Code of Maine Rules
99 - INDEPENDENT AGENCIES
346 - MAINE STATE HOUSING AUTHORITY
Chapter 16 - LOW-INCOME HOUSING TAX CREDIT RULE

Current through 2024-38, September 18, 2024

STATUTORY AUTHORITY: 30-A MRS §§4741(1) and 4741(14), § 4726, Section 42 of the Internal Revenue Code of 1986, as amended Internal Revenue Code of 1986, as amended

BASIS STATEMENT: This rule is the qualified allocation plan for allocating and administering federal low income housing tax credits ("LIHTC") in the State of Maine, which MaineHousing, as the State's designated housing credit agency, is required to adopt pursuant to Section 42 of the Internal Revenue Code and the above-referenced sections of the Maine Housing Authorities Act.

This rule replaces the prior rule and includes the following changes:

Throughout:

* Updated deadlines

* Updated Section number references

* Repaired grammatical errors (punctuation, typos, correcting defined terms, etc.)

Section 3 A: Added "at least" to clarify that MaineHousing can set aside more than 10% for the Nonprofit Set-Aside.

Section 3 B: Updated Preservation Set-Aside amount to $750,000.

Section 3 C: Increased the amount of credit per unit to $30,000 from $20,000, and changed the maximum amount of credit per project to $1,200,000.

Section 4 A: Pre-apps due July 3, 2024 and July 3, 2025.

Section 4 B2: Applications due September 19, 2024 and September 18, 2025.

Section 4 B3: Added language: "Submitted exhibits must include documentation such as grant award letters, signed documentation on letterhead or evidence of official municipal action to provide evidence of all funding sources and official approvals."

Section 4I4: Updated language to clarify.

Section 4I5: Added language "in the case of a TDC Index Cap waiver, the TDC Index increases substantially"

Section 5 A: Removed Section 811 language.

Section 5 A3 Revised to revert the language back to the language that was adopted in the 2023- 2024 QAP. MaineHousing had made changes to the 2023-2024 QAP after a public hearing and those changes were adopted, however in the version MaineHousing published for the 2025 -2026 QAP, those changes were inadvertently left out. MaineHousing did not intend to make any changes to this Section.

Section 5 A4 Revised to revert the language back to the language that was adopted in the 2023- 2024 QAP. MaineHousing had made changes to the 2023-2024 QAP after a public hearing and those changes were adopted, however in the version MaineHousing published for the 2025 -2026 QAP, those changes were inadvertently left out. MaineHousing did not intend to make any changes to this Section.

Section 5 B: Increased the TDC Index caps.

Section 5C: Increased Rehabilitation Costs per unit of existing housing from $50,000 to $75,000.

Section 5G: Updated and clarified re-characterization language.

Section 5H: Added a link to the latest version of the Quality Standards and Procedures Manual and noted energy efficiency standards. Additionally, updated Build America, Buy America requirements, removed electrical raceway/conduits language and relocated and updated Section 3 language.

Section 5 I3: Revised to revert the language back to the language that was adopted in the 2023- 2024 QAP then revised to update the language to be consistent with the changes that were provided in the 2025 -2026 version of the QAP that was published. Changed Broadband Capabilities to "Broadband Access" and indicated that the project must include broadband infrastructure with capacity sufficient to support the provision of Telehealth services. Separated out the definition of Broadband infrastructure and removed "ConnectMaine". Deleted "If the broadband capabilities are used for telemedicine services".

Section 5J: Added that the resident service coordinator must be available twice weekly which is the appropriate number of days each week acceptable to MaineHousing.

Section 6: Renumbered and reorganized the scoring criteria.

Section 6 A: Increased the scoring points for Rehabilitation or Reuse of Existing Housing, Structure or Site from 4 to 5.

Section 6 B: Increased the scoring points for Historic Rehabilitation from 4 to 5.

Section 6 E: Updated the scoring points for Accessibility to increase 6 points to 9 points for Projects that are not specifically for Older Adults or Families, having only 1 BR and/or efficiency units and to add 6 points for Family Projects.

Section 6 F: Increased the scoring points for National Housing Trust Fund from 1 to 2.

Section 6 G: Increased the scoring points for Acquisition Cost from 4 to 5, increased the average

acquisition cost per unit and increased the percentage of project's acquisition cost as comparted to average acquisition cost and the associated points.

Section 6 I: Decreased the scoring points for Housing Need from 10 to 8 and updated the Service Center Community Cities/Towns for both Project providing housing for Older Adults and Other Housing Projects and the associated points. Additionally, adjusted the points for Projects located on Native American tribal lands from 10 points to 8 points.

Section 6 J: Increased the scoring points for Community Revitalization from 3 to 5 and added two points for Projects located in a QCT with at least 20% of the units at market rate.

Section 6 K: Adjusted the scoring points and criteria for proximity to activities important to daily living to up to 5 points for activities important for daily living that are located within not more than a 1/2 mile of the Project, 1 point per activity.

Section 6 L: Increased the scoring points for Readiness and provided a breakdown of the points for different categories.

Section 6 M: Added the word "successfully" to the scoring criteria for two categories.

Section 6N: Changed to negative points for bad performance. Added language clarifying that MaineHousing has the discretion to consider whether non-compliance was a direct result of the Applicant's non-performance, the performance of an unaffiliated third- party, or a result of something outside the control of any affiliated party provided it was corrected appropriately within a reasonable timeframe.

Section 6O: Reduced the weight of the scoring criterion from 5 points to 2. Added language clarifying that experience successfully managing at least one (1) low income housing property developed under a Federal program that is substantially similar to LIHTC, to be determined at MaineHousing's sole discretion, is experience that qualifies for 1 point.

Section 6P: Changed to negative points for bad performance.

Section 10 F: Added Utility Monitoring to begin in Year 2 of the QAP.

Section 11 H: Added a reference to Appendices for clarity.

Appendix A: Change made to "Activities Important to Daily Living" definition adjusting retail store to a store that offers regularly purchased household supplies.

Deleted the definition for "Telemonitoring."

Appendix B: Language was added to require any available radon test results for the Project site.

Appendix E: Revised to revert the language back to the language that was adopted in the 2023- 2024 QAP. MaineHousing had made changes to the 2023-2024 QAP after a public hearing and those changes were adopted, however in the version MaineHousing published for the 2025-2026 QAP, those changes were inadvertently left out. MaineHousing did not intend to make any changes to Appendix E.

PUBLIC COMMENT:

Process:

Notice of Agency Rule-making Proposal (MAPA-3) was submitted to the Secretary of State for publication in the March 27, 2024 edition of the appropriate newspapers. Additionally, MaineHousing sent the proposed rule to Interested Parties on March 27, 2024 and published the proposed rule on its website on March 27, 2024. MaineHousing held a public hearing on April 16, 2024. The comment period was held open until April 26, 2024 at 5:00 PM.

A second Notice of Agency Rule-making Proposal (MAPA-3) was submitted to the Secretary of State for publication in the May 15, 2024 edition of the appropriate newspapers. Additionally, MaineHousing sent the proposed rule to Interested Parties on May 15, 2024 and published the proposed rule on its website on May 15, 2024. No public hearing was held. The comment period was held open until June 14, 2024 at 5:00 PM.

Summary of Comments and Responses to Comments:

Comment: Brian Kilgallen, Development Officer for Community Housing of Maine, submitted written comments and questions as follows:

1) If a property uses the ODE account to fund a YE operating deficit before the application deadline, would the application lose a point in Owner Performance?

2) Can Management Company and Ownership scores be available before the Pre-application deadline?

3) What is the process for MaineHousing to approve the building design prior to a project submitting for readiness points?

4) Is the Maine Construction General Permit required to earn the readiness points? Typically, this is done closer to construction.

5) Section H references dates from 2023 and 2024.

6) Was any consideration given to phased projects that can run relatively concurrently?

Response:

1) No.

2) Applicants are encouraged to connect with management companies and owners prior to Pre-application and perform due diligence in gathering information regarding performance. Currently MaineHousing does not publish scores on its website.

3) There is no process by which MaineHousing would approve a building design prior to the submission of an application. The Pre-application review is generally a site visit (sometimes a walk-through if the project is an adaptive reuse) and potentially a brief review of conceptual plans and specifications. Construction Analysts are not assigned until an application is awarded funding and MaineHousing does not have the resources to conduct detailed building design reviews beforehand for all applicants. MaineHousing can try to answer general questions a developer might have about specific items, but cannot provide full review in advance of an award.

4) No. It is typically done closer to construction.

5) This has been corrected.

6) The QAP scoring currently does not award points for phased projects that can run relatively concurrently. MaineHousing intends to retain that position.

Comment: Amanda Bartlett, Chief Operating Officer of Developers Collaborative, submitted written comments asking MaineHousing to further amend Section 6(N), Owner Performance, to better align with the intent of the scoring in the category.

Response: MaineHousing has added clarifying language to Section 6(N), Owner Performance, explaining that MaineHousing has the discretion to consider whether non-compliance was a direct result of the Applicant's non-performance, the performance of an unaffiliated third-party, or a result of something outside the control of any affiliated party provided it was corrected appropriately within a reasonable timeframe.

Comment: Tyler Norod, Development Director of Westbrook Development Corporation provided testimony at the public hearing and submitted written comments asking MaineHousing to consider removing Brownfield remediation costs from the TDC calculation as the costs are typically paid by outside funds and can be very expensive.

Response: Brownfield remediation is frequently performed outside of and/or prior to the project scope of work and therefore does not contribute to the TDC.

Comment: Tyler Norod also recommended a waiver process for Section 6(N), Owner Performance, whereby an owner could seek a waiver from the negative scoring points for the issuance of an 8823 that was outside of the owner's control.

Response: MaineHousing has added clarifying language to Section 6(N), Owner Performance, explaining that MaineHousing has the discretion to consider whether non-compliance was a direct result of the Applicant's non-performance, the performance of an unaffiliated third-party, or a result of something outside the control of any affiliated party provided it was corrected appropriately within a reasonable timeframe.

Comment: Tyler Norod also recommended that MaineHousing outsource the Environmental Review work to qualified engineers to save MaineHousing staff significant time and remove the risks and barriers associated with Choice Limited Actions for tax credit applications. Norod proposed that applicants could have the checklist completed and included with the submission of a project application for tax credits.

Response: MaineHousing appreciates this recommendation and intends to look into the possibility of outsourcing the Environmental Review work; however, it should be noted that the requirements of an Environmental Review are dependent on the type of Federal funding a project receives.

Applicants would not know which type of Federal funding they would receive prior to an award, so requiring Applicants to complete the Environmental Review prior to award could be a cost to the Applicant that would not be an eligible project cost if it turned out an Environmental Review was not required. Additionally, the Choice Limiting Action period does not expire until the project receives a release of funds from the Department of Housing and Urban Development ("HUD"). The completion of the Environmental Review itself does not stop the Choice Limiting Action period and MaineHousing would still have to request a release of funds from HUD and go through the public comment period before an applicant could take any action that would be considered a Choice Limiting Action.

Comment: Cory Fellows, Vice President of Development for Preservation of Affordable Housing ("POAH") submitted written comments asking MaineHousing to replace its project-level $750,000 Net Developer Fee cap with a $25,000 per-unit cap that would better reflect the significant overhead and risk associated with larger or more complex Low Income Housing Tax Credit ("LIHTC") projects.

Response: MaineHousing continues to believe that the Net Developer Fee cap of $750,000 is appropriate. The Net Developer Fee cap is reviewed with each iteration of the QAP and adjustments are made as necessary.

Comment: Corey Fellows also expressed concern regarding the requirement to set aside at least 60% of the units in a LIHTC project for households under 50% AMI. Fellows indicated this requirement is aggressive and undermines project viability, creating a very significant barrier to financing a viable construction or rehabilitation project and substantially weakening a project's long-term financial stability.

Response: MaineHousing designs its financing packages to make its affordability requirements feasible. The need of the State is taken into consideration when determining what is required for affordability. MaineHousing has a long track record and an extremely successful portfolio of projects bolstering the position that its requirements are not burdensome to the properties.

Comment: Corey Fellows also recommended that MaineHousing restore scoring criteria for new Project-Based Rental Assistance ("PBRA") to encourage sponsors to incorporate PBRA which is a sustainable solution for long-term affordability.

Response: MaineHousing removed the scoring criteria for new PBRA as in the past a number of local public housing authorities have pledged Project-Based Vouchers to their own projects, making it an unfair scoring advantage for those Developers that have their own Project-Based Vouchers.

Additionally, MaineHousing has committed to providing Project-Based Vouchers for each unit that a developer pledges to set-aside for special needs populations.

Comment: Corey Fellows noted that POAH supports MaineHousing's revisions to the maximum credit amount, including the increased cap per Credit Unit and the imposition of a new $1.2M total maximum.

Response: MaineHousing appreciates the support for those changes.

Comment: Corey Fellows noted that POAH supports MaineHousing's efforts to ensure its funded costs are reasonable and necessary, but is concerned that the TDC Index Cap will exclude some worthy projects from competing for MaineHousing resources. Fellows commented that the increased New Construction TDC Index Cap still remains too low, particularly for projects where certain desirable characteristics drive higher costs (i.e. projects for special populations with needs for specific physical accommodations or facilities, projects in high opportunity areas where land costs are higher, projects with advanced energy performance, and projects complying with new Build American, Buy American ("BABA") requirements).

Response: MaineHousing took all of these factors into consideration when setting the new TDC caps. MaineHousing's priority is to fund as many new, high quality housing units as possible with its limited resources. Based on the costs in the current pipeline, as well as current labor and materials pricing and trends, MaineHousing is confident that the proposed TDC caps are reasonable and will eliminate certain projects which would otherwise have a higher per unit cost than necessary. MaineHousing's energy efficiency standards are already quite high and those costs are known; the adjustments to the standards do not add materially to the TDC. The effects of BABA are still unclear at this time.

Comment: Corey Fellows also notes that the QAP's Maximum Credit Amount provisions already serve to limit the LIHTC resources allocable to any given project, ensuring that higher cost developments will not claim a disproportionate share of agency resources, so there is no clear policy benefit from the TDC Index Cap to offset the real harm it may cause by excluding good projects from competing. Fellows recommended MaineHousing either eliminate the TDC Index Caps entirely or implement a waiver process for projects where special characteristics cause them to exceed the caps.

Response: MaineHousing discusses TDC Caps in preparation for each QAP. MaineHousing has determined that the clarity of specific cost targets is helpful to developers and therefore wishes to keep the TDC Caps. During the pandemic MaineHousing chose not to hold developers to hard caps, which resulted in longer negotiations and higher per unit costs. Most additional resources brought to a project are from other public resources and MaineHousing takes its responsibility as stewards of public funds seriously. In very limited circumstances, the Director of MaineHousing has the ability to waive program guidelines for good cause.

Comment: Corey Fellows recommended that MaineHousing take into consideration when considering funding priorities and evaluating project budgets that different towns and regions have different demographics and needs and that the cost of securing local land-use approvals for family housing is often more difficult, time-consuming and expensive than senior housing.

Response: MaineHousing does not prioritize housing for older adults over housing for families, or vice versa. Each housing type is eligible for an equal number of points under the QAP. MaineHousing will continue to track the number of units developed under each type of housing and can make adjustments in the future if the Board of Commissioners and MaineHousing Staff feel there is a trend towards unnecessarily producing more of one type of housing.

Comment: Erinn Roos-Brown, Project Manager of Travois, Inc. submitted written comments stating that the requirements, in Section 4 (B1.a) - Allocation Process: Existing Housing, for Acquisition and Rehabilitation Projects to "include the addition of at least 20 new units, or meet the

requirements of the Preservation Set-Aside in Section 3.B" effectively eliminates Tribal entities from applying for acquisition and rehab projects under LIHTC in Maine due to: the smaller scale of Tribal projects; the financial feasibility; the limitation of buildable land in assigned Reservations; and the Federal funding available to Tribes which does not qualify for the Preservation Set-Aside. Roos-Brown recommended MaineHousing remove the requirement that 20 new units be developed as part of Acquisition and Rehabilitation projects.

Response: The requirement that 20 new units be developed as part of Acquisition and Rehabilitation projects is aimed at achieving the goal of adding additional housing stock to Maine. MaineHousing believes this strikes the right balance between supporting acquisition & rehabilitation of housing and creating more affordable housing. MaineHousing continues to search for alternate methods of funding preservation, and increase the ability to do so when more funding is available.

Comment: Erinn Roos-Brown also commented that the TDC Index Caps prescribed by MaineHousing are exceedingly low in comparison to LIHTC QAP TDC Caps nationwide. Roos- Brown requested MaineHousing recognize the calculated maximum unit development costs specifically for Tribal projects developed by HUD and include a reference to PIH-2023-30 as the applicable limits for Tribal projects

Response: MaineHousing believes that the TDC Caps in Maine's QAP are appropriate for Maine projects and allow for the creation of as many safe, efficient, quality units as possible. Based on a review of the projects in MaineHousing's pipeline, developer partners are currently creating units for far less than the new proposed TDC Caps.

Comment: Erinn Roos-Brown stated that MaineHousing's requirement for extensive amenities including a community room, significant broadband infrastructure requirements, and recreational areas at each project is challenging for Tribal developers. Roos-Brown requested MaineHousing eliminate these amenity requirements for Tribal projects or change them from threshold requirements to scoring categories instead.

Response: MaineHousing believes that these amenities provide great benefits to the people MaineHousing serves and it is important that everyone have access to such amenities. If a developer can show readily available alternatives of equal quality and accessibility, MaineHousing may take that into consideration to avoid funding redundant resources.

Comment: Erinn Roos-Brown recommended that MaineHousing change the scoring criteria in the Property Tax Relief category to 3 points for Projects located in areas of the State that do not assess or collect property taxes and Projects that are exempt from property taxes.

Response: The intent of this scoring category within the "Financial Characteristics" section is to reward developers who undertake the work required to bring additional resources to the Project, saving MaineHousing's resources for additional housing production. Both the developer and community in which the housing will be built have undertaken a task for which points will be awarded. While the lack of property taxes on Tribal lands is of value, it is not awarded the maximum points due to the fact that neither the community nor the developer have undertaken a process for which these points are an incentive. MaineHousing welcome suggestions for other forms of funding assistance as an alternative for Tribal developers and communities.

Comment: Erinn Roos-Brown noted that Travois, Inc. supports keeping the language in the QAP that awards 8 points for Projects located on Tribal lands.

Response: MaineHousing appreciates the support.

Comment: Erinn Roos-Brown noted that the 15 points available in the Smart Growth category are typically a major challenge for Tribal projects and requested that this category have a 3-mile radius for Projects located on Tribal land and rural locations to create a fairer scoring opportunity.

Response: MaineHousing believes access to transportation and proximity to activities important to daily living are key factors in making projects successful and accessible to all. The scoring criteria creates an opportunity for projects to provide on-demand transportation to receive points when the other categories are not an option. Additionally, the scoring criteria was adjusted to allow projects to score one point for each walkable activity of daily living rather than requiring at least 3 activities in order to obtain any points.

Comment: Erinn Roos-Brown requested that MaineHousing change the language in Section 6(O), Management Experience, to match the language in Section M (Developer Capacity). Roos-Brown noted that Tribes have long-standing experiencing managing low income housing under other rules and regulations (NAHASDA and the 1937 Housing Act) that are similar to the LIHTC program and requiring property management agents to have previous LIHTC experiences puts Indigenous nations at a distinct disadvantage scoring wise.

Response: MaineHousing has added clarifying language to Section 6(O), Management Experience, stating that experience successfully managing at least one (1) low income housing property developed under a Federal program that is substantially similar to LIHTC, to be determined at MaineHousing's sole discretion, is experience that qualifies for 1 point.

Comment: Nicole McKeith Director of Housing Initiatives at ProsperityME testified at the public hearing and submitted written comments stating that a two-year QAP does not allow for flexibility to change the QAP to reflect current housing priorities and the housing market climate.

Response: MaineHousing has responded to the development community in Maine by implementing a two-year QAP. This allows developers to better plan their projects around MaineHousing requirements. In drafting the QAP MaineHousing considers current housing priorities and climate and projects trends over that two-year period in order to ensure a successful two-year QAP. MaineHousing has the ability, after the first year, to open rulemaking to make substantive changes to the QAP if it is deemed necessary.

Comment: Nicole McKeith commented that MaineHousing should consider QAP incentives or other policy initiatives to ensure New Mainer housing needs are adequately addressed.

Response: MaineHousing is open to, and actively solicits advice on, how it can better serve the New Mainer population. MaineHousing has a variety of programs other than LIHTC including the Rural Affordable Rental Housing Program, the Affordable Homeownership Program, the Supportive Housing Program, the Recovery Housing Program, and special programs to assist individuals and families experiencing homelessness. Additionally, MaineHousing has allocated Emergency Housing Relief Funds to assist the New Mainer population, including assisting individuals and families in gaining access to LIHTC housing units. LIHTC projects must meet certain underwriting criteria, without which they are financially infeasible. Due to the small number of 9% LIHTC projects funded in Maine annually, MaineHousing does not believe additional set-asides should be established.

Comment: Nicole McKeith commented that ProsperityME believes family projects and larger family units are discouraged through the scoring system as the scoring encourages Senior Projects. McKeith recommended MaineHousing allow exceptions that promote various bedroom size developments which would include exceptions to the TDC.

Response: The QAP provides equal scoring opportunities for family and older adult projects. Additionally, the TDC calculation is indexed to adjust for the number of bedrooms so as not to penalize units with more bedrooms.

Comment: Nicole McKeith expressed concern about the decreased per unit average acquisition cost for new construction from $14,000 to $7,500, which eliminates the Greater Portland area for development. McKeith recommended eliminating Section 6(G) to allow scoring to be based strictly on TDC for items included in the eligible basis.

Response: The average acquisition cost number is based off the average cost of recent projects. The average continues to drop which indicates that developers are finding ways to save on the acquisition of properties. The intent of this scoring category is to reduce TDC by requiring more thoughtful use of funds. MaineHousing has seen no signs that developers are developing fewer units in the Greater Portland area, and wants to ensure that all parts of the State are appropriately served with this funding source.

Comment: Nicole McKeith commented it was unclear where the scoring criteria for Section 6, Project Location, was coming from and recommended changing the Section to reflect points for housing need.

Response: The State of Maine determines the Service Center communities each year and makes the information available on its website (Service Centers: Municipal Planning Assistance Program: Maine DACF). Demand for affordable housing units in each Service Center is determined by subtracting the total number of available units for those at or below 60% of Area Median Income from the total number of households making 60% of Area Median Income or less. This housing needs analysis may result in changes to the scoring of individual municipalities in the Project Location Section of the QAP each time it is compiled. MaineHousing continually looks for better data and expertise in this area, but to date this has presented as the best method to assess housing need. MaineHousing welcomes and suggestions or alternative methods that may better assess housing needs in Maine.

Comment: Nicole McKeith notes that Maine Housing could consider identifying opportunities to encourage more diversity in development and management teams by reducing barriers to entry, facilitating joint ventures, providing predevelopment capital, or creating other incentives for participation by underrepresented groups. McKeith asked for clarification on the term "successfully" that was added to each section.

Response: MaineHousing regularly meets with a Cultural Advisory Board, made up of individuals with diverse cultural backgrounds that provide insight on how MaineHousing can assist in encouraging diversity in its programs. Additionally, MaineHousing encourages partnerships and provides scoring criteria that allows for points to be received based on collective experience of development teams. MaineHousing staff are available to answer questions new developers might have and can assist in linking new developers with experienced developers and consultants. MaineHousing also has engaged and will continue to engage the Genesis Fund to provide technical assistance, which has proven successful in assisting new developers enter MaineHousing programs. Every program MaineHousing offers is sent to Maine Small businesses, Women and Minority Businesses or Labor Surplus Area Firms that provide a similar service/program and a copy of each program is sent to Maine PTAC (Procurement Technical Assistance Center) for publishing on their website for greater outreach.

Comment: Nicole McKeith asked for clarification on the term "successfully" that was added to each section.

Response: Successful development experience means that the team has consistent recent experience delivering projects on budget and on time.

Comment: Nicole McKeith commented that one of the required selection criteria under Section 42 of the Internal Revenue Code is 'projects intended for eventual tenant ownership' and recommended that MaineHousing add an additional section of requirements for eventual homeownership, or clarify in Section 6(Q) what is required.

Response: Section 6(Q) states that if there is a need for a tie breaker because applications with the same score request the same amount of Credit and 0% deferred debt per unit, the project with the most acceptable plan to convert the project to affordable homeownership for the residents after the Extended Use Period will have priority. Section 6(Q) outlines that the plan must describe the process for transferring ownership to the residents, the purchase price or process for determining it, any financial assistance available for residents (including any reserves), how the affordability will be maintained, and must provide for homebuyer counseling and professional representation of the residents at the time of conversation. To date, no feasible plan for rental projects to transition to homeownership through the Tax Credit Program has been presented to MaineHousing. Additionally, due to the limited funding available for affordable rental units and the desire to maintain the affordability as rental units, it is most advantageous for projects to remain rental units for a minimum of 45 years. MaineHousing welcomes suggestions as to how to better promote and encourage this concept.

Comment: Nicole McKeith asked if there is a list of approved Market Study analysts that MaineHousing considers qualified professionals.

Response: MaineHousing requires market studies prepared by National Council of Housing Market Analysts ("NCHMA"), the only professional body dedicated exclusively to enhancing the professionalism and standards surrounding residential rental real estate market analysis. NCHMA can provide professionals in Maine that meet the definition of qualified professional under the QAP.

Comment: Nicole McKeith asks that MaineHousing provide flexibility for Housing Credit owners to utilize the optimal utility allowance for each development and to encourage utility allowances that accurately reflect anticipated utility consumption.

Response: MaineHousing allows developers to use the maximum utility allowances. The QAP has been revised to start requiring utility monitoring which should provide developers and MaineHousing with the ability to better estimate consumption over time.

Comment: Nicole McKeith commented that allowing twinned 4% and 9% projects leverages the benefits of both programs across different portions of the development, offering a nuanced solution to funding challenges and producing more units in a project.

Response: In Maine, both 9% and 4% projects typically need soft money, or subsidy, requiring developers to compete for resources. In competitions, project feasibility is required and thus "twinning" 4% and 9% projects does not work as a project is not guaranteed to be successful in the second competition, thus rendering the project infeasible in the first competition. Twinning is more common where competition for soft money is not required.

Comment: Nicole McKeith noted that average income was not addressed in the QAP and asked if it was allowed.

Response: Income averaging is allowed under the right circumstances. Applicants should have a conversation with MaineHousing's Asset Management and Development teams before incorporating income averaging in their development pro formas. Considerations include management company willingness and experience with income averaging and the management company's ability to report required information through their software systems.

Comment: Nicole McKeith commented that the informational sessions regarding the QAP, don't seem very interactive and recommended that MaineHousing encourage more public involvement in developing policies.

Response: MaineHousing holds several sessions throughout each year to listen to and discuss potential changes and emerging needs in the affordable housing market. For the 2025-2026 QAP

MaineHousing received less input than in the past, which suggests that the current QAP is serving the State's need at this time. MaineHousing encourages all partners to participate and engage with MaineHousing staff at any time.

Comment: Nicole McKeith commented that overall, ProsperityME would like to see more policies to encourage housing development for New Mainers.

Response: MaineHousing is open to, and actively solicits advice on, how it can better serve the New Mainer population. As mentioned in response to McKeith's earlier comment, MaineHousing has a variety of programs, including the Rural Affordable Rental Housing Program, the Affordable Homeownership Program, the Supportive Housing Program, the Recovery Housing Program, and special programs to assist individuals and families experiencing homelessness. Additionally, MaineHousing has allocated Emergency Housing Relief Funds to assist the New Mainer population, including assisting individuals and families in gaining access to LIHTC housing units. MaineHousing encourages developers to provide suggestions on additional steps that could be taken, keeping in mind the economics of the LIHTC projects.

Comment: Claude Rwaganje, Executive Director of ProsperityME, provided testimony at the public hearing asking MaineHousing to look for a balance between senior and family housing to avoid a disproportionate award of senior projects over family projects.

Response: MaineHousing does not prioritize housing for older adults over housing for families, or vice versa. Each housing type is eligible for an equal number of points under the QAP. MaineHousing will continue to track the number of units developed under each type of housing and can make adjustments in the future if the Board of Commissioners and MaineHousing Staff feel there is a trend towards unnecessarily producing more of one type of housing.

Comment: Claude Rwaganje also commented that the two year QAP is problematic for new developers trying to enter the program as they have to wait until 2026-2027 to gain entry. Rwaganje recommended a set-aside for new developers to encourage diversity in MaineHousing's programs.

Response: A two year QAP offers two consecutive years of funding. One is not dependent on the other and new developers can apply in any year.

Comment: Matthew Brock, Kittery Housing Committee Chair, and Kendra Amaral, Town Manager for the Town of Kittery, commented on two areas of the QAP that they felt were a disadvantage to the Town of Kittery:

1) The revisions to Section 6, Project Location, reduced the scoring for the Town of Kittery from 10 to 8 points for projects not specifically for older adults. Kittery continues to see an intense demand for housing for younger adults and Brock and Amaral recommended MaineHousing consider maintaining the 10 points in this category.

2) Kittery has very few properties that earn maximum points in Section 6(K), Smart Growth, due to the lack of appropriate transit and the fact that properties in Kittery that have public transit are generally in locations that are incredibly valuable. Brock and Amaral recommended MaineHousing reconsider the Smart Growth scoring criteria for rural communities.

Response:

1) The State of Maine determines the Service Center communities each year and makes the information available on its website (Service Centers: Municipal Planning Assistance Program: Maine DACF). Demand for affordable housing units in each Service Center is determined by subtracting the total number of available units for those at or below 60% of Area Median Income from the total number of households making 60% of Area Median Income or less. This housing needs analysis may result in changes to the scoring of individual municipalities in the Project Location Section of the QAP each time it is compiled. The scoring for the Town of Kittery was adjusted based on this analysis. It should be noted that the Project Location Section allows municipalities to receive their Housing Need score from the immediately preceding QAP if that score was higher.

2) MaineHousing believes access to transportation and proximity to activities important to daily living are key factors in making projects successful and accessible to all. The scoring criteria creates an opportunity for projects to provide on-demand transportation to receive points when the other categories are not an option. Additionally, the scoring criteria was adjusted to allow projects to score one point for each walkable activity of daily living rather than requiring at least 3 activities in order to obtain any points.

Comment: Patrick Hess, the Director of Development at Avesta Housing, commented on the change to Section 6(G), Acquisition Cost, asking for clarification on the thinking of the lower per unit costs for new construction and adaptive reuse. Hess commented that the changes seem to incentivize sprawl by pushing development further out. Hess recommended considering scoring that is based on whether a project meets the standards or not, rather than a sliding scale based on percentages of an average.

Response: The average acquisition cost number is based off the average cost of recent projects. The average continues to drop which indicates that developers are finding ways to save on the acquisition of properties. The intent of this scoring category is to reduce TDC by requiring more thoughtful use of funds. MaineHousing wants to ensure that all parts of the State are appropriately served with this funding source.

Comment: Laura Mitchell, the Executive Director of the Maine Affordable Housing Coalition, asked MaineHousing to reconsider Total Development Cap figures more frequently within the 2 year QAP process to adjust for inflation, unexpected construction cost changes, and other ongoing shifts in state and national policy/funding.

Response: MaineHousing has responded to the development community in Maine by implementing a two-year QAP. This allows developers to better plan their projects around MaineHousing requirements. In drafting the QAP MaineHousing considers inflation, unexpected construction cost changes and other potential shifts in polices/funding over that two-year period in order to ensure a successful two-year QAP. If an unforeseen circumstance warrants opening rulemaking after the first year, MaineHousing has the ability to do so and make substantive changes to the QAP if necessary.

Comment: Laura Mitchell asked MaineHousing to build in the added cost that EV requirements create in terms of larger transformers in addition to AC use tracking.

Response: The TDC Caps take into consideration greater costs than in the past. The EV requirements have been in other MaineHousing programs since 2022 and have not been a cost burden. MaineHousing does not require specific AC electricity use tracking outside of the total electricity consumption tracking.

Comment: Laura Mitchell asked MaineHousing to consider that data collection and energy use monitoring has a cost that should be included in the LIHTC eligible expenses.

Response: MaineHousing agrees and those expenses are eligible.

Comment: Laura Mitchell asked that MaineHousing add another priority group to Section 5 to prioritize Section 8 vouchers and those seeking, but ineligible for Section 8.

Response: The QAP gives an occupancy preference to eligible persons whose names are on a public housing or Section 8 waiting list in an attempt to assist those individuals with affordable housing (Section 5(L)). Providing another priority group for individuals seeking Section 8 vouchers and/or individuals who are ineligible for Section 8 vouchers would not result in an increase in access to LIHTC units, without rental assistance or sufficient income to pay LIHTC rents.

Comment: Laura Mitchell recommends that to meet workforce and demographic needs, a balance of senior, 1-bedroom nonage restricted, and family units is needed. Mitchell recommends a regular needs analysis so developers can effectively meet changing needs over time.

Response: MaineHousing does not prioritize housing for older adults over housing for families, or vice versa. Each housing type is eligible for an equal number of points under the QAP. MaineHousing will continue to track the number of units developed under each type of housing and can make adjustments in the future if the Board of Commissioners and MaineHousing Staff feel there is a trend towards unnecessarily producing more of one type of housing. The State of Maine determines the Service Center communities each year and makes the information available on its website (Service Centers: Municipal Planning Assistance Program: Maine DACF). Demand for affordable housing units in each Service Center is determined by subtracting the total number of available units for those at or below 60% of Area Median Income from the total number of households making 60% of Area Median Income or less. This housing needs analysis may result in changes to the scoring of individual municipalities in the Project Location Section of the QAP each time it is compiled. MaineHousing continually looks for better data and expertise in this area, but to date this has presented as the best method to assess housing need. MaineHousing welcomes and suggestions or alternative methods that may better assess housing needs in Maine.

Comment: Laura Mitchell noted that the proposed QAP's scoring discourages larger bedroom counts. Special populations that need consideration are immigrants in need of large bedroom counts for intergenerational and larger family residence. Mitchell recommends in areas with demonstrated need, exceptions should be allowed to promote various bedroom size developments.

Response: The TDC calculation is indexed to adjust for the number of bedrooms so as not to penalize units with more bedrooms.

Comment: Laura Mitchell commented that the changes to Section 6(G) reduce scoring for projects in high land value areas such as the Portland Labor Market Area making it unclear what Section 6(G) is trying to incentivize.

Response: The average acquisition cost number is based off the average cost of recent projects. The average continues to drop which indicates that developers are finding ways to save on the acquisition of properties. The intent of this scoring category is to reduce TDC by requiring more thoughtful use of funds. MaineHousing has seen no signs that developers are developing fewer units in the Portland Labor Market Area, and wants to ensure that all parts of the State are appropriately served with this funding source.

Comment: Laura Mitchell states that there continues to be a lack of transparency in how project need/location are identified and prioritized. Mitchell recommended leveraging the housing study that identifies housing need by region in addition to regional and local income levels on top of housing need. Mitchell further commented that it was unclear why communities abutting prioritized communities are not also prioritized. Mitchell also recommended adjusting "Other Housing Projects" to include Portland Labor Market area communities or removing overall point scores for town/city location. Mitchell also recommended that MaineHousing clarify why so few communities are listed and encourage greater municipal participation in the project location selection and scoring section.

Response: The State of Maine determines the Service Center communities each year and makes the information available on its website (Service Centers: Municipal Planning Assistance Program: Maine DACF). Demand for affordable housing units in each Service Center is determined by subtracting the total number of available units for those at or below 60% of Area Median Income from the total number of households making 60% of Area Median Income or less. This housing needs analysis may result in changes to the scoring of individual municipalities in the Project Location Section of the QAP each time it is compiled. MaineHousing continually looks for better data and expertise in this area, but to date this has presented as the best method to assess housing need. MaineHousing welcomes and suggestions or alternative methods that may better assess housing needs in Maine.

Comment: Laura Mitchell commented that adding points for market rate units (Section 6(J)) does not seem fair for rural communities to be able to compete with areas such as Cumberland County where market rate units would be easier to fill. Mitchell recommended adding points for vouchered units instead.

Response: MaineHousing believes offering points for projects in QCTs where at least 20% of the units are market rate is one way to achieve community revitalization.

Comment: Laura Mitchell recommended adding a variance of points to Section 6(K), Smart Growth, to separate out elderly and family to increase the requirement of safe walking distance for families to 3/4 mile or 1 mile. Mitchell commented that location and smart growth points should focus on suburban areas with good school systems in strong labor markets as important sites for equitable development and distribution of housing.

Response: MaineHousing believes that 1/2 mile is a reasonable and appropriate walking distance to activities important to daily living for all housing types.

Comment: Laura Mitchell commended that the changes to Section L, Sponsor Characteristics - Readiness, was a positive addition to the QAP.

Response: MaineHousing appreciates the support for those changes.

Comment: Laura Mitchell commended that clarity on the added term "successfully" to Section 6(M) should be provided.

Response: Successful development experience means that the team has consistent recent experience delivering projects on budget and on time.

Comment: Laura Mitchell commended that the required selection criteria under Section 42 of the Internal Revenue Code 'projects intended for eventual tenant ownership' should either be added as an additional requirement prior to the Tie Breaker section or clarify as to why it is in the Tie Breaker section should be provided.

Response: "Projects intended for eventual tenant ownership" is included in the Tie Breaker section as MaineHousing believes due to the limited funding available for affordable rental units and the desire to maintain the affordability as rental units, it is most advantageous for projects to remain rental units for a minimum of 45 years. Additionally, to date, no feasible plan for rental projects to transition to homeownership through the Tax Credit Program has been presented to MaineHousing to warrant a change to the current scoring. MaineHousing welcomes suggestions as to how to better promote and encourage this concept.

Comment: Laura Mitchell commended that a list of qualified Market Study Analysts or a definition of "qualified profession" would help new developers engage the right professionals.

Response: MaineHousing requires market studies prepared by National Council of Housing Market Analysts ("NCHMA"), the only professional body dedicated exclusively to enhancing the professionalism and standards surrounding residential rental real estate market analysis. NCHMA can provide professionals in Maine that meet the definition of qualified professional under the QAP.

Comment: Laura Mitchell commented Maine needs a variety of housing types serving a range of income levels and recommended MaineHousing consider new ways in which LIHTC can be used to increase the range of housing opportunities for those at the lower end of the economic spectrum.

Response: Most LIHTC projects currently have mixed incomes which may include Extremely Low Income units, Very Low Income units, Low Income units and/or Market Rate units. Additionally, some funding sources, such as the National Housing Trust Fund create deeper affordability in LIHTC projects. Developers may also elect Income Averaging, in the right circumstances with approval from MaineHousing, which could be used to address the needs of different income levels. Additionally, MaineHousing offers a number of other programs which have varying income eligibility requirements that provides a wide range of housing to individuals of mixed incomes.

Comment: Laura Mitchell commented that there are a number of ways to achieve a variety of housing types serving a range of income levels such as:

1) A set-aside for one housing project targeting tenants within the lower income range each round.

2) Providing Project-Based Voucher with LIHTC funding for every unit at the building.

3) Leveraging Average Income that enables projects to target a broader mix of tenants.

Response:

1) Creating too many set-asides will limit MaineHousing's ability to fund projects as well as developers' abilities to compete for MaineHousing funding. A typical 9% competitive process results in at most four projects being funded and with two already established set- asides, creating a third could limit more than 75% of the funding available through the competitive process. LIHTC projects to some extent already accommodate a range of mixed incomes and other funding sources aid in creating deeper affordability in LIHTC projects. Additionally, Income Averaging, in the right circumstances with approval from MaineHousing, could be used to address the needs of individuals at different income levels. MaineHousing also offers a number of other programs which have varying income eligibility requirements that provides a wide range of housing to individuals of mixed incomes.

2) MaineHousing believes in keeping with the Congressional intent of the Housing Choice Voucher Program, spreading Project-Based Vouchers throughout many different types of projects creates a broader reach and provides more opportunity. MaineHousing is currently allocating Project-Based Vouchers appropriately in accordance with funding/availability and MaineHousing's Housing Choice Voucher Plan. Additionally, MaineHousing has committed to providing Project-Based Vouchers for each unit that a developer pledges to set-aside for special needs populations.

3) Income averaging is allowed under the right circumstances. Applicants should have a conversation with MaineHousing's Asset Management and Development teams before incorporating income averaging in their development pro formas. Considerations include management company willingness and experience with income averaging and the management company's ability to report required information through their software systems.

Comment: Emily Flinkstrom, Executive Director of Fair Tide and Hershey Hirschkop, Director of Housing for Fair Tide commented that making LIHTC funding more available for individuals making 30%-40% AMI would assist with the growing homelessness crisis. Flinkstrom and Hirschkop recommended a set-aside for one housing project targeting tenants within the lower income range each round, similar to the set-aside for a preservation project. Flinkstrom and Hirschkop commented another approach would be to provide Project-Based Vouchers with LIHTC funding for every unit at the building.

Response: Creating too many set-asides will limit MaineHousing's ability to fund projects as well as developers' abilities to compete for MaineHousing funding. A typical 9% competitive process results in at most four projects being funded and with two already established set-asides, creating a third could limit more than 75% of the funding available through the competitive process. LIHTC projects to some extent already accommodate a range of mixed incomes and other funding sources aid in creating deeper affordability in LIHTC projects. Additionally, Income Averaging, in the right circumstances with approval from MaineHousing, could be used to address the needs of individuals in the 30-40% range. MaineHousing also offers a number of other programs which have varying income eligibility requirements that provides a wide range of housing to individuals of mixed incomes. With regards to Project-Based Vouchers, MaineHousing is currently allocating Project- Based Vouchers appropriately in accordance with funding/availability and MaineHousing's Housing Choice Voucher Plan. Additionally, MaineHousing has committed to providing Project- Based Vouchers for each unit that a developer pledges to set-aside for special needs populations.

Comment: Beth Boutin, Vice President of Community Investments at Evernorth, commented that Appendix E should be revised to remove the "the lesser of fair market value" language so that the exercise price is just the statutory minimum purchase price under Section 42(i)(7) of the Internal Revenue Code. Beth commented if "the lesser of FMV" language is required, a sponsor could purchase a property for less than the outstanding debt on the property which could result in a cancellation of debt income and resulting tax consequences.

Response: The language in Appendix E does not allow a purchase that is less than the outstanding debt. The language specifically says ". . . but in no event less than the outstanding debt secured by the Project, excluding any indebtedness incurred within the 5-year period ending on the date of the sale pursuant to the ROFR ...." MaineHousing will reevaluate this language as it prepares for the

next QAP and clarify the language as necessary.

Comment: Beth Boutin also recommended the removal of "the later of: (i) the public offer of the Project for sale by the general partner or managing member; and (ii)" language in Appendix E so that the Right of First Refusal exercise period ends 36 months after the expiration of the Compliance Period. Beth commented that the language as currently drafted could be interpreted as having an unlimited ROFR exercise period if a public offer of the project for sale is never made as a forced sale is not allowed.

Response: MaineHousing acknowledges that there could be a scenario where a public offer of the project for sale is not made for a long period of time however because the general partner or management member may elect to sell the project to the holder of the ROFR in connection with the exercise of the ROFR following the general partner's or managing member's receipt of a bona fide third party offer to purchase the project, MaineHousing feels that the ROFR should not expire 36 months from the end of the Compliance Period if the Project has not been publicly offered for sale.

Comment: Beth Boutin also recommended the removal of the "bona fide" requirement in Appendix E and suggested instead a requirement of only a third party offer because bona fide: (a) is contrary to the public policy underlying the LIHTC statutory scheme; (b) sets an extremely high bar that makes it very difficult for a nonprofit to exercise a ROFR; and (c) encourages aggregators to challenge the exercise of ROFRs by nonprofits.

Response: The requirement that offers be "bona fide" means the offers must be made in good faith. MaineHousing does not believe this standard is unduly burdensome, extreme or contradictory to public policy. Requiring a good faith offer is standard practice.

Comment: Bill Pearse, Chief Financial Officer at Realty Resources Management provided testimony at the public hearing stating MaineHousing should exercise discretion under Section 6(K), Smart Growth, to allow the proximity to activities important to daily living to be increased from 1/2 mile to a further distance in certain circumstances. Nichole Lorentzen, Development Officer of Realty Resources Management added to Pearse's comment asking MaineHousing to look at senior housing vs. family housing and perhaps adjust the distances based on the type of housing.

Response: MaineHousing believes that 1/2 mile is a reasonable and appropriate walking distance to activities important to daily living for all housing types.

Comment: Bill Pearse also commented that the Nonprofit Set-Aside in Section 3(A) discourages nonprofits from being able to move forward with new construction as the set-aside is only 10% of the annual State Ceiling (approximately $400,000). Pearse commented this is not an adequate amount of funding for new construction and is small in comparison to the credits that are offered in the competitive programs.

Response: MaineHousing has added language in Section 3(A) to state it will set-aside "at least" 10%, which clarifies that MaineHousing may, in its sole discretion, provide more than 10% for the Nonprofit Set-Aside.

Comment: George Lavigne, Licensed Architect for CWS Architecture and Interior Design, submitted a written comment noting that the QAP references the 2009 edition of ANSI 117.1 twice and asking if this was correct as his understanding was that MaineHousing was moving to a new edition.

Response: This is the correct reference at this time. Once the newest version of the Maine Uniform Building and Energy Code is approved the new edition of ANSI will apply and MaineHousing will update the requirements as necessary.

Comment: Seth Parker, Director of Real Estate Development for Bath Housing, submitted written comments regarding Section 6 L, Readiness. Seth noted that the provision for having all local and state approvals in hand plus having any appeals periods expired puts tremendous pressure upon the developer to start the approvals process so far in advance of the tax credit deadline. Seth suggested softening this provision by requiring only approvals in hand by the application deadline, which would give time for the appeals period to expire before the LIHTC award date. Seth also suggested that an alternative might be to require approvals in hand and appeals expired before the LIHTC award date.

Response: The Readiness Scoring Criteria gives points to Developers who are fully prepared to proceed with a project. The requirement that the timeframe to appeal has passed and no actions have been taken and/or all actions have been resolved supports the notion that a Developer is fully prepared to proceed with a project. Without the passage of the appeal timeframe, there is a risk of the appeal terminating the project or resulting in the project not being able to move forward for a long period of time. For these reasons, MaineHousing believes the requirement is appropriate. It requires preplanning on the Developer's part to ensure all approvals are in place and all appeal timeframes have passed prior to Application, but it does not create an undue burden.

Comment: Brooks More, Director of Development for South Portland Housing Authority, submitted written comments asking MaineHousing to consider removing the TDC Index Cap as a reason for termination of an application in Section 4(I)(5).

Response: MaineHousing's priority is to fund as many new, high quality housing units as possible with its limited resources. MaineHousing takes its responsibility as stewards of public funds seriously and for that reason believes the TDC Index Caps are important. Projects that exceed the TDC Index Cap warrant closer examination and if the costs are too great, MaineHousing needs a mechanism to not move forward with a project. That said, in limited circumstances, projects can request a waiver of the TDC Index Cap for good cause and avoid the termination of an application if the reasons are justified.

Comment: Brooks More commented that the Total Development Cost Section (Section 5(B)) should be removed as the TDC index is a static figure that is based on historic data which does not reflect real-time construction costs. In the alternative, Brooks suggested increasing the cap for new construction above $370,000, adjust the cap annually using a benchmark such as the Consumer Price Index or a construction price index, and including a percentage increase for Passive House or LEED certified buildings.

Response: The TDC Index is not a static figure. MaineHousing discusses the TDC Index and TDC Caps in preparation for each QAP and takes into consideration characteristics of projects that drive higher costs. MaineHousing looks at the costs of projects in its current pipeline, as well as current labor and materials pricing and trends to propose numbers that are reasonable and allow for increased costs over the short term. MaineHousing believes that the TDC Index and TDC Caps in Maine's QAP are appropriate for Maine projects and allow for the creation of as many safe, efficient, quality units as possible. Currently MaineHousing is not requiring Passive House or LEED certifications due to the fact that MaineHousing's energy efficient standards produce comparable results. For that reason, those costs will not be factored into TDC.

Comment: Brooks More commented that the new design criteria in Section 5(H) for higher efficiency buildings, Build America, Buy America Act and Section 3 requirements are laudable, but increase project costs which supports the removal of the TDC cost cap.

Response: MaineHousing's analysis of the TDC Cost cap in preparation for each QAP takes into consideration characteristics of projects that drive higher costs, such as Build America, Buy America Act and Section 3 requirements. MaineHousing reassess these characteristics periodically and if the TDC Cost caps prove to be too prohibitive given the regulatory requirements, MaineHousing can adjust the caps or consider a waiver for good cause.

Comment: Brooks More commented that community rooms should be made optional particularly for family projects where they do not get much use. Making this requirement in Section 5(I) option would further the goal of lowering costs.

Response: MaineHousing believes the requirement of a community room in all projects is essential to encouraging socialization, collaboration and a sense of community and is for the benefit of the tenants. In certain circumstances a community room may not be feasible and there may be viable alternatives which can be explored through a request for a waiver for good cause.

Comment: Brooks More commented asking MaineHousing what the criteria of a "single-family residential area" in Section 6(A)(3) means.

Response: A "single-family residential area" is an area predominately made up of single family homes, meant to be used as living spaces and not for multiple families or a commercial venture. There may be situations where it is not clear if an area is predominately single family and in those situations MaineHousing would consider the factors and circumstances in making that determination.

Comment: Brooks More commented suggesting the acquisition cost points in Section 6(G) should increase in light of the rising cost of land in Maine.

Response: The average acquisition cost figures are based on recent purchase prices, which have stayed consistent in most areas of Maine. The goal of this point category is to keep acquisition costs down and encourage developers to negotiate for a better price. MaineHousing will continue to review this category in preparation for each QAP and make adjustments as necessary.

Comment: Brooks More commented applauding the separation of points for local and state approvals under Section 6(I).

Response: MaineHousing appreciates the support.

Comment: Brooks More commented the Net Developer Fee in Section 7(B) needs to increase. Maine has the lowest Net Developer Fee in the nation and projects take a long time and considerable resources to developer therefore the fee should reflect this commitment and risk.

Response: MaineHousing reevaluates the Net Developer Fee with every QAP and will continue to do so in the future. MaineHousing believes the New Developer Fee is appropriate at this time.

Comment: Jay Waterman, Director of Real Estate Development for Portland Housing Development Corporation, submitted written comments addressing Section 5B stating that the QAP incentivizes developers to take on brownfield mitigation, which can be very costly, outside of LIHTC deals because of the cost caps. Jay urged MaineHousing to consider removing Brownfield remediation costs from the TDC calculation.

Response: If Brownfield remediation is performed as part of the LIHTC deal it must be included in the TDC calculation as it is part of the total development cost. Developers may, as suggested, perform Brownfield remediation outside of and/or prior to the project scope of work to avoid inclusion in the TDC.

Comment: Jay Waterman also commented that generally the project cost caps are too low. With higher costs associated with building in Southern Maine's urban areas and the fact that cost caps are fixed for over two years, it leads to developers needing to seek waivers of the cost caps. Jay urged MaineHousing to consider annual increases to the cost caps based on actual costs and/or a recognized inflation index, as well as regional cost caps, splitting the state into lower and higher cost cap areas.

Response: MaineHousing's priority is to fund as many new, high quality housing units as possible with its limited resources. Based on the costs in the current pipeline, as well as current labor and materials pricing and trends, MaineHousing is confident that the proposed TDC caps are reasonable and will eliminate certain projects which would otherwise have a higher per unit cost than necessary. MaineHousing believes that the TDC Caps in Maine's QAP are appropriate for Maine projects.

Comment: Jay Waterman also commented on Section 6(N), Owner Performance, expressing concern regarding negative points for situations where incidents occur that are no fault of the owner or property management company and are quickly remediated, but still result in the issuance of an 8823.

Response: MaineHousing has added clarifying language to Section 6(N), Owner Performance, explaining that MaineHousing has the discretion to consider whether non-compliance was a direct result of the Applicant's non-performance, the performance of an unaffiliated third-party, or a result of something outside the control of any affiliated party provided it was corrected appropriately within a reasonable timeframe.

Comment: Jay Waterman also commented on Section 7 B, Developer Fee, stating $750,000 is still among the lowest in the nation. Jay expressed there is significant financial risk in taking on these projects and the amount should be increased to at least the national median.

Response: MaineHousing continues to believe that the Net Developer Fee cap of $750,000 is appropriate. The Net Developer Fee cap is reviewed with each iteration of the QAP and adjustments are made as necessary.

Comment: Jay Waterman also commented that MaineHousing should streamline the environmental review process and help mitigate some of the risk that comes with a potential Choice Limiting Action. Jay suggested using qualified third-party engineers to compile the Environmental Review Checklist to submit to MaineHousing for review and approval. Jay commented this would be relatively inexpensive and would save a lot of MaineHousing staff time and remove the regulatory risk of a Choice Limiting Action much earlier in the life of a LIHTC project.

Response: MaineHousing appreciates this recommendation and intends to look into the possibility of outsourcing the Environmental Review work.

FISCAL IMPACT OF THE RULE: The 2025 State of Maine ceiling of federal low-income housing tax credits is projected to raise approximately $ 34,700,000 of private investor capital, and the 2026 State of Maine ceiling of federal low-income housing tax credits is projected to raise approximately $ 35,300,000 of private investor capital. The private investor capital generated by the federal low-income housing tax credits will be used to develop affordable housing for low-income persons. Additionally, it is estimated that 1,400 jobs a year will be created with this investment. The rule will not impose any costs on municipalities or counties for implementation or compliance.