Proposed Changes 1. Scoring (Non Compliance Percentage) 2. Recertification waiver for 100% LIHTC Properties 3. Acceptance of Rural Development Certifications 4. Tenant Agreements

#1 Non Compliance Percentage A Non Compliance Percentage will be used to determine owner performance, property performance and management performance. The non compliance percentage is determined at the time of review as evidenced by the issuance of the IRS Form 8823, Report of Non Compliance and UPCS inspection standards.

#1 Non Compliance Percentage All percentages will be calculated as follows: Total number of units non compliant/total units reviewed= Non Compliance Percentage % The Non Compliance Percentage of all ADFA properties reviewed within a 3 year period of time will be averaged and given an Average Non Compliance Percentage

#1 Non Compliance Percentage Owners are subject to point deductions, determined by ADFA allocation, based on the Average Non Compliance percentage as follows:

#1 Non Compliance Percentage OWNER Average Non Compliance Percentage Negative Points 51% or more % % % % 0

#1 Non Compliance Percentage Management companies will be given a GRADE based on the Average Non Compliance Percentage of properties they manage. The overall management company grade will be updated annually and posted on the ADFA website. The grades will be considered during management change requests, in determining management compliance during the application process, to review management performance standards and used for public information.

#1 Non Compliance Percentage MANAGEMENT Average Non Compliance Percentage Grade 51% or more F 41-50% D 31-40%C 16-30% B 0-15% A

#1 Non Compliance Percentage Disclaimer: Grading is strictly based on 8823 reports of non compliance issuance and failed Uniform Inspection Standards for units cited during the monitoring visit

#2 Recertification Exception For 100% LIHTC Properties 100% LIHTC Properties 1. Properties must have completed the First year in service or initial credit year, whichever is later; 2. ADFA must have completed the initial compliance monitoring review at the property 3. ADFA requires a move-in certification and a recertification at first anniversary of the Household’s move-in before the waiver exception is accepted.

#2 Recertification Exception For 100% LIHTC Properties Owners are not required to recertify but must use the ADFA approved Tenant Self Certification Form and Student Verification Form annually. There cannot be any other type of ADFA funding on the property, i.e., HOME, BMIR, FAF, ALIF, etc. ADFA reserves the right to revoke the recertification waiver policy if documentation requirements are not met. Owners/managers are required to update tenant data online using ADFA’s web-based computer reporting from the Tenant Self Certification Form.

#2 Recertification Exception For 100% LIHTC Properties NOTE: If your property has other set asides such as 30% designations the owner is NOT relieved of the recertification requirements for those set asides. ADFA recommends that owners or managers complete third party verifications of income for those units.

#3 Acceptance of RD Certifications The purpose of this policy is to eliminate duplication of RHS (Rural Housing Service) and Low Income Housing Tax Credit (LIHTC) requirements as defined Under Treas. Reg. §1.42-5(c)(4), as it pertains to Tenant Income Certification and Annual Re-certifications.

#3 Acceptance of RD Certifications Under this exception, owners are not required to preform annual income re-certifications specific to IRC §42, and the state agencies are not required to review, tenant income re-certifications, supporting documentation and rent records. However, student status must be documented annually.

#3 Acceptance of RD Certifications The state agency must review the information provided by RHS and determine whether the owner is in compliance with the income limitations and rent restrictions in IRC §42(g)(1) and (2)

#3 Acceptance of RD Certifications RHS determines tenant eligibility based on its definition of “adjusted annual income,” rather than “annual income” as defined under the Section 8 program. Therefore, the state agency may be required to calculate the tenant’s income for IRC §42 purposes and may need to request additional income information from the owner.

# 4 Tenant Agreements In addition to the lease, ADFA requires that owners or managers get the tenants to sign a Tenant Agreement. The Tenant Agreement specifies the development’s rules with which the tenant is expected to comply.

# 4 Tenant Agreements Example of what could be in a Tenant Agreement: Tenants must cooperate with management during the re-certification process Smoke alarms must not be disconnected Tenants must keep their units clean and sanitary and must permit inspections by management and ADFA Use of illegal substances on the premises will not be tolerated and will be grounds for eviction Tenants must comply with rules and regulations of the LIHTC Program Any other legitimate reasons for eviction