApplicationForms,Exhibits,andDigitalMediaEachapplicantisrequiredtosubmittheexhibitsapplicabletothetypeofdevelopmentitisproposing.QuestionsastowhetheranexhibitisapplicabletoaspecificApplicationmustbeaskedpriortotheapplicableNOFAdeadline.

IfyouhavequestionsaboutApplicationexhibits,especiallyifyouarenotsurewhetheranexhibit applies to your particular development, please contact the Director of RentalProductionorSeniorUnderwriter.Anyitemthatmayservetosatisfytherequirementsofmultipleexhibitsshouldbecopiedandincludedineachapplicableexhibittab.Forexample,a letterof support from the city that also confirms the zoning for anapplicationmustbeincludedbothinthePublicOfficialContactVerificationandSupportLettersexhibitandtheZoningLetterexhibit.

Ifanexhibit isrequiredbutyoufeel thereisareasonitshouldnotbeapplicableforyourapplication, you may request a waiver of that exhibit requirement. Please note, waiverrequestsmustbesubmittedontheMHDCwaiverformandsubmittedandapprovedpriorto


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theApplicationduedate.Waiverswillonlybegrantedinrarecircumstanceswitharationalexplanationandproperjustification.

The Application Certification Page, digital media, application fee, development narrativeand questionnaire, site review information, applicant site control, market study, andfinancingcommitmentsconstitutethePrimaryDocumentation.Acceptableformsofdigitalmedia include, but are not limited to, a CD‐R, DVD, or a USB flash drive. All remainingexhibits listed on the FIN‐125 constitute the Secondary Documentation.MHDC staffmaycontactapplicantsforclarificationorquestionsregardinganysubmittedexhibit.However,suchcontactdoesnotindicateanythingotherthanarequestforinformation.

The MHDC FIN‐125 will identify which exhibits the digital media must contain. DigitalmediaexhibitnamesmustmatchtheMHDCFIN‐125.TheMHDCFIN‐125specifiesexhibitformat.

Therequireddigitalmediadocumentsareimportantintheapplicationreviewprocessandmust be included with the Application. Please test the digital media after loading thedocumentstoensurethefilesopenproperlyandeveryrequireddocumentisincludedintherequiredformat.

RentalHousingProgramsApplication

FIN‐100‐Addendum

The FIN‐100‐Addendum must be filled out completely and accurately with thecertification executed by all reporting parties. The FIN‐100‐Addendum in theoriginal binder must have original signatures. If you have any questions whencompletingtheFIN‐100‐Addendum,pleasecontactMHDCstaff.

ExhibitAtoForm2013

Applicants should utilize the Exhibit A to provide more information on costs orcircumstances related to theproject that is important toevaluationof theproject,whichisnototherwisecapturedintheApplication.

Furniture, Fixtures & Equipment (FF&E)

Ifcostsinexcessof$30,000havebeensubmittedfortheFF&Elineitem,abreakoutoftheitemsandcoststhatcomprisetheFF&EmustbeprovidedintheExhibitAtoForm2013.

ApplicationFeeThe check for the applicable application fee must be included in the binder and thedevelopmentnamemustbewrittenonthechecksubmitted.

NonprofitPriorityApplicationFee

Proposals that qualify for theNonprofit Priority and request consideration underthatpriorityowea$750applicationfee.ThisdoesnotincludeBondDevelopments,whichmustpaythestandardapplicationfee.


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StandardApplicationFee

All applications that do not qualify for the Nonprofit Priority owe a $2,000applicationfee.

Exception: Applicants submitting proposals under the Property Disposition Priority for apropertylistedpubliclybyMHDCasrealestateownedandavailableforpublicbidarenotrequiredtosubmitanapplicationfee.

DevelopmentNarrativeandQuestionnaire

NarrativeDescription

Thenarrativedescription shouldpresent any informationyou feel isnecessary tounderstand your development and is not adequately described in the rest of theApplication.ThenarrativeisyouropportunitytoargueforandconvinceMHDCwhyyourdevelopmentisimportantandwhyitshouldbefunded.Thenarrativeshouldincludeabriefdescriptionofthefollowingitems:

1. DevelopmentCharacteristics:describethetypeofdevelopment,populationserved,amenities,andservicesofthedevelopment.

2. Market Characteristics: describe the rent structure and how those rentscomparewithotheraffordableandmarketratepropertiesinthearea.AlsodiscusshowtheApplicationwilladdresstherelevanthousingneeds.

3. Development Team Characteristics: explain the key development teammembersandhighlightexperiencewithsimilardevelopmenttypes.

4. Financial Feasibility: provide a description of anything unusual regardingfeasibilitythatmaynotbeobviousfromlookingattherestofthesubmittedinformation.

5. CommunityImpact:explanationsoftheleveloflocalsupport,catalyticeffectandhowtheApplicationwilladdresstheneedsofthecommunity.

6. Other Salient Information: provide any information or description of thedevelopment that explains any unique or important characteristics thatwouldhelpMHDCbetterunderstandwhatyouaretryingtoaccomplish.

The development narrative is intended to be the applicant’s chance to addressMHDC’sselectioncriteria.Anyinformationthatcanhelpilluminateanddistinguishan application is encouraged. Please be clear and concise when creating thenarrativeandkeepthestatedpurposeinmind.

DevelopmentQuestionnaire

The questionnairemust be completed. The questionnaire is a complement to thenarrativedescriptionandthenarrativedescriptionneednotcoveritemsdiscussedinthequestionnaire.

SiteReviewInformationMHDC’ssite reviewersuse the information in thesitereviewexhibit toproperlyevaluatetheproposedsiteandproposal.ThefollowingsitereviewinformationmustbeincludedintheApplication:


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DevelopmentLocationMaps

Twomapsmustbesubmitted:(i)acommunity‐widemapclearlyidentifyingthesitewithrespecttothetownasawholeor,forlargemetropolitanareas,itsproximitytotheintersectionoftwomajorthoroughfares;and(ii)amoredetailedmapshowingthe property within the context of a five‐ to ten‐block area with site boundariesclearly demarcated. Please provide an appropriate amount of information so apersoncompletelyunfamiliarwith the community can find thepropertybasedonthemapsprovided, includingclearlymarkedstreetnames.Detaileddirectionsarewelcome,especiallywithrespecttovacantground.

SitePhotographs

Colorphotosofthesite,includinglandmarksandsurroundingproperties.

SitePlanorSubdivisionMap

Ifaproposalisforsingle‐familyhomesinasubdivision,asubdivisionmapwiththelotsfortheapplication.Allotherproposalsarerequiredtoprovideasiteplanthatidentifiesthefootprintofthebuilding(s)andsiteamenities.Pleaseincludedistancesfromthepropertyperimetertothebuildinglocationsorotherreferencesthatwillassistsiteinspectorsinidentifyingtheproposedfootprintonvacantground.

FEMAFloodMap

AcopyoftheFEMAfloodmappanelthatcoverstheapplicationsite. Clearlymarkthesubjectpropertyboundaries.Includethepanelnumberifitisnotprintedonthemaps.FEMAmapscanbefoundat:https://msc.fema.gov/portal.

MarketStudyThemarket study guidelines and requirements have changedmaterially from the2014Developer’sGuide.Thedevelopershouldbeawareofthesechanges(foundinthe Market Study Guidelines located on MHDC’s website) and inform its marketanalystaboutthechanges.

ExistingReportsThemarketstudymustbedatedwithinsixmonthsofapplicationandaddresstheproperty inquestion. If themarket study isdatedwithineighteen (18)monthsoftheapplicationduedate,anupdatelettermustbeprovided.Nomarketstudyolderthaneighteen(18)monthswillbeaccepted.

Form1300Thismustbecompletedbythemarketanalystandincludedasbothanexhibitonitsown and as part of the narrative market study. When submitted as part of theapplication,thisFormmustbeaseparatedocument.

MarketStudyNarrativeA favorable statement of conclusions about the strength of the market for theproposeddevelopmentdoesnotvestinanapplicantordevelopmentanyrighttoareservationoranallocationofMHDCfinancing(including,butnotlimitedto,LIHTC)inanyamount.


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Themarketstudymust:

1. BepreparedbyanexperiencedmarketanalystshownonMHDC’sapprovedproviderlist(notanaffiliatedcompany),whoisanindependentthirdpartyand completely unaffiliated with the developer and/or owner of theproposeddevelopment.

2. Containastatementbytheanalystthat:

a. Thereport is in full compliancewithMHDC'sMarketStudyGuidelines.The MHDC Market Study Guidelines can be found athttp://www.mhdc.com/rental_production/market_study/index.htm.

b. TheinformationincludedisaccurateandthereportcanbereliedonbyMHDCas a trueassessmentof the affordablehousing rentalmarket intheareaoftheproposeddevelopment.

c. The document is assignable to lenders and/or syndicators that arepartiestothedevelopment’sfinancialstructure.

d. Acknowledges and agrees themarket studywill be sharedwith otherpartiesthatwillassistMHDCintheanalysisofthemarketstudy.

e. Liststhesupport,ifany,thatmayjustifytheneedfortheproposedunitsbytype,size,number,andlocation.

f. The analyst has compared the proposed rents to those found in thesubject’sPMA,and

g. The analyst’s opinion of the market’s need, if any, for the proposeddevelopment.

Nonprofitentitiesapplying forHOMECHDO funds todevelopeightor fewerunitscansubmitaself‐preparedmarketanalysis in lieuofengagingamarketanalyst toperform a full market study. Applicants seeking approval under the PropertyDispositionPriorityarenotrequiredtosubmitamarketstudy.

PreliminaryFinancingCommitmentsAll non‐MHDC sources of debt and equity must be evidenced by a commitment oracceptable documentation in lieu of a commitment. All preliminary commitment lettersmust includethe informationrequiredbytheMHDCGuidelines forPreliminaryFinancingCommitments which can be found at www.mhdc.com. At a minimum, there should becommitmentsforthefollowingtypesoffunds,whereapplicable:

1. Federal LIHTC Equity. If one syndicator/investor is purchasing all housing andhistoric tax credits, one commitment meeting the requirements for each type ofcredit isacceptable. If thesyndicator/investor isalsoprovidingabridge loan, thatcommitmentcanbeincludedintheequitycommitmentifitcontainsallofthetermsofthebridgeloan.

2. StateLIHTCEquity

3. FederalHistoricRehabCreditEquity

4. StateHistoricRehabCreditEquity


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5. OtherNon‐MHDCFinancing.Alldebtandgrantfinancingmusthaveacommitmentletterincludedwiththeapplication,includinganyconstructionloans.

If the application involves rehabilitation with existing tenants, include an income fromoperationsduringconstructioncalculation.

If theapplication involvesrehabilitation, identifywhether thesellerorbuyerreceives thereplacementreservebalanceatclosing.

All commitment letters must include the contact information for the person writing thecommitment.MHDCmaycontact theauthorofacommitment todiscuss thedevelopmentandtheircommitment.

MHDC requires a preliminary commitment letter at the time of Application for all non‐MHDCsourcesof financing.Updatedcommitment lettersarerequiredat the timeofFirmSubmissionforapprovedapplications.

Debt/GrantCommitments

1. Any debt or grant funds that will be part of the development’s financingmusthave a commitment letter or a letter stating an applicationhasbeenreceived for the source in question. Commitment lettersmust indicate thefollowing:

a. Loanor grant amount. If using tax‐exemptbonds, specify if bondsaredrawdownbonds.

b. Loan term and amortization. The minimum acceptable term forpermanentloansiseighteen(18)years.

c. Interest rate. Permanent loans must have a fixed interest ratethroughouttheloanterm.

d. Feesassociatedwiththeloanorgrant.

e. Reserverequirements.

f. Lienpositionoftheloan.

g. Relevantrequirementsthatmayaffectotherfinancingsourcesortheoperationsoftheproperty.

h. ContactinformationforthepersonprovidingthecommitmentandtowhomMHDC’squestionscanbedirected.

Commitmentlettersarerequiredforbothconstructionandpermanentsources.

Ifa loanisgoingtobeassumedoranexistingloanistoberestructured, includeacopyofthenote,currentnotebalance,andaletterfromthelenderstatingtheloancan be assumed and details of the terms and conditions of any assumed orrestructured note. This is of particular applicability to HUD‐ and RD‐financeddevelopmentsbeingpreserved.

Ifaloan/granthasbeenappliedfororwillbeappliedforfromacompetitivesource(e.g., city funds, Federal Home Loan Bank), a letter is required that eitheracknowledgesthefundshavebeenappliedfororverifiesafundingroundiscomingup and the applicant is eligible to apply.The letter should indicate the amountoffunds requested and the timing for funding decisions. Applicants should be


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preparedtoexplainalternativeplansifnotsuccessfulinanynon‐MHDCcompetitivefundingrounds.

An updated commitment letter must be provided with the Firm Submission andshouldupdatetheinformationfromanycommitment(s)providedatApplication.

EquityCommitments

If all the various types of tax credit equity are to be provided by the samesyndicator, one commitment letter meeting all the requirements below will besufficient.

Any development with tax credit equity listed as a source must include apreliminarycommitmentletterorletterofintereststating:

1. Theownershippercentageandamountofannualcreditstobepurchasedbytheequityprovider.

2. Thepriceperdollarofannualcreditpurchased.Investorstakingmorethanademinimisshare(i.e.1%orgreater)ofownershipinterestmustprovideacapitalcontribution(atthesamepriceastheprimaryinvestor)inexchangefortheirshareofFederalLIHTC.

3. Thetotalamountofcapitalcontributions.

4. Theamountofequitypaidduringtheconstructionperiod.

5. Any fees, such as an assetmanagement fee, thatmust be paid during theCompliancePeriod.

6. Anyreserverequirements.

7. Forhistoricrehabilitationtaxcreditequity, theeligiblebasiscalculatedforboththeStateandFederalHistoricTaxCredits.

8. Fordevelopmentscommitting tospecialneedshousingunits, evidence theinvestor(s) is aware of the special needs housing commitment beingproposed.

9. ContactinformationforthepersonprovidingthecommitmentandtowhomMHDC’squestionscanbedirected.

AtFirmSubmission(definedhereinafter),commitments for taxcreditequitymustupdate all the information provided with the Application and also include thefollowing:

1. Capitalcontributiontimingandamounts, includingthedatesormilestoneswhen equity will be contributed to the partnership. MHDC requires aminimum contribution of 10% of Federal LIHTC and State LIHTC equityinvestedatconstructionclosingwithatleastanother10%ofFederalLIHTCandStateLIHTCequityinvestedby50%constructioncompletion.

2. Descriptionofdevelopmentcostsattributedtothelimitedpartner,includingsyndicationcosts.

Ifabridgeloanistobeprovidedbytheequityinvestor,thetermsandconditionsofthat loan can be included with the equity commitment and do not need to bepresentedinaseparatecommitmentletter.


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TimingRequirements

All equity commitments must be signed by the provider of the commitment anddatedwithin forty‐five (45) days of the Application deadline or Firm Submissiondate,asapplicable.

SiteControl

SellerSiteControl

Theapplicantmustdemonstratesellersitecontrolintheformof:

1. Avestingdeed(e.g.awarrantydeed);or

2. Titlepolicythatclearlyindicatesthecurrentowner.

Fortransactionsinwhichthereisanidentityofinterestbetweenthesellerandthebuyerorbetweenthesellerandamemberofthedevelopmentteam,theapplicantmust include a copy of the seller’s contract or settlement statement from the lastarm’slengthtransactionifthetransactiontookplacewithinthelastfifty(50)years.If an identity of interest relationship exists between the buyer and seller of realestate a limitation of developer fee will result. Please see the Developer Fee +ConsultantFeesectionformoreinformation.

ApplicantSiteControl

Evidence of applicant site control must clearly link the current owner to theeventualownershipentityandbeintheformof:

1. Executed purchase option agreement. MHDC will not accept a purchasecontract;

2. Executedlong‐termlandleaseoroptiononalong‐termlease;or

3. Othercommitments/agreementsapprovedbystaffpriortotheApplicationdeadline.

Applicants thatalreadyownthegroundasevidencedbyavestingdeedneedonlyprovideacopyof thatrecordeddeedfortheapplicantsitecontrol.Applicantswillalsoneedtoprovidetheidentityofinteresttransactioninformationinthesellersitecontrol section described above. Due to certain restrictions (“Choice LimitingActions”) imposed byHUDon all developments requestingHOMEFunds or otherHUD financing, all applications requesting HOME Funds must have 100% sitecontrol of all application sites and the form of site control document must be apurchaseoption,notarealestatecontract.AlldevelopmentsnotrequestingHOMEFundsorotherHUDfinancingmustdemonstratepropersitecontrolforatleast50%ofthesites listedintheApplication.Fordevelopmentsthatdonotevidence100%sitecontrol,adescriptionofhowsitecontrolwillbeobtainedismandatory.Failuretoprovidesuchdescriptionwillresult inApplicationrejection.Theuseofeminentdomain to obtain site control of any sites not under control at the time ofApplicationmaybedeemedacceptablebyMHDCifatleast50%ofthetotalparcelsmaking up the development site are under control at the time of Application.Applicants who do not clearly have acceptable site control should contactMHDCprior to the Application deadline. MHDC approval of site control prior to theApplicationisadvisable.


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FIN305:SellerCertification

The FIN‐305 is required for every application with existing tenants and/orrequestingaloanfromMHDC.IfnoloanisrequestedbutMHDCultimatelyawardsaloan, theFIN‐305mustbe completedandsubmittedprior to theexecutionof anyConditionalReservation.

LegalDescription

Alegaldescriptionoftheproposeddevelopmentsitemustbeincludedasaseparateexhibit. The legal description must match what is included in the site controlsection. If the site(s) being purchased is larger than the development site(s), anarrative description of how much of the site is for the development and abreakdown of the costs attributable to the development’s site is required. Formultiple‐parcel single‐family proposals, clearly label the legal descriptions,contracts/options,andanyotherdocumentationrelatedtothevarioussitessostaffcanmatchthedocumentationtotheproposedparcels.

PublicOfficialContactVerificationorSupportLettersPublic officials should be contacted via certifiedmail or some othermanner that can beproventohavebeenreceivedbytheofficial.Publicofficialcontactlettersmustincludethepopulationbeingserved,thenumberofunitsproposed,andanyotherrelevantinformationdemonstrating the official has received a sufficient description of the proposeddevelopment. The following public officials must be contacted prior to Applicationsubmission:

1. ChiefElectedOfficial.Provideevidencethelocallegislativebody(forexample,citycouncil members) and chief elected official of the local jurisdiction (for example,mayor)havebeeninformedtheapplicantissubmittinganapplicationtoMHDC.

2. StateSenator

3. StateRepresentative

4. CityCouncilpersonorAlderman

5. PublicHousingAuthorityExecutiveDirector

6. School Superintendent (new construction and historic conversion familydevelopmentsonly)

7. HeadofLocalLawEnforcement

8. CityCouncilorCountyBoardResolutionofSupport,ifpossible

9. If the proposed development is locatedwithin the City of St. Louis or the City ofKansasCity,provideevidencethedeveloperhascontactedthehousingofficeinthatlocation.

Scattered site developmentsmust contact public officials for each locality/jurisdiction inwhichthesitesarelocated.

Youmustsubmiteither (a)acopyof the lettersent to theofficialandevidence the letterwasreceived,or(b)acopyofaletterofsupportfromtheofficial.MHDCrecommendsusingcertifiedmailandobtainingthereturnedreceiptcardtoprovetheletterwasreceived,butother proof is acceptable if discussed in advance with MHDC staff. MHDC strongly


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encourageslettersofsupportfrompublicofficialsrequiredtobecontacted.Lettersshouldclearlyreferencethedevelopmentbeingsupported.Resolutionsofsupportfrommunicipalor county boards are not required but strongly encouraged. All letters and resolutionsshouldbeincluded.

TheCommissionplaces great importanceon thedemonstrationofneed for theproposeddevelopment and a key indicator of its potential and perception may be found in theopinionsexpressedbythepublicofficials.InmunicipalitiesandcountiesfromwhichMHDChas receivedmultiple applications, staff reserves the right to contactmayors and countyexecutivestorequestaprioritizationoftheapplications.

While support letters are not required from other officials, community groups,neighborhood partners, current residents, or citizens at the time of application, allcorrespondence iswelcome.Lettersmaybe includedintheapplicationorsentdirectlytoMHDC(c/oRentalProduction).

StatutorilyRequiredDocumentationVariousfederalandstateregulationsrequireapplicantsprovidecertaininformationatthetime of application. The following required documents must be filled out properly andexecuted.

IRSForm8821

In accordancewith the IRSMOU, IRS Form 8821, Tax Information Authorization,must be submitted for the developer, all key principals of the developer andownership entity, and all general partners that are not affiliates of the developer.PleasefilloutonlySection1andsignSection7.

MissouriForm8821

In accordance with the Tax Credit Accountability Act, MDOR Form 8821,Authorization for Release of Confidential Information, must be submitted for thedeveloper,allkeyprincipalsofthedeveloperandownershipentity,andallgeneralpartnersthatarenotaffiliatesofthedeveloper. Pleasefilloutonlythetopsectionandsigntheauthorizationbelow.

FIN‐109LegalEmploymentPracticesCertification

Inaccordancewith§285.025,RSMo,MHDCrequiresallapplicantstocertifytheydonotemployillegalaliens/undocumentedworkersincompliancewithfederal,state,andlocalhiringlaws.

EvidenceofConsistencywithConsolidatedPlan

DevelopmentsrequestingfinancingfromMHDCandlocatedinajurisdictionwithaconsolidatedplanfiledwithHUDarerequiredtoprovidecertificationtheproposeddevelopment is in compliance with such plan. If a jurisdiction does not have aconsolidatedplan,a certification theproposeddevelopment is consistentwith thecomprehensiveplanmustbesubmitted.


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HousingPriorityDocumentationApplications requesting consideration under one or more of the established HousingPrioritiesmustincludetheapplicablerequireddocumentationwiththeApplication(pleaseseethediscussionoftherequireddocumentationintheHousingPrioritiessectionabove).Iftherequireddocumentationismissingordoesnotfulfilltheapplicablerequirement(s),theApplicationwillnotbeconsideredforthedesiredpriority,butitwillstillbeconsideredforfunding.

ZoningLetterThezoninglettersubmittedmustbeanoriginal,ontheletterheadofthelocalgovernmentalunitresponsibleforzoning,andmustclearlyindicate:

1. Thezoningdesignationwithabriefdescriptionofsuchdesignation;

2. Densityrequirements/limits;and

3. Description of any conditional use restrictions or overlay regulations that furtherrestricttheproperty.

If thesite isnotproperlyzoned, includea letter fromtheappropriategovernmentalbodydescribingwhatneedstobedonetobeincomplianceandthetimeframeforachievingsuchcompliance.

If there isno zoning in a jurisdiction, a letter from the locality statingno zoningexists isacceptableinlieuofazoningletter.

ArchitecturalItemsElevations,floor,andunitplansincludedasexhibitsintheApplicationcannotbelargerthan11”x17”andmustbedrawntoscalewhenpossible.ThefollowingarchitecturalitemsmustbeincludedwitheachApplication:

Elevations(newconstruction)orPhotos(rehabilitation/conversion)

Youmustprovidecolorphotosinsteadofschematicelevationsforexistingbuildingsbeingrehabbedorconverted.

FloorPlans

Youmust provide floor plans for each floor. If one ormore floors have identicalplans,itisacceptabletoshowoneplanwiththenumberofeachfloorwiththatplanhighlighted.

UnitPlans

Youmustprovideaplan foreachunit typebeingproposed. In thecaseofhistoricconversions, at a minimum one plan for each bedroom number category beingproposedisrequired.Iftherearelargesquarefootagedifferenceswithinabedroomnumbercategory, includeanexamplenear theextremesanda typicalunit in thatcategory.Unitplansmusthavethesquarefootagefortheunitlisted.


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DevelopmentCharacteristicsWorksheet

TheDevelopmentCharacteristicsWorksheetmustbe filledoutand fullyexecuted.The development characteristics described or chosenmust be adhered to by theowner.FailuretodosomayresultintheterminationofanyConditionalReservationorFirmCommitment.

ScopeofWork

Forrehabilitationdevelopments,provideadetailedscopeofworkdescribingwhatisbeingcontemplated/completedbytheprojectarchitectorgeneralcontractor.Thescopeofwork shouldbe innarrative formor a list brokendownbyConstructionSpecificationInstitute(CSI)divisionsoranothereasilyunderstoodindexingsystemfororganizingconstructiondatawithsufficientdetail tocomprehendwhatwillbedone.

PhysicalNeedsAssessmentorCapitalNeedsAssessment

Forrehabilitationdevelopments,provideaPhysicalNeedsAssessment(“PNA”).ThePNA must follow the requirements found in MHDC Form 1201, Physical NeedsAssessmentGuidelines.TheAssessmentshouldnotbeperformedbyanentitythathasanIdentityofInterestwiththedeveloperorcontractor.

Forapplications that includebothMHDCandUSDA‐RD financing,aCNApreparedwithin six months of the application deadline according to USDA guidelines isrequired. Applicantsmust follow the USDA requirements for an “as‐is” CNA andshouldcontactthestateUSDAofficeformoredetails.

Applicants proposing a gut rehab of the building(s) are not required to provide aPNA but an assessment of the structural condition of the building is required, asdetailedbelow.

StructuralLetter

Forhistoricdevelopments that involveagut rehabof thebuilding,a letter fromathird‐party structural engineer or equally qualified professional unrelated to thedeveloper certifying the buildinghasbeen inspected and is structurally sound fortheintendedusemustbesubmittedinlieuofaPNA.

HistoricApproval

Forproposalsstructuredwithhistorictaxcredits,includethestatusoftheFederalandStateHistoricTaxCreditreview.Requiredinformationincludes:

1. Historic Designation. Either (a) the Federal Register publicationdemonstratingthepropertyislistedindividuallyontheNationalRegisterofHistoricPlaces,(b)thePart1approvalconfirmingthepropertycontinuestobecertifiedascontributingtothesignificanceofacertifiedhistoricdistrictlisted on the National Register of Historic Places, or (c) the EligibilityAssessment performed by the State Historic Preservation Officer,accompaniedby a timeline for the review and approval of thenominationfor national register designation by the Missouri Advisory Council onHistoricPreservationandtheNationalParkService.


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2. State Historic Tax Credit Approval. A copy of correspondence or otherdocumentation showing the developer has discussed with the MissouriDepartmentofEconomicDevelopment the submissionof thedevelopmentforapprovalofstatehistorictaxcredits.

MHDC reserves the right to contact the Missouri Department of EconomicDevelopmentregardingthestatusofhistorictaxcreditapplications.

SustainableHousingInformationAllnewconstructionproposalsmustmeetthecurrentstandardsforthecertificationlevelofchoice for of one of the following green building rating systems: Enterprise GreenCommunities,anyoftheLEEDratingsystems,ortheNationalGreenBuildingStandard.Anycertificationlevelofthesesystemsisacceptable,butthedevelopmentteammustindicateinthe Development Characteristics Worksheet the rating system and certification level towhichtheyarecommitting.AllnewconstructionApplicationsmustprovidedocumentationdemonstrating how the development team and property will achieve and maintain theselectedgreenbuildingstandard.Newconstructionapplicationsmustalsoinclude:

1. Thecriteriaandfeaturesbeingincorporatedfromthechosengreenbuildingratingsystemaccompaniedbytheapplicablechecklist:

a. EnterpriseGreenCommunities–GreenCommunitiesCriteriaChecklist;

b. LEED–LEEDChecklist;

c. National Green Building Standard – Designer’s Report from the GreenBuildingScoringTool;

2. Resumesfordevelopmentteammemberswithsustainabledevelopmentexperience,proof at least one team member is a LEED AP®, LEED Green Associate™ or aCertified Green Professional™, and a description of the development(s) they haveworkedon and their role in theprocess. If thedevelopment is notbeing formallycertified,thedevelopmentteammembermustdocumentthepledgedgreenbuildingstandardswithpictures,asignedandscoredscoringtool,andbriefnarrativeduringtheconstructionprocess;and

New construction developmentsmust demonstrate at Application, Firm Submission, andconstruction completion that the development has been designed and built to meetcertification under the chosen system. Formal certification by a certified third‐party iswelcomebutnotrequired.Failuretoprovidethesustainablehousingpromisedatthetimeof Application may result in the recapture of funding and will reflect poorly on futureapplications.

RelocationandExistingMultifamilyOperationsDataFor developments requesting HOME Funds and requiring temporary or permanentrelocationof existing residentialor commercial tenants, theownermust complywith theFederalUniformRelocationAssistanceandRealPropertyAcquisitionPoliciesActof1970,asamended(“URA”).Fordevelopmentsrequestingallother typesofMHDCfinancingandrequiring temporary and permanent relocation of existing residential or commercialtenants, the ownermust complywith the requirements of § 523.205, RSMo. Each of theexhibitsbelowisrequired,regardlessofthetypeoffinancing.


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CurrentTenantList

Tenant list must include the names of the leaseholder, the number of persons ineachhousehold,thestartdateofeachlease,theamountofrentcharged,theamountof rent paid, income of each household, and race/ethnicity information. Subsidiesbeing provided to residents should be noted. For properties that are currentlymarket‐rate, if household incomecannotbeprovided, indicate to thebestof yourknowledge which households may be permanently displaced by the proposedfinancingrestrictions.

RelocationPlan

Therelocationplanmustincludethefollowing:(i)abriefdescriptionofthetypeofrelocation anticipated and how itwill be handled, (ii) a list of all buildings (withaddresses) currently occupied by renters or owner‐occupants of residential orcommercial buildings being renovated or demolished as a part of the proposeddevelopment,(iii)abreakdownoftherelocationexpensesexpectedtobeincurred(which reflect the number used in the development budget), (iv) a description ofservicesprovidedduringtherelocationperiod,(v)howrecordswillbemaintained,and(vi)arelocationtimeline.Ifanidentityofinterestexistsbetweenamemberofthe development team and the firmhired to perform the relocation planning andexecution,theprofitforrelocatingtenantswillbelimitedtoamaximumof20%oftherelocationcosts.

MHDC reserves the right to require a cost certification of relocation costs for anydevelopment that has a relocation expense. MHDC is likely to exercise this rightwhenanidentityofinterestexists,asdescribedabove.

GeneralInformationNotice(GIN)

AcopyoftheGeneralInformationNotice(GIN)requiredbytheUniformRelocationAct (URA) for application purposes must be provided. At minimum, this mustincludeacopyoftheproposedGINtobedistributedtotenantsifMHDCfundingisapproved.

AcceptanceofMHDCRelocationPolicy

Youmustprovide a signed statement acknowledging youhave read and acceptedtheMHDCRelocationPolicy(availableatwww.mhdc.com).

AnnualFinancialStatements

Youmustprovideacopyof theproperty’sannual financial statements for the lastthree years. If the applicant is related to the current ownership entity, anyunaudited financial statements must be accompanied by a certification from anauthorizedrepresentativeoftheownertheinformationistrueandaccuratetothebestoftheirknowledge.

HomeownershipPlanFor developers proposing the construction of single‐family homes for purchase by theresidents following the completion of the Compliance Period, a homeownership plandetailingthetimeline,proposedsaleprices,tenantdiscounts,andresidenthomeownershiptrainingmust be provided. The proposed homeownership plan is expected tomirror the


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structures described in theMHDC Homeownership Policy (available at www.mhdc.com).DevelopersproposinghomeownershiparerequiredtowaivetherighttooptoutaftertheCompliancePeriodforanadditionalfifteen(15)years.

PHAApprovedUtilityAllowancesDevelopments using HOME funding must use the HUD Utility Schedule Model whendetermining the utility allowance. The HUD Utility Schedule Model is located at:http://huduser.org/portal/resources/utilmodel.html. Forallotherdevelopments,providethemost current utility allowance schedule from the local public housing authority. TheutilityallowanceusedintheapplicationshouldmatchthePHA‐approvedallowancefortheproperty type. If using less than or more than the PHA amount, an explanation of thedifference must be provided. On the utility allowance schedule circle or highlight theappropriateutility amounts. Theutility allowance schedulemustbedatedwithin twelve(12)monthsoftheapplicableNOFAdeadline.Iftheprovidedscheduleismorethantwelve(12)monthsold, a letter from the issuing authority stating the included allowance is themostrecentmustbeincluded.

DeveloperandGeneralPartnerInformationThe following exhibits, if applicable,mustbe included for thedeveloper. If thedeveloperandgeneralpartnerareunaffiliatedentities,informationforeachentitymustbeprovided.If a developer is a newly‐formed entity made up of principals from othercompanies/individualswithhousingexperience,theinformationmustbeprovidedforeachentity/individual.

FIN‐105ExperienceSummaryforDeveloper(s)

If thedeveloper/applicantwishes toutilizea formdifferent than theFIN‐105, thereportprovidedmust,ataminimum, includeall the informationrequestedon theFIN‐105.

FIN‐107DeveloperQualifications

Thepurposeofthisformistoillustratethefinancialandoperationalcapacityofthedeveloper.

DeveloperFinancialStatements

Financial statements for the developer entity and its principals must be sent ordeliveredunderseparatecovertotheattentionoftheDirectorofRentalProductionpriortotheapplicableNOFAdeadline.Submittedauditedfinancialstatementsmusthavebeenissuedinthelasttwelve(12)months.Ifthedocumentprovidedisnotanaudited financialstatement, itmustbedatedwithin thepastninety(90)daysandmustbeaccompaniedbyacertificationexecutedbyanauthorizedrepresentativeoftheentityor theprincipal stating the statement is trueandcorrect, to thebestoftheirknowledge.

FIN‐105ExperienceforGeneralPartner(s)

If there isageneralpartner that isnotanaffiliateof thedeveloper,aFIN‐105 forthatentityisrequired.


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ManagementCompanyInformation

ExperienceSummary(FIN‐105)

IfthemanagementcompanychoosestoutilizeaformdifferentthantheFIN‐105,thereportprovidedmust,ataminimum, includeall the informationrequestedon theFIN‐105.

ManagementCompanyCertificationManagementCompanyCertificationProcess:

All existing and/or newmanagement companies seeking tomanage properties inMissouri are required to submit an application to be approved as a “CertifiedPropertyManagementAgent.”Theapplicationaddressesanumberofitemsrelativeto the management agent, its principals, the company’s operations, thequalifications of its management staff; and agent’s performance in managingmultifamilyproperties.

Once a management company is approved as an MHDC “Certified ManagementAgent,” MHDC staff will indicate the length of time for the certification, and willplacethepropertyonanapproved“CertifiedPropertyManagementAgent”listthatwillbemadeavailableonMHDC’swebsiteatwww.mhdc.com.Certificationswillbevalid for up to a three‐year period. Actual certification period length will bedetermined by MHDC’s Asset Management Committee. Certified Agents mustreapplyprior to their existing agreement expiring tobe consideredandapprovedforre‐certification.

AllmanagementcompaniesapplyingtomanagepropertiesinMissouriforthefirsttime will be restricted to a one‐year certification. After the first year, themanagementcompanymustreapplypriortotheirexistingagreementexpiringtobeconsidered and approved for re‐certification; and if approved, approval isconditionalannuallyforthenexttwoyears.Themanagementcompanywillreceivefullcertificationafteritssecondconditionalyear.

All propertiesmust bemanaged by an agent listed onMHDC’s Certified PropertyManagement Agent Listing. A full description of the management certificationprocessandrelevantformsarelocatedatwww.mhdc.com.

MHDCstaffwillmaintainalistofallMHDCCertifiedPropertyManagementAgents,together with date of certification on the MHDC website at www.mhdc.com.Interested parties are encouraged to review the list to ensure that the chosenmanagementagentisincluded,asthelistmaychangeperiodically.

ApplicationUnderwritingStandardsIn order to conduct the Feasibility and Viability Determination described above and inaccordancewith theQAP, theCode,Missouri state law,andotherapplicable federal laws,MHDC has created the underwriting standards listed below. The standards are based onrecognizedunderwritingpracticesandMHDC’sownexperiencewiththevariousaffordablehousingprogramsanddevelopments.Duetothechangingeconomicandmarketdynamicsoftheaffordablehousingindustry,MHDCreservestherighttodeviatefromthesestandards


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whenappropriateandreasonable.MHDCrecognizestheuniquenatureofeachApplicationandwillconsideradevelopment’sindividualsituationbutwillnotapplythestandardsinacapriciousmanner.

SourcesWhen reviewing the sources contemplated by any application, MHDC will apply thefollowingstandards:

Debt

All sources of debt, with the exception of MHDC debt, must have a commitmentletter.Pleaseseetheapplicationexhibitsectionaboveformoreinformationonwhatisrequiredinthecommitmentletters.

1. DebtServiceCoverage.AllhardMHDCdebtmust show initialdebt servicecoverage(“DSC”)between1.20and2.00.IftheDSCfallsbelow1.15duringtheCompliancePeriod,theapplicantmustexplainhowdeficitswillbedealtwith. For developments utilizing non‐MHDC debt,MHDCwill use the DSCratioindicatedbythelenderinitspreliminaryfinancialcommitment.IftheDSC falls below the lender’s standard during the Compliance Period, theapplicantor its lendermust explainhowdeficitswill bedealtwith.MHDCreservestherighttounderwritetothestandardforMHDCdebtregardlessof the source. If no explanation is provided for DSC ratios below thestandards listed above,MHDCmay underwrite a debt‐service reserve intothedevelopment. If adevelopmentdoesnothave a loanoronly has cash‐flow contingent loans, the development must demonstrate that the ratiobetweenincomeandexpensesisgreaterthan1.00fortheentireCompliancePeriod. MHDC staff will not recommend a development for funding if theDSCisbelow1.00atanypointduringtheCompliancePeriod.

2. Interest Rate. For MHDC debt, the appropriate rate for the applicablefundingsourcewillbeused.PleaseconsultthelatestMHDCtermsheetsfortheappropriateratesonMHDCdebt.Fornon‐MHDCdebt,theinterestratedescribed inthe lender’spreliminarycommitmentwillbeused.MHDCwillnotacceptpermanentloaninterestratesthatfloatorareresetatanypointduringthefirsteighteen(18)yearsofoperations.

MHDCdebttermsmaybechangedduringunderwritingtobettersuittheneedsofthedevelopmentandMHDC.

ConstructionLoans

IftheloanisanMHDCHOMEFundsloaninsecondpositionduringconstruction,thetermwillbeequaltothatofthefirstpositionconstructionloan.IftheMHDCHOMEFundsloanistheonlyconstructionloan,thetermwillbedeterminedatFirmCommitmentbutwillgenerallynotexceedeighteen(18)months.

Applications must clearly state whether or not they are requesting aparticipationloan.DevelopmentsrequestingMHDCFundBalanceparticipationloansmustprovideapreliminarycommitmentletterfromsuchpreferredlenderwhichstates(i)thelenderiswillingtotakeaco‐firstlienpositionwithMHDC,and (ii) the lender is willing to accept the MHDC Participation Agreement.


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Otherwise,MHDCreservestherighttodetermineappropriateloanfinancingforthe proposal. If the loan is an MHDC participation construction loan, theconstruction loan term will be eighteen (18) months. An application mayrequest a participation construction loan term of twenty‐four (24) months;provided, however, a twenty‐four (24)‐month term will increase theconstructionperiodinterestrate.Sucharequestmustbemadeinwritingandismostappropriatelymadeinthedevelopment’snarrative.

MHDC will require recourse on the entire construction loan during theconstructionperiod.Exceptions to this recoursemaybegranted forNonprofitandCHDOapplicants.

If using tax‐exempt bonds, the applicant must specify if they are draw downbonds.

PermanentLoans

MHDC hard permanent loans will feature a twenty (20)‐year term, with theexception of loans for single‐family homeownership developments,whichwillfeature an eighteen (18)‐year term. Soft loans fromMHDCwill generallyhavethesametermas thehard firstmortgage; if there isnohard firstmortgage, itwillhaveathirty(30)‐yearterm.

Non‐MHDC debt will be underwritten with the term described in thepreliminarycommitmentletter.MHDCwillnotacceptanypermanentloantermlessthaneighteen(18)years.

Amortization

Hardpermanent loans fromMHDCwill amortize over thirty (30) years for alldevelopments except single‐family homeownership developments, which willamortize over twenty‐five (25) years. Soft loans will not amortize, but willrequire an annual payment equal to 50%of available cash‐flow unlessMHDCstaff determines there is not sufficient cash‐flow available. The definition of“cash flow” and the priority of payment will be set forth in the FirmCommitment. Non‐MHDC loans will be underwritten with the amortizationdescribedinthelender’spreliminarycommitmentletter.

DeferredDeveloperFee

IncaseswhereMHDCisprovidingaloandependentoncashflowforrepayment,deferred developer fee should be structured as a note and its position in thedistributionofcashflowclearlyindicatedintheowner’spartnershipagreementor operating agreement, as applicable. MHDC reserves the right to create,eliminate, or adjust the deferred developer fee to efficiently utilize resourcesand appropriately underwrite each deal. Deferred developer fee in excess of50%of the total developer fee should be avoided andwill be allowed only inrarecircumstances.Itmustbedemonstratedthatthedeferreddeveloperfeecanbepaidback fromcash flow.Preferably, this repaymentwill takeplacewithinthefirstten(10)years.


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IncomeFromOperationsDuringConstruction

Income from operations during constructionmust be included as a source offunds.

Equity

EligibleBasis

Certain basis‐eligible line items of the development budget may not beunderwritten as 100% eligible. These line items include construction loaninterest and bond‐related costs. If 100% of these line items are included ineligiblebasis,areasonwhyoracalculationofhowyouarrivedat100%ofthecostbeingeligiblemustbeprovided.

To calculate the maximum amount of credits for which the proposeddevelopmentiseligible,usetheIRS‐issuedapplicablepercentageineffectatthetimeofapplicationforthe9%Creditor4%Credit.MHDCstaffhastherighttoadjusttheapplicablepercentagetoarateineffectforsubsequentmonthsduringthe underwriting process. Please note that MHDC will allocate the creditamountbasedontheneedoftheprojectandnotoneligiblebasis.

DevelopmentslocatedinaQualifiedCensusTractorinaDifficultDevelopmentArea,asdefinedbelow,maybeeligibletoincreaseeligiblebasisby30%.

o QualifiedCensusTract. Developments located inareasdesignatedbyHUDasQualifiedCensusTracts.

o DifficultDevelopmentAreas. Developments locatedinareasdesignatedbyHUDtobedifficulttodevelop.

o StateDesignatedDifficultDevelopmentAreas. Pursuantto§42(d)(5)(B)(v)oftheCode,MHDCmayestablishcriteriatodesignateadditionalpropertiesapprovedfor9%Creditstobetreatedaslocatedinadifficultdevelopmentarea For purposes of this Plan, to qualify for such an increase, propertiesmustmeetatleastone(1)ofthefollowingcriteria:

Be determined to meet the qualifications of the PreservationPriority;

Be determined to meet the qualifications of the Special NeedsPriorityanddemonstratethepropertyownerwillincurdirectcostsin addition to costs covered by third parties in the provision ofservices to enhance the residential stability and independence ofspecialneedsresidents;

Be determined to meet the qualifications of the Service EnrichedPriority;

Bea familydevelopment locatedinacountywhosemedianincomeis below the 2015 statewide median income, as established andpublishedbyHUD,andproposetosetasideatleast20%ofthetotalunitstobeoccupiedbyhouseholdsearningbetween60%and80%of the areamedian income (workforce units), calculated using theappropriateincomelimits;or


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Be part of a larger mixed‐use economic development area. For adevelopment to qualify as part of a mixed‐use economicdevelopmentarea,itmust:

Be part of a mixed‐use economic development area thatincludes different housing types for different householdincome levels, new retail/office/light industrial space thatcreatesnewpermanentjobs,andnewpublicspaceoractivitycentersdesignedforusersofthearea;or

BepartofaTransitOrientedDevelopment(“TOD”)plan.TheTOD plan must be centered around and integrated with atransit stop and the proposalmust be locatedwithin 1,750feet of a transit stop. The TOD plan must be mixed‐use,mixed‐income, pedestrian friendly, and of appropriatedensityforaTOD.

MHDC will decide, in its sole discretion, what evidence and whattypesofdevelopmentwillqualifyforanincreaseineligiblebasisformixed‐useeconomicdevelopmentareas.AnimportantfactoristhattheMHDCdevelopmentisnottheonlydevelopmenttakingplaceandtheMHDCdevelopmentwillenhancetheoverallplan,ratherthanbethe overall plan. It is expected the plan, of which the MHDCdevelopmentisapartof,contemplatesthedevelopmentofmultiplebuildings over an area of reasonable size. Thiswill not apply to asingularstructure,regardlessoflocation.

CreditPricing

MHDCstaffmayusethepriceoutlinedinthepreliminaryfinancialcommitmenttounderwrite thedevelopment,providedthepricereasonablyreflectscurrentmarket conditions. However, MHDC staff reserves the right to underwritedevelopments at credit prices different than outlined in the preliminaryfinancingcommitment(s).

AlldevelopmentsmustmeettheMHDC‐requiredminimumcontributionof10%ofFederalLIHTCandStateLIHTCequityinvestedatconstructionclosingwithatleastanother10%ofFederalLIHTCandStateLIHTCequityinvestedatorbefore50% construction completion. These thresholds must be met by both theFederal LIHTC and State LIHTC equity investors independently unless theFederalLIHTCinvestorandStateLIHTCinvestorarethesameentity.OnlyiftheFederalLIHTCinvestorandStateLIHTCinvestorarethesamewilltheequitybeconsidered in the aggregate. In no event may AHAP contributions counttowards theserequiredequity thresholds. IfHUD isproviding loan insurance,equity contributions must meet or exceed current HUD guidelines. Investorstakingmorethanademinimisshare(i.e.1%orgreater)ofownershipinterestmustprovideacapitalcontribution(atthesamepriceastheprimaryinvestor)inexchangefortheirshareofFederalLIHTC.

MHDCstaffwillunderwritewithanetpricefloorof$0.44percreditontheStateLIHTC.GiventhechanginglandscapeoftheFederalLIHTCequitymarket,MHDCwilldetermineareasonablenetpricefloorfortheFederalLIHTCatthetimeof


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application review.MHDC reserves the right to adjust and update how equitypricingisunderwritten.

MHDCstaffmaycontactanypersonorentityprovidingapreliminaryfinancingcommitmentfortaxcreditequitytodiscussthedevelopmentand/oritslevelofactivityand/orinterestininvestinginMissouri.

HistoricCredits

Please indicate in theapplicationwhetheramaster tenant/leasepass‐throughstructurewillbeutilizedonhistoricdevelopments.Failuretoindicatesuchwillresult in MHDC staff assuming no such structure is being utilized, and thehistoric creditwillbededucted fromeligiblebasis.Thepricingandamountofhistoriccreditequitylistedintheapplicationmustbethenetamountprovidedto the ownership entity, excluding special reserves and costs taken from thegrosspriceforputandcalloptions,syndicatorbridgefinancing,etc.

AHAPCredits

Ifanapplicant isplanningtouse theAHAPcredit,besure to indicatewhetherthedonationwillbestructuredasaloan,anequitycontribution,orsomeothermethod.Ifitwillbealoan,thetermsmustbedetailedinthecommitmentletter.

UsesThe standards listed below should be used when determining appropriate numbers fordevelopmentbudgetlineitems.

MaximumDevelopmentCost

ThemaximumtotaldevelopmentcostforadevelopmentcannotexceedthecurrentMaximum Development Cost Limits published on the MHDC website. MaximumDevelopmentCostLimitsaredeterminedusingtheHUDmethodofcalculatingthe221(d)(3)totalreplacementcostlimits.MHDCreservestheright,onrareoccasion,toallowexceptionstothecostlimitonacase‐by‐casebasisifuniquedevelopmentcharacteristics that meet or exceed the standards and goals of the QAP areincorporatedintotheproposal.

ContractorFees

MHDCwilllimitcontractorfeestothefollowing:

1. Aggregate Contractor Fees (defined as builder’s profit, builder’s overheadandgeneralrequirements)cannotexceed14%oftotalconstructioncontractcosts,minus builder’s profit, overhead, and general requirements. Generalrequirementsmustincludethecostofbuilder’sriskinsurance.

2. Builder’s profit may not exceed 6% of total construction contract costsminusbuilder’sprofit,overhead,andgeneralrequirements.

Bondingcostsandpermitcostsshallnotbeincludedinthecalculationofcontractorfeelimitsforgeneralrequirements,overhead,andbuilder’sprofit.


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AllgeneralrequirementitemsintheFIN‐115mustbeincludedinthecalculationofthemaximumamount forgeneral requirements, regardlessof thepartywhopaysfortheitems.

Developer+ConsultantFees

MHDCwill limit the feepaidtothedeveloperandtoconsultantsperformingworktypicallycompletedbythedeveloper.Thefollowingexpensesmustbepaidthroughthedeveloperfee:

1. Developer overhead including, but not limited to, postage, copying costs,stafftraveltosite,andmeals;

2. Developerprofit;

3. Costsincurredforthesubmissionofapplicationsinyearspriortotheroundinwhichtaxcreditsorloanswereawarded;

4. Consultant fees, including, but not limited to, the following types ofconsultants: development and/or credit, application, historic, MBE/WBE,andSection3consultants;

5. Realestatebrokeragefeesand loanbrokeragefeespaidtoarelatedparty;and

6. Compensationforanyconstructionmanagementoversightprovidedbythedeveloper.

The Conditional Reservation Agreement approved developer fee cannot beincreasedwithoutCommissionapproval.

Development costs paid for by a previous owner are not considered whencalculating developer fee, even if the cost of the previouswork is included in thesales/purchasecontract.

Thedeveloperfee+consultantfeefornewconstructiondevelopmentsislimitedtothelesserof:(a)15%ofthefirst$4,000,000oftotalreplacementcostsplus10%ofanytotalreplacementcostsover$4,000,000;or(b)theper‐unitcalculationfromthechartbelow. Only25%ofthedeveloperfee(excludingdeferredamounts)maybepayable at closing,with an additional 25%permitted at 50% completion. MHDCstaff reserves the right to further restrict the amount of developer fee payableduringconstruction.

Thedeveloper fee+consultant fee foracquisition/rehabandhistoricpreservationdevelopmentsis limitedtothelesserof:(a)thesumof8%ofacquisitioncostsforthefirst$2,000,000ofacquisitioncosts,6%ofanyadditionalacquisitioncosts,15%of the first $4,000,000of non‐acquisition total replacement costs and10%of anyadditional non‐acquisition total replacement costs, or (b) the per‐unit calculationfromthechartbelow.

i. Thedeveloper+consultantfeeforacquisition/rehabdevelopmentwhereanidentity of interest relationship exists between the seller and thebuyer ofrealestateislimitedtothelesserof:(a)thesumof3%ofacquisitioncosts,15%of the first$4,000,000ofnon‐acquisition total replacementcostsand10% of any additional non‐acquisition total replacement costs, or (b) theper‐unit calculation from the chart below. NOTE: This does not apply to


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entitiesorindividualswhomeeteitheroneofthefollowingcriteria:(1)thedeveloper has owned the property for less than four (4) years; or (2) thedeveloper has submitted an unsuccessful LIHTC rehabilitation applicationforthepropertywithinfour(4)yearsofacquisitionandhasnotownedthepropertyformorethansix(6)years.PerUnitDeveloperFeeMaximum

TotalUnits PerUnitLimitFirst40Units $20,000Units41‐100 $17,500*Units101‐150 $15,000*Units151+ $12,500*

* Please see the Development Characteristics section under Selection Criteria for additional information on developments which contain more than fifty (50) affordable units.

Example1:

A fifty (50)‐unitnewconstructiondealwith total replacement costsof$8,250,000wouldbeeligibleforthelesserof:

PerUnit=(40x$20,000)+(10x$17,500)=$975,000

CostCalculation=$4,000,000x15%=$600,000+($4,250,000x10%=$425,000)=$1,025,000

Therefore,themaximumallowabledeveloper+consultingfee=$975,000

Example2:

A120‐unitrehabdealwithacquisitioncostsof$3,000,000andnon‐acquisitiontotalreplacementcostsof$4,200,000wouldbeeligibleforthelesserof:

PerUnit=(40x$20,000)+(60x$17,500)+(20x$15,000)=$2,150,000

CostCalculation=($2,000,000x8%)+($1,000,000x6%)+($4,000,000x15%)+($200,000x10%)=$840,000

Therefore,themaximumeligibledeveloper+consultingfee=$840,000

Example3(IdentityofInterest):

Developer A, who has owned Project X for 10 years and is the GP, brings in anapplication for Project X to MHDC for acquisition / rehab using LIHTCs. ThepurposednewownershipofProjectXhasDeveloperAastheGP.Thedeveloperfeewouldbelimitedtotheaboveguidelines.


Developer A, who has owned Project X for 3 years and is the GP, brings in anapplication for Project X to MHDC for acquisition / rehab using LIHTCs. ThepurposednewownershipofProjectXhasDeveloperAas theGP.Theirdeveloperfeewouldnotbelimitedtotheaboveguidelines.


DeveloperA,hasownedProjectXfor5yearsandistheGP.DeveloperA,1yearafteroriginally acquiringProjectX, submittedanapplication toMHDC for acquisition /rehabusingLIHTCs.ThepurposednewownershipofProjectXhasDeveloperAastheGP.DeveloperAandwasnotapprovedforfundingatthattime.DeveloperA,4


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years later (5 years after originally acquiring Project X), brings in an applicationagainforProjectXtoMHDCforacquisition/rehabusingLIHTCs.ThepurposednewownershipofProjectXhasDeveloperAastheGP.Thedeveloperfeewouldnotbelimitedtotheaboveguidelines.


DeveloperA,hasownedProjectXfor7yearsandistheGP.DeveloperA,1yearafteroriginally acquiringProjectX, submittedanapplication toMHDC for acquisition /rehabusingLIHTCs.ThepurposednewownershipofProjectXhasDeveloperAastheGP.DeveloperAwasnotapprovedforfundingatthattime.DeveloperA,6yearslater(7yearsafteroriginallyacquiringProjectX),bringsinanapplicationagainforProject X to MHDC for acquisition / rehab using LIHTCs. The purposed newownership of Project X has Developer A as the GP. The developer fee would belimitedtotheaboveguidelines.

MHDCLoanFees

MHDCfeesvarybythetypeofloanbeingissued;thefollowingisaroughestimate,subjecttochange.

MHDCFundBalanceConstructionandPermanentLoans:1%ofprincipalamount

HOMELoans:Nofeeischarged

ParticipationLoans‐Construction:0.75%ofprincipalamount

ParticipationLoans‐Permanent:0.5%ofprincipalamount

RiskShare(Tax‐ExemptBondsOnly)1%ofprincipalamount

*Please see above for further informationon adevelopmentwhich containsmorethanfifty(50)affordableunits.

ConstructionInspectionFee

MHDC will charge a fee of $10,000 to perform, or hire a third‐party to perform,periodic inspections of the construction progress for all developments(“ConstructionInspectionFee”).

AppraisalFee

MHDCwillrequireanappraisalonalldevelopmentstoconfirm,ataminimum,themarketvalueofthelandandimprovementsatacquisition(withoutconsiderationofanyvaluecontributionthatmaybecreatedbytheproposedtaxcreditsorfavorablefinancing); the market value at project completion and stabilization using bothmarket rents and restricted rents; and the contributory value of the proposedLIHTCs, if any. If the proposed purchase price is not supported by the MHDCappraisal, the purchase pricemay be reduced to the appraised value. MHDCwillordertheappraisalandassessafeeof$6,500fromthedevelopmentatConditionalReservation.Theappraisalfeeisnon‐refundable.

ConstructionCostAnalysis

MHDCwillassessafeeof$5,000foranindependentthirdpartyreporttoprovideanupfront construction cost analysis for all approved developments in excess of six


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units.ThisfeewillbeduewiththeFirmSubmission.Ifathirdpartyanalysisisalsorequiredbyalenderorinvestorontheproperty,MHDCstaffwillendeavortoworkwiththatpartytoavoidduplicatecosts.

If applicable, this analysis would be performed after the Firm Submissiondocuments (plans and specs) have been submitted. The purpose of any suchanalysiswouldbetohaveathirdpartyreviewtheproposedcostsandtheplansandspecs. If it is determined the costs submitted are either excessive or deficient,MHDCmayadjusttheamountofLIHTCsorloanfundsallocatedtothedevelopment.This review would also include a replacement reserve analysis for all proposedrehab,preservation,orconversions(exceptforRDproperties).

ConstructionLaborCosts

Owners are required to pay at least federal prevailing wage to all laborers andmechanics employed in the construction of the development, as determined andposted by the United States Department of Labor for the locality of the site andcurrentwithintendaysofconstructionclosing.TheconstructionbudgetsubmittedwiththeApplicationmustutilizetheappropriateDavis‐BaconwagedeterminationineffectatthetimeoftheApplication.Forpropertieswithfourorfewerfloors,usethe“residential”decision.Forpropertieswithfiveormorefloors,usethe“building”decision.Wagedeterminationscanbefoundathttp://www.wdol.gov/.

ConstructionLoanInterest

The amount of construction loan interest calculated and the amount included ineligiblebasisshouldbecarefullyconsideredandyoushouldbeabletoexplainhowyouarrivedateachamount.MHDCstaffmayunderwriteareasonableconstructionloan into any application that shows LIHTC equity as its only significant sourceduringconstruction.

Contingency

Contingencyshouldbe4%‐7.5%ofthetotalconstructioncostsfornewconstructionand6.5%to10%foracquisition/rehabs.Numbersoutsideofthoserangesrequireanexplanation.MHDCdoesnotdistinguishbetweenhardcostcontingencyandsoftcostcontingency.

TaxCreditFee

The feewill be equal to 7%of the annual Federal LIHTC amount awarded to thedevelopment.

TaxCreditMonitoringFee

The fee is equal to $300 per tax credit unit (including employee units) andworkforcehousingunit(occupiedbyhouseholdsbetween60%and80%oftheareamedianincome).

AHAPFee

TheAHAPfeeisequalto0.5%oftheAHAPcreditamount,plusthe$100applicationfee.


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SyndicationCosts

Thefeespaidbythedeveloperforsyndication‐relatedexpenseswillbereviewedforcompetitiveness. Investorduediligence includingarchitecturalreview,bridge loanfees, and interest should not be reflected in the development budget. SyndicationcostmustbeexplainedintheApplication.

OperatingReserve

The operating reservemust reflect at least sixmonths of operating expenses anddebtservice.Amountslessthansixmonthsmustbeaccompaniedbyanexplanation.

ReplacementReserve

The initial replacement reserve should be $600 per unit. Any other amount willrequireanexplanation.

Debt‐ServiceReserve

If the development cannot maintain the DSC described above, a debt‐servicereserve,inadditiontotheoperatingreserve,mayberequired.

OtherUses

AlluseswillbeexaminedfortheircompetitivenessandreasonablenessandmaybequestionedduringtheApplicationreview.Developersshouldbeabletoexplainhowtheyarrivedatanyparticularlineitem,butitwillbeinthesolediscretionofMHDCwhether toacceptanexplanationor thecost forany line item.Anycosts incurredfor submission of applications in years prior to the development being awardedMHDCfundsshallberepayabletothedeveloperonlyaspartofthedeveloperfee.

ProjectIncomeThe following standards should be considered when structuring the development andcompletingtheApplication.

Rents

The proposed rents must be reasonable for the population being served andappropriateforthemarketinwhichthedevelopmentis located. Rentsmustmeetthe requirements of the various financing sources in the Application and, at aminimum, must meet the requirements of the Code to be eligible for a LIHTCallocationundertheQAP.Taxcreditrentsshouldbeatleast15%lessthanmarketrents. In rare instances, area market rate rents may be depressed due todeteriorating conditions. Therefore, areamarket rate rents could be less than taxcreditunitrents. Ifadevelopment includesbothtaxcreditandmarketrateunits,themarketrateunitrentsmustbeat least15%higherthantaxcreditrents. Thisdoesnotapplytospecialneedshousingproperties.

Other/CommercialIncome

All other income must be fully explained. MHDC staff, in its sole discretion, willdetermine the amount of other/commercial income that will be recognized.


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Other/commercialincomemayormaynotberecognizedforLIHTCamountand/orloansizingpurposes.

IncomeTrending

Forpurposesofthefifteen(15)‐yearproforma,MHDCstaffwillusea2%inflationfactorforallsourcesofincome.

Vacancy

Familydevelopmentswill beunderwrittenwitha rental incomevacancy factorof7%.Elderlydevelopmentswillusearentalincomevacancyfactorof5%.Recognizedcommercialincomemayusealowerorhighervacancyratedependingonthetypeof income. MHDC staff will also look at how higher vacancy rates affect thedevelopment and what is the break‐even vacancy rate. MHDC staff reserves therighttousedifferentvacancyratesthanthoseshownabovebasedonactualvacancyratesinthemarket.

MaximumIncome/MaximumRentsMHDC no longer publishes theMaximum Income/MaximumRent Schedule forMissouricounties. Income limits and maximum rent levels can be determined by accessingNovogradac&CompanyLLP’sRent&IncomeLimitCalculator©.TheRent&IncomeLimitCalculator©willcalculateIRC§42(i)(3)(A)LIHTCrentandincomelimitsforeveryMissouricountyandMSA.Thedeterminationofmaximumincomeandrentlimitsiscomplexandtheuseofacomplianceprofessionalishighlyrecommended.

OperatingExpensesBecauseofthedifferenttypesofdevelopmentsandthevariancesinoperatingcostsfoundinthedifferentregionsofMissouri,withtheexceptionofreplacementreserves,MHDCwillnotprovide minimum or maximum operating expense requirements. Each development willundergoadetailedreviewandwillbecomparedwithexistingdevelopmentsofsimilartype,location, anddesign.MHDC is interested in fundingproposalsdemonstrating feasible, yetcompetitive and reasonable, expenses that will assure long‐term operating stability andquality.Thepresenceofafull‐timemanagerisstronglyencouraged.

ExpenseTrending

Forpurposesofthefifteen(15)‐yearproforma,MHDCstaffwillusea3%inflationfactorforannualincreasesinoperatingexpenses.

ReplacementReserves

MHDC requires all developments to fund an annual replacement reserve equal to$300 per unit, increased annually by 3%. If a different amount is required by alenderorsyndicator,pleaseclearly indicatethat intheApplication.However,suchindicationwillnotnecessarilyresultinMHDCwaivingitsstatedpolicy.

Security

Fordevelopmentproposalsinareaswherethemarketstudyreportsacrimeindexabovetwotimesthecurrentstateindexof4.33asreportedinthe


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neighborhoodscout.comdata,suchproposalsmustaddresssecurityneedsinthedevelopmentandoperatingbudgets,orprovideadetailedexplanationwhysuchmeasureswillnotbenecessary.NOTE:Thestateandlocalfactorsfromneighborhoodscout.comchangeannuallyinthelatefallofeachyear;thereforeanymarketstudyupdatesubmittedforconsiderationmustincludeupdatedcrimestatistics.

ApplicationApproval

StandardsofConductThe MHDC Standards of Conduct, adopted on July 31, 2009, contains the followingrequirements concerning contact with commissioners and staff during the applicationprocess:

Definitions:

Commissioner

All appointed and ex officio members of MHDC, including all properdesignees of any member which are authorized to vote on behalf of themembertheyrepresent.

CompetitiveMatter

Anymatterwhichshallbeput to theCommission foravotewhere twoormoreInterestedPartiescouldbenefitfromanoutcomeofthevoteincluding,but not limited to, the award of any MHDC controlled or administeredresourcesandanyCommissionapprovedcontractsforservices.

Director

TheExecutiveDirectorofMHDC.

DisclosurePeriod

TheperiodoftimeafteranInterestedPartysubmitsaproposal,application,bidorresponseinaCompetitiveMatter.

Employee

TheDirectorandallemployeesofMHDC.

InterestedParty

Anypersonorentity(oranyoneactingattheirdirectionorontheirbehalf)whom submits a proposal, application, bid or response to a solicitation,request,noticeorinvitationtodosovis‐à‐visaCompetitiveMatter.

QuietPeriod

The period consisting of seven days prior to a scheduled vote by theCommissiononaCompetitiveMatter.


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CommissionersandEmployeesmayatanytimeand forany legalpurpose initiatecontactwithanyone, including InterestedPartiesor agentsof InterestedParties, in the courseofinvestigatinganyCompetitiveMatter.

If an Interested Party initiates communication, in any form, with a Commissioner orEmployee regarding a CompetitiveMatter following submission of the Interested Party’sproposal, application, bid or response, the Interested Party shall follow the followingdisclosureprocedure:

Within twenty‐four (24) hours of contacting a Commissioner or Employee, theInterested Party must file a written notice of the contact with MHDC staff. ThewrittennoticewillincludeawrittendescriptionofanyoralcommunicationfromtheInterested Party to the Commissioner or Employee, and the written notice willincludecopiesofanywrittenorrecordedmaterialsprovidedtotheCommissioneror Employee. In addition, within twenty‐four (24) hours of filing the notice ofcontactwithMHDC, theMHDC staffwill deliver, either in person, by facsimile, orelectronic mail or through overnight courier, a copy of the notice (including anyattachments)toeachandeveryotherInterestedParty.

DuringtheQuietPeriod,InterestedPartiesshallnotinitiatecontactwithCommissionersorEmployees.

Failure to honor the provisions set forth herein regarding the Disclosure Period and/orQuiet Period shall result in the disqualification of the Interested Party’s proposal,application,bidorresponse.

ThecompleteversionoftheStandardsofConductmaybefoundontheMHDCwebsite.

CommissionApprovalStaff will provide the Commissioners with available application data, staff reviewcomments,andpublichearingresults.StaffwillsubmitalistofApplicationsrecommendedforapprovaltotheCommissionersnolaterthansevendayspriortotheregularlyscheduledCommissionmeetingatwhichapprovalsarescheduledtobemade.Recommendationsmayinclude the revision of budgets, unit counts, rents, and tax credit and loan amounts as aresultoftheunderwritingprocess.

At the approval meeting, the Commissioners have the right to inquire further about theApplications, to approve the list as recommended, or to add Applications to or deleteApplications from the list. Following the Commission’s approval of the final list ofapplications for LIHTCs, HOME Funds, and/or other MHDC‐administered financing, staffwillproceedwiththeConditionalReservationprocess.

Whenthepotentialforaconflictofinterestortheappearanceofaconflictofinterestexists,MHDCCommissionersandstaffwillidentifysuchsituations,disclosethepotentialconflict,andtakewhateverstepsmaybewarrantedbythesituation,uptoand includingrecusingthemselvesfromdecision‐makingoractionpertainingtothesituation.

Pre‐ConditionalReservationApprovallettersaregenerallysenttodevelopersofallapprovedproposalstheweekafterCommission approval. The approval letter identifies the stages of underwriting fromenvironmental submission/review through Firm Commitment and identifies the


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underwriterassignedtoeachdevelopment.Attachedtothisletter,andprovidedbelow,isageneric checklist of documents needed to prepare theConditionalReservationAgreement(“Pre‐ConditionalReservationItems”):

OwnershipEntityOrganizationalDocuments:1. Acopyof the letter fromtheDepartmentof theTreasuryorotherdocumentation

demonstrating the Employee Identification Number assigned to the ownershipentity.

2. A copy of the certificate of limited partnership, certificate of organization, orcertificate of incorporation, as applicable, from the Missouri Secretary of State’soffice.NOTE:TheownerentitymustbeorganizedinthestateofMissouri.TheonlyinstanceinwhichMHDCwillconsiderawaiverofthisrequirementisif theownerentityhaspresentedacompellingreasonthatprecludesitfrombeingorganizedinMissouriandonlywhentheownerentityisreceivingonlylow‐incomehousingtaxcreditsandnoloanfundsfromMHDC.Anysuchwaiverrequestwillbeconsideredonacase‐by‐casebasis.

3. Acopyof the initial limitedpartnershipagreementoroperatingagreement,or fornonprofitorganizations,acopyofthebylaws.

4. AMissouricertificateofgoodstanding fortheentity if ithasbeeninexistenceformorethanoneyear.AcertificatemaybeobtainedelectronicallyattheSecretaryofState’s website for a nominal fee. A screen print of the search screen with adescriptionoftheentity’sstandingisnotacceptable.

5. A draft of the signature block for the ownership entity. Please note, if thedevelopment was approved for 9% Credits from the nonprofit set‐aside, thenonprofitentitymustbeoneofthesigners,evenifitisnotthesolegeneralpartnerormember.

6. A resolution authorizing the individual, general partner, manager, or managingmembertosignonbehalfoftheownerentity.

GeneralPartner/MemberOrganizationalDocuments Please provide for every tier of the general partner or member entities that are notindividuals.

1. Acopyof the letter fromtheDepartmentof theTreasuryorotherdocumentationdemonstrating the Employee Identification Number assigned to the generalpartner/memberentity(ies).

2. A copy of the certificate of limited partnership, certificate and articles oforganization,orcertificateandarticlesofincorporationfromtheMissouriSecretaryofState’soffice.IfthegeneralpartnerentityisnotaMissourientity,MHDCstaffwillalsorequireacertificateofforeignregistrationevidencingthatthegeneralpartnerisregisteredtodobusinessinMissouri.

3. Acopyoftheinitiallimitedpartnershipagreement,operatingagreement,orbylaws.

4. Aresolutionauthorizing the individual to signonbehalfof thegeneralpartnerormemberentity(ies).


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5. AMissouricertificateofgoodstanding fortheentity if ithasbeeninexistenceformorethanoneyear.AcertificatemaybeobtainedelectronicallyattheSecretaryofState’s web site for a nominal fee. A screen print of the search screen with adescriptionoftheentity’sstandingisnotacceptable.

PropertyInformation1. Asiteplanaccuratelyidentifyingthelandwhichcomprisesthedevelopmentwhich

includesthefollowingdetail:

a. Eachbuildingnumbered(1,2,3,etc.). MHDCstaffwillutilizethenumberstocreatethebuildingidentificationnumbers.

b. Thenamesofthestreetswhichbordertheproperty.

c. Theboundariesofthepropertyclearlymarked.

ConditionalReservationAll applications receiving approval from the Commission will be awarded a conditionalreservation agreement (“Conditional Reservation") shortly after MHDC staff receives,reviews,andapprovesthePre‐ConditionalReservationItems.TheConditionalReservationwilldescribethetype,amount(s), termsandrequirementsapplicableto thedevelopment.Conditional Reservations will be subject to the requirements MHDC staff determinesnecessaryorappropriate.

All developments receiving a Conditional Reservation must submit a Firm SubmissionpackagenolaterthanthedateestablishedintheConditionalReservation.

AConditionalReservationissubjecttorescissionshouldthedevelopmentfailtocomplyinatimelymannerwith the conditions thereof. This includes,but isnot limited to, failure toprovide evidence satisfactory to MHDC staff of financial feasibility or sufficient progresstowardFirmSubmission,closing,andplacementinservice.

FirmCommitmentAll applications awarded a Conditional Reservation must be issued an MHDC FirmCommitment (“Firm Commitment”) for construction closing to occur. The ConditionalReservation includesadeadline for submissionof theFirmCommitment reviewchecklistitemsandthisdeadlinemustbemettoreceiveaFirmCommitment. AllFirmSubmissionitemsmustbesenttotheattentionoftheassignedunderwriter.

For HOME and federally‐insured developments, Vapor Encroachment Conditions (VEC)must be addressed using ASTM E 2600‐10 Standard Guide for Vapor EncroachmentScreeningonPropertyInvolvedinRealEstateTransactions.IfaTier1ScreeningidentifiespotentialVECproblems, thesemustbe investigated todetermine if theyarea recognizedenvironmental condition (REC). Developments not requiring a Phase I EnvironmentalReportdevelopedbyanenvironmentalprofessional (EP)mustengageanEP toconductavaporencroachmentinvestigation.

Initial monthly rents cannot exceed the rents reflected in the Firm Commitment unlessMHDCstaffdetermines,initssolediscretion,adifferentrentisnecessaryandappropriate.


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Initialmonthlyrentscannotincreaseuntilatleastone(1)yearafterthelastunitisplacedinservice.

FirmCommitmentExhibitsEach approved development is required to submit a firm submission package (“FirmSubmission”). The firm submission will include: (1) an electronic version of the FirmSubmission(alinkwillbeprovidedonMHDC’swebsite),(2)onetabbedthree‐ringbinderwithrequiredexhibits,and(3)digitalmediawithrequiredelectronicexhibits.Dependingon the type of financing, some individual exhibits may not be applicable but alldevelopmentsmustsubmitaFirmSubmissionpackage.Questionsastowhetheranexhibitis applicable to a specific development must be asked prior to the Firm Submissiondeadline.

IfyouhavequestionsaboutFirmSubmissionexhibits,especiallyifyouarenotsurewhetheran exhibit applies to your particular development, please contact the Director of RentalProductionortheSeniorUnderwriter.Anyitemthatmayservetosatisfytherequirementsofmultipleexhibitsshouldbecopiedandincludedineachapplicableexhibittab.

Ifanexhibitisrequiredforyourtypeofdevelopmentbutyoufeelthereisareasonitisnotapplicable,youmayrequestawaiverofthatexhibit.WaiverrequestsmustbesubmittedontheMHDCwaiverformandsubmittedandapprovedpriortotheFirmSubmissionduedate.Waiverswillonlybegrantedinrarecircumstanceswitharationalexplanationandproperjustification.

AFirmCommitmentwillbeissuedafterareviewoftheFirmSubmissionpackagehasbeencompletedand it is clear toMHDCstaffallMHDCrequirementshavebeenorwillbemetpriortoclosing. DevelopmentswithreservationsofHOMEFundsorRiskShareInsurancewillnotreceiveaFirmCommitmentuntilHUD’sAuthorizationtoReleaseGrantFundshasbeenreceivedbyMHDCstaff.

If the Firm Submission package reflects changes to the numbers and assumptions fromwhat was in the Conditional Reservation, the amount of financing committed to thedevelopment may change. MHDC staff reserves the right to terminate any ConditionalReservation and/or require a development to go back before the Commission forreconsiderationataregularly‐scheduledmeetingifthechangespresentedmateriallyaffectMHDC’sunderstandingofthedevelopment.

DigitalMedia

The FirmSubmission checklistwill identify exhibits to be submitted in the three‐ringbinderandexhibits tobesubmitteddigitally. Digitalmediamust include therequired electronic documents in the proper form. Each document should beproperlylabeledandshouldbecheckedtomakesureitopensproperly.Donotputfilesintosubfolders.

MHDCFormFIN‐101:IdentityofParties

TheFIN‐101mustbefilledoutwithcontact informationforthelistedmembersofthedevelopmentteam.TheFIN‐101willbeanexhibittotheFirmCommitmentandmustbeasaccurateaspossible.

SignatureBlocks


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Signature blocks must be provided for the architect, general contractor, titlecompany,andFederalLIHTCandStateLIHTCinvestorsintheformsinwhichtheyshouldappear inanyMHDClegaldocuments. If therehasbeenanychangeto theownershipentitysignatureblocksinceConditionalReservation,anupdatedversionmustbesubmitted.Itishighlyrecommendedthatthedeveloper’sattorneyhelptoprepareand/orreviewthesignatureblocksbeforesendingthemtoMHDCstaff.

If the project does not have an MHDC loan, only the signature block for theownershipentitymustbeprovided.

OrganizationalDocuments

Thosedocuments thatwerealready submitted for theConditionalReservationdonotneedtobeprovidedagain.

Ownershipentity:

Provide a Certificate of Limited Partnership or Certificate of Limited LiabilityCompany,asapplicable(mustbeaMissourientity,unlessthereisnoMHDCloanandthedevelopmenthasobtainedawaiverfromMHDC);

Provide a draft Amended and Restated Limited Partnership Agreement(including MHDC‐required limited partnership agreement language) orAmended and Restated Operating Agreement (including MHDC‐requiredoperating agreement language), as appropriate for the owner entity’s type oflegal structure. Themost currentPartnership/OperatingAgreement languagerequired by MHDC may be obtained athttp://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm.

GeneralPartner(s)orManagingMember:

Provide a Certificate of Incorporation or Certificate of Limited LiabilityCompany,asapplicable;

Provide an Operating Agreement or Articles of Incorporation and Bylaws, asappropriateforthetypeoflegalstructure.

FederalandStateLIHTCSyndicatororInvestor:

Provide a Certificate of Incorporation or Certificate of Limited LiabilityCompany;

ProvideaLimitedPartnershipAgreement,OperatingAgreement,orArticlesofIncorporationandBylaws,asappropriateforthetypeoflegalstructure.

FinancialStatements

Financial statements for the below entities must be provided. Audited financialstatementssubmittedmusthavebeenissuedinthelasttwelve(12)months.Ifthedocumentprovided is not an audited financial statement, itmustbedatedwithinninety (90) days, and must be accompanied by a certification executed by anauthorizedrepresentativeoftheentitystatingthestatement istrueandcorrecttothebestoftheirknowledge.


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1. Developer entity. If the entity is a newly‐created and/or single‐purposeentity,thefinancialstatementfortheparentcompanyisalsorequired.

2. General partner/member entity (unless it is the same entity as thedeveloper).Iftheentityisanewly‐createdand/orsingle‐purposeentity,thefinancialstatementfortheparentcompanyisalsorequired.

3. FederalLIHTCandStateLIHTCsyndicatorandinvestorentity(ies).

Financialstatements forallentities/individualsmust containacomplete listingofallcontingentliabilities.

CertificatesofGoodStanding

A Missouri certificate of good standing must be provided for the followingdevelopment team entities: architect, general contractor, title company,management company, surveyor, and environmental firm. A certificate may beobtained electronically at theMissouri Secretary of State’sweb site for anominalfee.Ascreenprintofthesearchscreenwithadescriptionoftheentity’sstandingisnotacceptable.

SiteControl

Evidenceofvalidsitecontrolbytheownershipentitymustbeincluded.Anyinitialoptions and all subsequent amendments or extensions, if applicable must beprovided. Apurchaseoption willnotprovidesufficientevidenceofsitecontrol ifthedatebywhichtheoptionmustbeexercised,orbywhichtheclosingmustoccur,hasalreadylapsedorwilllapseonadatebeforewhichaclosingcanrealisticallybeexpectedtooccur.Therefore,allsuchdocumentationforsitecontrolprovidedwiththe FirmSubmissionmust allow for at least sixty days to close from thedate theFirmSubmissionissubmittedtoMHDCstaff.

TitleCommitment

Alender’stitlecommitmentisrequiredtobeprovidedforeverydevelopment.Thecommitmentmustbeon form2006ALTALoanPolicy(6/17/06)andMHDCmustappear as the proposed insured, with the amount of the MHDC loan, if any, onScheduleA.Alltitlecommitmentsandproformatitlepoliciesmustbesignedbyarepresentativeofthetitlecompanyandthelegaldescriptionmustbeidenticaltothelegal description shown on the survey. Full and complete guidance regardingMHDC’spoliciesonacceptabletitleinsurers,titlecommitmentsandproformatitlepolicy requirements may be accessed on MHDC’s web site(http://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm). Each developer is encouraged to access and share this informationwithitsrespectivetitlecompanyinordertoadequatelyensurethatallMHDCtitlepolicyrequirementsaresatisfied.

For developments requesting a loan from MHDC, copies of exception documentsrelatingtoallexceptionsreflectedonScheduleBofthetitlecommitmentmustalsobeprovided.

Survey


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Afull‐sizedraftofthesurveyandsurveyor’sreport,FormHUD92457A‐M,mustbesubmitted.AlthoughadraftsurveyisrequiredforFirmCommitmentconsideration,the final survey must be updated within ninety (90) days of closing and thesurveyor’sreportmustbeupdatedwithinthirty(30)daysoftheclosing.Thelegaldescription must be identical to the legal description shown in the titlecommitment/pro forma policy. Full and complete guidance regarding MHDC’spolicies for surveys and survey reports may be accessed on MHDC’s web site(http://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm). Each developer is strongly encouraged to access and share thisinformation with its respective surveyor in order to adequately ensure that allMHDC survey requirements are satisfied. Please note that the HUD surveyor’sreport has recently changed. The current form is included in MHDC’s surveyrequirements.

MHDCForm3345:PlanReviewWorksheet

An executed plan review worksheet that accurately breaks down the unitinformationbybuildingmustbesubmitted.Theunitandsquarefootagedatamustagreewith the firm submission and the plans and specifications. Please provideboththeExcelworkbookandaPDFcopywithsignaturesonthedigitalmedia.

PlansandSpecifications

A complete set of construction drawings and specifications (or project manual)must be provided. For detailed requirements, see MHDC Form 1200,Design/Construction Compliance Guidelines dated August 1, 2009, as may beamendedfromtime‐to‐time..

Plans:

Ane‐fileandtwofull‐sizepapercopiesofarchitectural/engineeringdrawings,includingascheduleofunitsandsquarefootagemustbeincluded.

Specifications:

Two setsmust be submitted. Please note, (a) HOME‐financed developmentswithtwelve(12)ormoreHOME‐assistedunitsmustincludethecurrenteditionof the “General Conditions of the Contract for Construction” (AIA DocumentA201‐2007), as amended, and the “FederalLaborStandardsProvisions” (formHUD‐4010);and(b)developmentsreceivingRiskShareInsurancemustincludethecurrenteditionofthe“GeneralConditionsoftheContractforConstruction”(AIADocumentA201‐2007),asamended,andthe“SupplementaryConditionsoftheContractforConstruction”(formHUD‐2554).

DevelopmentCharacteristicsWorksheet

A new Development CharacteristicsWorksheet with original signatures from thedeveloper,owner,andarchitectmustbeprovided. Ifno informationhas changedsincetheoriginalsubmittedwiththeApplication,reprinttheoriginalExcelfileandexecutewithupdatedsignatures. Thisworksheetcodifiesthedevelopmentteam’scommitment toprovide theamenitiesdescribed. Any revisionsduring thedesignandconstructionprocessmustreceivetheapprovalofMHDCstaff.


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SustainableHousingDocumentation

All new construction developments must provide detailed information regardingwhat features and techniques have been incorporated into the design of thedevelopment. This information should be in the form of the checklist or scoringsystem associated with the chosen green building program. Rehabilitationdevelopments obtaining green building certification must submit the documentslistedintheSustainableHousingInformationsectionabove.

TermiteInspectionReportorMHDCTermiteCertification

If thedevelopmentconsistsofexistingbuildings,a termite inspectionreportmustbeprovidedbya licensedPestControlCompany. If termite infestationis foundinthereport,thescopeofworkmustincludewhatstepswillbetakentoeliminatetheproblem. The scope of work must be updated during construction if additionaldamageisfound.

AlldevelopmentsmustexecuteandsubmittheMHDCTermiteCertificationform.

Owner‐ArchitectAgreement

A copy of the Owner‐Architect Agreement (AIA B108‐2009 with executed MHDCAmendment indicatingthenumberofsitevisitspermonth)mustbesubmitted. Ifthis agreement does not include all required architectural and engineeringdisciplines, then copies of all consulting contracts shouldbe alsobe included. AllamendmentstothestandardAIAformmustbeclearlyandconspicuouslyreflectedwithinthebodyoftheagreementandwillbesubjecttoapprovalbyMHDCstaff.

ContractorDueDiligence

Thefollowingcontractorduediligenceitemsmustbeprovided:

1. Contractor’sQualificationStatement(AIAA305);

2. Contractor’sAuditedFinancialStatement;

3. MHDCFormFIN‐116,CreditSummarywithcontractor’staxI.D.number;

4. MHDCFormFIN‐105,ExperienceSummaryandacompanyresume;and

5. ConstructionContract(ifMHDCisnotthefirstlienpositionlender).IfusingtheAIAformofconstructioncontract,youmustusetheAIAA102.TheA102must be amended to incorporate all MHDC required language for theconstruction contract. This required language may be obtained at:(http://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm). Further, all amendments to the standard AIA formmust be clearly and conspicuously reflected within the body of theagreement andwill be subject to approval byMHDC staff. IfMHDC is thefirst lien position lender, the MHDC form construction contract must beused,andwillbecirculatedwiththeMHDCloandocuments.

EqualEmploymentCertification(HUDForm92010)

Include an executed Equal Employment Opportunity Certification (HUD Form92010) for the owner (for developments with HOME Funds) or the generalcontractor(otherfinancing).


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Thisexhibitisnotrequiredfortax‐creditonlydevelopments.

MHDCFormFIN‐115:Contractor’s/Mortgagor’sCostBreakdown

ThecostbreakdownproperlycompletedwiththedivisionoflaborandmaterialsonformFIN‐115,executedbyboththeownerandcontractor,mustbeprovided. TheFIN‐115willbeupdatedpriortoconstructionclosingtoreflectanychangesintheclosingplansandspecifications.

MHDCFormFIN‐150:ConstructionDrawSchedule

OnlydevelopmentswithaconstructionloanfromMHDCmustcompleteandprovideFormFIN‐150.QuestionsregardingtheFIN‐150shouldbedirectedtotheassignedMHDCprojectunderwriter.

UpdatedFinancingCommitments

Debt/GrantCommitments:

All construction and permanent debt/grant sources of financing listed in theFirmSubmission,otherthanthoseprovidedbyMHDC,musthaveacommitmentletter from the financing provider. If a commitment letter was previouslyprovided,anupdatedlettermustbegivenatFirmSubmission.Thecommitmentletter(s) must include the terms and fees associated with the financing.Permanentloantermsmustbeatleasteighteen(18)years.Ifreservesarebeingassumed, a letter from the current lender must be provided indicating thereservescanbeassumedby thenewownershipentity. MHDCalsorequiresastatement indicating the current balance of such reserves. Foracquisition/rehabilitation proposalswith existing tenants, construction periodincomemust be included as a source and a calculation of constructionperiodincomeshouldalsobeincluded.

EquityCommitments:

All sources of tax‐credit equity listed must have a commitment letter. If acommitmentletterwaspreviouslyprovided,anupdatedlettermustbegivenatFirmSubmission. Thecommitment letter(s)must includetheamounts, timingof capital contributions, reserverequirements, terms,and feesassociatedwithequitycontributions.MHDCrequiresaminimumof10%ofFederalLIHTCandStateLIHTCequitybeinvestedinthedevelopmentatclosingandagainby50%ofconstructioncompletion.

ManagementAgentDocumentation

The following management company documentation, executed with originalsignatures, as applicable, must be submitted. If the company has been certifiedthroughMHDC,onlyitemsExhibitA‐2,J‐1andLarerequired.Ifyouareunabletofill out all the documents in their entirety for a new construction development,please indicate that. Any incompleteormissingdocumentswillberequired tobesubmitted to MHDC Asset Management immediately once the managementcompanyandsitestaffareinplace.

1. Articlesofincorporation.


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2. MHDCFormFIN‐116,CreditSummaryincludingtaxI.D.number.

3. Auditedfinancialstatement.

4. MHDC Form FIN‐105, Experience Summary and company resume. If thedevelopment will receive Risk Share Insurance, also include Form HUD‐2530,asfiledelectronicallywithHUD.

5. ExhibitA‐2:UniversalEntityManagementCertification.

6. ExhibitA‐5,ManagementEntityProfile(MHDCForm2004‐B).

7. ExhibitA‐6,AuthorizationforReleaseofInformation.

8. ExhibitA‐7,ProjectTrainingCertificateChecklist.

9. ExhibitJ,AuthorizedRepresentativeDesignation.

10. ExhibitJ‐1,ManagementAuthorizedRepresentativeDesignation.

11. ExhibitL,PropertyInformationSheet.

AffirmativeFairHousingMarketingPlan

Provide an executed and complete HUD Form 935.2A (Multifamily)/ HUD Form935.2B(SingleFamily)AffirmativeFairHousingMarketingPlan.

PHAApprovedUtilityAllowanceInformation

DevelopmentsusingHOMEfundingmustusetheHUDUtilityScheduleModelwhendetermining the utility allowance. The HUD Utility ScheduleModel is located at:http://huduser.org/portal/resources/utilmodel.html. For all other developments,providethemostrecentutilityallowanceschedulefromthelocalhousingauthorityavailableforthedevelopmenttypeandgeographicareainquestion. Ontheutilityallowance schedule, circle or highlight the appropriate utility amounts. If theschedule provided has an effective date that does not use the current year, astatementfromthehousingauthoritywhichsaystheestimateisstillvalidmustbeprovided.

Management/MaintenancePlan

A management/maintenance plan that describes, in detail, the operation,management, andmaintenance of the developmentmust be submitted. The planshouldbecustomizedtomeettheneedsofthedevelopment.

ProposedLeaseAgreement

A copy of the proposed lease agreement to be used by the development,accompanied by the appropriate HOME and/or LIHTC lease addendum must beprovided.

Lease‐UpNarrativeandBudget

Narrative:

A lease‐up narrative describing, in detail, the marketing plan and lease‐upprojectionsforthedevelopmentmustbeprovided.


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Budget:

MHDC Form FIN‐117 should be used to show occupancy and expenseprojectionsforthelease‐upperiod.

Service‐EnrichedHousingDocumentation

IfyouindicatedyouwouldbeprovidingsocialservicesintheApplicationorifyouplan to include them as the development goes forward, an updated plan thatexplainswhat services are going to be provided to the tenants, bywhom, and atwhatcostmustbe included. Theplanmustalso include lettersof intent fromanysocialserviceprovider(s)mentioned.

SpecialNeedsHousingDocumentation

If you indicated you would be providing housing opportunities for persons withspecialneeds,anupdatedplanthatexplainswhatservicesaregoingtobeprovidedtothetenants,howtheunitsaretobemarketed,bywhom,andatwhatcostmustbeincluded.Theplanmustalsoincludeanaffordabilityplanwhichaddressesthetypeof rental assistance or rent structure thatmay be utilized tomake targeted unitsaffordabletospecialneedshouseholdswithextremelylowincome.

RelocationDocuments

All developments subject toMHDC’s Relocation Policy are required to submit thestage2documentationapplicabletoitstypeoffinancing.

Section3Plan

DevelopmentssubjecttotheSection3Requirement(asdefinedbelow)arerequiredtoprovideasignedSection3planfortheirdevelopment. PleaseseetheSection3guidelinesbelowfordetails.

TaxAbatement/PILOTInformation

AnydevelopmentreceivingtaxabatementorenteringintoaPILOTagreementmustprovideadetaileddescriptionof thepercentage, length, and termsgranted to thedevelopment.Acopyofanyagreementorordinancegrantingthetaxreliefmustbeincluded. If that document covers more than the development in question, adescriptionofwhatisapplicabletotheMHDC‐financeddevelopmentisrequired.Ifthe tax relief does not cover the entire Compliance Period, a description of whatstepswillbetakentocoverthecostoffulltaxesmustbeprovided.

HomeownershipPlan

Developments that have indicated they will offer single‐family homes for sale toqualified residents at the end of the Compliance Period must provide ahomeownershipplan thatdetails such intent. Theplanmust reflect the structurerequired in the MHDC Homeownership Policy (available on the MHDC website).Developments must waive the right to opt out of the LIHTC program for anadditionalfifteen(15)yearsbeyondtheCompliancePeriod.

LegalDescription

ProvidethelegaldescriptioninMicrosoftWordformat.


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MBE/WBEUtilizationPlan

Provide the updated and signed Utilization Plan (as defined below) and updatedSchedule of Participation. The plan should also include a detailed listing ofMBE/WBEfirmstobeutilized.

Once a complete Firm Submission package is received by MHDC staff, loan closingrequirementsandaclosingchecklistwillbeforwardedtothedeveloper.Aclosingdatewillnotbedetermineduntil aFirmCommitment is issued. Tax‐creditonlydevelopmentsarealsorequiredtoprovideinformationtoMHDCstaffpriortoclosing.

If the development necessitates the assignment of a HAP contract, the developer mustreceivethepaperworkfromthesellerrequiredforsuchassignmentatleastsixweekspriorto closing. This should allow adequate time forMHDC contract administration staff andHUDtoreviewandapproveanytransfer.

CarryoverAllocation9%Credit developments that receive a conditional reservation of tax creditsmust sign aCarryover Allocation Agreement (“Carryover Allocation”) to allow the development anadditionaltwoyearstocompleteconstructionand/orrehabandplacethedevelopmentinservice, otherwise the development must be completed, placed in service, and receive8609snolaterthanDecember31oftheyeartheConditionalReservation isreceived.TheCarryover Allocation will be prepared and issued in conjunction with the FirmCommitment.AsarequirementoftheCarryoverAllocation,a10%Test(asdefinedbelow)mustbecompletedandsubmittedtoMHDCstaff.

CarryoverAllocationAgreement

TheownershouldcarefullyreviewtheCarryoverAllocation.

ApplicableCreditPercentage

IRC Section 42(b)(A) requires the developer choose when the applicable creditpercentagewillbeestablished.Thechoicesare:

1. Themonthofallocation(theeffectivedateoftheCarryoverAllocation);or

2. Themonththebuildingisplacedinservice.

TheownerwillindicateitspreferenceinSection8oftheCarryoverAllocation.

OwnerSignature

TheownerneedstosigntheCarryoverAllocationinblueink,haveitnotarized,andreturntoMHDC,Attn:LIHTCDepartment,920MainStreet,Suite1400,KansasCity,Missouri64105.

Deadlines

TheCarryoverAllocationmustbeintheofficeofMHDCatleastfivebusinessdaysbefore the endof themonth inwhich the owner signed the CarryoverAllocation.The CarryoverAllocationmust also be signed byMHDC in the samemonth if theapplicablecreditpercentageisforthemonthofallocation.


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If a Carryover Allocation is not signed by the owner andMHDCwithin the samecalendaryearoftheConditionalReservation,theownermustplacethebuildingsinservice, cost certify, and receive the 8609s within the calendar year of theConditionalReservation.

10%TestTheownermustcompletethe10%testnolaterthantwelve(12)monthsafterthedateoftheCarryoverAllocationortheLIHTCswillbereturnedtoMHDC(“10%Test”). The10%Testshouldbesubmittedassoonasthetesthasbeenmet.The10%Testisnotrequiredifadevelopment is able toplace thedevelopment in service,provide the cost certification toMHDC,andreceive8609(s)inthesameyeartheConditionalReservationisreceived.

10%TestRequiredDocumentationOriginalMHDCForm3341,DevelopmentFinancingCertification;

OriginalMHDCForm3342,ExhibitBwithsupportingdocumentation;

OriginalMHDCForm3343,CarryoverAllocation10%Letter;

Electronic(non‐pdf)versionofMHDCform3342,ExhibitB;

Acopyoftherecordedwarrantydeed/lease;

A copy of the signed amended and restated partnership agreement, oramendedandrestatedoperatingagreement,asapplicable;and

A copy of the note(s) and copies of recorded deed of trust(s) for all non‐MHDCloans.

Scan and email the above to [email protected] and [email protected] (orincludeonaCD/flashdriveandsubmitwiththerequiredoriginaldocuments).

10%TestDeadlineThe10%Testmustbemetnolaterthantwelve(12)monthsaftertheeffectivedateof theCarryoverAllocation. Alldocumentationevidencingthe10%Testhasbeenmet must be submitted to MHDC staff by the end of the 13th month after theCarryoverAllocationeffectivedate.Earlysubmissionisencouraged.

ConstructionLoanClosingGuidanceMHDC’slegaldepartmentischargedwiththeroleofoverseeingandcoordinatingclosingsonalldevelopmentsreceivingloanfundsand/orLIHTCsfromMHDC.Thisprocessincludesthe receipt and reviewof all requiredduediligence items, drafting and negotiation of allMHDCloanand/ortaxcreditdocuments,reviewofallloandocumentsfromotherlenders,ifany,providing loan fundsto the transaction,aswellasreviewingandapprovingallothercollateraldocumentationgermanetothedevelopment. ThissectionprovidesanoverviewofMHDC’sconstructionloanclosingprocess, includingcertainspecificrequirementstobefulfilledandkeytimingissuesrelevanttotheprocess.


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KeyMilestonesintheConstructionLoanClosingProcessWithinMHDC’sconstructionloanclosingprocessthereareeightnotablestages.

FirmSubmission

While there are multiple steps that occur with regard to underwriting andenvironmental requirements prior to a borrower providing a Firm Submission toMHDCstaff,theFirmSubmissionitselfisthefirstkeymilestoneintheloanclosingprocess. When the Firm Submission documentation is provided to MHDC staff,MHDC’slegaldepartmentwillassignaclosingattorneytospearheadthetransactionon behalf of MHDC. This is the initial point at which MHDC’s legal departmentgenerallybecomesinvolvedinadevelopment. OnceMHDC’s legaldepartmenthasassignedaclosingattorney, theborrowershouldbegin includingMHDC’sattorneyinallconferencecallsandcorrespondencerelatedtothedevelopment.

ReviewofFirmSubmissionDueDiligence

AllappropriatedepartmentswithinMHDCinvolvedintheFirmSubmissionreviewprocesswillconductreviewsoftheirrespectiveduediligenceitemsfromtheFirmSubmission.Uponcompletionoftheirrespectivereviews,eachdepartmentwillidentifyallcommentsorconcernsrelatedtoitsrespectiveitemsfromtheFirmSubmissionduediligenceitemsandwillprepareamemorandumtoMHDC’sunderwritingdepartmentlistingallissueseachrespectivedepartmenthasidentifiedintheFirmSubmissionmaterialswhichmustbeaddressedbythedeveloper.TheFirmCommitmentcannotbeissueduntilallreviewingdepartmentsaresatisfiedwiththeFirmSubmissionmaterials.TheloneexceptionistheMHDClegaldepartment,whichwillprovideitscommentsintheformofaclosingduediligencechecklistwhichwillbecirculatedtothedeveloperunderseparatecover.

FirmSubmissionCommentsandClosingChecklistCirculated

Upon completion of all departmental reviews, the Firm Submission reviewmemorandumswillbecompiledbytheMHDCunderwriterandattachedtothefirmcommitment. In addition,with respect to theMHDC legal department review, theclosingattorneywillcirculatecommentstopertinentFirmSubmissionitems,alongwith MHDC’s complete construction loan closing due diligence checklist. Thischecklistprovidesaprojectedcomprehensive listof all itemswhich theborrowerwill be required to submit andwhichMHDCstaffwill have to approvebefore theconstruction loanclosingcanoccur. However, thecontentof the loanclosingduediligencechecklist is subject tochange throughout thecourseof theduediligenceprocess as facts and circumstances evolve which may require the addition ormodification of requirements reflected on the initial closing checklist. If theborrower has not already started including the MHDC closing attorney on allconference calls and correspondence prior to this stage, it is imperative that theborrowerimmediatelybeginincludingMHDC’sattorneyatthispoint.Failuretodoso is likely to cause several issues which will inevitably slow down the closingprocess,suchasfailuretoproperlysubmitorcorrectissueswithrequireditemsonMHDC’sloanclosingchecklist.


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On‐GoingLoanClosingDueDiligenceSubmissionandReview

Once all MHDC departments have circulated comments to the Firm SubmissionitemsandacopyofMHDC’sclosingchecklisthasbeensentout,itisincumbentuponthe borrower to work diligently to submit all items on the closing checklist forMHDCstaff’s reviewandapproval. As itemsare received,MHDCstaffwill reviewdue diligence and provide comments on any deficiencies, as necessary. It is theborrower’sresponsibilitytoaddresssuchdeficienciesinatimelymanner.

IssuanceofFirmCommitment

The FirmCommitment issued to the owner byMHDC staff contains all of the keyterms of the business deal being agreed to between MHDC and the owner as itpertainstotheloanfundsand/ortaxcreditsbeingissuedbyMHDC.OncetheFirmCommitment is issued, MHDC’s closing attorney can begin drafting MHDCdocuments and working with the owner to establish a closing timeline andprojectedclosingdate.

DraftandCirculationofMHDCLoanDocuments

After the Firm Commitment has been issued, MHDC’s closing attorney will draftproposed documents and will then circulate draft documents to all necessarypartiesforreview.

FinalizationofLoanClosingDueDiligenceandMHDCLoanDocuments

Subsequent to theMHDCdocumentsbeing circulated, inaddition to continuing toreceive and review due diligence items from MHDC’s closing checklist, MHDC’sclosing attorneywill field and review any comments toMHDC’s documents. It isimportant to note that, while MHDC attempts to be reasonable in addressinglegitimate concerns or requested changes to MHDC’s documents to properly andaccurately reflect thebusinessdealMHDChasagreed to,MHDCgenerallywillnotmakematerialchangestoitsdocuments.

ExecutionofMHDCDocumentsandReleaseofFunds

OnceallitemsonMHDC’sclosingchecklisthavebeensubmittedtoMHDCstaffandapproved by the appropriate parties, and all parties to the transaction haveapproved theMHDCdocuments, the transactionwillbe cleared to closeand fund.MHDC staff generally requires all due diligence be submitted in final form andapproved byMHDC staff at least seven days prior to the scheduled closing date.Likewise, MHDC staff generally requires all MHDC documents be fully negotiatedandagreedtoatleastthreedayspriortothescheduledclosingdate.UnlessMHDC’sclosing attorney specifically approves an alternative arrangement, MHDC willrequiretheclosingofanMHDCloantakeplaceinMHDC’sKansasCityoffice.

LoanClosingChecklistDueDiligenceRequirementsAllMHDClegalandclosingformscanbeaccessedonMHDC’swebsite.

MHDC’s closing checklist indicates all due diligence which must be submitted to andapprovedbyMHDCstaffbeforeclosingonanMHDCloan.MHDCwillnotcloseonorfundaconstruction loanpriortothesatisfactionofall itemsontheMHDCloanclosingchecklist.Thepurposeofthissectionistohighlightsomeofthekeyduediligenceissueswhichshould


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betopofmindtoallborrowerswhenworkingtowardaclosingonanMHDCloan.However,please note this is not an all‐inclusive list of required items. Also, in reviewing thatchecklist, please keep in mind every loan closing involves a unique set of facts andcircumstances. Therefore,dependingonthespecificsofagivendevelopment,someitemsnotedontheformchecklistmayberenderedinapplicableandadditionalitemsnotshownonthechecklistmaybeadded.

TitleInsuranceRequirements

For all developments receiving anMHDC loan,MHDCwill require a lender’s titleinsurancepolicybeprovided.Thetitleinsurerissuingthelender’spolicymusthaveanacceptableA.M.BestorDemotechratingforthepolicytobeacceptable. MHDCrequiresthetitleinsurerissuetoMHDCaproformalender’stitlepolicypriortotheclosingdate. Thispro formapolicyshouldbe ina final form,acceptable toMHDCstaffat leastsevendayspriortothedateonwhichtheMHDCloanisscheduledtoclose.AfullexplanationofMHDC’stitleinsurancerequirementsmaybeobtainedat:http://www.mhdc.com/rental_production/other_resources.htm.

OrganizationalDocuments

MHDCrequiresallpertinentorganizationaldocumentsbesubmittedtoMHDCstafffor each tier of the ownership entity. Among the pertinent organizationaldocumentswhichmustbesubmittedarealldocumentsrequiredtobefiledwiththeMissouriSecretaryofStatetovalidlyorganizetheentity,anygoverningdocumentsof the entity which may not be filed with the Secretary of State (e.g., OperatingAgreements, Partnership Agreements, By‐Laws, etc.), and a Certificate of GoodStanding for each entity dated within thirty (30) days of the date of closing theMHDCloan.

In order to ensure project closing is not unduly delayed, MHDC recommendsincludingyourMHDCclosingattorneyinalldiscussionsandnegotiationsregardingthe ownership entity’s Amended and Restated Limited Partnership/OperatingAgreementat theearliestpossible juncture. MHDCstaffreviewsthisdocument indepthtoensurethebusinessagreementbetweenthegeneralpartner/managerandthe investors comports with the business terms as underwritten by MHDC staff.Among the specific requirements MHDC imposes on the Amended and RestatedLimitedPartnership/OperatingAgreement(“A&RLPA/OA”)arethefollowing:

1. AllequitypricingandpayinamountsmustmatchtheamountssetoutinMHDC’sFirmCommitment.

2. In the event thatmore credits are delivered than amount set forth inMHDC’sFirmCommitment,thepricingontheupwardadjustermustbegreaterthanorequalthecreditpricingatFirmCommitment.

3. FordevelopmentswithanMHDCloan,atleasttenpercentoftheFederalLIHTCandStateLIHTCequitymustbepaidinatclosingandatleastanadditionaltenpercentofFederalLIHTCandStateLIHTCequitymustbepaidinbyfiftypercentcompletionofthedevelopment.AHAPdonationswill not count towards these thresholds and each investor mustindependently meet this requirement unless the investors are relatedparties,inwhichcasetheamountsmaybeaggregated.


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4. Any partner/member receiving one percent or more of the FederalLIHTC and/or State LIHTCs must pay for its respective share of suchLIHTCs at the same pricing as the federal and/or state investor, asapplicable.

5. Theamountsandtimingofallequity installmentsmustbesufficienttoadequately fund all escrows/reserves and pay down all constructionloandebtwhendue.

6. MHDC’srequired languagemustbe incorporated intotheA&RLPA/OAverbatim, along with the partner/member information schedule (thislanguage may be obtained on MHDC’s web site athttp://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm).

SurveyRequirements

All developments receiving aMHDC loan are required to submit a survey in formandsubstanceacceptabletoMHDCstaff.EachsurveymustfollowtheALTA/ACSM2011Minimum Standard Detail Requirements andmust further comportwith allMHDC survey requirements. In addition, the surveyormust provide a completedSurveyor’sReportonformHUD‐92457A‐MThefullexplanationofMHDC’ssurveyand survey report requirements can be found on MHDC’s website athttp://www.mhdc.com/rental_production/2016_fy_items/legal_department_forms/index.htm

SiteControlDocuments

ThesitecontroldocumentsprovidedtoMHDCstaffmustadequatelydocumentthetransfer of the development from the current owner of record to the anticipatedownershipentity.Theconveyancedocumentsmustconveyanunencumberedfeeorleasehold estate. No reversionary interests or reverter clauses contained in theconveyancedocumentswillbeacceptable.Totheextentanysuchclausesexist,theymustbeexpresslysubordinatetoanyMHDCloansontheproperty.Intheeventtheestatebeingconveyedtotheanticipatedownershipentityisaleaseholdestate,theground leasemustbe fora termofat least fifty‐five (55)yearsandmustmeetallMHDCrequirements.

CompletionAssuranceRequirements

Asaconditionofprovidingloanfundstoadevelopment,MHDCrequiresthegeneralcontractortoprovideadequatecompletionassurance.Thecompletionassuranceisallowedtotakeoneoftwoforms:(i)thegeneralcontractorcanprovideadepositintheformofcashoranunconditional,irrevocable,non‐documentaryletterofcreditfor an amount equal to 15% of the value of the construction contract, or (ii) thegeneralcontractormayprovideaperformanceandpaymentbondfor100%ofthevalueoftheconstructioncontract.

MHDCLoanDocumentsMHDCgenerallyrequiresthesamesetof loandocumentsforalldevelopmentsinwhichitholdsaloan(thoughthecontentsofthedocumentsmayvarydependingonthetypeofloanfundsinvolved).However,ininstanceswhereMHDCistoholdafirstpositionloanduring


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the construction phase of the development, there are certain notable documents whichMHDCrequires,including:

1. MHDC form Construction Contract‐Cost Plus (in lieu of the AIA A102 formconstructioncontract);

2. Ifapaymentandperformancebondisbeingusedforcompletionassurance,MHDCformPerformanceandPaymentBond(inlieuoftheAIAformofbond);and

3. AssignmentofCapitalContributions.

TheAssignmentofCapitalContributionsisintendedtosecureMHDC’sabilitytoenforcetheinvestor partners’/members’ obligations to make capital contributions when due to theextent necessary to pay down the MHDC construction loan to the permanent loanamount.Thisrequirementisimposedonallinvestorsandcannotbewaived.However,intheeventan investorprefersnot to execute theassignmentdocument,MHDCwill acceptalternativesecurity in the formofanunencumbered firstpositionsecurity interest in theinvestor’sinterestintheownerentity,includingitsinterestintheLIHTCstobegeneratedbythedevelopment.

Where MHDC is in a subordinate loan position during the construction phase of thedevelopment,theAssignmentofCapitalContributionsisnotrequiredandMHDCwillallowthe owner entity to utilize the standard AIA forms for construction contracts andperformanceandpaymentbondsprovidedthatallMHDCrequirementswithregardtothecontent ineachof thesedocumentsaremet.Outsideof theseexceptions,allotherMHDCloandocumentsarerequiredregardlessofthepriorityofMHDC’sloan.

InallinstanceswhereMHDCisprovidingaloantoadevelopment(otherthanariskshareloan),thegeneralpartnerentityanditsunderlyingprincipalswillberequiredtoexecuteaGuaranty Agreement to MHDC in relation to such loan personally guaranteeing therepayment of the loan during the construction phase of the development. This GuarantyAgreement will only be in effect during the construction phase, with such guarantyterminating and the MHDC loan shifting to a non‐recourse loan upon conversion of theMHDC loan toapermanent loan. In instanceswhere theborrower isutilizingRiskShareInsurancewithMHDCasthebondissuer,anunconditional, irrevocable,non‐documentaryletterof credit for the fullamountof thebuydownamountof thebondsat conversion isrequiredinlieuofaguaranty.

With theexceptionof changes toMHDC’s loandocumentsnecessary toadequately reflectthedealtermsagreedtobyMHDCstaffandtheownershipentity,MHDCgenerallywillnotmakematerial changes to its form loandocuments.However,MHDCstaffwill attempt toaccommodate reasonable requests where possible, provided the MHDC loan documentsshouldbeinfinalformandnotsubjecttoanyfurthercomment(outsideofcorrectionsforerrors)atleastthreedayspriortothescheduledclosingdateoftheMHDCloan.

ConstructionPhaseTheConstructionPhaseofapropertydevelopmentbeginswithaNoticetoProceed,issuedbythearchitecttothegeneralcontractor,indicatingallthepre‐constructionrequirementshavebeenmetbythedevelopmentteam.AcopyoftheproperlyexecutedNoticetoProceedmustbeprovidedtotheMHDC‐designatedconstructioninspector.


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Constructionshallbe inaccordancewith theapproveddrawingsandspecificationswhichhavebeenpreparedbythedevelopment’sarchitectofrecordandapprovedbyMHDCstaffandany local governing agencies. Thedrawingsand specificationsand subsequentworkmust always complywith local building codes, zoning ordinances, and other governmentregulations.CopiesofpermitsthecontractorhasobtainedmustbeprovidedtoMHDCstaff.

Anychanges in the construction requirementsof thesedocumentsmustbepresented forconsiderationonanAIADocumentG701(“ChangeOrder”). After reviewof theproposedchanges,thisChangeOrdermustbesignedbythearchitect,thecontractor,andtheownerbeforeitwillbeconsideredaContractChangeinCostorTime.AbsolutelynoworktowhichaChangeOrderpertainswillbeallowedtobeginpriortotheproperexecutionandapprovalofthatparticularChangeOrder.

AnychangesinthelineitemsofthescheduleofvaluesastheyappearonFIN115mustalsobe accompaniedby aproperly executedChangeOrder, showinghoweach and every lineitemwillbechangedif theChangeOrder isapproved. BecausethistypeofChangeOrderdoesnotaffectthetotalcostoftheproject,itisreferredtoasa“ZeroCostChangeOrder.”This request may be submitted as a part of any other Change Order or as a standalonedocument,butitmustbeapprovedandexecutedbythefourpartiesaswithaChangeOrderforcostincreases/decreaseortimeincreases/decreases.

Duringthecourseofconstruction,everyoneenteringorworkingonthedevelopmentworksitemust strictly adhere to the standards set by the Occupational Safety and Health Act(“OSHA”)anditslatestrevisions(seesection“WorksiteSafetyandOSHATraining”below).Everyone performing work on the job must have an OSHA‐10 card showing successfulcompletionofaten(10)‐hourtrainingprogram.

Pre‐ConstructionConferencesBeforeanyactualphysicalworkcanbeperformedon thedevelopment,MHDCrequiresaPre‐Construction Conference take place. Although certain elements of the constructionphasearerequirementsofMHDCandshouldbeincludedontheagenda,Pre‐ConstructionConferencesareguidedandscheduledbythegeneralcontractor.

ConstructionLoanDisbursements

RequestingtheInitialAdvanceofMortgageProceedsThe initial Advance of Mortgage Proceedsmust be submitted to theMHDC ConstructionDisbursementDepartmentat leastsevenworkingdayspriortothedateoftheinitial loanclosing,andshouldincludethefollowing:

1. twooriginalsoftheApplicationforAdvanceofMortgageProceeds(MHDCForm2420or,ifbondfinancing,MHDCForm2420‐2);

2. two originals of theApplication and Certification for Payment (AIADocumentG702‐1992™);

3. two originals of the Continuation Sheet (AIA Document G703‐1992™) whichmustmatchtheFIN‐115submittedwithfirmsubmission;

4. copiesofallpaidreceiptsand/orinvoicestosupporttherequest;


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5. contractorlist(MHDCForm2502)withallappropriatecolumnscompleted;

6. copiesofallsubcontracts,ifanyhavebeensignedasofrequestsubmissiondate;and

7. copiesofallbids,ifnotpreviouslysubmitted.

Alldocumentationtosupporttherequesteddisbursementmustbeincluded.Alldocumentsmustbecompleteandbesignedinblueink.Incompletedocumentsmaybereturnedtothemortgagorforcompletion.

RequestingAdvanceofMortgageProceedsduringConstructionThe Advance of Mortgage Proceeds must be submitted to the MHDC ConstructionDisbursementdepartmentandshouldincludethefollowing:

1. twooriginalsoftheApplicationforAdvanceofMortgageProceeds(MHDCForm2420orifbondfinancing,MHDCForm2420‐2);

2. updatedconstructionDisbursementSchedule(MHDCForm2430)reflectingthecurrentactualcostsalongwithanyrevisedprojectsoffuturepaymentrequests,includingthearchitectfeeforsupervision;

3. two originals of the approved Contractor’s Advance Form 2440 reflecting thebuilder’soverhead,generalconditions,andprofitinanamountnottoexceedthepercentageofcompletion;

4. two originals of theApplication and Certification for Payment (AIADocumentG702‐1992™);

5. two originals of the Continuation Sheet (AIA Document G703‐1992™) whichmust match the Contractor’s/Mortgagor’s Cost Breakdown (MHDC Form FIN‐115)submittedwithFirmSubmission;

6. twooriginalsoftheChangeOrder(AIADocumentG701‐2001™);

7. copiesofallpaidreceiptsand/orinvoicestosupporttherequest;

8. contractor’sPrevailingWageCertificate(MHDCForm2450);

9. contractorlist(MHDCForm2502),withallappropriatecolumnscompleted;

10. copiesofanysubcontractsnotpreviouslysubmitted;and

11. copyofacurrentCertificateofGoodStandingissuedbytheMissouriSecretaryof State’s office for the general contractor and all subcontractors (one‐timesubmissionforsubcontractors).

Alldocumentsmustbecompleteandbesignedinblueink.Incompletedocumentsmaybereturnedtothemortgagorforcompletion.MHDCwillnotreleaseanyfundsuntiltheMHDCconstructioninspectorhasapprovedtherequest.

Processing the Advance of Mortgage Proceeds duringConstructionIfthedrawrequestandallsupportingdocumentationarecomplete,MHDCstaffwillbeginitsreview.OnceMHDCstaffapprovesthedrawrequest, itwill fundthedraw.MHDCstaffstrivestodisbursealldrawswithinfiveworkingdaysfromthedatethecompleterequest


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packageisreceived.IntheeventHOMEFundsorloanfundsfromaparticipatinglenderarebeing disbursed, it could take up to seven to ten working days to complete thedisbursement.MHDCstaffwillsendthedisbursementpackagetothetitlecompanywhichwillincludethefollowing:

1. Letterofinstructions;

2. ApplicationofMortgageProceeds(Form2420)approvedbyMHDCstaff;

3. DisbursementSchedule(Form2430)approvedbyMHDCstaff;

4. Contractor’sAdvance(Form2440)approvedbyMHDCstaff;

5. Supportingdocumentation;and

6. MHDC’s funding check or documentation showing information for a wiretransferoffunds

MHDCstaffwillalsosendacopyofitems1‐4abovetotheowner,generalcontractor,andthearchitect.

ConstructionRetainageSubject to the approval ofMHDC staff, the contractor shall be entitled to payment of anamountequaltothetotalvalueofclassesofworkacceptablycompleted,plus,thevalueofmaterialsandequipmentincorporatedinthework, lessa5%holdbackor“retainage”(oracceptable substitute security, as required by §436.306‐309, RSMo) and less priorpayments.Therewillbenoretainageonbondfees,permitfees,orstoredmaterials.Uponachievementof90%completionofthedevelopment,50%oftheretainagewillbereleasetothecontractor. TheremainderoftheretainagewillbereleaseduponMHDCstaff’sreceiptandapprovalofallrequiredduediligencetoconvertconstructionloantopermanentstatusandissue8609s,ifapplicable.

StoredMaterialsStoredmaterialsmust be approved byMHDC staff. Storedmaterialsmust be stored in asecure, bondedwarehouse or on‐site trailerwithin a twenty‐five (25)mile radius of thedevelopment. The storedmaterialsmust have the appropriate insurance and security. AcopyofthematerialinvoicesandtheCertificateofInsuranceshallbeprovided.

ChangeOrdersAnyadjustmentsmade topreviously approvedContractor’s/Mortgagor’sCostBreakdown(Form115),theconstructioncontract,orlineitemsmustbemadebyaChangeOrder.TwoChange Orders with original signatures in blue ink, along with copies of drawings,specificationsorothersupportingdocumentationmustbesubmittedtoMHDCstaff.

Savingsinlineitemsafterthefinaladvanceofmortgageproceedsiscalculatedwillnotbeadvancedtotheowner.AtthediscretionofMHDCstaff,anysavingsinlineitemsmayresultinareductionofLIHTCsorthemortgagenoteamount.HOMEprogramregulationsrequireanyundisbursedfundsbereturnedtoHUD.


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EscrowsReleases fromescrowsheldbyMHDCrequire the submissionof aRequest forReleaseofEscrowFunds(Form2460).PleasesubmittwooriginalcopiesofForm2460(withoriginalsignatures)inblueinkwithanysupportingdocumentationtosubstantiatereleasefromtheescrow.

RequestingtheFinalAdvanceofMortgageProceedsThe final Advance of Mortgage Proceeds must be submitted to the MDHC ConstructionDisbursementdepartmentandshouldincludethefollowing:

1. twooriginalsoftheApplicationforAdvanceofMortgageProceeds(MHDCForm2420orifbondfinancing,MHDCForm2420‐2);

2. applicationandCertificationforPayment(AIADocumentG702‐1992™);

3. continuationSheet(AIADocumentG703‐1992™);

4. copiesofallpaidreceiptsand/orinvoicestosupporttherequest;and

5. escrowfunds.

Please include all documentation to support the requested disbursement. All documentsmust be complete and signed in blue ink. Incomplete documentsmay be returned to themortgagorforcompletion.

LatentDefectsMHDC requires the general contractor escrow a sum equal to 2.5% of the constructioncontractamountforaperiodoftimetoensureanyfaultyconstructionwillbecured. Thiscanbe accomplishedby (a) submitting a letter of credit for said sum, or (b) reducing anexistingletterofcreditplacedinescrowforcompletionassuranceto2.5%atthetimetheMHDCconstructionloanconvertstopermanentstatus.Thelatentdefectescrowwillbeheldforfifteen(15)monthsfromthedateofsubstantialcompletion,whichdateisestablishedbythearchitect,owner,andgeneralcontractorandapprovedbyMHDCstaff.Duringthefifteen(15)‐month period, an MHDC inspector will visit the property and any findings will bereportedinwriting.Iftherearenofindings,theinspectorwillauthorizethereleaseofthelatent defect escrow. A fee of $50/hourwill be charged if the inspectormust return toverifyunrepaireddeficienciesdiscoveredduringaLatentDefectInspection.Pleaserefertothe Design/Construction Compliance Guidelines (MHDC Form 1200, Exhibit F) foradditionalinformationpertainingtothelatentdefectperiod.

Conversion/PermanentLoanClosingAll of the forms and documents referenced in this section can be accessed on MHDC’swebsite.

Just as MHDC’s legal department is in charge of overseeing and coordinating MHDCconstructionclosingsonalldevelopments receivingconstruction loansand/or taxcreditsfromMHDC,itisequallyresponsibleforoverseeingandcoordinatingtheconversionofallMHDCconstructionloanstopermanentstatusandtheclosingofallpermanentMHDCloanfinancing. This section provides an overviewof the requirementswhichmust bemet to


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convertanMHDCconstructionloantopermanentstatus.Inaddition,thissectionprovidesanoverviewofthepermanentloanclosingprocess,includingcertainspecificrequirementstobefulfilledandkeytimingissuesrelevanttotheprocess.

PLEASENOTE:FordevelopmentsreceivingonlytaxcreditsandnoloanfundsfromMHDC,MHDC’slegaldepartmentisnotinvolvedintheconversionofthosedevelopments.Assuch,theconversionoftaxcreditonlydevelopmentsisnotcoveredinthissection.

ConversionRequirementsMHDCrequiresallof itsconstruction loansbeconvertedtopermanentstatusbythedatespecified in the MHDC loan documents. In order to convert a construction loan topermanentstatus, theownermust fulfillallrequirementsset forthonMHDC’sconversionchecklist. Thepurposeof thissection is tohighlightsomeof thekeyrequirementswhichmust be fulfilled prior toMHDC staff approving final conversion of its construction loan.However, please note that this is not an all‐inclusive list of required items. Also, inreviewingthatchecklist,pleasekeepinmind,thateveryloanclosinginvolvesauniquesetof facts and circumstances. In any given construction loan closing, there may beoutstandingissueswhichcannotbeaddressedpriortothebeginningofconstruction(e.g.,relocation of easements based on movement of utility lines, removal of existingencroachments,etc.).AllsuchitemsofthisnaturewillberequiredtobecompletedaspartoftheconversionchecklistuponclosingtheMHDCconstructionloanandmustbefinalizedinorderforconversiontooccurand8609stobeissued,ifapplicable.

There are key due diligence items which all ownership entities receiving MHDCconstruction loans should be mindful of when working toward the conversion of theconstructionloantopermanentstatus.BeforeanMHDCconstructionloancanbeconvertedtopermanent status, the title insurermustprovideMHDCstaffwitha final originaldate‐downendorsement increasingthe insuredamountunderMHDC’s lenderpolicy to the fullamountofMHDC’sconstructionloan,evidencingthatnounapprovedexceptionshavebeenadded to MHDC’s lender policy, and otherwise meeting all requirements for MHDC titlepolicies. In the event theMHDC construction loanwas fully disbursed prior to the finaldisbursementof fundsforconstruction,MHDCwillstillrequireadatedownendorsementtothedateofthefinaldisbursementevidencingthatnounapprovedexceptionshavebeenaddedtoMHDC’slenderpolicysincethedateofthelastdisbursementofMHDCloanfunds.Inaddition,thetitleinsurermustprovidethefinalALTA3.1endorsementtoMHDC’slenderpolicy. MHDC staffmust be providedwith a final ALTA/ACSM surveymeeting allMHDCrequirements. If the development is a rehab of an existing development, an “as‐built”surveymaybeprovided in lieuofanALTAsurveyprovided(i) thebuilding footprinthasnotchanged,and(ii)noneweasementsneedtobeshownonthesurvey.Finally, thecostcertificationdocumentingtheactualcostsofconstructionofthedevelopmentmustbefullycompletedandapprovedbyMHDCstaff.

PermanentLoanClosingProcessandRequirementsWhereMHDCisprovidingonlypermanentfinancingtoadevelopmentandnoconstructionperiod financing, theMHDC loan is closed subsequent to completion of the development.However, while the MHDC staff loan closing itself does not take place until afterconstructioncompletion,MHDCmustbeincludedintheconstructionloanclosingprocess.MHDCstaffmustreviewandapprovemuchofthesameduediligencepriortotheclosingoftheconstructionloanclosingasitwouldwereitprovidingtheconstructionfinancingitself.


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Theduediligence itemsMHDC staffmust review and approveprior to the closing of theconstructionloanincludethestatusofthetitle,allconveyancedocuments,construction.

FinalAllocation/CostCertificationFor any development receiving funding from MHDC, the owner must complete theDevelopmentCostCertification(“CostCertification”). Fundingmeansany loanorLIHTCs.MHDC staff must review and approve the Cost Certification prior to loan conversion,permanentloanclosing,and/orissuanceof8609(s)andMissouriEligibilityStatement(s),ifapplicable. MHDC staff will evaluate all funding sources and costs and determine themaximum mortgage amount (if receiving an MHDC mortgage) and will evaluate thereasonableness of costs and uses before determining the final amount of LIHTCs, ifapplicable. MHDC staff reserves the right to ask for additional information to provideclarificationtotheCostCertificationsubmitted.

PleaserefertotheQAPthedevelopmentwasapprovedunderforlimitsoncontractorfees,developerfees,etc.,orotherrequirements.

The forms posted onMHDC’swebsite are themost up‐to‐date forms. A revision can bemade to correct any errors in the form or to make changes to comply with regulatory,statutory, or other necessary changes. Any forms revisedwill be postedwith a revisiondate.Pleaseusethemostup‐to‐dateformwhenpreparingtheCostCertification.

RequiredFinalAllocationDocumentationMHDCloanonly(noLIHTC),providethefollowing:

1. Contractor’sCertificateofActualCostIndependentAuditor’sReport

2. 3320,Contractor’sCertificateofActualCosts

3. 3320‐I,ItemizedListofallContractor’scostwithsubtotals

4. 3320‐A,IdentityofInterestWorksheet

5. 3320‐II, Itemized List of Contractor with Identity of Interest and costs withsubtotals

6. DevelopmentCostCertificationIndependentAuditor’sReport–MHDCMortgage

7. 3335,DevelopmentCostCertification

8. 3335‐A,Itemizedlistofcostsoutsideofconstructioncontract

9. FinancialStatements(compilationacceptable)BalanceSheetandIncomeStatement

10. 3335‐E,OwnerCertification

ForLIHTC‐onlydevelopments,providetwooriginalsofeachofthefollowing:





5. 3320‐II,ItemizedListofContractorwithIdentityofInterest


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6. DevelopmentCostCertificationIndependentAuditor’sReport–TaxCredit



9. 3335‐B,BuildingDetail

10. 3335‐C,Building‐by‐BuildingBasis

11. 3335‐D,SummaryofBuildings


13. 3341,TaxCreditDevelopmentFinancingCertification

ForProjectswiththecombinationofaMHDCloanandLIHTCs,providetwooriginalsofthefollowing:





5. 3320‐II,ItemizedListofContractorwithIdentityofInterest

6. DevelopmentCostCertificationIndependentAuditor’sReport–TaxCredit

7. DevelopmentCostCertificationIndependentAuditor’sReport–MHDCMortgage



10. FinancialStatements(compilationacceptable)BalanceSheetandIncomeStatement

11. 3335‐B,BuildingDetail

12. 3335‐C,Building‐by‐BuildingBasis

13. 3335‐D,SummaryofBuildings


15. 3341TaxCreditDevelopmentFinancingCertification

Anydevelopmentreceivinghistorictaxcredits,inadditiontoLIHTCs,mustsendacopyoftheHTC‐E.

Whentosubmit

ThecostcertificationshouldbesubmittedtoMHDCstaffnolaterthanthelastdayofthe second full month following the date of substantial completion for the lastbuildinginthedevelopment.

For example, if substantial completion of the last building is May 15, the costcertificationshouldbesubmittednolaterthanJuly31.


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Wheretosubmit

IfMHDCisprovidinganytypeofpermanentfinancing,submittheCostCertificationpackageto:MHDCLegalDepartment920MainStreet,Suite1400KansasCity,MO64105If MHDC is not providing any type of permanent financing, submit the CostCertificationpackageto:MHDCTaxCreditDepartment920MainStreet,Suite1400KansasCity,MO64105

ComplianceReporting

AnnualReportingAllcomplianceandassetmanagementformsanddocumentsreferencedinthissectioncanbeaccessedatwww.mhdc.com/docs/compliance.

Annual reportingallowsMHDC tomonitorcompliance issuesandverifyadherence to theprogram requirements associatedwithdevelopmentoperations. These requirements areuniqueto theprograms inuseat thegivendevelopment. MHDCAssetManagementstaffhas compiled general and administrative guidance on compliance reporting that includesprograminformationandthetypeofreportingrequiredofeachprogram.

TheTaxCreditProgram

Congress has delegated LIHTC administration to state housing agencies to assuregood, quality housingwill be availablewhere it ismost needed. This is the roleMHDCfulfills.MHDCischargednotonlywiththeallocationofLIHTC,butalsowithassuring compliance with the regulations. This includes the performance of aphysical inspection of the property and a review of management and occupancyproceduresduringtheCompliancePeriodandtheExtendedUsePeriod.

UndertheprovisionsoftheTaxCreditAccountabilityAct,alldevelopers/applicantsmust complete all necessary forms and reporting requiredduring theApplicationandallocationprocessandforaperiodofthreeyearsfollowingtheissuanceofStateLIHTCsbyMHDC.

TaxCreditProgramReportingRequirements

LIHTC reporting requirements consist of Certification On‐Line Reporting (“COL”)and submission of the Owner’s Certificate of Continuing Program Compliance(ExhibitA). COLisaninternet‐baseddata‐trackingsystemthathasbeendesignedforowners,agents,andmanagerstouploadannualtenantactivityon‐line.Ownersmust establish a username and password. Information regarding occupancy, rent


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andincomelimits,utilityallowances,andapplicablefractionsisenteredandvariousreportscanbecompiledfromentereddata.

The owner’s Certificate of Continuing Program Compliancemust be printed fromCOL, signed by the owner, notarized andmailed toMHDC. Upon submission, thisspecificExhibitAisstoredvirtuallyatMHDCandisusedthereafterforallpertinentbusiness.

TheHOMEProgram

MHDC Asset Management is responsible for ensuring the ongoing compliance ofrentalhousing thathasbeen financedbyMHDCusingHOMEFunds.This includesensuring owners of such housing are complying with the income limits, rentrestrictions,physicalconditionstandards,andothercomplianceissuesspecifiedbyfederal HOME guidelines tomeet the housing needs of low and very low incomeMissourihouseholds.

HOMEProgramReportingRequirements

TheHomeProgram reporting requirements for rental housing financedwith onlyHOMEFundsdifferfromtherequirementsofapropertyfinancedwithbothHOMEFundsandLIHTCs.

For developments financed with HOME Funds without LIHTCs, the reportingconsists of submission of the Annual Certification of Continuing ProgramCompliance(ExhibitK)andtheAnnualOccupancyReport(ExhibitH).AhardcopyofExhibitHmustbesubmittedtoMHDCeachyearnolaterthancloseofbusinessonMarch 31. In addition, an accurate, current utility allowance is required to beupdated and submitted to MHDC on an annual basis in conjunction with theseannualreports.

The annual reporting requirement for developments financed with HOME FundsandLIHTCmustbedone throughCOL, inaccordancewith theSeasonalReportingSchedule which is based on the year the last building is placed‐in‐service. Theoriginal, executed copy of the Annual Certification of Continuing ProgramCompliance(ExhibitK)muststillbeprovidedinthehardcopyformatalongwithanaccurate,currentutilityallowance.

(SeasonalReportingSchedule)

SEASONAL REPORTING SCHEDULE

Placed-In-Service Date

Activity Period Covered COL Report Due Date

Exhibit A & K Due Date

1990, 1991, 1992, 1993, 2006, 2010, 2014, 2018

April 1 – March 31 April 15

April 30

1994, 1995, 1996, 1997, 2007, 2011, 2015

July 1 – June 30 July 15

July 31

1998, 1999, 2000, 2001, 2008, 2012, 2016

October 1 – September 30

October 15

October 31

2002, 2003, 2004, 2005, 2009, 2013, 2017

January 1 – December 31 January 15

January 31

Insomeinstances,thiscouldcausereportingforapartialyearinordertocatchuptotheappropriateschedule.


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AssetManagementMHDC administers a wide array of affordable housing programs and monitors thesedevelopmentsforcompliancefrominception,throughtheCompliancePeriod,includingtheExtended Use Period. As administrator of the affordable housing programs for Missouri,MHDC is your direct source for assistance and guidance regarding specific programrequirementsandobligations.

Asafunctionofmonitoringcompliancewithourprograms,AssetManagementwillensureall parties are awareof and in compliancewith theSuspension/DebarmentGuidelines (4CSR1708.010‐8.160,asmaybeamendedfromtime‐to‐time).

SuspensionanddebarmentactionsprotectMHDCfromdoingbusinesswithindividualsandcompanieswhoposeabusinessrisktotheintegrityandresourcesoftheprogramsMHDCadministers.AllapplicantsandparticipantsmustbeingoodstandingandcompliantwithallMHDCrequirements. Inmaking suspensionanddebarmentdecisions,MHDCreliesoninformationprovidedbyandonbehalfoftheapplicant,portfolioreviews,andphysicalandfile inspections. MHDC staff’s review of documents, assurances and certifications will besubmittedinconnectionwiththesuspensionanddebarmentprocess.Eventsthatwillresultinsuspension/debarmentrecommendations:

1. Generalpartner/managingmember/sole stockholder thathasbeenremoved fromthe ownership entity of a previous development due to poorperformance/malfeasance. Subject to verification of circumstances surroundingremoval.

2. Uncuredeventofdefaultpersection1602ofTaxCreditAssistanceProgram.

3. FairHousingActviolationsinvolvingafindingofdiscriminationbyanadversefinaldecisionfromafederalcourtorajudgmentenforcingthetermsofaconsentdecree.

4. CivilRightsActviolations involvinga findingofdiscriminationbyanadverse finaldecisionfromafederalcourtorajudgmentenforcingthetermsofaconsentdecree.

5. ForeclosureinvolvinglossofunitstotheaffordablehousingstockorfailuretonotifyMHDCofforeclosure(includingdeedinlieuofforeclosuretransaction).

6. ClaimingtaxcreditsbysubmittingfalsifiedIRSForm(s)8609totheIRS.

7. Misrepresentationofeligibilityitems.

8. Failuretofulfillcommitmentsmadeintheinitialapplication.

9. Apatternofuncorrected8823sbasedonareviewoftheportfoliofortheparticipantandthetimeframeoftheissuanceofthe8823s

10. Portfoliohasahistoryoverthepastthreeyearsofoccupancybelow85%.

11. Portfoliohasahistoryoverthepastthreeyearsofunacceptableinspectionratings.


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12. General partner/managingmember/sole stockholder is onHUD’s debarred list orhasreceivedalimiteddenialofparticipationinthepastfiveyears.

13. General partner/managing member/sole stockholder is currently or has been onanystatehousingagency’sdebarredlistinthepastfiveyears.

Theinitialset‐upforeachdevelopmentisaveryimportantaspectofensuringcompliancefor participating owner/agent entities. Proper set‐up allows for open and directcommunicationswithMHDCandensuresinformationregardingtheproperty’scomplianceandprogramobligationscanberelayedandmaintained. Thefollowingoutlinesthestepsforinitialpropertyset‐ups.

LeaseUpProviding accurate and current contact information for your development andowner/management entity along with filing the various required authorization formsallowingMHDCtorequestandconductbusinessisvital.Onceinitialauthorizationformsaresubmitted, the initial lease‐up information must be submitted. This information allowsMHDCstafftoestablishthetimeframeformonitoringcompliancemovingforward.

FirstCertificateofOccupancy

In order to claim the LIHTC, all developments receiving a LIHTC allocation since1987mustcomplywithalleligibilityrequirementsfortheCompliancePeriodwhichbeginswiththefirsttaxableyearofabuilding'sCreditPeriod.TheCreditPeriodforabuildingbegins ineithertheyear it isplaced inserviceor thefirstyearafter,asdeclaredinPartIIoftheIRSForm8609.

NotificationofFirstUnitOccupancyDate

To enable MHDC staff to determine a property’s final year of LIHTC programcompliance,MHDCstaffmustbeprovidedwithacopyoftheFirstYearCertificationPart IIof IRSForm8609, asexecutedby theownerand filedwith the IRS.MHDCstaffmustalsobeprovidedwithacopyoftheFirstYearCertificationPartIIoftheMissouri Eligibility Statement. If these documents are not provided, MHDC willrequire the development to remain in the program throughDecember 31st of thesixteenthyear,forcreditallocationsmadein1990andthereafter.

Establish Username and Password for MHDC Asset ManagementReportingSystems(AMRS)

Monitoring is designed to determine if the development is in compliance withfederalandstateregulationsandwithMHDCpolicies.However,complianceissolelytheresponsibilityoftheownerandisnecessarytoretainandusetheLIHTC.

LatentDefectInspections

Each new construction and substantial rehabilitation developmentwith anMHDCconstructionloanissubjecttoLatentDefectInspection(“LDI”)uponcompletionofconstruction.MHDCstaffwillestablishanLDIdateandnotifyallparties. TheLDIwill be performed by MHDC representatives in conjunction with the architect,general contractor, and property manager. The owner/management agent entity


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willberesponsiblefornotifyingresidentswiththeproperinspectionnotifications,perprogramguidelines.TheLDIinspectionhasthespecificparametersassetforthbelow.

TimeframeforLDIInspections

Eachdevelopmentmustbeinspectedforlatentdefectswithinninemonthsfromthereportedfinalconstructiondate.Anyalterationstothisdatemustbe properly reported to MHDC so alterations in the LDI timeframes canequally reflect those changes. Failure to report and verify changes are theresponsibility of the owner/agent and their general contractor. Prior to arepresentative’s visit,MHDCstaffwillprovideofficialnoticeof theLDIviatheLatentDefectInspectionAppointmentLetter(ExhibitD).

DeficiencyResolutionsandPenaltiesforNon‐Compliance

TheLDIwill be conductedwith respect to the scopeof theproject andallconstruction rehabilitation requirements established in the originalApplication.AnydefectsobservedduringtheLDIwillbereported indetailand supported by photographs by the architect and provided to theowner/agent of record,with copies provided to the general contractor, asapplicable. From the date of the inspection report, the owner/agent ordesignatedrepresentativehasforty‐five(45)daystoreturncertificationanddocumentationsupportingthemitigationofthedeficientitemsorconditionscitedintheLDIreport.FailuretosubmitproperdocumentationsupportingcorrectionofeachitemcitedwillresultintheissuanceofaForm8823totheIRSreportinganactionofnon‐compliancebytheowner/agentinquestion.

ProgramComplianceInspectionsAllprogramcomplianceformsanddocumentsreferencedinthissectioncanbeaccessedatwww.mhdc.com/docs/compliance.

MHDC is responsible for conducting operational management audits and physicalinspections for our participating developments. These assignments consist of occupancyreviews,tenantfilemanagement(forinitialparticipanteligibilityandcontinuedeligibility),physicalassetmanagement,andgeneralprogramcompliance.

Thephysical inspections component isbasedon theUPCSCode,asprovidedbyHUDandtheapplicationoffederal,state,andlocalbuildingcodeenforcement.Inspectioncyclesvarydependingontheprogramsineffect. MHDCmustconducttheseassessmentsadherenttothe most restrictive program in effect at a given development. The inspection cyclefrequencymaybeincreased,dependingontheconditionsofthephysicalassetandoverallprogramcomplianceasobservedduringthesitereview.

FrequencyoftheRequiredInspectionandManagementReviews

For developments layeredwith several affordable housing programsMHDCmustconducttheinspectionconsistentwiththemostrestrictiveregulationsapplicabletothedevelopment.

1. MixedMHDCFundBalanceorHOMEFunds(25unitsormore)withLIHTCs–inspectionsareconductedannually.


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2. HOME Funds (5‐24 units)with LIHTCs – inspections are conducted everytwoyears.

3. HOME Funds (1‐4 units) with LIHTCs – inspections are conducted everythreeyears.

4. LIHTC‐only–inspectionsareconductedeverythreeyears.

5. Developments with Special Needs Units – inspections are conductedannually.

AHAPProgramInspections

Priortotheinspection,aMHDCComplianceOfficerwillprovidetheowner/agentadocumentpackagewhich includesanAppointmentLetter‐Exhibit(AHAP‐1). Thispackage will also contain Exhibits C‐3A, C‐4, C‐5, and information regarding theinspection process. Owners/agents participating in the AHAP program shouldcompleteallformsandinformation,andreturntoMHDCstafften(10)dayspriortothe inspection date shown on the Appointment Letter. Once the inspection iscomplete,MHDC staffwill provide theowner/agent the audit reportwithin thirty(30)daysviaExhibitAHAP‐12(PhysicalInspectionandManagementReviewForm).The owner/agent then has thirty (30) days to respond to all findings cited in thereport. Once verification has been received, MHDC staff will provide theowner/agentanAHAPC‐28Formclosingtheinspectionprocessforthatperiod.

HOMEProgramInspections

Priortotheinspection,anMHDCComplianceOfficerwillprovidetheowner/agentadocument package which includes an Appointment Letter (Exhibit HOME C‐1A).ThispackagewillalsocontainExhibitsC‐3A;C‐4,C‐5,andinformationregardingtheinspectionprocess.

Additionally, HOME program regulations require a HUD Form 9834AddendumBPart A be completed for each development. This form collects data regardingdemographics. Once the inspection is complete, MHDC staff will provide theowner/agent the audit report within thirty (30) days via Exhibit C‐12 (PhysicalInspectionandManagementReviewForm).Theowner/agent thenhas thirty (30)days to respond to all findings cited on the report. Once verification has beenreceived by, MHDC staff will provide the owner/agent a C‐28 Form closing theinspectionprocessforthatperiod.

LIHTC,TCR,andTCAPProgramInspections

Priortotheinspection,aMHDCComplianceOfficerwillprovidetheowner/agentadocumentpackagewhichincludesanAppointmentLetter(ExhibitC‐1LIHTC).Thispackage will also contain Exhibits C‐3A; C‐4, C‐5, C‐15, C‐16 (as applicable), andinformation regarding the inspection process. Once the inspection is complete,MHDCstaffwill provide theowner/agent the audit reportwithin thirty (30)daysvia Exhibit C‐12 (Physical Inspection and Management Review Form). Theowner/agentthenhasthirty(30)daystorespondtoallfindingscitedonthereport.Onceverificationhasbeenreceived,MHDCstaffwillprovidetheowner/agentaC‐28Formofficiallyclosingtheinspectionprocessforthatperiod.


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DeficiencyResolutionsandPenaltiesforNon‐Compliance

FailuretosubmitproperdocumentationsupportingcorrectionofeachfindingcitedinthePhysicalInspectionandManagementReviewFormmayresultintheissuanceof a Form 8823 to the IRS reporting an action of non‐compliance by theowner/agentinquestion.Inaddition,MHDCreservestherighttoassessamonetarypenaltyfornoncompliance.

Non‐ComplianceFees

A non‐compliance feewill be assessed for the period of time a property, specificbuilding, or unit is ineligible because of failure to satisfy program requirements.Theamountofthefeevariesbasedonthetypeonnon‐complianceobserveduponinspection. Instances of non‐compliance include, but are not limited to, physicaland/or file deficiencies, failure to submit required documentation, change inpartnershipormanagementagentwithoutpriorapprovalfromMHDCandfailuretoreport casualties in a timely manner. The detailed non‐compliance fee notice islocatedatwww.mhdc.com.

AffordableHousingAssistanceProgram(AHAP)AllAHAPformsanddocumentscanbeaccessedatwww.mhdc.com/docs/AHAP.

TheAHAPCreditisaMissouristatetaxcreditcodifiedin§§32.105‐32.115and32.120‐32‐125, RSMo, as amended (“AHAP Statutes”), authorized byMHDC, and issued to businessfirms that engage in providing affordable housing assistance contributions to non‐profitneighborhoodorganizations.TermsnotdefinedinthissectionshallhavethemeaninggiventothemintheAHAPStatutes.

AHAPOperatingAssistanceCredits

OperatingAssistancecreditsareallocatedtodonorswhoprovideeligibledonationstoagenciesforgeneraloperatingassistance.Theagencymustspecifytheprojecteduse of the donationwith respect to its operating expenses and demonstrate bothneed for the donation and leverage with additional sources. Qualified operatingexpenses include salaries, office supplies/equipment, office rent/mortgagepayments,utilities,taxes,insurance,maintenance/repairs,andprofessionalservicesincurredbytheagency.Donationsmaybereceivedfromoneormultipledonors.

AHAPProductionCredits–MultiFamilyRentalProperties

Production credits are allocated to donors who provide eligible donations toagencies for the following affordable housing assistance activities: acquisition,acquisition/rehabilitation, rehabilitation only, new construction, newconstruction/rehabilitation,andrentalassistance.

AnnualReporting

AHAP program regulations require the owner/agent provide certain informationannually fora tenyearperiod(“AHAPRestrictionPeriod”).This informationmustbeprovidedonthespecificformsoutlinedbelow.


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AHAP‐355‐Owner’sCertificateofContinuingCompliance

Owner/agents must provide MHDC staff with the Owner’s Certificate ofContinuing ProgramCompliancewithinninety (90) days of the endof thecalendaryear.

AHAP‐356‐OccupancyReport

Owner/agentsmustprovideMHDCstaffwiththeAnnualOccupancyReportwithinninety(90)daysoftheendofthecalendaryear.

AHAP‐350‐AgencyAffordableHousingActivitiesReporting

Emergencyshelters/transitionalhousingdevelopmentsmustsubmitreportsofaffordablehousingassistanceactivitiesandactualcountandcompositionofpopulationserved(listedbymonth)annually foreachyearofoperationduringtheAHAPRestrictionPeriod.

AHAP370‐HomebuyerIncomeCertification

IndividualsapplyingtopurchaseanAHAPhomeshouldbeadvisedearlyintheirinitialvisittothepropertythattherearemaximumincomelimitsthatapplytotheunits.ManagementshouldexplaintothequalifiedAHAPbuyersthat the prior income of all persons expected to occupy the unitmust beverifiedandincludedonanapplicationandincomecertificationformpriortooccupancy.

AHAP‐371‐HomeSaleCertification

Ownermust submit this form certifying toMHDC that the cost of theunit(mortgagepayment,mortgageandcasualty insurance, andproperty taxes)isprojectedtobe incompliancewith thecorrespondingrent limits for thehousehold.

AHAP‐372‐SingleFamilyNoticeofChangeofOwnership

AHAPProductionCredit–RentalAssistance

Aspartofthemonitoringrequirements,MHDC’saccountingdepartmentreviewstherecordsofpaymentsforassistancecomparedtooccupancyreportsthatdenotetheamountofassistancegrantedtoeachresident.

AHAP‐320‐RentalAssistanceCalculationWorksheet

Owners of developments outside MSAs must complete this form for eachresident receiving rental assistance when they first begin receivingassistanceandatre‐certificationeachyearthereafter.

AHAP‐325‐RentalAssistanceAnnualReview

Owners of AHAP developments in MSAs must submit documentation toMHDC staff no later than March 31 annually (for as long as funds areavailable)toconfirmoradjusttheamountofrentalassistancebasedontheproperty’soperatingbudgetandcurrentmarketconditions.


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AHAP‐330‐ScheduleofRentalAssistancePaymentsDue

Copiesareduethirty(30)daysfromtheendofeachquarter.Thisincludesescrow agreement with the property receiving assistance, annual incomecertifications of residents receiving assistance, monthly requests forpayment,andmonthlybankstatementsdetailingaccountactivity.

AHAP‐350 ‐ Agency Affordable Housing Activities AnnualReportingForm

Foremergencyshelters/transitionalhousing,reportsofavailableaffordablehousingassistanceactivitiesandactualcountandcompositionofpopulationserved (listed by month) for each year of operation during the AHAPRestrictionPeriodmustbesubmitted.

ManagementCompanySet‐upatApplication/FirmCommitmentAllmanagementcompany/complianceformscanbeaccessedonMHDC’swebsite.

The initial step for participation in one or more of the affordable housing programsadministered by MHDC is providing specific contact, communication, and ownerauthorization information so MHDC staff can begin an assessment of the proposedowner/management company. MHDC requires certain documentation be submitted. ThedocumentationrequiredisdependentontheMHDC‐administeredprogram(s).

OwnershipChange/TransferofPhysicalAssets(TPA)ChangestothedevelopmentassubmittedintheApplicationrequirewrittennotificationtoand approval of MHDC staff. These changes may include changes in ownership, generalpartner,and/orlimitedpartner.Theformsrequiredtobesubmittedinrequestingapprovalof a change in ownership, general partner, and/or limited partner can be obtained atwww.mhdc.com/docs/compliance.

TwoPrimaryTypesofTPATransfers:

1.ModifiedTPATransfers

AmodifiedTPAisachangeineitherageneralpartnerorlimitedpartnerfromwhatwasrepresentedinthefinalorganizationdocumentsoftheownershipentityatthetime of closing on the loan and/or LIHTCs with MHDC. Such transfers requirewritten notification to and approval ofMHDC staff prior to the occurrence of thetransfer. Transfers of this nature generally require a review time of 15‐30 daysfrom the date all documentation required by MHDC is submitted in a formacceptable toMHDCstaff.However, in instanceswherethemodifiedTPA isbeingrequestedonadevelopment inwhichMHDChasanexisting loanthat isnotbeingpaid off in conjunction with the transfer, the review time may be thirty (30)days. Any party seeking approval of a modified TPA request should allow for asufficient reviewperiodbyMHDCstaff indeterminingwhen tosubmit its requestforapproval.


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2.FullTPATransfers

AfullTPAisachangeintheactualownershipentityfromwhatwasrepresentedinthefinalorganizationaldocumentsoftheownershipentityatthetimeofclosingonthe loanand/orLIHTCswithMHDC.SuchtransfersrequirewrittennotificationtoandapprovalofMHDCstaffpriortothetransfer.Transfersofthisnaturegenerallyrequire a review time of forty‐five (45) days from the date all documentationrequired byMHDC is submitted in a form acceptable toMHDC staff. However, ininstanceswherethefullTPAisbeingrequestedonapropertyinwhichMHDChasanexistingloanthatisnotbeingpaidoffinconjunctionwiththetransfer,thereviewtimemaybe30‐45days.Anypartyseekingapprovalofa fullTPArequestshouldallowforasufficientreviewperiodbyMHDCstaffindeterminingwhentosubmititsrequest for approval.NOTE: In instanceswherea fullTPA isbeingrequestedforadevelopmentwhereMHDChasanexistingloanthatisnotbeingpaidoffin conjunction with the transfer, the entity assuming ownership of thepropertymustsatisfyallrequirementsnecessary toqualifyasan“ApprovedMortgagor”under4CSR170‐3(including,butnotlimitedto,therequirementtheownershipconstituteasinglepurpose,singleassetentity).

YearEndTPAs

MHDCunderstandsthat insomeinstancesapprovalsofmodifiedor fullTPAsaredesiredpriortotheendofagivencalendaryearforvarioustaxorotherbusinesspurposes.MHDCstaffmakeseveryefforttoprocessandapproveallTPArequeststomeetanysuchdeadlines.However,inordertoensurecompletereviewofaTPArequestpriortotheendofaspecificcalendaryear,thatTPAmustbesubmittedtoMHDC no later than November 1 of the year in which the approval issought. Provided aTPA requestneeding approval prior to the endof a calendaryearissubmittedonorpriortoNovember1oftheyearinquestion,itwillreceivetoppriority forprocessing,andprovided further thatall requisitedocumentationsubsequentlyrequestedbyMHDCstaff isprovidedina formacceptabletoMHDCstaffinatimelymanner,allsuchtransferssubmittedonorpriortotheNovember1deadlinewillbefullyreviewedpriortotheendofthatcalendaryear.If,however,anownermissestheNovember1deadline, itsTPArequestwillbeplacedbehindall TPA requestsmeeting theNovember 1 deadline andMHDC cannot guaranteethatsuchTPAwillbefullyreviewedpriortotheendofthatcalendaryear.

ManagementCompanyChangeMHDC staff must approve all management changes prior to the actual change inmanagement for all developments that have an MHDC loan, HOME Funds, and/orTCAP/TCR funding. Failure to first obtain approvalmay lead toMHDC staff denying thechange, and ownership having tomake another change and possible assessment of non‐compliance fees. The forms for submission can be accessed atwww.mhdc.com/docs/compliance.ThefollowingExhibitsmustbesubmitted:

ExhibitL:PropertyInformationSheet

ExhibitJ:AuthorizedRepresentativeDesignation

ExhibitJ‐1:ManagementAuthorizedRepresentativeDesignation

ExhibitA‐2:ProjectOwner'sManagementAgentCertification


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HUD935‐2A:AFHMP(Multifamily)

HUD935‐2B:AFHMP(SingleFamily)

ManagementCompanyFeeIncreaseRequests for management fee increases must be submitted between October 1 –December 31. Increases are not automatic. Decisions are based on overall propertyfinancialhealth,managementcompliance,andinspectionratings.Theformsforsubmissioncanbeaccessedatwww.mhdc.com/docs/compliance.

OccupancyDataSubmissionGuidelinesMHDCisrequiredtocollectdataregardingthedevelopment’soccupancyformonitoringonamonthly basis. Owner/agents are required to submit theirmonthly occupancy activitythroughMHDC’sAMRSsystembythetenthofeachmonth.

AnnualFinancialStatementSubmissionGuidelinesAnnualfinancialstatementsareduewithinninety(90)daysofeachproperty’sfiscalyear‐end. All developments with thirteen (13) units or more are required to submit theirfinancialstatementsthroughMHDC’sAMRSsystem.Financialstatementsmustbepreparedusing MHDC’s Chart of Accounts and must include all schedules required by MHDC.Developmentswith twenty‐four (24)ormoreunitsmust fileaudited financial statementsthat follow Generally Accepted Auditing Standards and Government Auditing Standards(only ifHUD,RD,orHOMEassistance isreceived).Development’swith13–23unitsmayfilereviewedorcompiled financialstatements that followtheStatementonStandards forAccountingandReviewServices.

BudgetSubmissionGuidelinesBudgets are required for allMHDC‐financed and LIHTC developmentswith thirteen (13)unitsormore(excludingdevelopmentsmostlycoveredbyaProjectBasedHAPcontract).DevelopmentsarerequiredtosubmittheirbudgetsthroughMHDC’sAMRSsystemannuallybyNovember15.

RentIncreaseGuidelines

MHDCstaffsetstherentsforalldevelopmentsinvolvedintheMHDCFundBalance,LIHTC,andHOMEprograms.ThewindowforsubmittingarentincreaseeachyearisOctober1–December31.Allrentincreaserequestssubmittedoutsidethiswindowarenotprocessed.MHDCstaffdoesnotacceptmailedrentincreaserequestsunlessthedevelopmentcontainstwelve(12)orlessunits.RentincreaserequestsmustbesubmittedonlinethroughMHDC’sAMRSsystemwhichisaccessibleathttps://amrs.mhdc.com.Ausernameandpasswordisrequiredtoaccessthissystem.Itisimportanttonotethatarentincreaserequestcannotbesubmitted until the development has successfully submitted the annual budget. Theeffectivedateofaproposedrentincreasemustbeatleastoneyearaftertheeffectivedateofthe development’s last approved rent increase. Existing residentsmust be given a thirty(30) day notice before implementing any rent increase. The owner/management isrequired to post for public viewing MHDC Exhibit A‐21 (Notice to Residents ofManagement’s Intention to Submit a Rent Increase to MHDC staff for approval) prior to


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submittingtherentincreaserequesttoMHDC.TheExhibitA‐21noticeshouldhaveathirty(30)daycommentperiodforresidentstorespondtoMHDC.

Themaximumrent increase allowed for a family designateddevelopment is 7%, and themaximumrent increaseallowedforaseniordesignateddevelopment is thepreviousyearSocial SecurityCOLAadjustment. AllMHDC‐approved rent increases are issuedonFormScheduleII.

Budget‐BasedRentIncreases

All developments that havemore than a LIHTC‐only relationshipwithMHDC (i.e.MHDC or HOME loan) have their rent increases tied to an MHDC‐approvedbudget.Sincerentsaretiedtothebudget,itisimperativethedevelopmentsubmitarealistic, itemizedoperating incomeandexpensebudget. MHDCstaffanalyzestherevenueproposedundertherentincreaseandcomparesittoexpensesapprovedinthebudget todetermine if thedevelopment isprojectinga surplus/shortfall. ThetwomainperformanceindicatorsMHDClooksatwhenapprovingrentincreasesarecash flow and Debt Service Coverage Ratio (DCR). MHDC considers a healthydevelopmentonethatmaintainsa1.20DCR.DevelopmentsthatprojectaDCRthatexceedsa1.20mayhavetherentincreaserequestreducedordenied.HigherDCRsmaybeallowedfordevelopmentstoachieveagreeduponownerdistributions,tore‐pay surplus cash notes, and/or to pay remaining deferred developer fees. In anyevent,MHDCstaffwillnotapproveanincreasethatismorethan7%ofthecurrentapprovedrentorthepreviousyear’sSocialSecurityCOLAadjustment,asapplicable.

RequiredItemsforaBudget‐BasedRentIncrease:

1. FinancialStatementandBudget

2. CurrentRentRoll

3. Threecomparablerentsintheareaforeachbedroomtype

4. CurrentUtilityAllowance

5. Occupancyatthedevelopmentforthepastsix(6)months

6. Indication current residents have been notified of a proposed rentincrease

TaxCreditOnlyRentIncreases

MHDC staff’s approval for LIHTC‐only rent increases is not based on thedevelopment’s approved budget. LIHTC‐only rent increase approvals arecompliancebased.Toapprovetherequest,MHDCstaffensuresthedevelopmentisin good standing (i.e., inspections are closed, noncompliance issues are resolved,etc.),therequestdoesnotexceed7%ofthecurrentapprovedrentorthepreviousyear’s Social Security COLA adjustment, as applicable, the increase meets Coderequirements, and at least twelve (12) months have passed since the last rentincrease.

RequiredItemsforaLIHTC‐OnlyRentIncrease:

1. CurrentUtilityAllowance


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2. Indication current residents have been notified of the proposed rentincrease

3. CurrentRentRoll

WorkforceEligibility

PolicyThe MHDCWorkforce Eligibility policy was adopted by the Board of Commissioners onSeptember17,2010,andreadsasfollows:

TheMissouriHousingDevelopmentCommission(“MHDC”)herebyestablishesaworkforceeligibilitypolicy.ThispolicyreplacesanyandallpriorMHDCpoliciesregardingworkforceeligibility,includingtheWorkforceEligibilityPolicy(passedonMarch17,2006),thePolicyfor Bond Financed Multifamily Developments (passed on May 2, 2006), the WorkforceEligibility Policy clarification memorandum (passed on November 17, 2007) and allWorkforceComplianceHandbooks.

ThispolicyisapplicabletoallbusinessentitieswhoreceivefundingfromtheMHDCintheform of a grant, tax‐credit(s) or loan(s) for the purpose of developing rental housingdevelopments (collectively “Resources”). This policy does not extend to the MissouriHousing Trust Fund, any single family program and the affordable housing assistanceprogram.

AnyBusinessEntityreceivingResourcesshall:

a) Provide MHDC with an original sworn affidavit which affirms, under penalty ofperjury, that theBusinessEntity is enrolledandactivelyparticipating in a federalwork authorization program and that the Business Entity does not knowinglyemployanypersonwhoisanUnauthorizedAlieninconnectionwiththecontractedservices;

b) RequiretheirGeneralContractortoprovideMHDCwithanoriginalswornaffidavitwhichaffirms,underpenaltyofperjury,thattheGeneralContractorisenrolledandactively participating in a federal work authorization program, that the GeneralContractordoesnotknowinglyemployanypersonwhoisanUnauthorizedAlieninconnection with the contracted services, and that the General Contractor’semployeesarelawfullypresentintheUnitedStates;

c) RequirethattheirGeneralContractorobtain,andmakeavailable for inspectionbyMHDC, from each subcontractor of any tier, an original sworn affidavit whichaffirms, under penalty of perjury, that the subcontractor is enrolled and activelyparticipatinginafederalworkauthorizationprogram,thatthesubcontractordoesnotknowinglyemployanypersonwhoisanUnauthorizedAlieninconnectionwiththecontractedservices,andthatthesubcontractor’semployeesarelawfullypresentintheUnitedStates;

d) ProvideMHDCwithdocumentationwhich shows to the satisfactionofMHDC thatthe Business Entity and their General Contractor have enrolled in a federalworkauthorizationprogram. AnexampleofaprovisionofdocumentationwhichmeetsthisrequirementisacopyoftheE‐Verifymemorandumofunderstanding;


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e) RequiretheirGeneralContractortoobtain,makeavailableforinspectionbyMHDC,and provide copies as requested, from each subcontractor of any tier,documentationwhichshowstothesatisfactionofMHDCthatthesubcontractorhasenrolledinaFederalWorkAuthorizationprogram.

f) Require a provision which stipulates that “the Contractor shall comply with allapplicable federal, state and local labor laws and is not Knowingly in violation of§285.530(1),RSMo,andshallnothenceforthbe insuchviolation” toappear in itscontractwith the general contractor, in contracts between the general contractorandsubcontractors,andcontractsbetweensubcontractorsofanytier.

g) Require a provision which stipulates that the Contractor shall comply with§285.230,§285.233,§285.234,§285.500–285.515,and§285.550,RSMo.

h) Require a provision which stipulates that the Contractor for the purposes ofconstruction of an MHDC project and any subcontractor to such contractor shallprovide a ten‐hour Occupational Safety and Health Administration (OSHA)constructionsafetyprogramfortheiron‐siteemployeeswhichincludesacourseinconstructionsafetyandhealthapprovedbyOSHAorasimilarprogramapprovedbythedepartmentwhichisatleastasstringentasanapprovedOSHAprogram,unlesssuch employees have previously completed the required program. All employeeswho have not previously completed the program are required to complete theprogramwithinsixty(60)daysofbeginningworkonsuchconstructionproject.

Thetermscapitalizedhereinshallhavethefollowingmeaning:

BusinessEntity ‐ anypersonor groupof personsperforming or engaging in any activity,enterprise,profession,oroccupation forgain,benefit, advantage,or livelihood. The term"businessentity"shallincludebutnotbelimitedtoself‐employedindividuals,partnerships,corporations,contractors,andsubcontractors.Theterm"businessentity"shallincludeanybusiness entity that possesses a business permit, license, or tax certificate issued by thestate,anybusinessentitythatisexemptbylawfromobtainingsuchabusinesspermit,andanybusinessentitythatisoperatingunlawfullywithoutsuchabusinesspermit.Theterm"businessentity"shallnotincludeaself‐employedindividualwithnoemployeesorentitiesutilizing the services of direct sellers as defined in subdivision (17) of subsection 12 ofsection288.034,RSMo.

Contractor ‐ a person, employer, or business entity that enters into an agreement toperform any service or work or to provide a certain product in exchange for valuableconsideration. This definition shall include but not be limited to a general contractor,subcontractor,independentcontractor,contractemployee,projectmanager,orarecruitingorstaffingentity.

Employees‐anypersonperformingworkorserviceofanykindorcharacterforhirewithinthestateofMissouri.

Federal Work Authorization Program ‐ any of the electronic verification of workauthorizationprogramsoperatedbytheUnitedStatesDepartmentofHomelandSecurityoran equivalent federal work authorization program operated by the United StatesDepartment ofHomelandSecurity to verify informationof newlyhired employees, undertheImmigrationReformandControlActof1986(IRCA),P.L.99‐603.

Knowingly‐apersonactsknowinglyorwithknowledge.


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Unauthorized Alien ‐ an alien who does not have the legal right or authorization underfederallawtoworkintheUnitedStates,asdefinedin8U.S.C.1324a(h)(3).

ComplianceGuidanceOn September 17, 2010,MHDCpassed aWorkforce Eligibility policy. The purpose of theWorkforceEligibilityComplianceHandbook(WECH)istoprovideguidanceforContractingPartiesinconnectionwithMHDCfundeddevelopments.

MHDC requires that all Contracting Parties adhere to all applicable labor laws andspecificallyprohibits theuseofundocumentedworkers in theconstructionofanyMHDC‐approvedDevelopment.Inaddition,MHDCrequiresthatallContractingPartiescompelallsubcontractors, mechanics, third party contractors, agents or other parties providingconstructionrelatedlaboronadevelopmenttolikewiseadheretoallapplicablelaborlawsandrequirementssetforthbyMHDC.Noncompliancewiththerequirementssetforthmayresult inveryserioussanctions includingbutnot limited tosuspensionandrevocationoffunding,rescissionoftaxcredits,andsuspensionanddebarmentfromMHDCprograms.

MHDC encourages the submission of required documentation in an electronic format viaemailorCD‐R.AlldocumentationshouldbeinPDFformat.TheCD‐RoremailedfilesshouldbeclearlylabeledwiththedevelopmentnameanddevelopmentnumberassignedbyMHDC.Intheeventitisimpossibleorimpracticaltosubmitdocumentationinanelectronicformat,hardcopiesmaybesubmitted.Emailsubmissionsshouldbesent to [email protected]‐RorhardcopysubmissionsshouldbemailedtoMHDC’sKansasCityofficeandclearlylabeled“WorkforceEligibility.”

Audits of construction siteswill be conducted on a periodic basis. Each construction sitemusthavepresentatalltimesanindividualdesignatedtoassistwiththeauditprocess.

ComplianceRequirements

ContractLanguageRequired

Specific languageisrequiredforallconstructioncontractsexecutedinconjunctionwithMHDC‐approveddevelopments.Thespecific languagerequired is included inthe following section and is available in electronic Word or PDF format. Therequired language must be included verbatim in every contract with ContractingParties.

UseofE‐Verify

EachContractingPartywhohasorwillhaveemployeesthatperformlaboronsitemustenrollandactivelyparticipateinE‐Verify.

WorkforceEligibilityAffidavit

Prior to commencing work or providing labor in connection with anyMHDC‐approved Development, each contracting partymust complete and submitForm MHDC‐2507, Workforce Eligibility Affidavit. The Affidavit and proof of E‐Verifyaresubmittedwiththecertifiedpayrolls.


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ProofofUsingE‐Verify

All employers must submit a copy of the employer’s Department of HomelandSecurityMemorandumofUnderstandingasproofofenrollmentinE‐Verify.

CompliancewithMissouriStatutesandTransientEmployers.

Eachcontractingpartymustcomplywithallapplicablefederal,stateandlocallaborlawsincludingbutnotlimitedto§285.530(1),285.233,285.234,285.500–285.515,and285.550,RSMo.

OSHAtraining.

Within sixty (60) days of commencingwork, any person performing constructionlabor on any MHDC‐approved Development must have completed an OSHAconstructionsafetytrainingprogramortheequivalentofsuchprogramasdetailedin the Workforce Eligibility Policy. Proof of completion of such training must bemadeavailableonsiteduringperiodicauditsconductedbyMHDC.

ContractLanguageThe following language shall be included in all construction contracts and subcontractsincluding, but not limited to, those between the Owners, Contractors, Subcontractors, orindependent contractors in conjunction with projects which benefit from any MissouriHousing Development Commission (MHDC) administered funding sources including, butnotlimitedto,loans,MHDCissuedbonds,andLowIncomeHousingTaxCredits:

“The contracting parties acknowledge and agree to be bound by the MHDCWorkforceEligibilityPolicy.IfthereisaviolationoftheMHDCWorkforceEligibilityPolicy,asmaybeamendedfromtimetotime,thecontractingpartiesaresubjecttosanctionsbyMHDC.The impositionofsanctionswill include,but isnot limitedto,suspension or revocationof fundingprovidedbyMHDC, rescissionof credits, andsuspensionanddebarmentofthecontractingparties.

The contracting parties agree that in order to adhere to the MHDC WorkforceEligibilityPolicy,eachpartytothisagreementshallcomplywiththefollowing:

ThecontractingpartiesagreethatallcontractsandsubcontractsanddownthelinecontractsandsubcontractsenteredintoasapartofthisdevelopmentshallincludethelanguageofthisExhibit1verbatim.

ThecontractingpartiesagreetoenrollandactivelyparticipateintheDepartmentofHomeland Security’s E‐Verify program (E‐Verify) for the purpose of verifying theworkforce eligibility of employees and to provide a sworn affidavit affirming thatthe party is enrolled in and actively participating in E‐Verify, that the party’semployees are lawfully present in the United States, and that the party does notknowingly employ any person who is an unauthorized alien. The parties furtheragreetoprovidewrittendocumentationshowingproofofenrollmentinE‐Verifyina formacceptable toMHDCsuchasa copyof theMemorandumofUnderstandingentered into with Department of Homeland Security. In the event a contractingpartyisnotanemployerandisthereforeunabletouseE‐Verify,suchparty,inlieuof enrolling and participating in E‐Verify and providing the above listeddocumentation, shall provide a sworn affidavit stating that the party is unable toparticipate in E‐Verify because the party is not an employer and does not have


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employees, that all independent contractors paid by such party are properlyclassifiedasindependentcontractorsandshouldnotbeclassifiedasemployees,thatallsuchindependentcontractorsarelawfullypresentintheUnitedStates,andthatanysuchindependentcontractorsarenotunauthorizedaliens.

Thecontractingpartiesshallcomplywithallapplicablefederal,stateandlocallaws,including but not limited to, RSMo §285.530(1), 285.230, 285.233, 285.234,285.500‐285.515,and285.550.

The contracting parties shall require participation in or provide a ten‐hourOccupationalSafetyandHealthAdministration(OSHA)constructionsafetyprogramfortheiron‐siteemployeesandindependentcontractorswhichincludesacourseinconstructionsafetyandhealthapprovedbyOSHAorasimilarprogramapprovedbythedepartmentwhichisatleastasstringentasanapprovedOSHAprogram,unlesssuch employees have previously completed the required program. All employeesand independent contractors are required to complete the program within sixtydays of beginningwork and shallmakedocumentationproving completion of theprogramavailableforinspection.

The contracting parties agree to permit site access to MHDC for the purpose ofconductingWorkforceEligibilityPolicycompliancereviewsandshall cooperate inprovidingrequesteddocumentationcongruentwiththetermsofthisagreement.”

WorksiteSafetyandOSHATrainingSafetyonconstructionsites isoftheutmost importance. Managementcommitmentisthekey factor to success of any safety program and adherence to safety standards must bemodeledandenforcedbythegeneralcontractor.

Pursuant to theWorkforceEligibilitypolicy,anypersonperformingconstruction laboronany MHDC‐approved development must have completed an OSHA construction safetytrainingprogramortheequivalentofsuchprogramwithinsixty(60)daysofcommencingwork.ProofofcompletionofsuchtrainingmustbemadeavailableonsiteduringperiodicauditsconductedbyMHDC.

MHDCstaffprovidesperiodicOSHA training. MHDCprovided training is available toanyperson who is or will be performing labor on an MHDC‐approved development free ofcharge, except for a nominal charge for trainingmaterials. The cost ofmaterialsmaybewaived for non‐profit organizations and small emerging businesses includingMBE/WBE/DBEandSection3businesses. ContactMHDCstaff torequestawaiverof thematerialsfee.

TransientEmployerRequirementsMHDC’s Workforce Eligibility policy requires compliance with transient employer laws.Transient employermeans an out‐of‐state employer, as defined by theMissouri statutes.Out‐of‐stateemployerswhotemporarilytransactanybusinesswithinthestateofMissouriare defined as transient employers and are required to register, file a bond, and remitwithholdingtaxtotheMissouriDepartmentofRevenue.


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Someout‐of‐stateemployersareexemptfromthetransientemployerbondingrequirement.EmployerswhomeetallthreeofthefollowingcriteriaarenotrequiredtofileabondwiththeMissouriDepartmentofRevenue:

a) The principal place of business of the out‐of‐state employermust be in a countywhichbordersthestateofMissouri;and

b) The employer must have been under contract to perform work in the state ofMissouriforatleastsixty(60)dayseachyearforthepasttwocalendaryears;and

c) Theemployermustobtainataxclearanceissuedbythedepartmentstatingthattheemployerhascompliedwiththetaxlawsofthisstateandwiththeprovisions.

EmployersrequiredtocomplywiththetransientemployerbondrequirementsmustsubmitproofofcompliancepriortocommencingworkonanMHDCapproveddevelopment.

PrevailingWage

IntroductionTheDavis‐BaconActof1931andadditionallawsknownastheRelatedActsareacollectionofUnitedStatesfederallawswhichestablishedtherequirementforpayingprevailingwageoncertainpublicworksorpubliclyfundedprojects.Theselawsrequireallcontractorsandsubcontractorspaysomeoftheiremployeesparticularwageratesdependingonthetypeofworkeachemployeeperforms.

Davis‐Baconlawsdonotapplytoalldevelopments.Onlycertaincircumstanceswilltriggerthe applicability ofDavis‐Bacon such as the use ofHOMEFunds for twelve (12) ormoreunits.

While Davis‐Bacon only applies to some developments, the MHDC 2016 QAP includes aprovision requiring payment of prevailing wage on all MHDC approved developments,regardless ofwhether Davis‐Bacon is required by law. Because of this provision,MHDCrequiresweeklycertifiedpayrollsbesubmittedforalldevelopments.

WorkersPrevailingwagewillapplytoanypersonperformingconstructionlaborontheconstructionsite. Persons performing construction labor are listed as laborers and mechanics andcontractors are required to pay those laborers andmechanics a minimum of the locallyprevailingwageratesandfringebenefitspaidonprojectsofasimilarcharacter.

WorkingForemen

Foreman or supervisors that regularly spend more than 20% of their timeperforming construction work must be paid prevailing wage under thecorrespondingworkerclassification.

WageRatesandPayrollProcessingWageratesaresetby followingthewagedeterminationspublishedby theDepartmentofLabor forDavis‐Bacon. UnderDavis‐Bacon laws,all contractorsandsubcontractorsmustpaytheirlaborersandmechanicsnotlessthantheprevailingwageratesandfringebenefits


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for correspondingclassesof laborersandmechanicsemployedonsimilarprojectswithinthearea.

WageDeterminations

The Wage and Hour Division of the Department of Labor (“Division”) issuescommunications known asWageDeterminations (sometimes referred to asWageDecisions).AWageDeterminationisalistingofwageratesandfringebenefitratesfordifferentclassificationsoflaborersandmechanicsinagivenareaforaparticulartypeofconstruction.

The Division issues its Wage Determinations by publication of a notice in theFederal Register. Wage Determinations are effective from the date of notice andhavenoexpirationdate.WageDeterminationsarecontinuallyupdatedandchangefrequently. However, only one Wage Determination will be applicable to adevelopment.TheWageDeterminationthatwillapplytoadevelopmentwillbetheWage Determination in effect on the date the construction loan documents aresigned.TheWageDeterminationofthatdateis“lockedin”andsubsequentupdatesor modifications to Wage Determinations will not affect the wage rates on thedevelopment.

IntheeventadevelopmentusesconstructionfinancingthroughasourceotherthanMHDC, thedeveloper is required tonotifyMHDCstaffwithin ten (10)daysof theconstruction loan closing date and provide a copy of the executed constructioncontracttoMHDC.

Within the body of eachWage Determination a listing of classifications (laborersand mechanics) will be found. Accompanying those classifications will be basichourly wage rates and fringe benefit rates that have been determined to beprevailingforthesametypeofconstructionwithinthegeographicareacoveredbytheWageDetermination.

Classifications

Some classificationsmay include a subclass or group number. Common examplesinclude Operator, Truck Driver, and Painter. Subclasses or groups may havedifferentpayraterequirementssodetailingthesubclassonthecertifiedpayrollsisimportant.

WageAmounts

Alldevelopmentswithbuildings that are fouror fewer storieswillbe required tocomply with the "Residential" Wage Determinations. All developments that havebuildings with five or more stories must comply with the "Building" WageDeterminations.

Wage rates are based on classification of the worker. The classification isdetermined based on the type of work actually being performed by the workerduring the pay period. It is important to note, the prevailing wage for eachclassification must be paid to a worker in the classification regardless of theworker’s skill level. For example, if a worker is performing duties normallyperformed by a carpenter, that worker must be paid prevailing wage for theclassificationofcarpenter,evenifthecontractordoesnotconsidertheworkertobefullytrained.


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Intheeventaworkerperformsdutiesinmorethanoneclassification,theemployermay pay wage rates separately provided the employer maintains accurate timerecords showing the amount of time spent in each classification of work. If timerecordsarenotavailable,theemployermustpaytheworkerthehigherofthewagerateoftheclassificationsforthedutiesperformed.

Wagescanbecalculatedbyvariousmethodssuchaspiecework.Regardlessof themethodusedtocalculatewages,thetotalwagesmustbeconvertedtoanhourlyrateforsubmissiononthecertifiedpayrollreportsandsuchhourlyratemustmeettheminimumprevailingwagerates.

ApprenticeRates

Apprentices may be paid less than the Wage Determination rate, provided thepersonemployed is individually registered inabona fideapprenticeshipprogramregisteredwiththeDepartmentofLabor.

Usually,theapprenticewagerateisexpressedasaseriesofpercentagestiedtotheamount of time spent in the program. Documentation detailing the wages ratesshould be submitted to MHDC staff. For example, an apprentice of less than sixmonthswouldreceive65%ofthejourneyman'swagerate,whileanapprenticewhohasbeenintheprogrambetweensixmonthsandoneyearwouldreceive70%,etc.

An apprenticeship certification from the Department of Labor's Office ofApprenticeshipmustbeprovidedtoMHDCstaff.Ifnoapprenticeshipcertificationisprovided,theworkermustbepaidtheprevailingwageforhisorherclassification.An approved apprenticeship program will regulate the ratio of apprentices tojourneymen. The maximum number of apprentices on the development cannotexceedtheratioallowedintheapprovedprogram.MHDCrequiressubmissionofacopyof theapprenticeshipratiosschedule foreachclassofapprenticeperforminglaboronthesite.Ifnoratioinformationisavailable,MHDCstaffwilldefaulttoa1:1ratio.

Payroll

Allworkersmustbepaidweekly.

Overtime must be paid to all covered workers who work in excess of forty (40)hoursduringaworkweek.Theovertimeratemustbeat least150%of theWageDeterminationbasicrateplus100%ofanyapplicablefringebenefitrate.

FringebenefitsareincludedinsomeWageDeterminationsandusuallyarelistedasanhourlyfringerate.IftheWageDeterminationincludesafringebenefitrateforaclassification,thefringebenefitratemustbeaddedtothebasichourlyrateunlesstheemployerprovidesbonafidefringebenefitsforemployees.Fringebenefitscaninclude health insurance premiums, retirement contributions, life insurance,vacation and other paid leave, as well as contributions to training funds. Fringebenefitsdonot includeemployerpayments for contributions requiredbyFederal,State,orlocallawssuchastheemployer'scontributiontoFICA.

Thetotalhourlywageratesmaybenolessthanthetotalofthebasicwageplusthefringebenefitwage. If the valueof provided fringebenefits is less than the fringebenefitratestatedintheWageDetermination,thedifferencemustbeaddedtothebasic wage rate. Likewise, if an employer provides fringe benefits with a value


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higherthanrequired,theemployermayoffsettheexcessamountagainstthebasicrate.Employersshouldsubmitadditionaldocumentationinthiscase.

Whenalowerbasicrateispaidduetoanoffsetoffringebenefits,theovertimeratemustbecalculatedbasedonthebasicrateasstatedontheWageDeterminationandnot on the basic rate actually paid. Based upon the previous example, when theWage Determination requires a basic wage of $15/hour and a fringe rate of$5/hour, the total wage rate including overtime would be $27.50/hour ($15 x150%)+($5x100%).Intheeventtheemployerprovidesfringebenefitsvaluedat$7/hour and, therefore, pays a basic rate of $13/hour, the employer mustneverthelesscalculateovertimebasedontheWageDeterminationrateof$15/hourratherthanthe$13/hourthatisactuallypaid.

ReportingMHDCrequiresthesubmissionofcertifiedpayrollonaweeklybasis.Eachcertifiedpayrollreport submittedmustbe theoriginal reportwith anoriginal signature. Photocopieswillnotbeaccepted.

Form

Use of FormWH‐347 (published by theDivision) is recommended. FormWH‐347and accompanying instructions may be obtained athttp://www.dol.gov/whd/forms.ItisalsoavailableonMHDC'swebsite.Useofthemostrecentrevisionoftheformisimportant.

Reports are not required to be submitted on FormWH‐347 and many softwarepackages produce certified payroll reports. Substitute forms are acceptable,provided the substitute form includes all of the information required byFormWH‐347, including the certification language and signatures. In the event asubstitute form is used, the proper certification language must be attached. ThecertificationlanguageisavailablefordownloadonMHDC’swebsite.

Contents

Regardless of which form is used, certified payrolls must be complete, legible,properlyexecuted,anddated.Thecertifiedpayrollreportsshouldcontainthenameof the development and the name of the contractor or subcontractor foridentificationpurposes.

If fringe benefits are included in the Wage Determination, paragraph (4) of thecertificationmustbecompletedbycheckingbox(a) to indicate fringebenefitsarepaid into an approved plan or by checking box (b) to indicate fringe benefits arepaidincash.Iftheemployeroffsetspartofthebasicwageduetothevalueoffringebenefits,MHDCrequiresaletterfromtheemployeritemizingthebenefitplanswiththerespectiveamountspaidtoeachplanandcertifyingfringebenefitswerepaidonbehalfoftheemployees.

Alldeductionsnotrequiredbylaworarepartofacollectivebargainingagreementmustbe authorized inwritingby theemployee.Thewritten authorization for thedeductionsshouldbeincludedwiththefirstpayroll.Forcourt‐ordereddeductions,MHDCwillacceptthecourtorderedletter.


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Numbering

Certified payroll reports should be numbered sequentially. The sequentialnumbering of reports helpsMHDC staff identifywhether any reports aremissingand relieves the contractor from having to submit reports when no work wasperformedonthesite.Thelastreporttobefiledshouldbelabeled"FinalPayroll".

Aseparatecertifiedpayrollreportwiththeaccompanyingpayrollcertificationmustbe submitted for each payroll for each weekly pay period. Providing onecertificationformultiplepayperiodsisprohibited.

Classifications

A jobclassificationmustbe listed foreachworkeroneachpayroll submitted.Thejobclassificationlistedmustshowthecurrentclassificationforthetypeofworktheperson is actually performingduring the payperiod.Only classifications listed onthe applicable Wage Determination can be used. If an additional classification isrequired, contactMHDC staff for assistance in determiningwhich classification torequest.

Ifajobclassificationhasanassociatedsubclassorgroupnumber,suchsubclassandgroupnumbershouldbeincludedonthereport.

OwnerOperatedSubcontractors

Whenacompanyisoperatedonlybyitsowner(s),theworkersmustbelistedonthecertifiedpayrollofthe“upper‐tier”contractor.

Whenanownerofacompanyworkswithhisorheremployees,theownerisonlyrequired to list his or her name andwork classification, alongwith a notation of“Owner”andthetotalhoursworked.Ownersarenotrequiredtoreporttheamountofpay.

InspectionsMHDCwillconductperiodicon‐siteinspectionswhichwillincludeinterviewswithpersonsperforming labor on the construction site. Interviewswithworkers are confidential andMHDCwill attempt to conduct the interviews in amanner causing as little disruption aspossible.

Postings

A copy of theWageDeterminationmust be displayed at the site of thework in aprominentandaccessibleplacewhereitcanbeeasilyseenbyemployees.

Records

Employers are required to maintain payroll records, including back updocumentation such as timecards, for aminimum period of three years after theconstructiondevelopmentiscompleted.Generalcontractorsmustmaintainacopyoftherecordsofallsubcontractorsforthesameperiodoftime.


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UnderpaymentsandCorrectionsIn the event MHDC staff discovers any prevailing wage compliance deficiencies, thecontractorwillbenotifiedimmediately.Thegeneralcontractorisresponsibleforensuringall underpayments are corrected within thirty (30) days. The general contractor mustprovideMHDCstaffwith:

a) An amended certified payroll report showing the corrections and labeled as“RestitutionPayroll”,and

b) Acopyofthecheck(s)makingtherestitution,and

c) Asignedstatementfromeachoftheunderpaidworker(s)statingtheyhavereceivedtherequiredrestitutionwithoutthreatofrepercussions.

AdditionalInformationandGuidanceAdditional information about Davis‐Bacon and the Related Acts may be obtained at theUnitedStatesDepartmentofLaborwebsite.

Thefollowingdocumentsareusedorprovideadditionalinformation:

a) Davis‐Bacon Labor Standards – This HUD publication provides guidance thatspecifically relates to Davis‐Bacon. MHDC Prevailing Wage requirements mirrorDavis‐Bacon.

b) FormWH‐347 –The certifiedpayroll formprovidedby theDepartment of Labor.This form is available in a fillable pdf format and can be downloaded from thewebsiteoftheDepartmentofLabor.

c) FormWH‐347 Instructions–Guidanceprovidedby theDepartmentofLaborwithspecificinstructionsforcompletingFormWH‐347.

d) HUD‐4010 – Information provided byHUD regarding Labor Standards (the termsandconditionsofthisformmustbeincorporatedintotheconstructioncontract).

e) LR‐96‐01 – This letter ruling issued byHUDprovides clarification regarding howprevailingwageappliestoowners.

f) FormWH‐1321–TheemployeerightsposterprovidedbytheDepartmentofLabor.

g) FormWH‐1321‐SP–TheSpanishversionoftheemployeerightsposterprovidedbytheDepartmentofLabor.

h) PayrollDeductionAuthorization–Thisformshouldbecompletedbytheemployeetoverifythatdeductionsareauthorized.

i) Form HUD‐2554 – This document must be used when the development includesRiskSharefinancing.

HomeownershipMHDCisdedicatedtostrengtheningcommunitiesandthelivesofMissouriansthroughthefinancing,development,andpreservationofaffordablehousing.Section42oftheIRSCodesupportshomeownershipopportunities forresidentsofsingle‐family low‐incomehousingrentaldevelopmentsbyallowingtheownerstosellthehomestotheresidentsfollowingthe


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completionoftheCompliancePeriod.ConvertingLIHTCrentalpropertiesintosingle‐familyhomeownership properties can prove to be beneficial to both resident and owner. Theopportunity of homeownership has proven to be a major incentive to residents. Thisincentiveallowstheresidentthepotentialofhomeownershipwhichmightotherwisebeoutofreach,aswellasencouragingthemtoremaininplace,adheretothelease,andcareforthe condition of their future home. MHDC has established the Homeownership Policy toguide developers and owners in the planning, development, and eventual conversion ofrental/homeownershipdevelopments(“HomeownershipPolicy”).

This section details the rules that must be adhered to when converting LIHTC rentalproperties into single family homeownership properties at the end of the CompliancePeriod.Additional restrictionsmayapplydependingonwhatother type(s)of financing isinvolved in the development. Developers and owners of affordable, single‐family rentaldevelopmentswhowant to convert theproperties intohomeownershipopportunities forthe residents must establish a plan for the timing and terms of sales to residents andqualified low‐income households at the end of the Compliance Period (“HomeownershipCommitment”). Every Homeownership Commitment will differ. MHDC realizes there aremanyoptionsfordeterminingthesalespricebesideswhatareoutlinedinthissectionandencourages the use of creativity within the Homeownership Commitment. Above all, aHomeownership Commitment must remain true to the LIHTC program by ensuring theopportunity for homeownership is directed at low‐income households at an affordableprice. The Homeownership Commitment must be proposed at Application, approved byMHDCstaffatFirmCommitment,andattachedtoeachresidentlease.

ThefollowingissuesapplytoandmustbeaddressedineachHomeownershipCommitment,in the implementation of the conversion for all single‐family rental/homeownershipdevelopments proposed with the FY2008 NOFA and thereafter, and all HomeownershipCommitmentsfiled.

1. Any development submitted to MHDC and reviewed as a single familyhomeownershipdevelopmentmustwaivetherighttooptoutoftheLIHTCprogramforanadditional fifteen(15)yearsbeyondtheCompliancePeriod.Inotherwords,theownerwillnotbeallowedto“opt‐out”oftheLIHTCprogramattheendoftheCompliance Period. This period is assigned on a building‐by‐building basis andbeginswiththefirstyearthatthecreditsareclaimed.TheLIHTCInitialCompliancePeriod ends on December 31 of the 15th year of the period for that particularbuilding.

2. Before offering a Right of First Refusal (“RFR”) to any resident, the developmentmust have fully completed the Compliance Period on ALL units. This will avoidconfusionbyallowing theowner, residents, andMHDCstaff toallbeon the sametimetable.

3. OwnersmustensurethepurchasepriceofeachhomecomplieswiththeminimumpurchasepricerequiredinSection42(i)(7)(B)oftheCode(“MinimumPrice”).Thisis defined as an amount equal to the sum of the principal amount of outstandingindebtednesssecuredbythebuilding(otherthanindebtednessincurredwithinthefive(5)‐yearperiodendingonthedateofthesaletotheresidents)andallfederal,state,andlocaltaxesattributabletosuchsale.

4. Topreserveaffordability,MHDCsets themaximumsalespriceatanamountsuchthat the monthly housing payment of principal, interest, property taxes, andpropertyandmortgageinsurance(“PITI”)plustenant‐paidutilitiesdoesnotexceed


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themaximumLIHTCrentbasedonbedroomsize(assuminga95%mortgage,thirty(30)‐yearamortization,interestrateequivalenttoMHDC’sFirstPlaceloanprogram,and typical insurance premium available to low‐income households) less a 1%discountforeachyeartheresidenthasleasedtheunit(“MaximumPrice”).

5. Thesalespricecanbedeterminedbyanumberofmethods,butitmustbecraftedwith the intention of being affordable to low‐income households at the time ofconversion.Adiscountoffthesalespricesforyearsoftenancyishighlyencouraged.The chosenmethodmustbe established in theHomeownershipCommitment andmustresultinasalespricenotlessthantheMinimumPriceandnotmorethantheMaximum Price. Several illustrative methods for setting the sales price aredescribedbelow.

6. The owner will offer the RFR within twelve (12) months of the end of theCompliancePeriod.Thiswillbeasetdateandcannotbechangedbecauseofmarketconditions, high interest rates, or other factors which affect the salability of thehouses.MHDCwillcallthisdatethe“ConversionDate”.

7. EachleasewillcontainanaddendumwhichcontainsacopyoftheHomeownershipCommitment. Because it is important for the residents to be aware of theConversionDatesotheyknowwhenthehouseswillbeofferedforsaletothem,theConversionDatemustbe referenced in the leaseaddendum.TheHomeownershipCommitmentshouldalsodefinetheterm“RightofFirstRefusal”andbecausehomeswillonlybeofferedtoresidentsingoodstanding,theHomeownershipCommitmentshould also define the term “good standing.” The owner does not have to outlinespecificdiscountsthatwillbeofferedtotheresidentasrelatedtothesalespriceofthehomes.However,theyshould,ingeneralterms,indicatetheplanforpricingthehomes.Theaddendumshouldalsostatethehomescannotbesoldatapricelowerthantheminimumsalespriceassetforthin§42(i)(7)(B)oftheCode.

8. Theownermustprovideinformationabouthomeownershiptrainingtotheresidentbyway of a notice or a brochure five (5) years before the Conversion Date. Thedeveloperwillhaveanagentorplanwithahomebuyercreditcounselor(thiswillusuallybeintheformofanonprofitagency).Thisinformationmustbeprovidedtothe resident in an addendum to the lease for all properties leased after the datewhichisfive(5)yearspriortotheConversionDate.

9. Theownershouldaddresstheissueofhowpotentialhomeownerswillbeeducatedconcerning home maintenance. Some suggestions are: have the propertymaintenance person work with potential homeowners while doing routinemaintenance and minor repairs to units, and enlist the help of nonprofitorganizationswhichpromotehomeownershipopportunities.

10. OneyearbeforetheofferingoftheRFR,theownermustdistributetoallresidentsinformation detailing the dates, timeline, and information contained within theHomeownershipCommitment.

11. Eachresidentwillbegivenuptosix(6)monthsaftertheConversionDatetodecidewhether to accept the RFR offer from the owner. Any resident who is in “goodstanding”at thetimeoftheofferingoftheRFRshallhavetherighttoexercisetheRFR.The residentwill exercise itsRFRby tenderinganoffer tobuy theproperty.Withinthisofferthereshouldbeadatesetforclosing.


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12. Afterthesixmonthperiodmentionedin#11above,theownerhasseveraloptionsinreferencetoanyunsoldunits:

a. Theowner can choose to sell the remainingunits in thedevelopment to anonprofitpartneroranotherentitythatwillcontinuetooperatetheunitsasaffordable housing in accordance with the LIHTC LURA. The sale mustinclude100%oftheremainingrentalunits,notaportionthereof.

b. Theownercanchoosetomaintaintheremainingunits inthedevelopmentas rentalunits, adhering to allMHDCExtendedUsePeriodguidelines.Theremainingunitsafterthisinitialsixmonthsellingperiodmayatanytimebeofferedforsaletothecurrentorsubsequentqualifiedresidents.

c. The owner can offer vacant units for sale to a buyer whose householdincome does not exceed 80% of the area median income. A potentialpurchaser who qualifies under this income restriction is not required toleasetheunitbeforetheypurchaseit.

13. At the sale of each home,MHDC staff will execute a partial release of the LIHTCLURAforthatparticularunit.

14. If MHDC holds amortgage on the development, the ownermust contactMHDC’sLoanServicingdepartmentjustpriortotheConversionDatetodeterminethepayoffamountforthesaleofeachhome.Therequiredpayoffwillbecalculatedover75%of thehomes in thedevelopment to accelerate thepaydownandpotentially easetheburdenonanyremainingunsoldhomes.TheownercanthenutilizethisfigureincalculatingtheMinimumPriceofthehome.

15. Thepayoffamountforeachhomewillbeequaltotheprincipalbalanceoftheloanas of the ConversionDate divided by .75 divided by the number of homes in thedevelopment.The title company assisting in the transactionmust contactMHDC’sLoanServicingdepartmentforthepayoffpriortothesaleofthehomeandtransferthepayofftoMHDCaspartoftheclosingtransaction.Theloanwillbere‐amortizedfollowingeachpaydown.Anexamplewouldbe:

a. TheprincipalbalanceofaloanontheConversionDateofadevelopmentis$500,000. There are thirty (30) homes in the development. The requiredpayoff per home sold would be $22,222.22 ($500,000 / .75 / 30). If theowner sells and closeson12homes in the5thmonth following the initialRFR,MHDCwillreceiveatotalpaydownof$266,666.64(12x$22,222.22)fromthe12closingtransactions.The loanwill thenbere‐amortizedbasedupon the $266,666.64 pay down. If then in the 10thmonth following theinitialRFR, theownercloseson3morehomes,MHDCshall receivea totalpaydownintheamountof$66,666.66(3x$22,222.22)andre‐amortizethemortgageaccordingly.

16. Aseachhomesellsandcontributestherequiredpaydownofthemortgage,MHDCstaff will execute a partial release of the deed of trust for that home. If fullrepayment of the loan occurs, the deed of trustwill be released for all remainingunsoldhomes.

17. Each house to be sold to a resident under the RFRmust pass a Housing QualityStandards (“HQS”) inspection. It must also undergo a physical needs assessmentperformedbyanMHDC‐approvedinspectorfollowingMHDCprescribedstandards.Anydeficienciesdescribedinthephysicalneedsassessmentmustbeaddressedby


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theownerbefore theConversionDate.TheHQS inspectionand/orphysicalneedsassessmentcannotbeusedinplaceofsubsequentinspections.

18. TheownershouldaddresstheissueofreplacementreservesintheHomeownershipCommitment. MHDC intends that any excess reserves after repairs andreplacements,asdeterminedonaprorataportionfortheunit(s)atthetimeofsale,willbenefitthedevelopmentandthenewhomeowner.Somesuggestionsaretoputthe unused pro rata portion of the reserves into an account to be used by theneighborhood homeowner’s association, use the unused pro rata portion of thereserves for additional downpayment assistance to the homeowner, discount thesales price by an amount equal to the unused pro rata portion of the reserveamount,andestablishareserveaccountforthenewhomeownerfromtheprorataportionofthereserveamount.

19. Thepurchasermustagreetooccupythehomeastheirprincipalresidence.

20. Ifthecurrentresidentrefusestobuythepropertyorisunabletobuytheproperty,theycannotbeaskedatanytimetovacatethepropertyexceptforreasonsspecifiedinthelease.

21. Aresidentingoodstandingcannotberelocatedorevictedtoexpeditethesaleofaunit. When renting a unit, a potential resident may not be discriminated againstbecausetheydonotwishtopurchasetheunittheyarerequestingtenancyin.

22. If ahouseholdhashadan increase in income sincemoving into thedevelopment,thiswill notdisqualify them frombuying theproperty. If a householdqualifies tomoveintotheunitasaresident,theyareincome‐qualifiedasapotentialbuyer(anexceptiontothisoccursifHOMEFundsareinvolved–seebelow).

23. To ensure all parties are prepared to begin selling the homes as outlined in theHomeownershipCommitment,theownerwillmeetwithstaffatMHDCinthe14thcompliance year to discuss the above items along with any other topics deemednecessary.TheownermustcontactMHDC’sAssetManagementdepartmenttobeginthisprocess.

24. TheownershipentitymayofferthefirstrightofrefusaltothenonprofitpartnerattheendoftheCompliancePeriod,withthenonprofitcommencingsalesoftheunitstotheresidentsandqualifiedbuyersthereafterif thefollowingrequirementshavebeenmet:

a. The limited partnership agreement or operating agreement, as applicable,governing the ownership entity has granted a first right of refusal to thenonprofitpartnerormember;

b. ThenonprofitentityisaqualifiednonprofitforpurposesoftheLIHTC.Thatis, it is a tax‐exempt organization formed with the express purpose offostering affordable housing, is not controlled by a for‐profit entity orsubsidiary, and has been materially involved in the operations of thedevelopment;

c. The nonprofit has filed a Homeownership Commitment that has beenapprovedbyMHDCstaffandattachedtoresidentleases;and

d. The nonprofit transacts the sales of the homes under the terms of theMHDC‐approvedHomeownershipCommitmentand followsallMHDCrules


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andguidelines applicable tohomeownership conversionwhen the right offirstrefusalisofferedtotheresidents.

DeterminingSalesPriceToextendtheopportunityforhomeownershiptoexistingLIHTCresidents,thehousesmustbeaffordableforpeoplewhoareatorbelow60%ofmedianincomeforthearea.

Residentswho buy the houses should replace their rent paymentwith a house paymentcomparable to what they were paying in rent. This is considered the “EquivalencyPrinciple”. To achieve maximum affordability, the monthly mortgage payment includingprincipal, interest, property taxes, property and mortgage insurance (PITI) should notsignificantly exceed themonthly rents inyear fifteen (15).As statedpreviously, the salespriceofthehomestoexistingresidentsorqualifiedbuyersmustfallbetweentheMinimumPriceandMaximumPrice.

DiscussedbelowarethreepossibleoptionsfordeterminingthesalespriceofthepropertyattheConversionDate.

ExistingObligationplusProfit

Section 42(i)(7)(B) of the Code defines theminimum purchase price for a LIHTCproperty at the end of its Compliance Period to be the sum of (i) the principalamount of outstanding indebtedness secured by the building (other thanindebtedness incurredwithin the five (5)‐yearperiodendingon thedateof sale),and (ii) all federal, state, and local taxes attributable to such sale. We alsounderstandthepropertywillneedtohaverepairsdonetoitbeforeitissoldandthedeveloperwilldesireaprofitfromeachsale.

MHDChastakentheaboveintoconsiderationandsuggestthepropertybesoldforthe following amount: [(((thepayoff of the entirenote)+ExitTaxes+Amount tomake any and all repairs deemed necessary to bring the building up to excellentcondition)/#ofunits in theproject)+ (Anamountofprofit theowner chooses toadd for the sale of each home)]. The residentwill then receive a discount off thesalespriceforeachyeartheyhaveoccupiedthepropertywithinthedevelopment,specifiedbytheowner.

Sampleassumptions:

Fifteen(15)‐homedevelopment

Remainingmortgageof$200,000

Exittaxesestimatedbylimitedpartnerat$150,000

Repairsnecessary=$180,000(inadditiontoreplacementreserves)

Profitrequestedbyowner=$20,000/home

Residentdiscount=1%peryearoftenancy

A resident who has rented the home for 7 years would pay a purchase price of$51,460or((($200,000+$150,000+$180,000)/15)+$20,000)x93%


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EquivalencyPrincipleApproach

The following procedure will occur on the Conversion Date and will be used todecidethesalespriceforthehouses.Thispricewillbeusedasthesalespriceforallthehousesuntilallthehousesaresold,regardlessoftheincomelevelofthebuyer.The sales price will be determined using the following guidelines based on amonthly housing payment equal to the current rent being charged for the unitsassuminga95%mortgage,30‐yearamortization,andaninterestrateequaltothatusedbytheMHDCFirstPlaceprogram.Existingresidentsareoffereda1%discountforeachyearoftenancy.

1. Currentmonthlyrent=$550

2. Forargumentsake,insuranceandtaxes=$150permonth

3. Mortgagepaymentisthen=$400permonth

4. UsinganestimatedMHDCMRBinterestrate=6.3%,themortgageamountwouldbe$64,623

5. Assuminga95%mortgage,thesalespricewouldbe$68,024

6. Iftheresidentleasedtheunitforfouryears,a4%discountwouldreducethesalespriceto$65,303

MaximumPriceApproach

The following application of theMaximum Price calculationwill be based on themaximumLIHTCrentinaffectatthetimethehomeissold,regardlessoftheincomelevelofthebuyer.Thesalespricewillbedeterminedusinganamountsuchthatthemonthly PITI payment plus tenant‐paid utilities does not exceed the maximumLIHTC rent based on bedroom size (assuming a 95% mortgage, thirty (30)‐yearamortization, interest rate equivalent to MHDC’s First Place loan program, andtypicalinsurancepremiumavailabletolow‐incomehouseholds)lessa1%discountforeachyeartheresidenthasleasedtheunit.

Anexamplewouldbe:

1. CurrentmaximumLIHTCrentfora3‐bedroomhouseinSpringfield=$801

2. Forargument sake, insuranceand taxes=$150.00permonth; tenant‐paidutilities=$125permonth

3. This allows for a total of $526 P&I that this family can afford/qualify permonthforahousepaymentwithathirty(30)‐yearterm

4. FirstplaceprogramMRBrateis6.3%

5. Themaximumloanamountwouldthenbe$84,980

6. Assuminga95%mortgage,thesalespricewouldbe$89,452

7. Ifthebuyerhappenstobearesidentwhohaslivedintheprojectforfour(4)years, theywould receive a4%discount off the $89,452 figure for a salespriceof$85,874.


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AdditionalHOMERulesHOMEFundsutilized fornewconstructionrentalhousingcarryanaffordabilityperiodoftwenty(20)years(“HOMEAffordabilityPeriod”).TheHOMEAffordabilityPeriod includesincomeandrentrestrictionssetforthintheHOMERegulatoryAgreementencumberingthedevelopment(“HOMERegulatoryAgreement”).HOMEregulationsallowforrentalunitstobe sold during the HOME Affordability Period but the following rules apply for unitsdesignatedasHOME‐assistedunits.Theseareinadditiontothehomeownershipruleslistedabove:

1. DuringtheHOMEAffordabilityPeriod,allpurchasersofHOME‐assistedunitsmusthave a household income at or below 80% of areamedian income. This includesboth resident purchasers and any subsequent purchasers involved in a resaletransaction.Theactualincomelimitisdependentonthehouseholdsizeandtheareainwhichthepropertyislocated.

2. For the termof theHOMEAffordabilityPeriod, some typeofdeed restrictionwillneed to be recorded against the property to help assure the new homeowneradherestoHOMErulesthroughouttheHOMEAffordabilityPeriod.Thiswillbeputinplaceby theoriginalowner.Thisdocumentwill expireon thedate theoriginalHOMEAffordabilityPeriod for thedevelopmentends.Thisdeedrestrictionshouldaddress resale provisions associated with the unit(s). Although the residentpurchasermustadhere to thesedeedrestrictions, theoriginalowner isultimatelyresponsible for compliance with the HOME rules and regulations. The deedrestrictionsmayoutlinerepaymenttermsbytheresidentpurchaserifthehomeissold to someone who does not income‐qualify under HOME rules. Violations ofaffordabilityrestrictionsmayresult inrecaptureofaprorataportionofthefundsbyHUD, atwhich timeMHDCwill look to the seller’s repayment and the originalownertoprovidetheamountofrecapturerequested.

3. Theownermustbeinvolvedwithfutureresaleoftheunits,specificallyinqualifyingthe incomes of subsequent purchasers and reporting to MHDC compliance withregulations regarding the resale of units occurringduring theHOMEAffordabilityPeriod.

4. Thehousingmustbeconsideredmodest in that thepurchaseprice for the typeofsingle‐family housing does not exceed 95% of themedian purchase price for thearea.

5. Thesalespricemustbeaffordabletothepurchaser.MHDCdefinesaffordabilityasatransaction inwhich nomore 35%of the purchaser’s income can be used to paymonthlyPITIpayments.

6. The initial homeowner who sells the unit during the HOME Affordability Periodmust receive a “fair return” which is defined by MHDC as the return of thehomeowner’sinitialinvestment.

7. Thebuyer(s)mustoccupythepropertyasitsprincipalresidenceandmustoccupysuchpropertyasitsprincipalresidencefornolessthaneleven(11)monthsofeachcalendaryear.ThepropertycannotberentedduringtheHOMEAffordabilityPeriod.

8. Theonlyexceptiontothetwenty(20)‐yeartermoftheHOMEAffordabilityPeriodisif the homebuyer receives HOME Funds directly as down payment assistance orsubordinate financing. In that case, the affordability period associated with the


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direct subsidy to the homebuyer commences and the twenty (20)‐year periodassociated with the development subsidy (from the initial construction of theproperty) is terminated.MHDCdoesnotcurrentlyofferHOMEFundsforpurchaseassistance and if it did, it cannot be targeted only to residents of specificdevelopments. The owner may wish to help its residents obtain direct HOMEsubsidiesfromParticipatingJurisdictionstoeasetherestrictionsonthehomebuyer,buttheavailabilityoffundsinthefuturecannotbecompletelyassured.

CommunityHousingDevelopmentOrganizationsPursuant to24C.F.R.§92.2,HUDhasestablishedspecificcriteriaanentitymustsatisfytoqualify as a Community Housing Development Organization (“CHDO”). These criteriagenerallyfallintothreecategories:(i)theentity’sformationandstructure,(ii)theentity’srelationship(ifany)tofor‐profitentities,and(iii)theentity’scapacitytocomplywithandperformunderHUD’sHOMEprogram.

FormationandStructureInordertoqualifyforCHDOstatus,anentitymustbevalidlyincorporatedunderapplicablestate and/or local laws, and must be a non‐profit corporation holding a tax exemptionrulingfromtheInternalRevenueServicepursuanttoeither§501(c)(3)or(4)oftheCode.Inaddition,itmustmeetallofthefollowingrequirements,allofwhichmustbeclearlysetforthintheentity’sorganizationaldocuments:

1. Nopartofthenon‐profitcorporation’snetearningsmayinuretothebenefitofany of itsmembers, founders, contributors, or individuals related to the non‐profitcorporation.

2. Thenon‐profitcorporationmusthaveamongitsstatedpurposessetforthinitsArticles of Incorporation the “provision of safe, decent, affordable housing tolow‐incomeandmoderate‐incomepersons.”

3. At least 1/3 of the non‐profit corporation’s Board of Directors must becomprised of residents of low‐income neighborhoods, other low‐incomecommunity residents, or elected representatives of low‐income neighborhoodorganizations.

4. Nomore than 1/3 of the non‐profit corporation’s Board of Directorsmay becomprised of public sector officials/employees and/or appointed by boardmemberswhoarepublicsectorofficials/employees.

5. The non‐profit corporationmust provide a formal process which allows low‐income program beneficiaries to advise the corporation on its decisionsregarding the design, siting, development, and management of affordablehousing projects. The non‐profit corporation’s organizational documentsshould not only note the existence of such a process, but also provide adescriptionoftheprocessitself.


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RelationshiptoFor‐ProfitEntitiesACHDOmaybesponsoredorcreatedbyafor‐profitentity. However,HUDplacescertainrestrictionson therelationship that canexistbetween thenon‐profitcorporationand therelatedfor‐profitentity.Specifically,thefollowingrestrictionsapply:

1. Thenon‐profit corporationmustnotbecontrolledby,norunder thedirectionof,anyindividualorentitythatseekstoattainmonetaryprofitoranyothergainfromthenon‐profitcorporation.

2. Thefor‐profitentitymustnothaveamongitsstatedpurposesthedevelopmentor management of housing. Therefore, non‐profit corporations sponsored orcreated by entities such as contractors, housing developers, and real estatemanagementfirmswouldnotqualifyforCHDOstatus.

3. The for‐profit entity cannot have the power to appointmore than 1/3 of thenon‐profitcorporation’sBoardofDirectorsandthedirectorsappointedbythefor‐profitentityareprohibitedfromhavingtheauthoritytoappointanyofthedirector positions comprising the other 2/3 of the board of the non‐profitcorporation.

4. Thenon‐profit corporationmustbe completely free to contract for goods andservicesfromvendorsofitsownchoosing.

Capacity/ComplianceInorder toqualifyasaCHDO, thenon‐profitcorporationmustbeable todemonstrate itsabilitytocomplywithallHOMErules,aswellasthecapacity tosuccessfullydeveloplow‐incomehousing.Specifically,therearethreecomponentseachnon‐profitcorporationmustbeabletodemonstrate:

1. Thenon‐profit corporationmustbe able todemonstrate a general capacity tocarry out activities forwhich the HOME programwas created. Under the FY2013 HUD Appropriations Law, CHDO’s must have staff with demonstrateddevelopmentexperience.Engagingaconsultantwillnolongersuffice.

2. The non‐profit corporation must demonstrate has a history of serving thecommunity inwhich it intends todevelophousingassistedwithHOMEFunds.Usually, thenon‐profit corporationmust show ithasserved thecommunity inquestionforatleastoneyearbeforeHOMEFundswillbeallocatedtoit.

3. Thenon‐profitcorporationmustdemonstrateitutilizesappropriateaccountingmethods and controls. Specifically, the non‐profit corporation’s standards offinancialaccountabilitymustconformtothosesetforthin24C.F.R.§84.21.

MHDCCertificationRequirementsInordertoobtaincertificationasaCHDOfromMHDC,anon‐profitcorporationmustsubmita CHDO application to MHDC staff for review. The application package must include acompleted original of the MHDC CHDO Certification/Recertification Form (Form CHDOR100)withallofthefollowingsupportingdocumentation:

1. AcopyoftheArticlesofIncorporationforthenon‐profitcorporation.ThecopyprovidedshouldbeacopyofthefullyexecutedArticlesfiledwiththeMissouriSecretaryofState.


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2. Acopyofthenon‐profitsBy‐Laws.Thecopyprovidedshouldbesignedbythenon‐profit corporation’s Secretary and certified as being the most currentversion of the By‐Laws approved by the non‐profit corporation’s Board ofDirectors.

3. ACertificateofGoodStandingfromtheMissouriSecretaryofStateforthenon‐profitcorporation.TheCertificateofGoodStandingmustbedatedwithinthirty(30)daysofthedatetheCHDOapplicationwassubmittedtoMHDCstaff.

4. A copy of the non‐profit corporation’s tax exemption ruling from the IRS (i.e.,letterfromtheIRSevidencingthenon‐profit’s501(c)(3)or501(c)(4)status).

5. Copies of the non‐profit corporation’s most current financial documentation,including:

a. Itscurrentannualoperatingandcapitalbudget;

b. Itscurrentstatementofincomeandexpenses;

c. Itscurrentbudgetvariancereport;and

d. Itsmostcurrentannualaudit(s)(ifthenon‐profitapplyingforCHDOstatusis a first time applicant ormore than two years has lapsed since thenon‐profit last applied forand receivedCHDOdesignation, thenon‐profitmustprovidecopiesofitsmostrecentthree(3)yearsofannualaudits;however,if the non‐profit has applied for and received CHDO status from MHDCwithin the last two fiscal years, the non‐profit need only supply its mostrecentannualaudit).

6. Evidence the non‐profit corporation’s accounting processes and proceduresmaintain compliance with the requirements set forth under 24 C.F.R. §84.21.Theevidenceofsuchcompliancemayconsistofeitherofthefollowing:

a. A letter from the Certified Public Accountant performing the non‐profitcorporation’s audit which certifies the non‐profit corporation is incompliancewith24C.F.R.§84.21;or

b. AsignedandnotarizedstatementfromthePresident,ExecutiveDirector,orChiefFinancialOfficerofthenon‐profitcorporationattestinghis/herbeliefthenon‐profitcorporationcomplieswith therulesandrequirementsof24C.F.R.§84.21,andacompletedfinancialquestionnaireintheformrequiredbyMHDC. If this form of evidencing compliancewith 24 C.F.R. §84.21 isutilized, MHDC staff will review the questionnaire and all supportingdocumentationandwilldetermine, in its solediscretion,whether thenon‐profit corporation has adequately evidenced its compliancewith 24 C.F.R.§84.21.

7. Acopyofthenon‐profitcorporation’scurrentorganizationalchart.

8. A copy of the non‐profit corporation’s current list of BoardMembers (clearlynotingthesectoreachBoardMemberrepresents).

9. Alistofallpaidstaffmembersofthenon‐profitcorporation.

10. Copiesofresumesandjobdescriptionsdescribingtheexperienceofallkeystaffmembersofthenon‐profitcorporation.

11. Acopyofthenon‐profitcorporation’smostrecentstrategicplan.


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Once MHDC staff has reviewed all required documentation, the applying non‐profitcorporationwill be notified byMHDC staff as towhether it has successfully qualified forCHDOdesignationorwhetherthereareinadequaciesinitsapplication.NoloansorLIHTCsallocated by MHDC to a development, which allocation is predicated on the non‐profitcorporation’s ability to qualify as a CHDO,maybe closed or fundeduntilMHDC staff hasdesignatedthenon‐profitcorporationasavalidCHDO.

MBE/WBEInitiativeMHDChasestablishedaMBE/WBE Initiative to encourage the involvementofbusinessesthat are Minority‐Owned Business Enterprises (“MBE”) and/or Women‐Owned BusinessEnterprises(“WBE”)(“MBE/WBEInitiative”).ThissectionistheguidanceforMHDC’sadministrationandsupervisionoftheprocessandits components that are paramount to MHDC’s effort to achieve diversity, to increasesupport,andtosustainMBE/WBEinvolvementinMHDCrentalpropertyproduction.TheMBE/WBEInitiativeisapplicabletoalldevelopmentswithmorethansix(6)units.

MBE/WBEDefinitionsBid‐Awrittenquotation,proposal,orofferbyabidderorcontractortoperformorprovidelabor, materials, equipment, supplies, or services for a price submitted in response to acompetitivebiddingsolicitation.Business Enterprise – A legal entity existing for the purpose of engaging in businessincluding, but not limited to, a corporation, partnership, individual, sole proprietorship,jointstockcompany,jointventure,oranyotherprivate,legallyrecognizedentity.Certification – The process bywhichMBE/WBEs verify their status to be considered anMBEorWBEcertifiedcompany.CertifyingAgency–TheOfficeofEqualOpportunityfortheStateofMissouri(OEO)orothercertifyingagency,asdeemedappropriatebyMHDCinconsultationwiththeOEO.CommerciallyUsefulFunction–Realandactualserviceinthedischargeofanycontractualendeavor, including the execution of an element ofworkby actuallyperformingwork, inaccordancewithnormalbusinesspractices,whentheentityreceivescompensationfortheworkperformedandsuchworkperformedisbonafiderealandactualservicesnecessaryandapartofthedevelopment.Compliance–Theconditionorstatusofanowner/developerthatdemonstratesitcomplieswiththegoalsoftheParticipationStandardorMBE/WBEPriority.Contract – Any and all agreements, regardless of what they may be titled, for theprocurementof supplies, services,or construction in connectionwith thedevelopmentofaffordablehousing.


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Contractor –Anybusiness enterprise that has entered into a contract in connectionwithconstructionofadevelopmentfundedorapprovedbyMHDC,includinggeneralcontractorsandsub‐contractors.ExcludedCosts–Thesearecostsassociatedwithadevelopmentnotusedincalculationstodetermine rates of MBE/WBE participation such as the cost of permits, licenses, publicsectorfinancing,bondissuancecosts,constructioninterest,andsimilarcosts.Hard Costs – Costs associated with a development for the actual, physical costs ofconstructionincluding,butnotlimitedto,generalcontracting,grading,excavation,concrete,paving, framing, electrical, carpentry, roofing, masonry, plumbing, painting, asbestosremoval,trucking,landscaping,andsimilaractivitiesorservices.Mentor/Protégé Relationship – A relationship in which a more experienced or moreknowledgeable non‐MBE/WBE developer (the Mentor) helps a less experienced or lessknowledgeable MBE/WBE (the Protégé) designed to support, promote and develop theknowledge, skill, and ability of the Protégé as a developer. The Protégémust perform aCommerciallyUsefulFunction.MinorityBusinessEnterprises(MBE)–Abusinesswhichisatleast51%ownedbyoneormoreminoritymembers;or,inthecaseofapublicly‐ownedbusiness,onewhichhasatleast51% of its voting stock owned by one or more minority group members, and whosemanagement and daily business operations are controlled one ormore such individuals.Minority group members include, but are not limited to, Black Americans, HispanicAmericans,NativeAmericans,Asian PacificAmericans, andAsian IndianAmericans. Theterm“minorityworker”shall includerepresentationsofall thepreviouslystatedminoritygroups.MBE/WBEInitiativeCoordinator–MHDCofficialassignedtheresponsibility formanaging,implementing,evaluating,andpromotingtheMBE/WBEInitiative.Non‐Compliance – The status of an owner/developer that fails to comply with theMBE/WBEInitiative.OptionalCosts–Costsassociatedwithadevelopmentthatcanbeused,butarenotrequiredtobeused,incalculationstodetermineratesofMBE/WBEparticipation,suchasdeveloperfee.Owner/Developer – The individual or entity submitting an Application for the award ofMHDC‐owned or controlled resources or that receives approval for an award of MHDC‐owned or controlled resources, including LIHTC, loans, or other funding through acompetitive applicationprocess, includingeachgeneralpartner,memberorother typeofownership interest within the owner/developer entity reduced to the principal levelirrespectiveofthenumberofentitylayerswhichmaybepresentforanyentity.Participation Standard – 10% participation of MBEs in hard costs, 10% participation ofMBEsinsoftcosts,5%participationofWBEsinhardcosts,and5%participationofWBEsinsoftcosts.


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ParticipationRate –The actual percentage ofMBE/WBEparticipation in costs associatedwithadevelopment.Principal – Any human being who has any interest in an entity identified as anowner/developer.ProfessionalServices–Serviceswhich involvepredominantlymentalor intellectual laborand skills including, but not limited to, architects, engineers, surveyors, attorneys, andaccountants.Schedule of Participation –Adocument reflecting how theParticipation Standardwill beachieved,includingalistofallMBE/WBEsproposedtoperformworkforthedevelopment.Soft Costs – Costs associated with a development for planning, architectural, relocation,legal, accounting, environmental, engineering, surveying, consulting fees, title company,disbursingcompany,marketstudy,appraisal,soilsreport,andsimilaractivitiesorservices.Utilization Plan – The document showing the plan tomeet the Participation Standard orjustifyaPriority.WomenBusinessEnterprise (WBE)‐‐‐ a businesswhich is at least 51%ownedby one ormorewomenmembers;orinthecaseofapubliclyownedbusiness,onewhichatleasthas51%of itsvotingstockownedbyoneormorewomenmembers,andwhosemanagementanddailybusinessoperationsarecontrolledbyoneormoreofsuchindividuals.

PurposeTheMBE/WBEInitiativeiscreatedandadministeredforthefollowingpurposes:

1. To facilitate, promote, and achieve equal opportunity to participate in rentalpropertydevelopmentactivities;

2. TomonitorandassesstheutilizationofMBE/WBEinrentalpropertydevelopmentactivities;

3. To monitor and assess compliance by owners/developers and contractors on allMHDC‐fundedrentalpropertydevelopments;

4. ToidentifyMBE/WBEandpromoteawarenessofMHDCrentalproperty;5. ToprovideassistanceandtrainingtoMBE/WBE;6. Toensurenon‐discriminationintheawardingofMHDCfunds;and7. Toprovideanarrowly‐tailoredprograminaccordancewithapplicablelaws.

SummaryofProgramTheMBE/WBE Initiative consists of two components: (a)Participation Standard; and (b)MBE/WBEPriority. Applications disqualified due to an incomplete submittalwill not bereviewedforcompliancewiththeParticipationStandardorqualificationfortheMBE/WBEPriority.


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ParticipationStandardMHDC’sParticipationStandardis10%hardcostsand10%softcostsforMBE,and5%hardcostsand5%softcostsforWBE. Applicationssubmittedunder9%Creditand4%CreditNOFA(s)areexpectedtomeettheParticipationStandard.AnMBE/WBEmustbecertifiedtocount towardtheParticipationStandard. AUtilizationPlansignedbytheowner/developermustbesubmittedwiththeapplicationindicatingtheplan for MBE/WBE participation, including the scope of work and compensation. AllcertificationsforMBE/WBEsperformingsoftcostitemsmustbeincludedintheApplicationandcertificationforMBE/WBEsprovidinghardcostitemsmustbeprovidednolaterthanFirmSubmission. Anoutreachplan for successfully securingMBE/WBEs toprovidehardcostandsoftcostitemsmustbesubmittedwiththeApplication.ThefinalUtilizationPlansignedbytheowner/developerandthegeneralcontractorwithallcertifications must be submitted to MHDC staff prior to construction loan closing. TheParticipation Standard can be satisfied by MBE/WBEs providing competitively‐pricedservicesand/ormaterialsinthefollowingcategories:

1. Hardcosts for theactualphysical costsof constructionwhich include,butarenotlimited to, general contracting, grading, excavation, concrete, paving, framing,electrical, carpentry, roofing, masonry, plumbing, painting, asbestos removal,trucking, and landscaping. When calculating hard costs, general requirements,overhead, bond costs, permits, and contractors profit should be excluded.Calculationsarebasedonthecontractorwhoactuallyperformsthescopeofworkasrequired.

2. Softcostswhich include,butarenot limited to,planning,architectural, relocation,legal, accounting, environmental, engineering, surveying, developer fee, consultingfees,titlecompany, disbursingcompany,marketstudy,appraisal,andsoilsreport.Inthecalculationofsoftcosts,thedeveloperfeesmaybe,butarenotrequiredtobe,included in the calculation of participation levels. Calculations are based on thecontractorwhoactuallyperformsthescopeofworkasrequired.

Additionally, development costs that do not include actual services ormaterials, such aspublic sector financing fees, reserves, and land acquisition shall not be included in thecalculation.

MBE/WBEPriorityApreferenceinfundingwillbegiventoapplicationsthatreflect:

a. A MBE/WBE developer, a developer group that includes a MBE/WBE, and/or aDeveloperMentor/Protégérelationship;or

b. MBE/WBE participation percentages significantly greater than the ParticipationStandardforbothhardandsoftcosts.

Applicants seeking the MBE/WBE Priority under paragraph (a) above must provide acomprehensive Utilization Plan signed by the owner/developer detailing the role of, and


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functions tobeperformedby, theMBE/WBE. Such roles and functionsof theMBE/WBEmustbethosetypicallyperformedbyadeveloper.AMentor/ProtégéRelationshipshallbedesignedtosupport,promote,anddeveloptheknowledge,skillandabilityoftheMBE/WBEprotégéinamannerintendedtoassistinthegrowthanddevelopmentoftheMBE/WBEasadeveloper.Applicantsseekingapreferenceunderparagraph(b)abovemustprovideacomprehensiveUtilization Plan signed by the owner/developer detailing how the applicant intends tosignificantlyexceedtheParticipationStandard.Applicants seeking the MBE/WBE Priority must include in the Application a history ofMBE/WBEparticipation,aswellasevidenceofMBE/WBEcertification.

Certification/DefinitionofMBE/WBECompaniesEachMBE/WBEmust be certified by the State ofMissouri or other certifying agency, asdeemedappropriatebyMHDCinconsultationwiththeOfficeofEqualOpportunityfortheStateofMissouri(OEO).

ApplicationforMHDCFundingAUtilization Plan signed by the owner/developer detailing how the applicant intends tomeet the Participation Standard must be included in the Application. Evidence ofMBE/WBEparticipationandcertificationforsoftcostfirmswillberequiredatapplication.EvidenceofMBEandWBEproposalsandcertificationsforhardcostfirmswillberequiredaspartoftheFirmSubmission.

FirmSubmissionWhen submitting the Firm Submission package, the signed Utilization Plan with anyupdated information, copies of any contracts or proposals entered into with MBE/WBEalongwithcopiesof theMBE/WBEcertificationmustbe included. Early submittalof theMBE/WBEpackageisencouraged.

AsyoureceiveandacceptproposalsfromMBE/WBEsaftertheFirmSubmissionhasbeendelivered toMHDC,please forward toMHDCstaff forreview.MHDCstaffmustperformacomplete review of the proposed Utilization Plan, and all supporting documentation,contracts,proposals,bids,andcertificationspriortotheclosingoftheconstructionloan.

GoodFaithEffortsAlleffortstoincludeMBE/WBEmustallowsufficienttimefortheMBE/WBEtoeffectivelyandprofessionallyparticipate in thebiddingprocess. It is important for thecontractor tohave evidence of meetings held, written notifications by email or facsimile, or certifiedletters so the contractor has proof of outreach. To achieve maximum effectiveness,outreachtoMBE/WBEshouldbedoneatthetimeofApplicationforfirmsperformingsoftcostworkandduringsubmission/approvalofarchitectdrawingsforhardcosts.Goodfaithefforts to achieve the Participation Standard must be demonstrated by the generalcontractor.Examplesofsucheffortsinclude,butarenotlimitedto,thefollowing:

1. Efforts made to select portions of the work proposed to be performed byMBE/WBEs to increase the likelihood of achieving the Participation Standard,


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includingthebreakingdownofcontractsintoeconomicallyfeasiblesubcontractstofacilitate MBE/WBE participation. When soliciting an MBE/WBE, you should bespecificregardingscopeofwork.

2. Givingwrittennotificationatleastfourteen(14)calendardayspriortotheopeningof bids soliciting MBE/WBE as a subcontractor or a supplier. This should alsoinclude agencies and organizations providing assistance in recruitment andplacementofMBE/WBEs.

3. Providing equal access to plans and specifications to all prospective contractors,includingMBE/WBEcontractors.

4. Advertising bidding opportunities in general circulation media, trade andprofessional association publications, small and minority business media, andminorityandwomen’sbusinessorganizations.

5. EffortsmadetonegotiatewithMBE/WBEsforspecificworkshallincludeevidenceofthefollowing:

a. Names, addresses, telephone numbers of the MBE/WBEs contacted, thedates of initial contact, and whether initial solicitations of interest werefollowed‐up on by contacting theMBE/WBE to determine, with certainty,whethertheMBE/WBEisinterested,

b. A description of the information provided the MBE/WBE regarding theplansandspecificationsandestimatedquantitiesforportionsoftheworktobeperformed,

c. AstatementwhyadditionalagreementswithMBE/WBEwerenotreached,and

d. Documentationof eachMBE/WBEcontactedbut rejected, and the reasonsfortherejection.

6. Efforts made to assist an MBE/WBE needing assistance in obtaining bonding,insurance,orlinesofcreditrequiredbythecontractor.

7. DocumentationindicatingaqualifiedMBE/WBEisnotavailableornotinterestedinbidding.

8. AttendanceatmeetingsscheduledbyMHDCstafforotheragenciesororganizationsto encourage better contractor‐subcontractor relationships and MBE/WBEutilizationopportunities(pre‐bidconferences,workshops,etc.).

9. Efforts to effectively use the services of available community organizations,contractor’s groups and other organizations and agencies providing assistance inrecruitmentandplacementofMBE/WBEs.

10. SendinginformationtocertifyingagenciesfordistributionofbiddingopportunitiestoMBE/WBEsontheirlisting.

CalculationofParticipationRateThemethodbywhichtheMBE/WBEInitiativeCoordinatorwillcalculatetheParticipationStandardshallincludethefollowing:


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1. Any tierofMBE/WBEcontractorsandsubcontractors tobeutilized in connectionwithadevelopmentshallbecounted.

2. Any owner/developer who is an MBE/WBE can count contractor work orprofessionalservicesperformedbytheowner/developer,includingdeveloperfees.

3. AnycontractorwhoisanMBE/WBEcancountcontractorworkorservicesactuallyperformed by the contractor, including general requirements, builder profit, andoverhead.NOTE:WhentheMBE/WBEisnotperformingtheworkbutisthenamedcontractor,creditwillbegivenfortwentypercent(20%)ofthecontractamount.

4. TheMBE/WBEmustperformaCommerciallyUsefulFunction.5. CalculationoftheParticipationStandardshallbecompletedforbothhardandsoft

costsasfollows:a. Total costs associated with the development will be reduced by any

ExcludedCosts;thenb. Totalcostsassociatedwiththedevelopmentmaybe,butarenotrequiredto

be,reducedbyanyOptionalCosts;thenc. RemainingtotalcostsshallbeseparatedintoHardCostsandSoftCosts;then

i. The total dollar value of the amount expended as payment to theMBE/WBE for work or services performed pursuant to the FirmSubmission and Firm Commitment in connection with Hard Costswill be divided by the total dollar amount of funds expended inconnectionwithallHardCostsforeachclassification;and

ii. The total dollar value of the amount expended as payment to anMBE/WBE for work or services performed pursuant to the FirmSubmissionandFirmCommitmentinconnectionwithSoftCostswillbe divided by the total dollar amount of funds expended inconnectionwithallSoftCostsforeachclassification.


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CostCategoriesThefollowingitemsshallbeconsideredHardCosts:

1.Earthwork 19. Flooring2.SiteUtilities 20. Carpet3.RoadsandWalks 21. Painting4.Off‐SiteWork 22. Signage5.Concrete 23. Bathroom&ClosetAccessories6.Masonry 24. Appliances7.StructuralMetals 25. WindowCoverings8.RoughCarpentry 26. Plumbing9.FinishCarpentry 27. FireSprinklers10.Cabinets 28. HVAC11.Waterproofing 29. Electrical12.Insulation 30. FireAlarmSystems13.RoofingSystems 31. SpecialEquipment14.Siding 32. Landscaping15.Gutters&Downspouts 33. AccessoryBuilding16.Doors&Hardware 34. Demolition17.Windows 35. SheetMetal18.Drywall 36. SiteWork

ThefollowingitemsshallbeconsideredSoftCosts:

1.Architect&EngineeringFee‐Design 13. LegalFees(Organization)2.ArchitectFee–Supervision 14. LegalFees(AcquisitionandRecording)3.SoilsReport 15. CostCertification4.Survey 16. AccountantFees5.Engineering 17. EnvironmentalAbatementServices6.EnvironmentalStudy 18. Relocation7.MarketStudy 19. Furniture,FixturesandEquipment8.Appraisal 20. ThirdPartyInspection9.Title,Recording&Disbursing 21. HistoricConsultant10.Title,Recording&Disb(Permanent) 22. GreenorNGBS CertificationConsultant11.LegalFees(Construction) 23. ConsultantFee12.LegalFees(Permanent) 24. ConstructionPeriodInsurance

ThefollowingitemsshallbeconsideredOptionalCosts:

1. DeveloperFee(calculatedasaSoftCostwhenincluded)2. GeneralRequirements(calculatedasaHardCostwhenincluded)3. BuilderOverhead(calculatedasaHardCostwhenincluded)4. BuilderProfit(calculatedasaHardCostwhenincluded)5. ConsultantFeeincludedinDeveloperFee(calculatedasaSoftCostwhenincluded)


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ThefollowingitemsshallbeconsideredExcludedCosts1.MHDCApprovedImpactFees 14. AcquisitionCostsofBuildings2.ConstructionLoanInterest 15. Land Lease3.ConstructionPeriodR.E.Taxes 16. TaxCreditAllocationFee4.MHDCRentalProductionApplicationFee 17. TaxCreditMonitoringFee5.MHDCConstructionLoanFee 18. AHAPApplicationandReservation6.MHDCConstructionInspectionFee Fee7.OtherConstructionInspectionFee 19. BondRelatedCosts8.MHDCPermanentFinancingFee 20. DebtServiceReserves(escrow)9.OtherPermanentFinancingFee 21. SyndicationCosts10.PrepaidMIP 22. OperatingReserves(escrow)11.Contingency* 23. ReplacementReserves(escrow)12.HistoricCreditFees 24. SocialServicesReserves(escrow)13.LandAcquisitionandRecordingFees 25.LeaseupandMarketing**

*Basedonhowcontingencyisexpended,itmaybeincludedinthecostsatthetimeofcertification.**Lease‐up ormarketing related to lease‐up can be considered an eligible cost if performed by aMBE/WBEnotassociatedwiththemanagementcompanyandunderseparatecontractassistinginthelease‐up/marketingoftheproperty.

MBE/WBEComplianceResponsibilitiesThe owner has the compliance responsibility for each development approved by MHDC.The owner may direct, as necessary, the responsibility of compliance to other teammembers (i.e., contractors or consultants) however, the ultimate responsibility forcomplianceiswiththeowner.

1. Throughouttheconstructionorrehabilitation,MHDCstaffwillmonitorthecumulativeParticipationStandard foreachdevelopment. TheownermustreviewtheScheduleofParticipationeachmonthandreport toMHDCstaffanyactualorperceiveddeficienciesinparticipationdollaramountsandtheParticipationStandard.

2. Atconstructionloanclosing,allSoftCostpaymentswillbereviewedagainstcontracts signed. If Soft Costs are provided throughout construction, thepaymentswillbemonitoredforcompliancewiththecontractuntil theendoftheconstructionperiod.HardCostcontractswillbereviewedagainsttheScheduleofParticipation,thegeneralcontractor’svendorpayment listings,and other documents, as MHDC staff deems necessary, to ensure timelypaymenttoMBE/WBEs. TheownermustprovideallcontractsorintenttoperformdocumentstoMHDCstaff.

3. IfthecontractisawardedonlessthanthefullParticipationStandard,suchawardwillnotrelievetheowneroftheresponsibilitytocontinuereasonablegood faith efforts to provide participation opportunities to MBE/WBEsthroughoutthelifeofthecontract.TheownerwillberequiredtodocumentgoodfaithefforttoutilizeMBE/WBEsubcontractorsand/orsupplierspriortoenteringintoacontractwithanon‐MBE/WBE.

4. WhentheownerisawardedfundsthroughMHDC,itwillberequiredtosignthe Conditional Reservation which indicates its commitment to reach thestatedParticipationStandardoutlinedinitsUtilizationPlan.Atconstruction


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completion,both the contractorandownerwill certify thepercentageandthe amount of MBE/WBE participation, along with a listing of thoseMBE/WBEcompaniesutilizedduringthedevelopmentprocess.

5. The owner must designate an individual who will be responsible for theadministrationoftheMBE/WBEUtilizationProgram.

6. ThecontractormustenterintosubcontractsorwrittenagreementswiththeMBE/WBEidentifiedontheScheduleofParticipationforthescopeofworkand amount specified. In the event a MBE/WBE indicated in thedevelopment’s Utilization Plan cannot be secured, the owner must notifyMHDCstaff.

7. If at any point during development construction it appears the scheduledamount of MBE/WBE participation may not be achieved, the ownermustprovide evidence to MHDC staff demonstrating how the ParticipationStandardwillbemet.

8. During thedisbursementprocess,MHDCstaffwill compare theMBE/WBElisted in the Schedule of Participation to the payment request and payrolldocuments to ensure compliance with the documents submitted. Tofacilitate this review, the owner/contractor must provide a listing ofpayments and completion records of MBE/WBE companies and copies ofcontracts.

RecordKeepingThe owner must keep records to enable MHDC staff to determine compliance with theMBE/WBEInitiative.Theserecordsshould includethenamesandcontract informationofall MBE/WBEs, scope of work, contracts, cancelled checks and paid invoices verifyingpayment forwork, services, and procurement, and documentation of all correspondence,telephone calls, and other efforts to obtain the services of MBE/WBE contractors. Uponrequest,theownershallsubmitallcontractsanddocumentationtoMHDCstaff.

ReportingThe owner must submit monthly reports on MBE/WBE involvement in a mannerdesignatedbyMHDCstaff,evenifnoMBE/WBEperformanceactivityoccurredduringthemonthlyreportingperiod.Reportswillberequireduntilallcontractorperformanceactivityis complete and the development is substantially completed. If MHDC staff isprocessing/reviewingconstructiondraws, the reportscanbe includedwitheachmonthlydrawrequestpackage.LIHTC‐onlydevelopmentswillberequiredtosubmitmonthlysinceMHDCstaffdoesnotprocess/reviewconstructiondrawsonthesedevelopments.

IftheParticipationStandardisnotmet,documentationsupportinggoodfaitheffortsmustbesubmittedwiththemonthlyreport.Failuretosubmitthemonthlyreportmayresult inthedelayofprocessingdrawsand/orissuanceof8609s.

Non‐ComplianceAnownershallbeconsideredtobeinastateofnon‐compliancewhentheowner,developer,oranycontractorassociatedwiththedevelopment:

1. Failstoadequatelydocumentcompliance;or


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2. FailstodiligentlypursueparticipationofMBE/WBEs;or3. Fails to comply with the elements set forth in the final Utilization Plan in

connectionwiththeParticipationStandardorMBE/WBEPriority;or4. EliminatesorreducestheCommerciallyUsefulFunctionstobeperformedbyan

MBE/WBEaftersuchMBE/WBEwasnamedinthefinalUtilizationPlan,unlessthedeveloperdemonstratesachangewasreasonablynecessaryandnotifiestheMBE/WBEInitiativeCoordinator;or

5. FailstocomplywithanyelementorprovisionoftheMBE/WBEInitiative.

Section3

IntroductionTheSection3guidelinessetforthinthissectionhavebeenpreparedtoprovideinformationandguidance to thosedevelopers/ownerswithanawardofSection3coveredassistance,andshouldnotbetreatedasacomprehensiverecitationoftheSection3ActandSection3Regulations.ThissectionisasummaryofthepertinentprovisionsoftheSection3ActandSection 3 Regulations, and focuses on the Section 3 requirements imposed on thedeveloper/owner,generalcontractor,andsubcontractorreceivingtherequisiteamountofSection 3 Covered Assistance.MHDC reminds each developer/owner, general contractor,andsubcontractorthateachbearstheresponsibilitytofamiliarizeitselfwiththeSection3ActandSection3RegulationspriortoacceptingSection3coveredassistancefromMHDC.Section3isrequiredfordevelopmentsawardedMHDCHOMEFundsinexcessof$200,000.

DefinitionsGeneralContractor(Section3)–Anyentityawardedaconstructioncontractof$100,000ormore by an owner/developer to provide general contractor services, generated by theexpenditure of Section 3 Covered Assistance or in connection with a Section 3 CoveredProject.Employment Opportunities – All employment opportunities arising in connection with aSection 3 Covered Project, as described in 135.3(a)(2), including management andadministrative jobs. Management and administrative jobs include architectural,engineering, or related professional services required to prepare plans, drawings,specifications, or work write‐ups, and jobs directly related to administrative support oftheseactivities(e.g.,constructionmanager,relocationspecialists,payrollclerk,etc.)Housing and Community Development Assistance – Any financial assistance provided orotherwise made available through a HUD housing or community development program,through any grant, loan, loan guarantee, cooperative agreement, or contract, includingcommunity development funds in the form of community development block grants, andloans guaranteed under Section 108 of the Housing and Community Development Act of1974, as amended. Housing and community development assistance does not includefinancialassistanceprovidedthroughacontractofinsuranceorguaranty.Low‐incomeperson–Definedinthedefinitionof“Section3Resident”herein.


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MetropolitanArea–AMSA,asestablishedbytheOfficeofManagementandBudget.NeighborhoodAreaorSection3Area–ForHUDhousingprograms,ageographicallocationwithinthejurisdictionofaunitofgenerallocalgovernment(butnottheentirejurisdiction)designated in ordinances or other local documents as a neighborhood, village, or similargeographicaldesignation.New Hires – Full‐time employees for permanent, temporary, or seasonal employmentopportunities.Non‐MetropolitanArea–AnyareaoutsideofaMSA.Owner/Developer – Any entity engaged in the business of development of affordablehousingwhichisanapplicantforSection3CoveredAssistanceorhasbeenawardedSection3CoveredAssistanceinexcessof$200,000byMHDC.PublicandIndianHousingAssistanceincludesfundsusedfor:

1. DevelopmentassistanceprovidedpursuanttoSection5oftheU.S.HousingActof1937(the“1937Act”);

2. OperatingAssistanceprovidedpursuanttoSection9ofthe1937Act;and

3. ModernizationAssistanceprovidedpursuanttoSection14ofthe1937Act.

Recipient –Any entity receivingSection3CoveredAssistancedirectly fromHUDor fromanother recipient and includes, but is not limited to, any State, unit of local government,PHA, IHA, Indian Tribe, or other public body, public or private nonprofit organization,private agency or institution, mortgagor, developer, limited dividend sponsor, builder,property manager, community housing development organization, resident managementcorporation, resident council, or cooperative association. Recipient also includes anysuccessor, assignee, or transferee of any such entity, but does not include any ultimatebeneficiary under the HUD program to which Section 3 applies and does not includecontractors.Section3BusinessConcern–Acompany:

1. Thatis51%ormoreownedbySection3Residents;or

2. Whosepermanent, full‐timeemployees includepersons,at least30%ofwhomarecurrentlySection3Residents,orwithin three(3)yearsof thedateof firstemploymentwiththeBusinessConcernwereSection3residents;or

3. That provides evidence of a commitment to contract in excess of 25% of thedollarawardofallsubcontractstobeawardedtobusinessconcernsthatmeetthequalificationssetforthinparagraphs(1)or(2)inthisdefinitionof“Section3BusinessConcern.”

Section 3 Clause – The contract provisions set forth in 24 CFR 135.38 and available atwww.mhdc.com.Section 3 Covered Contract – A contract or subcontract (including a professional servicecontract)awardedbyaRecipient,Owner,Developer,GeneralContractor,orSubcontractorfor work generated by the expenditure of Section 3 Covered Assistance of $100,000 or


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more,orforworkinlikeamount,arisinginconnectionwithaSection3Project.Section3CoveredContractdoesnotincludeanycontractsforthepurchaseofsuppliesormaterials,unlessthecontractincludestheinstallationofthesuppliesormaterials.Section3CoveredProject–Theconstruction,reconstruction,conversion,orrehabilitationofhousing(includingreductionandabatementoflead‐basedpainthazards),orotherpublicconstructionwhichincludesbuildingsorimprovements(regardlessofownership)assistedwithhousingorcommunitydevelopmentassistance.Section 3 Regulations – The regulations found at 24 CFR Part 135, as amended, whichgoverntheapplicationoftheSection3Act.Section3Requirements–Theemployment,trainingandcontractingopportunitiesimposedbytheSection3ActuponRecipientsandCoveredContractors.Section3Resident–(1)Apublichousingresident;or(2)anindividualwhoresidesintheMetropolitanAreaorNon‐metropolitanAreainwhichtheSection3CoveredAssistanceisexpended,andwhois:

1. Alow‐incomeperson,asthistermisdefinedinsection3(b)(2)ofthe1937Act(42 U.S.C. 1437a(b)(2)), which is families (including single persons) whoseincomesdonotexceed80%ofthemedianincomeforthearea,asdeterminedbyHUD,withadjustmentsforsmallerandlargerfamilies,exceptHUDcanestablishincomeceilingshigherorlowerthan80%ofthemedianfortheareaonthebasisoftheHUD’sfindingssuchvariationsarenecessarybecauseofprevailinglevelsofconstructioncostsorunusuallyhighorlow‐incomefamilies;or

2. Averylow‐incomeperson,asthistermisdefinedinsection3(b)(2)ofthe1937Act(42U.S.C.1437a(b)(2)),whichis families(includingsinglepersons)whoseincomes do not exceed 50% of the median family income for the area, asdetermined by HUD with adjustments for smaller and larger families, exceptHUDcanestablishincomeceilingshigherorlowerthan50%ofthemedianfortheareaonthebasisofHUD’sfindingssuchvariationsarenecessarybecauseofunusuallyhighorlowfamilyincomes.

Subcontractor–AnyentityawardedaSection3CoveredContractof$100,000ormorebyaGeneralContractor.

Section3PurposeThe Section 3Actwas enacted byHUD (12U.S.C. 1701u), as amended, to ensure certainemployment and economic opportunities generated by certain HUD‐funded Section 3CoveredAssistanceare,tothegreatestextentfeasible,directedtoSection3ResidentsandSection3BusinessConcerns. Therefore,uponreceiptoftherequisiteamountofSection3Covered Assistance and awards of Section 3 Covered Contracts, the Developer, GeneralContractorandSubcontractormustcomplywiththeSection3Requirements.

MHDCPolicyStatementMHDCisabodycorporateandpoliticofthestateofMissourianditspurposeistoprovidefinancingtodevelopersofaffordablehousingthroughoutthestateofMissouri.AportionofthisfinancingconsistsofHOMEFunds.Inaddition,MHDCservesastheSection8contract


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administratorforHUD,andparticipatesinHUD’sRisk‐Sharingprogram.Asaresult,MHDCis a Recipient of Section 3 Covered Assistance exceeding the $200,000 threshold and isobligated to comply with the Section 3 Act and the Section 3 Regulations. MHDC iscommitted to this purpose, and will work to ensure to the greatest extent feasible, andconsistent with Federal, State, and local laws and regulations, each Developer, GeneralContractor,andSubcontractortowhichitawardsSection3CoveredAssistancecomplywiththeSection3ActandSection3Regulationsthroughtheutilizationoftheseguidelines.

Successful compliance with the Section 3 Act and the Section 3 Regulations by theOwner/DeveloperandGeneralContractorwillbeafactorindeterminingfutureawardsofSection3CoveredAssistance.

According to the Section 3 Regulations (24 CFR Part 135), Section 3 Covered AssistanceRecipientsarerequiredtoprovideemployment,training,andcontractingopportunitiestoSection3ResidentsorSection3BusinessConcerns.However,theSection3Requirementsarenotimposedonarecipientthatdoesnotengageinthehiringortrainingofpersons,butinstead awards contracts to Owners/Developers and General Contractors that hire andtraininconnectionwithSection3CoveredProjects.AccordingtotheSection3Regulations,these recipients can complywith Section 3 by ensuring the Owners/Developers, GeneralContractors and Subcontractors receiving Section 3 Covered Assistance comply with theSection3Act. To theextentMHDCutilizesa smallportionof itsHOMEFunds topay thesalary of persons directly related to the HOME program and other HOME relatesexpenditures, MHDC will comply with the employment, training and contractingopportunitiesrequirementsofSection3.

Section3CoordinatorMHDChasaSection3Coordinator,whowillserveastheimmediatepointofcontactfortheOwner/Developer, General Contractor, and Subcontractor, and is available to assist inmeetingeachdevelopment’sSection3Requirements(“Section3Coordinator”).Inaddition,theMHDC Section 3 Coordinator will provide the Owner/Developer, General Contractor,and Subcontractor with Section 3 materials, including the Section 3 Act, Section 3Regulations, and these MHDC Section 3 guidelines and is available to provide technicalassistance to the Owner/Developer, General Contractor, and Subcontractor. Technicalassistance may consist of help in understanding the Section 3 Regulations, identifyingemployment opportunities and training programs available to Section 3 Residents, andinformation on outreach to Section 3 Residents and Section 3 Business Concerns. TheMHDCSection3CoordinatormayalsodevelopSection3forumsandmakepresentationsatseminarsandpaneldiscussionsonSection3.

TheMHDC Section 3 Coordinatormay engage additional MHDC staff whowill assist theMHDCSection3Coordinatorintheacquisition,assemblage,review,andanalysisofreportssubmitted by the Owner/Developer, General Contractor, and Subcontractor. MHDC staffmay also conduct random on‐site reviews of the Section 3 Covered Project to assesscompliancewiththeSection3Act.

TheOwner/Developer,GeneralContractor,andSubcontractorwilleachappointaSection3coordinatorandprovide thename,address, telephonenumberandemailaddressof suchindividual to the MHDC Section 3 Coordinator. This person will be the direct point ofcontact with theMHDC Section 3 Coordinator and advise the Owner/Developer, GeneralContractor, Subcontractor personnel and staff on Section 3 compliance. In addition, thecoordinatorwillberesponsible forthesubmissionofallrequiredSection3reportstothe


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MHDCSection3CoordinatorandwillserveasthepointofcontactforSection3complaintsandastheon‐sitemonitoroftheOwner/Developer,GeneralContractor,andSubcontractorimplementationofitsrespectiveSection3Plan.

Section3MeetingOnceMHDChasawardedtheSection3CoveredAssistance,itwillscheduleameetingwiththeOwners/Developer(s)todiscusstheSection3Requirements.AttendeeswillincludetheMHDCSection3Coordinator,GeneralContractors,andtheOwner’s/Developer’sSection3CoordinatorandtheGeneralContractor'sSection3Coordinator,ifselected.ThepurposeofthemeetingistoaddressanyquestionstheattendeesmayhaveregardingcompliancewithSection3Regulations. All attendeeswillbeprovidedwitha copyof theMHDCSection3Guidelines, the Section 3 Act and the Section 3 Regulations. EachOwner/Developer andGeneral Contractor will also be required to submit a statement to the MHDC Section 3Coordinator acknowledging its receipt of the foregoing documents as well as itsunderstandingtheSection3RegulationsapplytothespecificSection3CoveredProject,anditscommitmenttosubmitaSection3PlaninaccordancewiththedeadlinessetoutintheConditionalReservation.

Section3ContractingOpportunityGoalsOwners/Developers, General Contractors, and Subcontractors with Section 3 CoveredContracts must establish certain contracting opportunity goals for Section 3 BusinessConcernsinconnectionwiththeSection3CoveredProject.ThesenumericalgoalsapplytocontractsawardedbytheDeveloper,GeneralContractor,orSubcontractor.Thesegoalscanbemetbyachievingthefollowingbenchmarks:

1. At least 10% of the total dollar amount of all Section 3 Covered Contracts forbuilding trades work arising in connection with housing rehabilitation, housingconstructionandotherpublicconstruction;and

2. At least 3% of the total dollar amount of all other Section 3 Covered Contracts(professionalservices).

EmploymentandTrainingOpportunityGoalsTheSection3ActrequirestheOwner/Developer,GeneralContractor,andSubcontractortoutilizeSection3ResidentsandSection3BusinessConcernsinthedevelopmentofSection3projects, to the greatest extent feasible. Specifically, the Owner/Developer, GeneralContractor, and Subcontractor must establish certain Section 3 goals for each Section 3Project.

All Section 3 employment and training goalsmust be explicitly set forth in all Section 3Plansasfollows:

"Thenumericalgoal forEmployment forthisSection3CoveredProject is____%ofnewhires.

The numerical goal for Training for this Section 3 Covered Project is _____% ofresidentshired."

Employmentandtraininggoalscanbemetbyeitherdirectlyprovidingtheemploymentortraining or by facilitating the employment or training. That is, the Owner/Developer,General Contractor, or Subcontractor can satisfy the Section 3 employment and training


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goals by arranging for the employment or training of Section 3 Residents in connectionwith: a) theOwner’s/Developer’sSection3CoveredProjects;b) theOwner’s/Developer’snon‐Section3projects;orc)othernon‐Section3Projects.

TheMHDCSection3Coordinatorisavailabletoprovidetechnicalassistancetomeettheseemploymentandtraininggoals.

TheOwner/Developer,GeneralContractor,andSubcontractormustprovideinitsSection3PlanabreakdownofjobcategoriesandpositionsneededfortheSection3CoveredProject,includingpositionsoccupiedbypermanentemployees.

If the Owner/Developer, General Contractor, or Subcontractor does not have anyemploymentor trainingopportunitiesavailable in connectionwith theSection3CoveredProject,thismustbereflectedinitsSection3Plan.

FormalSection3PlanAfter the General Contractor has been selected, the Owner/Developer must submit acomprehensiveSection3Plan,signedbytheOwner/DeveloperandtheGeneralContractor,to the MHDC Section 3 Coordinator for review and approval, in accordance with thedeadlines set forth in the Conditional Reservation. The Section 3 Plan will include theSection3goalsoftheOwner/DeveloperandtheGeneralContractor.

Upon submission of the Section 3Plan, theMHDCSection3 Coordinatorwill review andeitherapproveit,conditionallyapproveitwithsuggestedmodifications,ordisapprovetheplan.MHDCstaffwillnotissueaFirmCommitmentforthedevelopmentuntiltheSection3Planhasbeenapproved. AftertheSection3Planhasbeenapproved,theMHDCSection3Coordinator will review and monitor it regularly to assess its implementation and theattainmentoftheSection3goals.

Assubcontractsinexcessof$100,000areawarded,suchSubcontractorswillberequiredtosubmit their own Section 3 Plan to the MHDC Section 3 Coordinator for review andapproval.

CopiesofallbiddocumentsthatarereceivedandallcontractsthatareawardedmustalsobesubmittedtoMHDCstaff.Thesedocumentsshouldbesubmittedelectronicallyandinpdfformat.

ComponentsofaSection3PlanThe Section 3 Plan must include specific information including, but not limited to, thefollowing:

1. Owner/Developer, General Contractor, or Subcontractor's statement certifying itintendstocomplywith theSection3ActandSection3Regulations,aswellas theMHDCSection3Guidelines;

2. Owner/Developer,GeneralContractor,orSubcontractor'sstatementcertifyingeachis aware of the employment, training, and contracting goals and agrees to worktogethertomeetthesegoals;

3. Name and contact information of the Owner/Developer, General Contractor, orSubcontractor'sSection3coordinator;

4. IdentificationoftheSection3Area(seedefinitionofNeighborhoodArea);


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5. Owner/Developer,GeneralContractor,orSubcontractor'scurrentworkforce;

6. Owner/Developer, General Contractor, or Subcontractor's Contractor’s workforcenecessitatedbytheSection3CoveredProject;

7. Owner/Developer, General Contractor, or Subcontractor's Section 3 employment,training,andcontractingopportunitygoals;

8. Specific strategies for notifying Section 3 Residents of Section 3 employment andtraininggoals;

9. SpecificstrategiesfornotifyingSection3BusinessConcernsofSection3contractingopportunities;

10. CommitmenttoinformallSubcontractorsofitsSection3Plan;

11. Owner’s/Developer’scommitmenttoprepareandsubmitmonthlySection3reportstotheMHDCSection3Coordinator;

12. General Contractor’s commitment to prepare and submit monthly reports to itsSection3coordinator;

13. Commitment of Owner/Developer, General Contractor, and Subcontractor toinclude the Section 3 Clause in all construction contracts and subcontractsexceeding$100,000.00awardedasaresultoftheSection3CoveredAssistance.

14. Commitmenttoprovideemploymentagenciesandlocalpublichousingauthoritiesofpossibleemployment,training,andcontractingopportunities.

15. Commitment by Owner/Developer, General Contractor, and Subcontractor toconductaggressiveoutreachandnotificationcampaign toSection3ResidentsandSection3BusinessConcernsregardingitsSection3goals,includingtheusageofsitesignage,flyers,etc.

16. InclusionofotherstrategieswhichfacilitatetheachievementoftheSection3goalsestablishedbytheOwner/Developer,GeneralContractor,andSubcontractor.

ImplementationStrategiesTo comply with the Section 3 Act and the Section 3 Regulations, the Owner/Developer,General Contractor, or Subcontractor, as applicable, must implement an aggressivecampaign to encourage participation of Section 3 Residents and Section 3 BusinessConcerns.Somestrategiestoimplementthiscampaignincludethefollowing:

1. Publish in a local newspaper a notice of the potential employment and trainingopportunities for Section 3 Residents and potential contracting opportunities forSection3BusinessConcerns.Writtennoticemustbeprovidedinsufficienttimetoenablebusinessconcernstheopportunitytorespondtothebidinvitation.

2. Post in a prominent location at the Section 3 Covered Project site notice of thepotential employment and training opportunities for Section 3 Residents, andpotentialcontractingopportunitiesforSection3BusinessConcerns.

3. Submit letters or flyers to the residents of the Section3CoveredProject advisingthemof the employment, training and contracting opportunities for the Section 3CoveredProject(appliestorehabilitationwhenthereareexistingresidents);


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4. Provide the residents of the Section 3 Covered Project and the surrounding areawith information on how to get certified as a Section 3 Resident or a Section 3BusinessConcern;

5. Providethelocalpublichousingauthoritywithflyers,noticesandotherinformationrelatedtotheSection3employment,trainingandcontractingopportunitiesfortheSection3CoveredProject;

6. ProvideinformationtoresidentsofaSection3CoveredProjectandthesurroundingarearegardingestablishedjobtrainingprogramslocatedwithintheSection3Area;

7. Provideminorityandwomen‐focusedlaborandtradeorganizationswithnoticeofSection3employment,training,andbusinessopportunitygoals;

8. Provideminorityandwomen‐focusedlaborandtradeorganizationswithnoticeofwhenandwhereplansandspecificationsforbidreviewwillbedistributed;

9. Establish public forums regarding Section 3 Covered Projects being developedwithintheSection3Area, inwhichtheOwner/Developer,GeneralContractor,andSubcontractorwillparticipate;

10. UtilizeotherstrategiessetforthinAppendix“A”oftheSection3Regulations;and

11. Seek out referral sources to ensure job readiness for public housing residentsthroughon‐the‐job‐training(OJT)andmentoringtoobtainnecessaryskillsthatwilltransferintotheexternallabormarket.

CertificationofSection3ResidentsIndividualsseekingtoparticipateinSection3CoveredProjectsmustfirstbedeterminedasSection3 eligible by themunicipality inwhich they reside or by the local public housingagency.Ifthemunicipalityorlocalpublichousingagencydoesnotprovidethisservice,theindividualmustcompletetheformentitled“ResidentEmploymentOpportunityData”foundat the HUD Website at: http://portal.hud.gov/hudportal/section3. The form can also beobtained by contacting the MHDC Section 3 Coordinator. The completed form and allrequired documentation should then be submitted to the Owner/Developer, the GeneralContractor, or theSubcontractor,who in turnwill providea copy to theMHDCSection3Coordinator.Forfurtherexplanationoneligibility,pleaserefertothedefinitionofaSection3Residentfoundearlierinthissection.

CertificationofSection3BusinessConcernsAnybusinessseekingtoparticipateinSection3CoveredProjectsmustfirstbedeterminedas Section 3 eligible by themunicipality inwhich the business is located or by the localpublichousingagency.Ifthemunicipalityorlocalpublichousingagencydoesnotprovidethisservice,aprincipalfromthebusinessmustcompletetheformentitled“CertificationforBusiness Concerns Seeking Section 3 Preference in Contracting and Demonstration ofCapability” foundat theHUDWebsiteat:http://portal.hud.gov/hudportal//section3.ThisformcanalsobeobtainedfromtheMHDCSection3Coordinator.ThecompletedformandallrequireddocumentationshouldthenbesubmittedtotheOwner/Developer,theGeneralContractor or the Subcontractor,who in turnwill provide a copy to theMHDC Section 3Coordinator.Forfurtherexplanationoneligibility,pleaserefertothedefinitionofaSection3BusinessConcernfoundearlierinthissection.


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TechnicalSupportandMonitoringThe MHDC Section 3 Coordinator is available to provide technical support toOwners/Developers, General Contractors, and Subcontractors participating in thedevelopmentofSection3CoveredProjects.

Owners/Developers,GeneralContractors,andSubcontractorsarerequiredtosubmitcopiesto the MHDC Section 3 Coordinator of all outreach attempts, copies of all responses tonotices published in the paper and posted other places, copies of all responses to bidinvitations, and any other documentation helpful in monitoring compliance with theapprovedSection3Plan.

The MHDC Section 3 Coordinator requires reports submitted by the Owner/Developer,GeneralContractor,orSubcontractor toassesscompliancewith theSection3Actand theSection3Regulations. Reports aredueno later than the20thof eachmonth. When theSection 3 Covered Project is completed, a final report will be due along with othercustomaryduediligencedocumentation. TheHUDForm60002shallbeusedforthefinalreport.

TheMHDCSection3CoordinatororMHDCstaffmayconducton‐siterandomreviewsoftheSection3CoveredProjecttodeterminewhethertheOwner/Developer,GeneralContractor,orSubcontractorarecomplyingwithitsapprovedSection3Plan.

In the event theMHDC Section 3 Coordinator determines the Owner/Developer, GeneralContractor, or Subcontractor is not meeting its employment, training or contractingopportunitygoalssetoutintheapprovedSection3Plan,he/shewillprovidetherespectivepartywithwritten notice of non‐compliance. The noticewill require the non‐complyingparty to meet with the MHDC Section 3 Coordinator to determine if the non‐complyingpartyuseditsbesteffortstomeetSection3requirementsandiffurtheroutreachattemptswouldresultingoalsbeingsuccessfullymet.