2017 Clarifications
Pursuant to Section 1.1(C) at the top of page 24 of the QAP, the deadline to submit questions for the
final issuance of clarifications was 12:00 pm Mountain Standard (Phoenix) time on February 17, 2017.
This is the final issuance of clarifications. We look forward to receiving your Applications before 4:00
pm Mountain Standard (Phoenix) time on Tuesday, March 1, 2017.
Week ending February 17, 2017
In the 2017 Clarifications for the week ending January 27, 2017, the Department addressed a question
about capitalizing the entire 15-year supportive service cost. The Department’s response was that under
certain circumstances when loan requirements or regulations do not permit the cost of supportive
services as an operating expense the LIHTC applicant should request a waiver from the ADOH. The
Federal Home Loan Bank announced during its webinar last week to AHP applicants, that the Bank
would no longer allow the cost for support services as an operating expense due to Bank
regulations. The Bank will, however, allow service costs to be capitalized in the development budget if
the cost relates to services for a special needs population, such as payroll for case management.
Since the FHLB AHP program regulations do not allow for support services as an operating expense, but
certain costs can be capitalized in the development budget, will the ADOH accept a waiver request to
capitalize payroll cost for case management in a Supportive Housing Project?

ADOH considers waivers on a case-by-case basis in accordance with Section 2.9(A)(5) of the QAP.
The second sentence in your question is inconsistent with the January 27th clarification. To reiterate,
in the January 27th clarifications ADOH stated “Section 7.1(C)(2)(c) indicates that “Costs for
Supportive Services will be considered an additional Operating Expense.’ A waiver may be requested
when USDA or HUD-insured loan requirements do not permit supportive services to be paid from
cash flow [emphasis added].” ADOH has confirmed that the Federal Home Loan Bank of San
Francisco continues to allow supportive services to be paid from below-the-line cash flow. The
allowance to pay supportive services as an above-the-line operating expense was a new provision in
2017, which was rescinded after Bank regulators required it to be prohibited.

Section 7.1(C)(2)(c) anticipates that Supportive Services will be paid from below-the-line cash flow.
ADOH has permitted the cost of the supportive services to be taken into account when applying the
requirement to maximize the primary debt, when the lender includes the cost of these services when
sizing its loan.
I know in previous years we have had resumes requested for team members such as property manager,
attorney, architect, etc. I was reviewing the QAP and didn’t see it noted that those were required but I
wanted to confirm with you directly. Do we need to include resumes for anyone other than the
developer/co-developer?
If you read a bit further down in Section 2.9(F)(2)(g) of the QAP on page 56 it states: “Applicant
must demonstrate the Development Team’s prior, successful housing experience and engage the
services of housing professionals, such as architects, appraisers, attorneys, accountants, contractors
and property managers with demonstrable tax credit and housing experience. Applicant may
demonstrate the housing professional’s experience through firm resumes.” Resumes for each of these
housing professionals must be included in the Application.
On the form 13, if you are only doing the HERS path should you only check the HERS box even though it
has a prescriptive path element for the remaining 9 points, or check both boxes?
Applicants who follow the Performance Based Path for scoring under Tab 14 should check both the
HERS Box and the Prescriptive Path boxes.
Can an employee unit be one of the 3-bedroom units that make up the 30% of 3-bedrooms required for
Households with Children?
Section 2.7(F) of the QAP states: “Five (5) points are available to Projects in which thirty (30%) of
the total Units [emphasis added] are offered on a preferential basis to households with children and
are three (3) or four (4) bedroom Units,” and Section 2.9(Q)(1)(a) refers to “thirty percent (30%) of
all Units [emphasis added].” Employee units are part of the total unit mix on Form 3 and the “total
units” at the bottom of Form 18, and thus would be included in the calculation.
Does Exhibit I need to be completed and submitted with the LIHTC Application? Is so, behind which
Tab?
Exhibit I is required with the Equity Closing submittal at Section 2.11(H) unless otherwise requested
during ADOH’s underwriting of the Application as a threshold letter item.
Week ending February 10, 2017
RE: SMI HTF Project Section 2.9(Z)/Tab 26, under Permanent Supportive Housing Set-Aside for the
Seriously Mentally Ill Housing Trust Fund Project.

The above referenced section in the 2017 QAP states that “Each of the Units set aside for this
population (SMI HTF) shall be a one (1) bedroom Unit.” Since this Set-Aside for SMI HTF is for individuals
only, then efficiency units should qualify as they provide the same amenities of kitchen facilities,
bathroom, and living/sleeping areas. Please confirm that within this SMI HTF Set-Aside, the units can be
either one (1) bedroom Units, or efficiency Units.
While the QAP is specific that a one (1) bedroom Unit is required for the SMI HTF Project, ADOH
will consider waivers of the one (1) bedroom configuration when both of the following standards are
met: 1) each Unit assisted by SMI Rental Assistance must be at least 470 net square feet, and 2) the
sleeping area must be screened by a wall. Here are two examples of acceptable configurations. The
one on the left is preferred, as it provides a more private sleeping area.

If you have a scattered site do require a Form 14 for each site or since the sites are now all one project
do you just require one?
Only one Form 14 should be submitted for a Scattered Site Project.
Please clarify that if a box is check, the System Component chosen only applies to the work being
done. For example, if Roofing is checked and one site does not need a new roof, the roofing
requirements only apply to the roofing work being done? Second example: HVAC-If all the HVAC units
were replaced at one site but the second site is in desperate need, the new units at the first site are not
required to be replaced?
The System Components on Form 14 each require a particular standard that must be met and
included in the scope of work for the entire Project in order to receive points. If the replacement of

certain components that were recently replaced is not cost efficient, you may want to consider the
Performance Path, which has more flexibility regarding the means used in each building to meet the
HERS score. ADOH offers the following for the two examples you cite:
Roofs: The Thermal Performance Roof option requires that the U/R value of the roof/ceiling insulation
be improved by fifteen percent (15%) over the 2012 or later IECC® requirements for the climate zone
or install sprayfoam insulation at the roof deck that meets the 2012 or later IECC® requirements for
the climate zone. If the seller replaced a roof recently, and that roof does not meet the standard, then
sprayfoam insulation would have to be installed so that it the U/R value of the roof/ceiling insulation
meets the standard.
HVAC: High Efficiency HVAC requires the Applicant to “install a very high efficiency HVAC
system with a minimum SEER rating of sixteen (16) in all Units.” In this case, if the HVAC units
that are not in need of replacement do not have a SEER rating of sixteen (16), then the Project would
not be awarded the points.
We are trying to determine possible ways to fit the minimum 2 hour weekday headways criteria of
“Frequent Bus Transit” with populations under 25,000. My questions are as follows:
1. The transit schedule shows routes that are specified as pick ups and drop offs. I am assuming
that the headway would be measured from one pick up to the next pick up at the same location.
In other words I am asking, Does the headway go from the pick up to the drop off interval, or
the pick up and pick up interval?
2. Also, in regards to the above. Does the headway have to be from the same stop, or can it be
from a different stop nearby. For example, the bus picks up at stop X at 10, and then picks up at
stop Y at 12, and then picks up again at stop X at 2, and so on. That would be a 2 hour headway
if the nearby stop Y can count, but it is a 4 hour headway if it has to be the same stop.
You are correct in your assumption that the headway would be measured from one pick up to the next
pick at the same location. Section 2.9(O) describes a “headway” as “the time interval between two
(2) buses traveling in the same direction on the same route.” For example, for a Project located in a
municipality or Census Designated Place with a population under 25,000, the transit schedule
should provide evidence that a bus stops to pick up and drop off passengers at the bus stop claimed for
points every two hours between 9:00 a.m. and 3:00 p.m., and service must be for at least six hours on
weekdays. (For example, 8:00 a.m. to 2:00 p.m. or 10:00 am to 4:00 p.m. Monday through Friday)
While more than one bus stop may be claimed for points if there are multiple routes, the headways are
measured from the same stop, not from different stops nearby.
We have another QAP clarification question to submit related to the definition of Contiguous &
Accessible. A tribal developer built a community center as part of a prior LIHTC project (completed in
2012). It is within 0.5 mile straight line radius of the proposed project’s six parcels which will contain 24

rehab units. Would services offered at this existing community structure count as being offered
contiguous and accessible to this proposed rehab project?
Alternatively, if the tribal developer built a new community center across the street from the parcel with
14 single family rehab units (the majority), would this structure also be considered “on-site” or
“contiguous and accessible”?
The definition of “Contiguous and Accessible” means on an adjoining parcel that shares at least one
(1) boundary line, which can be easily entered from the Project.” Thus, a structure across the street
from a Project is not “on-site” or “contiguous and accessible”.
The definition goes on to state: “For multi-phased subdivision Projects on Tribal Land, “Contiguous
and Accessible” means within one-half (½) mile straight-line distance from the Project.” Evidence
would need to be provided that the Phase contemplated in the Project is part of the multi-phased
subdivision Project with the community center.
Finally, the definition concludes: “For Projects that meet the Scattered Site definition for which there
are at least fifteen (15) non-contiguous single family parcels on Tribal Land within a fifteen (15) mile
radius, “Contiguous and Accessible” means centrally located between all Tribal single family parcels
in the Project, so that each and every parcel in the Project is within five miles of the Supportive
Service, which may be accomplished by providing the services at more than one location.” Thus, all of
the services claimed for points at Tab 17 must be provided at each “service center” location and may
not be located separately. Further, all “service center” locations must be centrally located between all
Tribal single-family parcels in the Project.
If the single-family parcels are ten miles apart, it is permissible to have the distance to the “service
center” be up to five miles from the furthest single-family parcel. If the “service center” location that
is centrally located between the single-family parcels is more than five miles from each single-family
parcel in the Scattered Site Project, then each additional “service center” must have all services
provided so that each and every single-family parcel in the Scattered Site Project is within the fivemile distance from a “service center”.

If a senior 55+ project is being proposed including 1 and 2 bedroom units, can the entire renter
population in that age group be used as the appropriate “Number of Renter Households age 55+ in
current year”? I believe the confusion extends from the capture rate section which gives guidance for
income assumptions to assume a one-person household only.
Yes, the Market Analyst should use the entire renter population in that age group as the appropriate
“Number of Renter Households age 55+ in current year”.

Week ending February 3, 2017
Updates to Forms:
Form 6-1 Cell D8 with the Project Name field has been unlocked.
Questions for Clarification:
What do we do if we have an older tax credit project and it does not have a sufficient numbers of BIN’s
for the number of buildings that we will be rehabbing?
ADOH will assign the additional BIN’s needed for the Project, if awarded.
We are seeking confirmation on (1) the scattered site definition and (2) that the proposed location of
before/after school, computer training, job training, and financial literacy services provided to a
Households with Children Project on Tribal Land is “Contiguous and Accessible” and therefore eligible
for points under Tab 17. The project will have one multifamily parcel and at least 15 single family parcels
on Tribal Land - all within 0.25 mile of each other. Not all of the single-family parcels are contiguous to
each other. The proposed supportive service locations are all within 1 mile of the project site.
Can ADOH confirm that (1) this described project meets the scattered site definition for Tribal projects
and (2) that the proposed supportive service locations would be considered “contiguous and accessible”
for a scattered site Tribal project?
ADOH does not pre-score Applications. Therefore, it is not possible to “confirm” that a specific
project meets certain definitions. However, ADOH notes the following sections of the QAP:
1. The 2017 QAP does consider Projects that “Consist of no more than six (6) non-contiguous
multi-family parcels in any area of the State and/or at least fifteen non-contiguous single
family parcels on Tribal Land within a fifteen (15) mile radius of each other” to be a Scattered
Site Project.
2. In addition, the Scattered Site definition states that “Rental Units and services claimed for
points at Tab 17 must exist upon each multi-family parcel (unless the parcels are within
a one-fourth (¼) mile walking distance of one another)…”
Therefore, when a Scattered Site Project has a multifamily parcel, it is possible to locate the
services on another parcel in the Scattered Site Project that is no more than ¼-mile walking
distance from the multifamily parcel.
3. The definition of Scattered Site goes on to explain, “Services claimed for points at Tab 17
must exist at location(s) that are centrally located between all Tribal single family
parcels in the Project, so that each and every parcel in the Project is within five miles of the

service. All services claimed for points must be provided at each service location in
order to receive points for that service.”
Thus, all of the services claimed for points at Tab 17 must be provided at each “service
center” location and may not be located separately. Further, all “service center” locations
must be centrally located between all Tribal single-family parcels in the Project.
If the single-family parcels are ten miles apart, it is permissible to have the distance to the
“service center” be up to five miles from the furthest single-family parcel. If the “service
center” location that is centrally located between the single-family parcels is more than five
miles from each single-family parcel in the Scattered Site Project, then each additional
“service center” must have all services provided so that each and every single-family parcel in
the Scattered Site Project is within the five-mile distance from a “service center”.
On QAP page 38, Section 2.7(C) says that Projects located within Tribal Land are eligible for up to 17.5
points with existing facilities (including Schools rated “B” or better) that are located within a 5-mile
straight line radius of the Site.
On QAP page 65, Section 2.9(K) says that applicants seeking points as a Household with Children project
must provide evidence of an elementary, junior high, high school, K-12, charter school or alternative
school rated “B” or better by the Arizona Department of Education. In lieu of a school within the
applicable one (1) or two (2) mile distance, ADOH will award points for a school if the Project is located
within an existing school boundary line for the school rated “B” or better by the Arizona Department of
Education. However, schools without school boundary lines must be within the applicable one (1) or two
(2) mile distance to qualify for points.
I believe the five (5) mile distance was erroneously left out of Section 2.9(K). Can you please confirm
that Projects located within Tribal land are eligible for points for Schools rated “B” or better by the
Arizona Department of Education if the school is within a 5-mile straight-line radius of the project site?
While Section 2.9(K)(2)(c) does not specify the 5-mile distance applicable to Tribal Projects in Section
2.7(C), Section 2.9(K)(2) states that the aerial map for each of the following Facilities claimed for
points must demonstrate that it is “located within the applicable straight-line distance stated in
Section 2.7(C) of this Plan.” Therefore, Projects should refer to Section 2.7(C) for the applicable
distance for this scoring category.
The 3rd party reports required for 4% application that I’ve seen in the QAP are the Market Demand
Study, Phase I Environmental Site Assessment and a Capital Needs Analysis. Can you please confirm
there is no requirement for an ALTA Survey or any other reports?
Applicants should refer to the 2017 QAP for a complete list of documents that are required in the 4%
Application. Section 3.1 of the 2017 QAP states “Applications submitted under this Section 3 must

include all non-scoring Application exhibits under Section 2.9, and all documents requested under
Sections 2.10 and 2.11 of this Plan.” You may refer to the Point Scoring Summary on page 36 for a
list of points, but Applicants must read each Tab in Section 2.9 to ensure that all documents required
for threshold are included in the Application.
Given that the 4% applications are accepted on a rolling basis – it’s OK to submit it after the March 1st
date for the 9% applications as well correct? Would doing this just slow down the turnaround time?
Applicants should submit a complete 4% Application as soon as possible after receiving Bond Volume
Cap, but at least 30 days prior to closing on the bonds in order to avoid extension fees on the bonds.
Regarding the Building Acquisition List on Form 3 – for “Date Building Place in Service by Current Owner”
– is this asking for the anticipated PIS date or the prior PIS date from 16 years ago?
The Building Acquisition Information (Item 10 on Tab 3 of Form 3) requests the “Date Building
Placed in Service by Current Owner”. This is the date that the Seller placed the building in service.
Are Forms 2-Self Score Sheet, Form 8-Planning & Zoning Verification, and Form 11-Servic Enriched
Location Facilities required for the 4% application? Broad question – since many of these tabs seem to
deal specifically with the 9% application, do you have some sort of guide for what is specifically required
for only 9% but not the 4% application?
The 2017 QAP and its accompanying Forms and Exhibits are the guide for what requirements
Applicants must meet; there is no separate guide for what is specifically required for only 9% but not
the 4% Application. Section 3.1 of the 2017 QAP states “Applications submitted under this Section
3 must include all non-scoring Application exhibits under Section 2.9, and all documents requested
under Sections 2.10 and 2.11 of this Plan.” You may refer to the Point Scoring Summary on page 36
for a list of points, but Applicants must read each Tab in Section 2.9 to ensure that all documents
required for threshold are included in the Application.
Any chance we can get a waiver on the CNA provider before we submit the application? Can I submit a
waiver early or do I have to submit with the application and wait to hear if you approve it after
submittal?
No. Section 2.9(A)(5) states: “Waiver requests must be submitted with the Application and shall be
supported by a detailed narrative explanation sufficient to permit ADOH to determine that: 1) waiver
of the requirement is consistent with I.R.C. § 42, its implementing regulations and IRS guidance; 2)
waiver of the requirement accomplishes the purposes and objectives of this Plan; and 3) the waiver
must not adversely affect the feasibility of the Project.“

Week ending January 27, 2017
Can we capitalize the entire 15-year supportive service cost?
Section 7.1(C)(2)(c) indicates that “Costs for Supportive Services will be considered an additional
Operating Expense.” A waiver may be requested when USDA or HUD-insured loan requirements
do not permit supportive services to be paid from cash flow. Applications where a waiver is approved
to have supportive services paid from a capitalized reserve should complete Form 3, page 5 as
described on those tabs of Form 3. The capitalized reserve should be identified in the cover letter and
included on pages 8-11 of Form 3 on line 122 or 123 (Cells C&D134 and C&D135) In addition, an
annual contribution should be calculated and added to Form 3, page 6 cell L63 (“Additional Monthly
Income”) to allow the anticipated portion of the capitalized reserve to flow into the cash flow as
income. (If you check the “headings” box under “view”, you can see the headings for worksheets to
identify a specific cell.)
Can you please clarify what the last sentence on page 132 and top of page 133 means and give me an
example? “In ADOH’s sole discretion, Applicants with USDA or HUD-insured loans may not be eligible for
ADOH HOME funds unless guarantees or equivalent security are provided to ensure full collateralization
of the ADOH Gap Financing for the entire period of affordability.”
In the event of a foreclosure on the USDA or HUD-insured loan and subsequent loss of affordability,
ADOH would be required to repay HUD the entire principal amount of the HOME loan with nonfederal funds. Therefore, ADOH requires a guarantee or equivalent security from the Developer or
another Person with sufficient financial capacity to ensure that the investment of these funds is not
lost for the people of Arizona. For example, the loan to value ratio on a refinanced RD property can
be more than 100%, not allowing for a repayment of the ADOH subordinate debt in the event of a
foreclosure. In addition, RD debt is often not forgivable in the event of a restructure.
Please confirm per the underwriting guidance on page 125, Project Pro forma/Cash Flow Analysis. ADOH
expects Years 1-15 (Compliance Period) DCR at a minimum of 1.20 and for years 16-30 DCR at a
minimum of 1.15.
You are correct regarding the Compliance Period, however the Extended Use Period is more nuanced.
In order to maximize primary debt, Section 7.1(C)(3)(b) requires that “the annual debt service
coverage ratio (“DSCR”) shall be no less than one point two zero (1.20) for each year of
operation during the Compliance Period and no more than one point one five (1.15) on the
earlier of: the date the Extended Use Period expires or the year the loan matures.”
Additionally, a Debt Service reserve is required under Section 7.1(C)(3)(j)(i) if “ADOH’s pro forma
for the Project anticipates a debt coverage ratio of lower than one point one five (1.15) in
any year prior to loan maturity on the primary debt”.

Form 15A, if a Service Provider is committing Door to Door transportation for only 1 year, is OK for the
Owner to find a replacement (with in the year approved by ADOH) or can the Owner take on the
transportation service.
Yes, subject to ADOH approval of the replacement provider. Form 15A includes the provision: “If
the Term of Commitment is less than fifteen (15) years, the Applicant commits to provide the services
as described below for no less than fifteen (15) years, either through the Service Provider making the
commitment on this form, or through another service provider that is acceptable to, and approved in
advance by the Arizona Department of Housing.”
I have a few questions on the maximum tax credit allocation. Does the $3,000,000 total to one
developer apply only to 9% competitive credit or does it also include bond projects from the 4% pool? If
a developer owns a fraction of a project, say 50%, does the project's entire allocation count toward the
total or only 50% of the project's allocation?
Section 3.1 states “Applicants applying for Tax Credits pursuant to I.R.C. § 42(h)(4) are not subject
to the Maximum Reservation Per Project,” so the $3,000,000 total to one developer does not apply to
the 4% Tax Credits with Tax-Exempt Bond Financing.
Regarding your second question, whether only a portion of the Maximum Reservation is applicable
when a Developer only owns a fraction of a Project, the Project’s entire allocation counts toward the
total, not a fraction thereof. Section 2.2 of the QAP states “The Maximum Reservation per Project
will be $1,750,000 of the State’s annual credit authority and not more than a total of $3,000,000 total
in Tax Credits and two (2) Projects in any [9%] Application Round for any Developer. For the
purposes of the Maximum Reservation, the term “Developer” includes the Developer, Co-Developer
or any Affiliate of a Developer or Co-Developer that is acting as a Developer or Co-Developer on a
Project.” Thus a Developer or Co-Developer may not exceed the Maximum Reservation or the limit of
$3,000,000 total in Tax Credits by partnering with other Co-Developers.
In the QAP, the Local Government Contribution scoring categories require evidence of the population of
the “Local Government”. According to the QAP, Local Government “means the governing body of the
city, town, county or Tribal government having jurisdiction over the real property upon which the
Project will be located”. Similarly, the Transit Oriented Design scoring category requires evidence of the
population for “municipalities and Census Designated Places”. Tribal project on reservations are under
the jurisdiction of a Tribal government, not the jurisdiction of a municipality. The Census Quick Facts link
provided in the QAP only provides population information on cities and towns, not reservations. Will
ADOH accept population data from the 2010 Census to substantiate the population in the Local
Government Contribution and Transit Oriented Design categories for tribal projects?

Yes, as stated in last week’s clarifications, the link listed in the QAP only works for cities and towns
with a population of 5,000 or more. Smaller geographies are available using the following tool, but
the data available is from 2010:
https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
ADOH will accept this 2010 data for smaller geographies.
I would like to understand why the Application Workshop certificate lists an individual’s name when the
company is paying for the registration as we are making application as a company?
The Application Workshop lists the name of the individual that attends the workshop. Section 2.5(B)
of the 2017 QAP requires that the Developer, Co-Developer, or Consultant submit a certificate of
attendance from the 2017 LIHTC Application Workshop. The terms Developer, Co-Developer and
Consultant are defined in the QAP. The individual listed on Form 3 as the principal contact and Tab
6/Form 6 should be the individual that attends the Application Workshop. If not, an explanation
regarding the role of the individual employee attending the workshop in preparing the Application
and developing the Project must be included in Tab 1 with the certificate.
In past somewhere I know it was referenced the percentage fee the management company could charge
based on the size of the project (number of units). For some reason I am not seeing this. Do you know
where I can find this?
The 2017 QAP and LIHTC Compliance Handbook do not address the amount of the property
management fee negotiated between the Property Management Company and the Owner. However,
amounts deemed to be excessive in comparison to other Applications may be reduced for purposes of
calculating the maximum primary debt under QAP Section 7.1(C)(3)(b).
Can a municipality utilize in-kind labor and equipment to conduct on site-grading and drainage work, as
the “local government’s contribution” to reduce the development budget? The work would be done
onsite and is directly related to the development of the project. The value would be based on the
standard rate for this type of work as established by Means Cost Data or current contractor charges for
equivalent work, documented by actual expenditure’s on City projects.
Section 2.9(T) of the QAP states “The Local Government contribution… shall be in the form of a
committed cash contribution, HOME contribution, CDBG contribution, loan, donation of land, or
waiver of fees.” The in-kind labor and equipment proposed does not fit into any of the allowable
categories listed in the 2017 QAP.
Can the waiver of design review fee’s and permit fees be utilized to meet the “Local Government
Contribution”?

Yes.
I was also trying to clarify what is covered under the definition of “development fees” as listed in Section
2.9(T)(2)(b) page 89 of the 2017 LIHTC QAP. Development Fees are traditionally impact fees which are
usually difficult to waive because the City has to cover the shortfall with general funds.
Development fees referred to in Section 2.9(T)(2)(b) include any fees that a Local Government
charges via its planning and development process to a Developer to review plans and specifications
issue building permits, and inspect the building prior to certificate of occupancy. The fees must be
fees that the Project would incur, if they were not waived. Examples include: site planning fees, site
plan review fees, environmental plan review and permit fees, subdivision and property division plan
review fees, sign fees, sign plan review fees, sign permit fees, civil engineering plan review fees, civil
engineering permit fees, on-site improvement permit fees, right-of-way permits, civil engineering
inspection fees, building safety plan review fees, building safety permit fees, building safety
inspection fees, and impact fees.
Since the current Compliance Manual states “the compliance monitoring fees are determined by the
Qualified Allocation Plan for the year the tax credits were awarded,” can you clarify if one uses the
current policy for this item vs. the year the credits were awarded?
The compliance monitoring fees are determined based upon the QAP of the most recent award of Tax
Credits. So if an Applicant applies to re-syndicate a Project in 2017, the 2017 compliance fees will
apply.
Weeks ending January 13 and 20, 2017:
Updates to Forms:
I have a question on the current Form 3. You mentioned at the training last Thursday that the contractor
bond & insurance is not included in the maximum eligible basis calculation for construction costs (Tab 811 line #56 of the Form 3 states this explicitly as well). However, the calculations for box K9 and K10 on
Tab 4 are picking up the cost of the contractor bond and including it in the maximum allowable per SF
construction cost and construction eligible basis. Is this an oversight, or should I be including my
contractor bond in the maximum eligible basis and the maximum allowable construction cost per SF?
Form 3 - Cell F17 on Tab 4 has been corrected to exclude Cell D56 (contractor’s bond and insurance)
on Tab 8-11. The calculation in Cell K9 on Tab 4 includes Cell F17 on Tab 4.
Form 3 - Cell K10 on Tab 4 has been corrected to exclude Cells E56 and F56 (contractor’s bond and
insurance) on Tab 8-11.

Questions for Clarification:
I keep getting the error message below when I try to get the population count for the City of
Phoenix. Do you know of another way that we should verify the population?
The link worked during the drafting of the QAP, but has since been removed by the webmaster. The
following link was found by typing in www.census.gov and searching for “quick facts” and clicking
on the first result:
http://www.census.gov/quickfacts/table/PST045216/00
It only works for cities and towns with a population of 5,000 or more. Smaller geographies are
available using the following tool, but the data available is from 2010:
https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
One additional question I have regarding the contractor bond and insurance line item is if we are able to
generate general requirements, profit and overhead off of the contractor bond line item? The formulas
in Tab 8-11, cells C61 through C63 include it in the calculations, but I wanted to confirm that is the intent
of the Department.
Yes, the maximum allowable general requirements, profit and overhead are limited to the percent of
costs in the table found at Section 7.1(C)(4)(f) found on page 129 of the QAP. As stated in the 2017
QAP, “[t]hese limits are calculated as a percentage of line item “Subtotal Direct Construction Costs”
(Cell D59 on Line 47 of Form 3 Pages 8 – 11)” which include contractor bond line item on Line 44 of
Tab 8 – 11.
Can you clarify the Compliance Training definition in the QAP? “Compliance Training” means a two (2)
day certification class designed to support an exam taught by authorized providers on operating and
managing Projects in conformance with the requirements of I.R.C. § 42, Reg. 1.42-5, the QAP and the
LURA. Approved Compliance Training providers are: ADOH, Zeffert and Associates, THEOPRO, Quadel,
Elizabeth Moreland, National American Indian Housing Council (“NAIHC”), Novogradac, NCHM and
Spectrum. ADOH programs must be specifically designated as a valid Compliance Training program that
meets the requirements of the QAP.” The last sentence is a bit confusing. In short we are wondering if
the compliance training needs to be AZ specific or would training provided by THEOPRO that was a
federal training be ok?
The training does not have to be specific to Arizona. It must be a two-day certification class designed
to support an exam as described in the Compliance Training definition.
If we have a project to propose for the SMI set-aside and we include the soft funding that comes with
that set-aside, but then do not get funded in that set-aside (and do not receive the soft $$), but the

project scores high enough to get funded in the general pool or gets funded in another set-aside without
the SMI funding, what happens then?
Projects submitted under the SMI Set Aside must not rely on the $ 2 million to fill any gaps. The
SMI Housing Trust Funds that are awarded to the selected Project will be used to replace tax credits
that would have otherwise been generated by the Project, as the structure of these funds as a deferred
forgivable loan will require a reduction in eligible basis. Therefore, projects submitted for the SMI Set
Aside need to be financially viable (have all gaps filled) whether awarded under the SMI Set-Aside or
the general pool.

Week ending January 6, 2017:
Updates to Forms:
Form 3 – ADOH unlocked the cell that allows the Applicant to indicate whether the Development Budget
includes Davis Bacon wages on page 8-11 of Form 3.
Questions for Clarification:
Is the preliminary site approval in accordance with “Project Readiness” tab subjected to ONE YEAR
VALIDITY like, for example, for the Appraisal or Market Study? In other words, if a project obtains the
preliminary site approval from the City before March 1st 2017, is this approval still valid for a March 1st
2018 LIHTC Application?
The validity of any site plan approval is determined by the Local Government that issues the site plan
approval. As long as the site plan approval is still valid without a re-submittal of the site plan, and
the next step is to submit engineering and construction documents, as documented on Form 7, and
the Project meets all requirements of Section 2.7(B) and 2.9(G), the Project would be eligible for the
points in this scoring category.
Are proposed 2017 LIHTC projects located in a Colonia eligible for the 130% boost?
Projects located in a Colonia are only eligible for the 130% boost if the specific location is in an area
identified in the 2017 QAP for the 130% boost. Section 7.2(A) limits the Projects eligible for the
130% boost to the following:
ADOH has elected to designate the following types of Projects as requiring an increase in credit of up
to one hundred thirty percent (130%) as needed for feasibility, under I.R.C. § 42(d)(5)(B)(b):
•

Projects qualifying for participation in the Supportive Housing Set-Aside, by meeting all of
the requirements in Section 2.9(P) of this Plan.

•

Projects on Tribal Land.

•

Urban Projects with Structured Parking that are located within ½ mile of a High Capacity
Transit line.

In addition, Section 7.2(A)(1)(a) states that an adjustment to Eligible Basis shall be made where the
“Project qualifies under I.R.C. §42(d)(5)(B)(i)-(iv)” (QCT or DDA).

Posted December 23, 2016
The Arizona Department of Housing (“ADOH”) posted updated Forms to the website on December 22,
2016 as follows:
Form 3 –ADOH’s suite address on the cover sheet was corrected.
Form 2 – Housing for Older Persons Project corrects the reference to Section 2.9T with a reference to
2.9Q; Targeting Low Income Levels corrects a reference to Form 22 with a reference to Form 18; Waiver
of Qualified Contract corrects a reference to Form 27 with a reference to Form 23; Sustainable
Development corrects references to Form 17 with references to Form 14.
Form 2-1 – the State Special Project Set-Aside was missing and was added
Form 15A – corrects a reference to Form 18 with a reference to Form 15A.
Questions for Clarification:
I would like to determine if an appraisal is needed in the following scenario. A non-profit corporation
owns an existing property free and clear and is rehabbing the property. There is no purchase involved
but they are transferring title to a limited partnership where the non-profit is the sole general partner in
order to create an entity suitable for receiving low income tax credits. Is an appraisal needed as there
are no acquisition credits being requested?
Section 2.9(G)(1)(b) for Projects involving Acquisition where there is Acquisition/Rehab or Adaptive
Re-use states that “The Appraisal must include separate values for the land and the buildings.” This
implies that the value of the underlying land and/or the value of the building acquisition are included
in the Development Budget. If the existing property, including both the land and the building, are
being donated to the Project, with no consideration of the value of the land or building in the
Development Budget, and with no consideration for a lease of the land and/or building during
operations, then there is no need to provide an Appraisal.
I've been re-reading section 7.2.3 of the draft 2017 QAP and I'm wondering how the max eligible basis is
going to be calculated. Is this Max before the 130% boost or is it after the fact?

Assuming that you mean Section 7.2(A)(3) “Maximum Allowable Eligible Basis for Total
Development Cost” on page 138 of the 2017 QAP, it states the Total Maximum Allowable Eligible
Basis for each Unit Type are then added together to derive the Maximum Allowable Eligible Basis for
Total Development Cost in Cell E138 (9% Eligible Basis) plus Cell F138 (4% Eligible Basis) on Line
126 of p. 8-11 of Form 3. The 130% boost is not part of this calculation. The 130% boost is included
on Line 137 (Cells E149 and F149) in the calculation of the Low Income Housing Tax Credits.
I noticed that ADOH revised the Form 3 (pages 8 – 11) to include “Contractor ‘s Bond and Insurance “. I
believe that the cost of the Performance Bond required by the Construction Lender and the Investor and
paid by the Developer belongs to Section IV “construction financing costs “. By switching the
Performance Bond cost to Section II “Direct Construction Costs” ADOH increases the “Total Construction
Costs“ (line 55) UNNECESSARILY by adding sale tax (around 9%) and GC general requirements, builder’s
profit and overhead (12 to 15 %) to the cost of the Performance Bond. For instance, for a total GC
Contract of 10 million dollars, the cost of the Performance Bond is around 1% or $ 100.000. By including
the Performance Bond to line 55 ADOH is adding around $ 9.000 in sale tax plus $ 12 to $ 15.000 in GC
General Requirements and Overhead and Profit for a total of 21 to $ 24.000. On the other hand, if the
cost of the Performance Bond is included in Section IV (Construction Financing Costs), like it was until
this year QAP, these extra costs (21 to $ 24.000) do not apply. I really believe that every unnecessary
costs should be eliminated, particularly when the “high” LIHTC project costs per unit are under intense
attention.
The cost of the Contractor’s Bond & Insurance (“B&I”) as itemized on Line 44 of the Development
Budget on Form 3 pp. 8-11 is typically included in a General Contractor’s contract with the Owner
and is therefore included in the Direct Construction Costs Sub-Total. The cost of the B&I is not
included in the definition of Total Construction Cost on page 21 of the 2017 QAP. That definition
has been taken into account in the calculation of “Maximum Allowable Eligible Basis for Total
Construction Cost” in Section 7.2(A)(2)(a) on page 137 of the 2017 QAP which states “80,000 x
$122.75 = $9,820,000 total Eligible Basis in the nine percent (9%) Eligible Basis [Cell E67] plus the
four percent (4%) Eligible Basis [Cell F67] columns allowable on Line 55 Total Construction Cost of
Form 3 Pages 8 through 11 minus Line 44 Contractor’s Bond & Insurance of Form 3 pages 811.” General Requirements, Builder’s Overhead, Builder’s Profit, and Sales Tax are calculated based
upon the terms of the construction contract. The 2017 QAP merely includes maximum allowable
amounts for General Requirements, Builder’s Overhead, Builder’s Profit, HC Contingency and
Hazardous Waste Contingency.