500SouthFrontSt10thFloorColumbusOhio43215MarchChadBensonDirectorof De - PDF document

1 500SouthFrontSt10thFloorColumbus,Ohio432
500SouthFrontSt10thFloorColumbus,Ohio43215MarchChadBensonDirectorof DevelopmentMichiganStateHousingDevelopmentAuthorityE. Michigan Ave. www.wodagroup.com Page 2 of 6 Woda Cooper Companies, Inc. �� &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
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.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ; &#x/MCI; 1 ;&#x/MCI; 1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x/MCI; 3 ;&#x/MCI; 3 ; &#x/MCI; 4 ;&#x/MCI; 4 ;current whereas other State QAP’s use outdated data sources that do account for current marketconditions. Objective scoring categories like this also allows for fair competition for allocations ofLIHTCs. We recommend one change to this scoring change. We recommend using Mobility as anindicator instead of Access to Jobs, Goods, and Services. In January 2020, Enterprise stoppedutilizing Access to Jobs,Goods, and Services as an Opportunity 360 indicator. Continuing to use thismetric will result in the usageof outdated data most recently updated in January 2019. In place,Housing Stability and Mobility are now used. Mobility aligns more closely with the priority ofAccess to Jobs, Goods, and Services. Data metrics that are used in Mobility include commuting bypublic transportation, commuting by walking, average travel time to work, commuting over an hour,andhouseholds forwhich no vehicles areailable.Scoring: Developments near Downtown/Corridors and Developments nearEmploymentCenters:Woda Cooper suggests that MSHDA use a tiered scoring system for the walk scorerequirements. First, the current system equates a walkscore to a walkcore. We believe thattherea significantdifference betweenwalk scoresof 50andwalkscoresof 79.Second,thecurrent system requires developers to find the “highest walk score in the municipality.” Thisrequirement is unrealistic because there are millions of walk scores in a municipality, and it does notaccount for sites that are on the boarder of municipalities that may be more walkable. The focus ofthe scoring criteria should be on the site and its proximity to walkable areas and not a municipality’shighestwalk score.Ouralternativesuggestionkeepthe1/3requirementand tierthescoringwalkscore.Seebelowforscoring:walk score12 pointswalk score9 pointswalk score6 pointswalk score3 pointsUnder50 walkscorepointsIn addition to the walk score tier system above, we suggest the scoring criteria forDevelopments near an Employment Center be considered in this point total and be valued at 3points. The total points attainable for both Developments near Downtown/Corridors andDevelopments near an Employment will still be 12 total points. We suggest that the ½ mile bebrought down to 1/3 of a mile so that it is consistent with the scoring criteria for walk score, but

2 trequirementfornumber ofemployeesremaint
trequirementfornumber ofemployeesremainthesame.thesechangesareincorporated,thenthereare two possible ways to score the maximum 12 points. The first is to be within 1/3 of a mile of an80+ walk score. The second would be to be within 1/3 of a mile of a 7079 walk score and within1/3an employment center.We think this provides a balance between walk score while also providing additional valuefor an employment center. Having a development near an employment center is a net positivebecause more jobs are available, and many employment centers are economic engines forcommunities. Under the current scoring structure, claiming points near an employment center is at apointdisadvantagewalkscore related points.Ourproposedscoringstructureprovides Page 3 of 6 Woda Cooper Companies, Inc. �� &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ; &#x/MCI; 1 ;&#x/MCI; 1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x/MCI; 3 ;&#x/MCI; 3 ; &#x/MCI; 4 ;&#x/MCI; 4 ;incentive to be in a high walk score area and near employment centers. Once the development hitsan 80walk score, there are enough amenities and jobs nearby that the value of being near anemployment starts to diminish drastically. This will help MSHDA with scoring “cliff issues” atbreak points (e.g. 79 walk score gets 7 points and 80 walk score gets 12 points) because more tiershave been created under our proposed system lessening the point swing between cliffs, and there isavenue“boost”thewalkscoreby being nearemployment center.Regardingthe definition of an Employment Center, we recommend removing the “fulltime” designation so that both parttime and fulltime yearround jobs can be counted at anEmployment Center. Furthermore, we recommend adding malls as an Employment Center. Whilehere may not be a singular company at the mall with 150 or 250 yearround employees, thecompanies which make up a mall account for 250+ employees at one location. While the residentswill not only benefit from job opportunities, they will also enjoy numerous amenities within proximityto theirhome.Woda Cooper also suggests using different thresholds for the walk score requirements basedon pool. In Balance of the State, only a handful of cities have a walk score of 80 or higher, namelyTraverse City, Marquette, and Sault Ste Marie. There are likely a few more cities where there will bean walkscore, but with this scoring section being a 12point category, only specific cities willscore highly enough to be competitive. Changing this to allow walk scores of 70 for max points inBalance of the State will openmore cities to score competitively. 70 walk scores are still verywalkable in the Balance of State pool, an

3 d opening up more cities will force deve
d opening up more cities will force developers to find sitelocations that are both walkable and score competitively on other competitive criteria such asOpportunity 360, instead of finding sites that score well on one category at the expense of otherscoringcategories.VI.Scoring:DevelopmentsOpportunityZonesRisingTideCommunitiesappreciate MSHDA’s forwardthinking byincluding OpportunityZones asscoringcategory shortly after the 2017 Tax Cuts and Jobs Act was passed.This is an example of goodpublic policy as MSHDA coordinates with new initiatives increase the supply ofaffordable housing.However, we believe MSHDA could better leverage the incentive to be in anOpportunity Zone in its scoring.We respectfully request that MSHDA expand on this scoringcriterion by adding an additional 3 points for developments that include a binding commitment offunding from an Opportunity Zone. Including this will allow MSHDA to further leverage the 9%taxcredits,scarceresource,andultimately increathenumberaffordablehousingunits funded.VII.Scoring:4%/9%DevelopmentsWhile we applaud MSHDA’s decision to establish a firm threshold in the Fall 2019 round for apercentunitsto befinancedby taxexempt bonds;requirement is extremelyhigh.Consequently, we propose a sliding point scale where developments can earn points basedupon the percentage of units which are financed by taxexempt bond.Furthermore, the 10 pointscurrently allocated to this item give highrent urban areas an advantage over rural areas which arenot able to take on as much amortizing debt.Even with the introduction of the Balance of StateOpen pool, rural deals still compete against urban ones in the Preservation and PSH pools, puttingruraldevelopmentsdisadvantage.proposemodifyingthiscategory tothefollowing: Page 4 of 6 Woda Cooper Companies, Inc. �� &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ; &#x/MCI; 1 ;&#x/MCI; 1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x/MCI; 3 ;&#x/MCI; 3 ; &#x/MCI; 4 ;&#x/MCI; 4 ; &#x/MCI; 8 ;&#x/MCI; 8 ;• 20% of totalunits financedby taxexemptbonds 2 pointstotalunits financedby taxexemptbonds 4 pointstotalunits financedtaxexemptbonds 5 points4%/9% deals only are feasible in larger, urban markets that have other financial resources available(e.g. Detroit, Grand Rapids, etc.). If the 4%/9% category remains, we suggest that a limited numberdealsobtainthese pointspromotegeographicdiversityLIHTCawardsacrossthestate.VIII.Scoring:ProximityTransportationWoda Cooper suggests tiering the scoring system for proximity to transportation and to adjustthescoringforsitesthat meetMSHDA’sruraldefinition.Thesuggestedtiersfoundbelow: points:withinfixedtransitstopthatoperate

4 sdays aweek,equivalent demandservicethat
sdays aweek,equivalent demandservicethat operates 7days aweek Points:withinfixedtransitstopthatoperatesdaysweek,equivalent demandservicethat operates 6days aweek Points:withinfixedtransitstopthatoperatesdaysweek,equivalent demandservicethat operates 5days aweek ForRuralprojects:projectsthatmeetthepointdefinitionwillawardedpoints.In our experience, the largest municipalities routinely operate bus systems on Saturdays andnot Sundays. We believe this should score slightly more than a bussystem that only operates 5daysa week. Additionally, rural areas often do not have the budgets to operate transportation systems thatrun 7days a week. This is likeMSHDA’s current employment center requirements andneighborhoodinvestment requirements wheretierepopulation.IX.Generally:PILOTsandTaxAbatementsWoda Cooper believes that PILOTs and alternative tax incentive structures are important to theshortand longterm financial health of any development and recommends no changes to currentscoring for PILOT’s and alternative tax incentive structures. However, municipal finances aretypically very tight and granting a PILOT is a major commitment to affordable housing on the partof a governmental entity. Developers work cooperatively with local governments to craft and adoptPILOT legislation.withanycooperative exercise,thereare importantcommitmentsmade onboth sides. The local government agrees to forego tax revenue, and the developer agrees to abide bythe terms of the PILOT and tomake the payments called for in the legislation. In our experience,several cities across Michigan are becoming increasingly concerned that if PILOT payments are notmade, and notice has been sent for nonpayment and the payments continue to go unpaid, itputs ahardship on that city to try and reclaim such payments. Woda Cooper recommends that cities havesome recourse through PILOT ordinances to impose a penalty for nonpayment of PILOT fees. Suchpenaltyshould occuronlyafterpropernoticeis given anadequatecurehas passed.Allowingfewbaddevelopersmakepayments withoutanyadverse consequencesjeopardizes Page 5 of 6 Woda Cooper Companies, Inc. �� &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ; &#x/MCI; 1 ;&#x/MCI; 1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x/MCI; 3 ;&#x/MCI; 3 ; &#x/MCI; 4 ;&#x/MCI; 4 ;theabilityconscientiousdevelopersworkcooperativelywithlocalgovernmentsfuturePILOTs.Scoring:CostReasonablenesswithCreditEfficiencyThe Credit Efficiency scoring criterion is an excellent example of accomplishing policy goalswithout putting undue financial strain on developments.This scoring item uses actual data todevelop ranges of appropriate credit requests for developments while taking int

5 o account differencesin unit sizes and c
o account differencesin unit sizes and construction types.The scoring item allows for realistic construction budgets to besubmitted but penalizes developers for requesting excessive amounts of scarce 9% credits.The 5points awarded here provide a strong incentive to keep costs reasonable, but not so strong thatawards become a “race to the bottom” and sacrifice development quality.We recommend this itemremain in the QAP unchangedto ensure quality, safe housing is produced and valuable 9% LIHTCresourcesareleveraged to theirfullest potential.XI.Threshold:MaximumTotalDevelopmentCostperUnitLimitThe maximum total development cost per unit limit is an effective tool to ensure LIHTCresources are used efficiently.That being said, the tool must remain relevant to the latest trends inthe dynamic construction market.This limit remained constant from the 20192020 QAP to the2021 QAP; however,construction costs, particularly lumber, skyrocketed since the 2019QAP’s publication in midConsequently, we recommend that the maximum totaldevelopment cost per unit limit be updated prior to each competitive 9% round.This will ensureprojects are being compared againsta current standard which reflects the latest conditions in arapidlychanging economy.XII.PSHSuccessfulPSHOutcomesWoda Cooper Development, Inc. suggests that MSHDA consider amending the languageoutlining acceptable PSH tenant housing documentation in Section E, Number 6 of the Interim QAP2021 Scoring Summary entitled “Successful PSH Outcomes.”MSHDA defines successfuloutcomes as “the percentage of PSH tenants that remained housed for at least 12 months,” and willaward points “for team members who can demonstrate 85% or more of the PSH tenants remainedhoused for at least 12 months over the last three years.” We suggest that the time frame for whichapplicantsneeddemonstratetenantsremainhousedforleastmonths shouldreducedfromthe last three years to the last year or two years. This change is necessary because it is burdensomefor the applicant to consolidate three years of property data. Applicants can sufficiently demonstratethe same successful housing of PSH tenants forat least 12 months in a narrower time frame of oneyeartwoyears thatreduces theburden onapplicants toconsolidatevoluminoustenant data.XIII.PSHSection(“Continuum ofCare”)WodaCooperDevelopment,Inc.suggeststhatMSHDAconsideramendinglanguageoutlining sufficient engagement with the local Continuum of Care to fulfill threshold PSHapplicationsubmissionrequirementsSectiontheInterim2021 Addendum Page 6 of 6 Woda Cooper Companies, Inc. �� &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [4; .30;' 3;.10;# 7;.33;‚ 5;
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.51;„ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ; &#x/MCI; 1 ;&#x/MCI;

6 1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x
1 ; &#x/MCI; 2 ;&#x/MCI; 2 ; &#x/MCI; 3 ;&#x/MCI; 3 ; &#x/MCI; 4 ;&#x/MCI; 4 ;MSHDA requires that, “The CoC form, a letter of support from the CoC, and meeting minutes fromthe initial planning meeting must be included with the application submission.” We suggest thatMSHDAeliminatethethresholdrequirementobtainsignedlettsupportfromthelocalCoC.Although a CoC letter of support strengthens the applicant’s demonstration of communityengagement, requiring the applicant to submit a letter of support is an unnecessary burden placed onthe applicant and may allow the CoC to act as a gatekeeper. Instead, we suggest that MSHDArequire the applicant to attend 2 CoC meetings and have the option to include a letter of support aspart of application submission. Meeting minutes sufficiently demonstrate the applicant’s communitinvolvement because they outline the applicant’s commitment to establish strong social networkswith CoC members. We recommend this change because sustained community engagement is morecritical than providing a letter of support that merely reiterates CoC involvement detailed in meetingminutes.XIV.DeveloperFeeLimitsDeveloper Fee limits of $1,500,000 for 9% developments and $2,100,000 for 4% developmentshave remained constant since the 20152016 QAP.Total development costs have increasedsignificantly over the last 6 years.For example, the lower bound of the MSHDA credit efficiencysafe harbor range for new construction deals has increased by 13.6% from the Spring 2015 round tothe Winter 2021 round.While MSHDA’s calculation of the developer fee is meant to ensure theyare an appropriate size of total development costs(TDC), the absolute cap has caused this fee to bean increasingly smaller percentage of TDC on deals in the rising cost environment in which ourindustryfindsitself.Consequently,themaximumdeveloper feesshouldincreasedacrosstheboard to $1,650,000 fordevelopments and$2,310,000 fordevelopments.TenantOwnershipWe suggest that tenant ownership be its own setaside (limited to one or two deals), or anaccepted threshold for strategic investment. In order to be eligible for the setaside or strategicinvestment credits, a developer must construct a single family product (i.e. single family homes ortownhomes), have substantial municipal support (i.e. a 30 year PILOT, or tax abatementthat runswith the land once sold), and a detailed ownership plan that includes how and for what price unitswill be sold. Woda Cooper Development’s first Michigan LIHTC project was Doranne Greene inHartford.his 49 unit singlefamily ‘lease to own’ development has been highly successful for bothWoda Cooper and the City of Hartford.Besides the unique product design, families were attractedbecause of the prospect of future ownership.Woda Cooper Development believes future tenantownership of LIHTC housing can trigger exceptional support by municipal leadership and motivatetenantsto increasecareandupkeep ofthepropertyin anticipationfuture homeownership.P. Craig PattersonSeniorVicePresident Respectfully submit