Arkansas Administrative Code
Agency 109 - Arkansas Development Finance Authority
Rule 109.00.17-001 - Guidelines for Reserving Volume Cap for Mulit-Family Housing Bonds

1. RESERVATION OF CREDIT FEE. A non-refundable reservation fee of One Hundred Dollars ($100) per low-income unit will be required at the bond closing.

2. AWARD OF CREDIT FEE. An award of credit fee of One Hundred Fifty Dollars ($150) per low-income unit will be required at the time the credits are awarded (at issuance of IRS Form 8609).

3. COMPLIANCE/MONITORING FEE. A compliance and monitoring fee of six percent (6%) of the amount of annual credits is required to be paid at the time the credits are awarded (at issuance of IRS Form 8609). In addition, a monitoring fee of $50 per low-income housing tax credit unit inspected will be owed to the Authority following any on-site compliance and monitoring inspection conducted by the Authority during the extended period following the close of the 15-year compliance period.

Summary of Proposed Rule

The purpose of the proposed rule is to allow the issuance of short-term bonds for the development of affordable, multi-family residential rental developments. It is necessary because short-term bonds are the only financially feasible vehicle that can generate the equity needed to rehabilitate affordable rental complexes which have more than seventy-five (75) units. ADFA's Housing Department is allocated roughly $30 million in volume cap each year for the issuance of tax-exempt multi-family bonds. ADFA has not issued multi-family bonds in nearly a decade. The cause for the lack of issuances is existing language in the Guidelines that restricts the use of multi-family bonds only for permanent financing. This language was incorporated into the Guidelines when market conditions caused high demand for tax-exempt private activity bond volume cap. The current market conditions are starkly different. There is little demand for tax-exempt bonds; therefore, little demand for tax-exempt multi-family bonds for the purposes of permanent financing, This means the tax-exempt private activity bond volume cap for Arkansas has gone untapped.

The proposed rule addresses two items. First, it removes language that restricts the use of multi-family bonds only for permanent financing. Second, it provides for a new issuance fee structure if a bond's maturity date is five years or less. Adopting this proposed rule will allow ADFA to issue short-term bonds. These bonds will be outstanding for the duration of the construction/reconstruction period and subsequently paid off by the applicant,

1. RESERVATION OF CREDIT FEE. A non-refundable reservation fee of One Hundred Dollars (SI00) per low-income unit will be required at the bond closing.

2. AWARD OF CREDIT FEE, An award of credit fee of One Hundred Fifty Dollars ($1500) per low-income unit will be required at the time the credits are awarded (at issuance of IRS Form 8609).

3. COMPLIANCE/MONITORING FEE. A compliance and monitoring fee of six percent (6%) of the amount of annual credits is required to be paid at the time the credits are awarded (at issuance of IRS Form 8609). In addition, a monitoring fee of $50 per low-income housing tax credit unit inspected will be owed to the Authority following any on-site compliance and monitoring inspection conducted by the Authority during the extended period following the close of the 15-year compliance period.