2. IPED Tax Credit Property Disposition 2008: Obligations and Opportunities Through Year 15 and Beyond Boston, Massachusetts, November 20-21, 2008 HUD Issues In a Year 15 Transaction Monica H. Sussman, Esq.Tatiana Gutierrez Abendschein, Esq. Nixon Peabody LLPNixon Peabody LLP 401 9 th Street, NW, Suite 900401 9 th Street, NW, Suite 900 Washington, DC 20004 Washington, DC 20004 (202) 585-8833(202) 585-8860 msussman@nixonpeabody.comtgutierrez@nixonpeabody.com msussman@nixonpeabody.comtgutierrez@nixonpeabody.com

3. What approvals are needed from HUD to complete a Year 15 Transaction involving new or existing HUD programs? l The revised 2530 Previous Participation review process l FHA Insured Loan Prepayments l Transfers of physical assets approvals l Section 215 Transfers l HAP Assignments l Other HUD Approvals l The Real Estate Assessment Center (REAC)

4. Revised 2530 Procedures l Limited Liability Corporate Investors –Investing in a tax credit property –Organized as... (any type of entity) –Limited or no control over routine property operations or HUD regulatory and/or contract compliance except upon default of operating partner l Submit LLCI certification and organizational chart to Field Office

5. Revised 2530 Procedures (contd) l APPS or Paper 2530s l Update on APPS l More rigorous paper filing requirements

6. Prepayments of FHA-Insured l Section 250(a) of the National Housing Act –150 day Notices –Use Agreement –Rehab Requirement –Waivers

7. Prepayments of FHA-Insured Loans (contd) l Wellstone Amendment –150 – 270 day Notices –Exception for continuing affordability –Wellstone Use Agreement

8. Transfers of Physical Assets l When is a Transfer of Physical Asset approval required from HUD? l Full TPA l Mod TPA

9. Section 215 Transfers Elements for Approval: Number of affordable units and amount of federal assistance remains the same Physically obsolete or economically non-viable Good physical condition of receiving project Tenant notification and consultation and local government approval No required relocation of tenants until new units are available

10. Section 215 Transfers (contd) Elements for Approval (contd): Best interest of the tenants Any lien on the receiving project from new financing must be subordinate to any FHA-insured mortgage lien Use agreement recorded on the receiving project with the same terms as existing use restrictions Any financial risk to the FHA General and Special Risk Insurance Fund reduced Federal liability with regard to the project will not be increased.

11. HAP Assignments l HAP Assignment process l New Guidance on extending HAP Contracts to 20 Year term

12. Other HUD Approvals l Public Housing Authorities l HUD Office of Public and Indian Housing l Enhanced Vouchers l Project-basing Vouchers

13. How to Deal with REAC? l How to prepare for your REAC – PREAC l Typical inspection issues – Cosmetic! l New REAC Compilation Bulletin released in 2008 (in materials)

14. How To Deal with REAC (contd) l Appealing your REAC inspection score –Why appeal? –Technical Review (30 days from posting) –Database Adjustment (45 days from posting)