Montana Administrative Register Notice 8-111-145 No. 9   05/06/2016    
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In the matter of the amendment of ARM 8.111.602 and 8.111.603 pertaining to the low income housing tax credit program








TO: All Concerned Persons


1. On May 26, 2016, at 10:00 a.m., the Department of Commerce will hold a public hearing in Room 228 of the Park Avenue Building at 301 South Park Avenue, Helena, Montana, to consider the proposed amendment of the above-stated rules.


2. The Department of Commerce will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Commerce no later than 5:00 p.m. on May 20, 2016, to advise us of the nature of the accommodation that you need. Please contact Bonnie Martello, Paralegal, Department of Commerce, 301 South Park Avenue, P.O. Box 200501, Helena, Montana, 59620-0501; telephone (406) 841-2596; fax (406) 841-2771; TDD (406) 841-2702; or e-mail bmartello@mt.gov.


3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:


          8.111.602 DEFINITIONS

          (1) and (2) remain the same.

          (3)  "QAP" means the board's "Montana Housing Credit Program 2016 2017 Qualified Allocation Plan," which sets forth the application process and selection criteria used by the board for evaluation and selection of projects to receive awards for allocation of housing credits for calendar year 2016 2017, copies of which may be obtained by contacting the Board of Housing by mail at P.O. Box 200528, Helena, MT 59620-0528, by telephone at (406) 841-2845 or (406) 841-2838, or at the board's web site www.housing.mt.gov.

          (4) remains the same.


AUTH: 90-6-106, MCA

IMP: 90-6-104, MCA


REASON: The proposed amendments to ARM 8.111.602 are necessary to update the Qualified Allocation Plan (QAP) definition to reference the 2017 Qualified Allocation Plan for the Montana Housing Credit Program.


Federal low income housing tax credits are allocated by the federal government to the states, according to their population, for allocation to particular buildings. Each state's share of federal low income housing tax credits is allocated to particular buildings under programs administered by the respective states' housing credit agencies. The Montana Board of Housing is Montana's housing credit agency for purposes of administering the tax credit program and allocating tax credits in the state of Montana. In Montana, the program is known as the Montana Housing Credit Program. Federal law requires that tax credits allocated to the state by the federal government must be allocated by the state pursuant to a "qualified allocation plan" or "QAP".


Prior to publication of this notice, the board conducted several public meetings to consider suggestions and comments regarding the provisions of the 2017 QAP. Thereafter, at its February 8, 2016 meeting, the board considered and approved public notice and distribution of the proposed 2017 QAP. After public notice of the proposed 2017 QAP and of the opportunity for public comment was published and distributed, a public hearing on the proposed 2017 QAP was held on February 17, 2016 and written comments were also received. At its March 14, 2016 meeting, after considering all written and oral comments on the proposed 2017 QAP, staff recommendations, additional public comment and various proposed revisions in response to comments, the board approved the 2017 QAP for submission to and approval by the Montana Governor, as required by the federal tax credit statute, 26 U.S.C. § 42. The 2017 QAP has been submitted to the Governor for approval. Adoption of the proposed rule is contingent upon the Governor's approval of the 2017 QAP. 


A copy of the 2017 QAP is available on the internet at http://housing.mt.gov/MFQAP or by requesting a copy from: Mary Bair, Board of Housing, Department of Commerce, 301 South Park Avenue, P.O. Box 200528, Helena, Montana, 59620-0528; telephone (406) 841-2845; fax (406) 841-2841; or e-mail mbair@mt.gov.



(1) and (2) remain the same.

(3) All projects wishing to apply for housing credits must submit a letter of intent in accordance with the requirements of the QAP.

(a)  At a board the board's meeting in the month after the letter of intent submission deadline and before the application submission deadline, board staff will present letters of intent to the board and the board will provide an opportunity for applicants to make a presentation regarding their projects and letters of intent and for public comment on proposed projects and letters of intent, all according to the provisions of the QAP. The board may ask questions of applicants and discuss proposed projects for purposes of assisting the board in determining which projects it will invite to submit applications and assisting applicants in presenting better applications, but there will be no applicant presentations and the board will not make any award determination at this meeting. Board such questions, answers comments, and discussion are for purposes of assisting applicants in presenting better applications and shall not be binding upon the board in any later award determination or other board process.

(b)  After considering the letters of intent, presentations, questions and answers and discussion, the board will select those projects that it will invite to submit applications, in accordance with the provisions of the QAP. Each project so selected by the board will be deemed invited to submit an application. An application may be submitted only for a project invited by the board to submit an application and all other applications will be returned without consideration.

(4) Following submission of applications, board staff will evaluate each invited application for conformance with the threshold and other requirements of the QAP. Applications meeting all minimum threshold requirements and not excluded from further consideration under the QAP will be evaluated for the amount of housing credits needed for feasibility and long-term viability and will be further evaluated and scored according to the development evaluation criteria of the QAP. The points awarded to each project pursuant to the evaluation criteria of the QAP are for the purposes specified in (9), and not for purposes of ranking projects for allocation of housing credits. Following application evaluation and scoring, board staff may provide recommendations to the board for allocation of housing credits to qualifying projects.

(5) After At the board's meeting in the month of application submission, the board will provide an opportunity for applicants to make a presentation to the board regarding their projects and applications board staff will present applications to the board and the board will provide an opportunity for public comment on proposed projects and applications, all according to the provisions of the QAP. The board may ask questions of applicants and discuss proposed projects but there will be no applicant presentations.

(6) Copies of applications and other information submitted to the board in connection with applications are available to other applicants for housing credit projects and members of the public to the extent provided and according to the procedures specified in the QAP board's information request and release policy, available on the board's web site at www.housing.mt.gov.

(7) and (8) remain the same.

(9) The board will select those projects to receive an award of housing credits that it determines best meet the most pressing housing needs of low income people within the state of Montana, taking into consideration the selection criteria as defined in the QAP. The awarding of points to projects pursuant to the development evaluation criteria of the QAP is for purposes of determining that the projects meet at least the minimum criteria required for further consideration under the QAP and to assist the board in evaluating and comparing projects. Development evaluation criteria scoring is only one of several considerations taken into account by the board and does not control the selection of projects that will receive an award of housing credits. In addition to any other selection criteria specified in the QAP, the board may consider the following factors in selecting projects for an award of housing credits to qualifying projects:

(a) the geographical distribution of housing credit projects;

(b) the rural or urban location of the projects;

(c)  the overall income levels targeted by the projects;

(d) the need for affordable housing in the community, including but not limited to current vacancy rates;

(e) rehabilitation of existing low income housing stock;

(f) sustainable energy savings initiatives;

(g) financial and operational ability of the applicant to fund, complete, and maintain the project through the extended use period;

(h) past performance of an applicant in initiating and completing housing tax credit projects;

(i) cost of construction, land, and utilities, including but not limited to costs/credits per square foot/unit;

(j)  the project is being developed in or near a historic downtown neighborhood; and/or

(j)(k) the frequency of awards in the respective areas where projects are located.


AUTH: 90-6-106, MCA

IMP: 90-6-104, MCA


REASON: The proposed amendments to ARM 8.111.603 are necessary to specify the purpose, procedure, and criteria for board consideration of the housing credit letter of intent, and the factors that may be considered in an award of housing credits.


In recent housing credit award rounds, the number of applications submitted and the housing credit dollars requested have greatly exceeded the number of projects that could be funded and the housing credits available for award.  Very considerable resources must be expended by applicants to develop and prepare a complete housing credit application and by board staff to evaluate, underwrite, and score such applications, yet only a small number of applicant projects receive an award of credits.


Accordingly, the board has determined that it is in the best interests of the program and applicants to adopt a process that screens proposed projects through the letter of intent process and reduces the number of projects expending the resources to submit full applications. Letters of intent will be required to include a market or minimarket study and other information that the board would be required to consider in making an award of credits. Based upon such information, presentations from applicants, questions by and answers to the board and public comment, and consideration of any of the selection criteria in the QAP, the board will select projects for invitation to submit full applications. The board will then consider applications from only those projects invited to apply.


This process allows the board to review the type, location, characteristics, and other details concerning particular projects being proposed for developments, along with applicants' justifications of need for the various projects in light of the most current housing market conditions. It further will allow the board to begin to prioritize potential projects under the QAP criteria, in particular, the factors that would be mandated by federal law for an actual award of housing credits, and to narrow the field of applicants who will fully compete for housing credits through submission of a full application.


Finally, the proposed rule amendments are necessary to add an additional factor to the list of factors the board may consider in selecting projects for an award of housing credits. The fact that a proposed project is being developed in or near a historic downtown neighborhood is a significant consideration, as such locations generally are close to services needed by residents, facilitate integration of projects into existing and historical neighborhoods, encourage resident engagement in community functions, and encourage engagement of community members in such projects.


4. Concerned persons may submit their data, views, or arguments concerning the proposed action in writing to:  Mary Bair, Board of Housing, Department of Commerce, 301 South Park Avenue, P.O. Box 200528, Helena, Montana, 59620-0528; telephone (406) 841-2845; fax (406) 841-2841; or e-mail mbair@mt.gov, and must be received no later than 5:00 p.m., June 3, 2016.


5. Mary Bair, Department of Commerce, has been designated to preside over and conduct this hearing.


6. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in section 4 above or may be made by completing a request form at any rules hearing held by the department.


7. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.


8. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.


9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rules will not significantly and directly impact small businesses.


/s/ G. MARTIN TUTTLE                         /s/ DOUGLAS MITCHELL

G. MARTIN TUTTLE                             DOUGLAS MITCHELL

Rule Reviewer                                       Deputy Director

                                                               Department of Commerce


Certified to the Secretary of State April 25, 2016.


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