Section 369.101  Purpose and Objectives

 

The Rules in this Part are established to accomplish the general purposes of the Act, and in particular the making of grants in connection with the construction or rehabilitation of qualified multifamily rental housing developments in accordance with the Program that receive LIHTC allocations from the Authority. The grant funds will help developers to overcome increased construction costs related to the COVID-19 pandemic-created supply shortages (in lumber and other materials) and to jump-start a housing recovery in the State in the wake of the pandemic. These funds will also incentivize and attract private equity and private lending and will allow the State to more fully use and draw down unused federal resources for affordable housing.

 

Section 369.102  Definitions

 

As used in this Part, the following words or terms mean:

 

"Act":  The Illinois Housing Development Act [20 ILCS 3805].

 

"Affordable Housing Grant Act":  The Illinois COVID-19 Affordable Housing Grant Program Act [310 ILCS 126].

 

"Allocation":  An allocation of low-income housing tax credits by the Authority.

 

"Application":  An application to the Authority for an Allocation submitted by a recipient or an owner of a Qualified Development, including any required supporting documentation.

 

"Authority":  The Illinois Housing Development Authority.

 

"Chairman":  The Chairman of the Authority.

 

"Code":  The Internal Revenue Code of 1986 (Title 26 United States Code) and the regulations promulgated thereunder.

 

"Compliance Period":  A period of 15 years after construction of a Qualified Development as further defined in Section 42 of the Code.

 

"Development":  The real estate, together with all buildings and other improvements constructed on it, and the equipment, and personal property appurtenant to the real estate.

 

"Director":  The Executive Director of the Authority.

 

"Disproportionately Impacted Area":  a census tract or comparable geographic area that meets at least one of the following criteria, as determined by the Department of Commerce and Economic Opportunity: 

 

the area has a poverty rate of at least 20% according to the latest federal decennial census;

 

75% or more of the children in the area participate in the federal free lunch program according to reported statistics from the State Board of Education;

 

at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program; or

 

the area has an average unemployment rate, as determined by the Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the United States Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application for an Allocation or Grant. [310 ILCS 126/10]

 

"Grant":  A grant made to an Owner or Nonprofit Corporation that is part of the ownership structure in connection with a Qualified Development to assist in the financial feasibility of a Qualified Development.

 

"Low Income Housing Tax Credit" or "LIHTC":  the federal low-income housing tax credit provided by 26 U.S.C. 42, including federal low-income tax credits issued pursuant to 26 U.S.C. 42(h)(3) and 26 U.S.C. 42(h)(4).

 

"Median Income":  The median income of the county or the metropolitan statistical area, as applicable, in which the Development is located, adjusted for family size. The median income is determined from time to time by the United States Department of Housing and Urban Development (HUD) for purposes of Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437a).

 

"Members":  The Members of the Authority.

 

"Nonprofit Corporation":  A not-for-profit corporation incorporated pursuant to the provisions of the Illinois General Not-for-Profit Corporation Act of 1986 [805 ILCS 105] or the State Housing Act [310 ILCS 5] and having articles of incorporation which, in addition to meeting other requirements of law, meet the requirements of Section 2(m) of the Act.

 

"Opportunity Area":  Communities with low poverty, high access to jobs and low concentrations of existing affordable rental housing as determined and published by IHDA.

 

"Owner":  Either (i) a limited liability company, partnership, or entity that holds legal title to the Qualified Development or when the Qualified Development is held in a trust, the entity owning the beneficial interest in the trust; or (ii) a Nonprofit Corporation that has an interest in the general partner or managing member of a limited partnership or limited liability company that owns the Qualified Development.  Under no circumstances shall "owner" mean the Authority or a Trustee.

 

"Prioritization Areas":  As set out in Section 369.302.

 

"Program":  The Authority's COVID-19 Affordable Housing Grant Program created pursuant to and in accordance with the Affordable Housing Grant Act.

 

"QAP": The Authority's Qualified Allocation Plan, as required by Section 42 of the Code.

 

"Qualified Development":  A qualified low-income housing project, as that term is defined in Section 42 of the Code, that is located in the State and is determined to be eligible for an Allocation.  [310 ILCS 126/10]  A Qualified Development must have received or simultaneously receive an Allocation to be eligible to apply for a Grant under the Affordable Housing Grant Act.

 

"Real Estate":  The real property upon which a multifamily housing development is to be or has been constructed or rehabilitated.

 

"Regulatory Agreement":  The regulatory agreement or other instrument in the nature of an agreement imposing continuing affordable housing restrictions, together with any supplements, amendments or modifications, governing a Grant.

 

"Related Requirements":  Any Authority compliance or documentation requirements imposed as a result of allocation of LIHTC to a Qualified Development, as more specifically set out in Section 369.304.

 

"Rules":  The Authority's administrative rules (47 Ill. Adm. Code 260 through 395).

 

"Staff":  The Director, the Deputy Executive Director and the employees of the Authority.

 

"State":  The State of Illinois.

 

"Total Development Costs":  The total of all hard and soft construction/rehabilitation costs in connection with a Qualified Development.

 

"Trust":  A trust that holds legal title to a Qualified Development, the sole beneficiary of which is an Owner.

 

"Trustee":  The trustee of a trust holding legal title to a Qualified Development.

 

Section 369.103  Compliance with Federal Law

 

Notwithstanding anything herein to the contrary, this Part shall be construed in conformity and compliance with applicable federal law, including, without limitation, Section 42 of the Code.

 

Section 369.104  Standards

 

In administering the Program, the Authority, the Chairman, the Director, and the Staff shall consider, in addition to the criteria specifically set forth in this Part (particularly in Subparts B and C), the following: the purposes of the Program to provide decent, safe, and sanitary multifamily rental housing; the requirements of applicable State and federal law; the financial condition and previous experience of potential and participating developers; the financial integrity of the Program; the housing needs of the State; the desirability of achieving a reasonable geographic distribution of Qualified Developments throughout the State; and specific standards for the LIHTC program set forth in the QAP and the references embedded therein (found at https://www.ihda.org/developers/qap/).

 

Section 369.105  Procedures, Fees and Charges

 

In connection with the Program, the Authority will establish forms, agreements, documents and procedures that may be used by the Authority for its general corporate purposes, including costs of administering the Program, to the extent permitted under and as contemplated by the Affordable Housing Grant Act and any enacting rules and regulations.  The Authority intends to functionally administer the Grants together with the administration and compliance requirements for any LIHTC Allocation by the Authority.  LIHTC requirements can be found in 47 Ill. Adm. Code 350.

 

Section 369.106  Amendment

 

This Part may be supplemented, amended or repealed in accordance with the Illinois Administrative Procedure Act [5 ILCS 100], by the Members from time to time and in such manner as they may determine consistent with the Rules, the Act and other applicable provisions of law. This Part shall not constitute or create any contractual rights.

 

Section 369.107  Severability

 

If any clause, sentence, paragraph, subsection, Section, or Subpart of this Part be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, subsection, Section or Subpart thereof as to which such judgement is rendered.

 

Section 369.201  Applications

 

a)         Eligibility.  An Owner of a Qualified Development is eligible to apply for a Grant only if it has received or is simultaneously receiving an Allocation.

 

b)         Process.  An Owner of a Qualified Development may submit an application for a Grant as part of its application for a 9% LIHTC competitive Allocation or a 4% LIHTC rolling Allocation.  In the application, the Owner must include the reason for its application and certification (in form and content prescribed by the Authority) that the Qualified Development is eligible for a Grant under the provisions of the Affordable Housing Grant Act due to a funding gap in its financing structure.  Authority Staff shall consider each application in terms of the certified eligibility criteria as evidenced by a certification submitted by an Owner attesting to the applicable Prioritization Areas creating a need for a Grant and the need to make a Qualified Development financially feasible (as set out more specifically in Subpart C).  In the event that a funding gap is not identified at the time of LIHTC Allocation, an Owner may make an application after Allocation, under the same terms and subject to the same review as applications received as part of the Owner's original Allocation application.

 

Section 369.301  Maximum Grant Amount

 

a)         Establishing Amount. The maximum grant amount available for any Qualified Development shall be 35% of Total Development Costs.

 

b)         Grant Increase. After the Authority has made a Grant for a Qualified Development, nothing contained in this Section shall prohibit the Authority from increasing the amount of the Grant in excess of the limitations specified in subsection (a) if the owner applies for additional funds and the Authority, in its sole discretion, determines that the increase is necessary to maintain the financial stability or economic viability of the Qualified Development.  In deciding whether to approve a Grant increase, the Authority shall consider, among other things, increases in construction costs before or during construction/rehabilitation, the physical condition of the Qualified Development, the value of the Qualified Development, the financial status of the Qualified Development, and any other relevant factors under the Affordable Housing Grant Act.

 

Section 369.302  Prioritization Efforts

 

a)         The Authority shall make best efforts to prioritize applications for proposed Qualified Developments as follows:

 

1)         developments that are located within a census tract that was disproportionately affected by the COVID-19 pandemic based on the number of positive COVID-19 cases;

 

2)         developments during construction involving contracts with certified disadvantaged business enterprises and certified underrepresented business enterprises owned by minorities, women, veterans, LGBTQIA persons, and persons with disabilities;

 

3)         developments involving project labor agreements with local building trades; and

 

4)         developments involving contracts or subcontracts with a registered apprenticeship program or pre-apprenticeship program.

 

b)         The Authority shall balance the approval of grants between those located within a Disproportionately Impacted Area and those located in Opportunity Areas.  [310 ILCS 126/25]

 

Section 369.303  Regulatory Agreement Required

 

The Owner of a Qualified Development that receives a Grant shall enter into a Regulatory Agreement with the Authority.  Because eligibility for grants is dependent on LIHTC eligibility, the owner of a Qualified development will be required to adhere to all affordable housing restrictions applicable to the LIHTC allocation for the Qualified Development (and described in the Authority's QAP at https://www.ihda.org/developers/qap/) for a period equal to the Compliance Period, and to agree not to transfer the ownership or materially change the ownership structure of the Owner without the prior written approval of the Authority.  The Regulatory Agreement shall be recorded in the office of the recorder of deeds in the county where the Qualified Development is located as a restrictive covenant on the Qualified Development.

 

Section 369.304  Related Requirements

 

Any award of a Grant shall be subject to the Related Requirements and any applicable requirements of the Act; which include:

 

a)         Restrictions:

 

1)         Income-eligible households:  Maximum AMI of 50% or 60%, or Average AMI of 60% with range between 20% and 80%, as owner elects.

 

2)         Affordable rents:  30% of target income.

 

3)         Target population:  Must be available to general public; restrictions on full-time students, but no citizenship requirement.

 

4)         Leasing requirements:  Not to be used for temporary housing; lease must be for at least 6 months.

 

5)         Physical condition:  Must be maintained to HUD's Uniform Physical Condition Standards (24 CFR 5 (2022))

 

6)         Annual income recertification required:  Not for 100% affordable projects; mixed income projects only.

 

7)         Fixed or floating units:  Floating units must maintain applicable percentage as measured by unit or square footage.

 

b)         Monitoring:

 

1)         Physical Inspection:  Triennial, using the sample size required by HUD's Real Estate Assessment Center (REAC) (see table to paragraph (c)(2)(iii), 26 CFR 1.42-5 (2022)).

 

2)         Tenant File Review:  Triennial, using the sample size required by HUD's Real Estate Assessment Center (REAC) (see table to paragraph (c)(2)(iii), 26 CFR 1.42-5 (2022)).

 

3)         Record keeping review.

 

4)         Annual Owner's Certification review.

 

c)         Owner's Reporting:

 

1)         Annual Owner's Certification.

 

2)         Annual Tenant Income Certification.

 

3)         Affirmative Fair Housing Marketing Plan.

 

4)         Tenant Selection Plan.