DECLARATION OF LAND USE RESTRICTIVE COVENANTS
FOR LOW-INCOME HOUSING TAX CREDITS
2018 ALLOCATION YEAR

	THIS DECLARATION OF LAND USE RESTRICTIVE COVENANTS (“AGREEMENT”) dated as of      , by      , a      , and its successors and assigns (“Owner”), is given as a condition precedent to the allocation of low-income housing tax credits by the Minnesota Housing Finance Agency, a public body corporate and politic of the state of Minnesota, 400 Wabasha Street North, Suite 400, St. Paul, MN 55102 (Minnesota Housing) together with any successor to its rights, duties and obligations.

RECITALS

A. Owner is or will be Owner of a      -unit rental housing Project located on real property located in the City of      , County of      , state of Minnesota, legally described in Exhibit A attached hereto (the “Project Land”), known as or to be known as       (the “Project”).

B. Minnesota Housing has been designated by the Legislature of the state of Minnesota as the housing tax credit agency for the location of the Project for the allocation of low-income housing tax credits.

C. Owner has applied to Minnesota Housing for an allocation of low-income housing tax credits to the Project, and Minnesota Housing has determined that the Project would support annual low-income housing tax credits in the amount of $      (the “Credits”).

D. Section 42 of the Internal Revenue Code of 1986, as amended (“Section 42” and the “Code”, respectively) requires as a condition precedent to the allocation of the Credits that Owner execute, deliver and record this Agreement in the official land records of the county in which the Project is located in order to create certain covenants running with the land for the purpose of enforcing the requirements of Section 42 and the Additional Restrictions (described in found in Section 5 and Exhibit C of this agreement)by regulating and restricting the use, occupancy and transfer of the Project as set forth in this Agreement.

E. Owner, under this Agreement, intends, declares and covenants that the regulatory and restrictive covenants set forth in this Agreement governing the use, occupancy, and transfer of the Project will be and are covenants running with the Project Land for the term stated in this Agreement and will be binding upon all subsequent owners of the Project Land for the term, and are not merely personal covenants of Owner.

NOW, THEREFORE, in consideration of the promises and covenants set forth in this Agreement and of other valuable consideration, the receipt and sufficiency of which is acknowledged, Owner agrees as follows.

SECTION 1 - DEFINITIONS

All words and phrases not otherwise defined in this Agreement that are defined in Section 42 or by the United States Department of Treasury (“Treasury”), the Internal Revenue Service (“IRS”), or the Department of Housing and Urban Development (“HUD”) in rules and regulations will have the same meanings in this Agreement.

SECTION 2 - RECORDING AND FILING; COVENANTS TO RUN WITH THE LAND

(a)	Upon execution and delivery by Owner, Owner will cause this Agreement and all amendments thereto to be recorded in the office of the County Recorder and/or Registrar of Titles of the county in which the Project Land is located and will pay all fees and charges incurred in connection with recording.  Upon recording, Owner will immediately transmit to Minnesota Housing an executed original of the Agreement, or a duly certified copy of the executed original, showing the date and document numbers of record.  Owner agrees that Minnesota Housing will not issue an IRS Form 8609 constituting final allocation of the Credits for the Project unless Minnesota Housing has received the recorded executed original, or a duly certified copy, of this Agreement as recorded.

(b)	Owner intends, declares and covenants, on behalf of itself and all future owners and operators of the Project Land and the Project during the term of this Agreement, that this Agreement, including the covenants and restrictions set forth and the exhibits, regulating and restricting the use, occupancy and transfer of the Project Land and the Project: (i) will be and are covenants running with the Project Land, encumbering the Project Land for the term of this Agreement, binding upon Owner’s successors in title and all subsequent owners and operators of the Project Land, (ii) are not merely personal covenants of Owner; and (iii) will bind Owner (and the benefits will inure to Minnesota Housing and any past, present or prospective tenant of the Project) and its respective successors and assigns during the term of this Agreement.  Owner hereby agrees that all requirements of the laws of the state of Minnesota to be satisfied in order for the provisions of this Agreement to constitute deed restrictions and covenants running with the land will be deemed to be satisfied in full, and that any requirements of privileges of estate are intended to be satisfied, or in the alternate, that an equitable servitude has been created to insure that these restrictions run with the land.  For the longer of the period that the Credits are claimed or the term of this Agreement, every contract, deed, or other instrument executed conveying the Project Land or any portion, will expressly provide that such conveyance is subject to this Agreement; provided, however, that the covenants contained in will survive and be effective regardless of whether such contract, deed or other instrument executed conveying the Project Land or any portion thereof provides that such conveyance is subject to this Agreement.

(c)	Owner covenants to obtain the consent of any prior recorded lien holder for the Project to this Agreement, and such consent will be a condition precedent to Minnesota Housing’s issuance of the IRS Form 8609 constituting final allocation of Credits for the Project.

SECTION 3 - REPRESENTATIONS, COVENANTS AND WARRANTIES OF OWNER

Owner hereby represents, covenants and warrants as follows:

(a)	Owner (i) is a       duly organized under the laws of       and is qualified to transact business under the laws of the state of Minnesota; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted; and (iii) has the full legal right, power and authority to execute and deliver this Agreement.

(b)	The execution and performance of this Agreement by Owner: (i) will not violate or, as applicable, has not violated any provision of law, rule or regulation, or any order of any court or other agency or governmental body; (ii) will not violate or, as applicable, has not violated any provision of any indenture, agreement, mortgage, mortgage note, or other instrument to which Owner is a party or by which it or the Project is bound; and (iii) will not result in the creation or imposition of any prohibited encumbrance of any nature.

(c)	At the time of execution and delivery of this Agreement, Owner has good and marketable title to the premises constituting the Project free and clear of any lien or encumbrance (subject to encumbrances created pursuant to this Agreement, any loan documents relating to the Project or other permitted encumbrances).

(d)	There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of Owner, threatened against or affecting it or any of its properties or rights that, if adversely determined, would materially impair its right to carry on business substantially as now conducted (and as now contemplated by this Agreement) or would materially adversely affect its financial condition.

(e)	The Project constitutes or will constitute a qualified low-income building or qualified low-income project, as applicable, as defined in Section 42 and any applicable regulations.

(f)	Each unit in the Project contains complete facilities for living, sleeping, eating, cooking and sanitation (unless the Project qualifies as a single-room occupancy Project or transitional housing for the homeless), which will not be used on a transient basis.

(g)	All units subject to Section 42 will be leased and rented or made available to members of the general public who qualify for occupancy under the applicable election specified in Section 42(g)(1) of the Code (“Low- Income Tenants”).

(h)	Owner will fully comply with the requirements of the Fair Housing Act as it may from time to time be amended.

(i)	Owner will not refuse to lease a unit to the holder of a voucher or certificate of eligibility under Section 8 of the United States Housing Act of 1937 because of the status of the prospective tenant as such a holder.

(j)	Each low-income unit is and will remain suitable for occupancy.

(k)	Subject to the requirements of Section 42 and this Agreement, Owner may sell, transfer or exchange the entire Project, at any time, but Owner will notify in writing and obtain the agreement of any buyer or successor or other person acquiring the Project or any interest in the Project that such acquisition is subject to the requirements of this Agreement and to the requirements of Section 42 and any applicable regulations.  This provision will not act to waive any other restriction on sale, transfer, or exchange of the Project or any low-income portion of the Project.  Owner agrees that Minnesota Housing may void any sale, transfer or exchange of the Project if the buyer or successor or other person fails to assume in writing the requirements of this Agreement and of Section 42.

(l)	Owner will notify Minnesota Housing in writing of any sale, transfer or exchange of the entire Project or any low-income portion of the Project.  Owner will obtain all required Minnesota Housing approvals of the sale, transfer or exchange as described in the Minnesota Housing Finance Agency Housing Tax Credit Program Procedural Manual (Procedural Manual). The notification to Minnesota Housing will be made in the manner described in the Procedural Manual.

(m)	Owner will not demolish any part of the Project or substantially subtract from any real or personal property of the Project or permit the use of any residential rental unit for any purpose other than rental housing during the term of this Agreement unless required by law.

(n)	If the Project, or any part,  is damaged or destroyed or will be condemned or acquired for public use, Owner will use its best efforts to repair and restore the Project to substantially the same condition as existed prior to the event causing such damage or destruction and to operate the Project in accordance with the terms of this Agreement.

(o)	Owner has not executed and will not execute any other agreement with provisions contradictory to, or in opposition to, the provisions hereof, and the requirements of this Agreement are paramount and controlling as to the rights and obligations set forth herein and supersede any other requirements in conflict herewith.

(p)	Owner will fully comply with the requirements of Section 42 and any applicable regulations as they may from time to time be amended.

SECTION 4 - INCOME RESTRICTIONS; RENTAL RESTRICTIONS

Owner represents, warrants and covenants that throughout the term of this Agreement and in order to satisfy the income and rental restrictions required by Section 42 (the “Occupancy Restrictions”):

(a)	The determination of whether a tenant meets the low-income requirement will be made by Owner at least annually on the basis of the current income of the tenant.

(b)	In accordance with Section 42(g)(1) of the Code, and as set out in more detail in Exhibit C, the Owner has elected that       percent or more of the residential units in the Project will be occupied by individuals whose income, or whose average income pursuant to Section 42(g)(1)(C) of the Code, is       percent or less of area median gross income.

(c)	All units subject to Section 42 (the “HTC Units”) will be rent-restricted in accordance with Section 42(g)(2) of the Code.

(d)	The applicable fraction (as defined in Section 42(c)(1) of the Code) for each building for each taxable year in the Extended Use Period (as defined in this Agreement) will not be less than the Applicable Fraction for each building specified in Exhibit B.

SECTION 5 - ADDITIONAL RESTRICTIONS

Exhibit C sets forth certain additional obligations of Owner with respect to the Project upon which the allocation of Credits has been based and with which Owner covenants to comply throughout the Extended Use Period.  The obligations listed in Exhibit C must be consistent with the Project’s original reservation and binding Agreement and, if applicable, carryover Agreement, with the exception of approved amendments.

SECTION 6 - TERM OF AGREEMENT

(a)	The following definitions will apply to this Section 6.

(1)	Compliance Period means, with respect to any building that is part of the Project, the period of 15 taxable years beginning with the first taxable year of the credit period with respect to the Project.

(2)	Extended Use Period means, with respect to any building that is part of the Project, the period beginning on the first day in the Compliance Period on which such building is part of a qualified low-income housing Project and ending on the date that is 15 years after the close of the Compliance Period as specified in Exhibit B.

(b)	This Agreement and Owner’s obligation to comply with Section 42 and the Occupancy Restrictions will commence on the first day of the Compliance Period and will end at the close of the Extended Use Period.

(c)	Notwithstanding Section 6(b), the Extended Use Period for any building that is part of the Project will terminate:

	(1)	On the date the building is acquired by foreclosure (or instrument in lieu of foreclosure) unless the Secretary of the Treasury determines that such acquisition is part of an arrangement with the taxpayer, a purpose of which is to terminate the Extended Use Period; or

	(2)	If Owner has properly requested that Minnesota Housing assist in procuring a qualified contract for the acquisition of the low-income portion of any building that is a part of the Project and Minnesota Housing is unable to present a qualified contract. This Section 6(c)(2) will be subject to the time limitations and any waivers set out in Exhibit C.

(d)	The Section 42 rent requirements will continue for a period of three years following the termination of the Extended Use Period pursuant to Section 6(c).  Throughout the term of this Agreement and during such three-year period, Owner will not evict or terminate the tenancy of an existing tenant of any low-income unit other than for good cause and will not increase the gross rent above the maximum allowed under Section 42 with respect to such low-income unit.

SECTION 7 - ENFORCEMENT OF ADDITIONAL RESTRICTIONS

(a)	Owner will permit, during normal business hours and upon reasonable notice, any duly authorized representative of Minnesota Housing to inspect any books and records of Owner regarding the Project with respect to the incomes of Low-Income Tenants that pertain to compliance with the terms of this Agreement.

(b)	Owner will submit any other information, documents or certifications requested by Minnesota Housing that Minnesota Housing deems reasonably necessary to substantiate Owner’s continuing compliance with the provisions of this Agreement and the requirements of Section 42.

SECTION 8 - ENFORCEMENT OF OCCUPANCY RESTRICTIONS

(a)	Owner covenants that it will not knowingly take or permit any action that would result in a violation of the requirements of Section 42, any applicable regulations, or this Agreement.  Owner covenants to take any lawful action (including amendment of this Agreement as may be necessary, in the opinion of Minnesota Housing) to comply fully with Section 42 and with all applicable rules, rulings, policies, procedures, regulations, or other official statements promulgated or proposed by Treasury, the IRS, or HUD from time to time pertaining to Owner’s obligations under Section 42 and affecting the Project.

(b)	Owner acknowledges that the primary purpose for requiring compliance by Owner with the requirements of this Agreement is to ensure compliance of the Project and Owner with Section 42 and any applicable regulations, AND BY REASON THEREOF, OWNER IN CONSIDERATION FOR RECEIVING CREDITS FOR THIS PROJECT HEREBY AGREES THAT MINNESOTA HOUSING AND ANY INDIVIDUAL WHO MEETS THE INCOME LIMITATION APPLICABLE UNDER SECTION 42 (WHETHER PROSPECTIVE, PRESENT OR FORMER OCCUPANT) SHALL BE ENTITLED, FOR ANY BREACH OF THE PROVISIONS HEREOF, AND IN ADDITION TO ALL OTHER REMEDIES PROVIDED BY LAW OR IN EQUITY, TO ENFORCE SPECIFIC PERFORMANCE BY OWNER OF ITS OBLIGATIONS UNDER THIS AGREEMENT IN A STATE COURT OF COMPETENT JURISDICTION.  Owner further acknowledges that the beneficiaries of Owner’s obligations hereunder cannot be adequately compensated by monetary damages in the event of any default hereunder.

(c)	Owner hereby agrees that the representations and covenants set forth herein may be relied upon by Minnesota Housing and all persons interested in Project compliance under Section 42 and any applicable regulations.

(d)	Owner acknowledges that Minnesota Housing is required, pursuant to Section 42(m)(1)(B)(iii) of the Code and Section 1.42-5 of the Treasury regulations, to establish a procedure to monitor Owner’s and the Project’s compliance with the requirements of Section 42, which procedure includes the monitoring of Owner’s compliance with the Additional Restrictions, if any, set forth in Exhibit C.  In addition, Minnesota Housing may be required to notify the IRS of any noncompliance.  

SECTION 9 - MISCELLANEOUS

(a)	Severability.  The invalidity of any clause, part or provision of this Agreement will not affect the validity of the remaining portions thereof.

(b)	Notices.  All notices to be given pursuant to this Agreement will be in writing and will be deemed given when mailed by certified or registered mail, return receipt requested, to the parties at the addresses set forth below, or to such other place as a party may from time to time designate in writing.

	To Minnesota Housing:	ATTENTION:  Housing Tax Credit Program
		Minnesota Housing Finance Agency
		400 Wabasha Street North, Suite 400
		St. Paul, MN 55102
	
	To Owner:	ATTENTION:     
		     
		     
		     

Minnesota Housing and Owner, may, by notice given pursuant to this Agreement, designate any further or different addresses to which subsequent notices, certificates or other communications will be sent.  Notices regarding compliance and monitoring by Minnesota Housing may be sent by electronic mail.

(c)	Amendment.  Notwithstanding anything to the contrary contained herein, this Agreement may be amended by a written agreement between Minnesota Housing and Owner, which agreement will be effective upon execution by Minnesota Housing and Owner and the recording of the amendment with the County Recorder and/or Registrar of Titles of the County in which the Project is located.  Owner agrees that it will take all actions necessary to effect amendment of this Agreement as may be necessary to comply with the Code and any applicable rules, regulations, policies, procedures, rulings, or other official statements pertaining to the Credits.

(d)	Subordination of Agreement.  This Agreement and the restrictions hereunder are subordinate to the loans and loan documents, if any, on the Project except insofar as Section 42(h)(6)(E)(ii) of the Code requires otherwise (relating to the three-year period of eviction and rent restrictions following the early termination of the Extended Use Period in accordance with Section 6(c)).

(e)	Governing Law.  This Agreement will be governed by the laws of the state of Minnesota and, where applicable, the laws of the United States of America.

(f)	Survival of Obligations.  The obligations of Owner as set forth in this Agreement and in Owner’s application for the Credits will survive the allocation of the Credits and will not be deemed to terminate or merge with the issuing of the allocation.

(THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK)

	IN WITNESS WHEREOF, Owner has caused this Agreement to be signed by its duly authorized representatives, as of the day and year first written above.

	OWNER

	     

	By:     

	Name:     

	Title:     

By:     

Name:     

Title:     

STATE OF MINNESOTA	)
	)  ss
COUNTY OF      	)

	The foregoing instrument was acknowledged before me this       day of      ,      , by      ,       of      , a      ,       of      , a      , on behalf of the      .

	     
	Notary Public

This document drafted by:

Minnesota Housing Finance Agency
400 Wabasha Street North, Suite 400
St. Paul, MN 55102

EXHIBIT A
Declaration of Land Use Restrictive Covenants
Legal Description

     

EXHIBIT B
Declaration of Land Use Restrictive Covenants
Applicable Fraction

BIN #		BUILDING ADDRESS	APPLICABLE		1ST YEAR OF 		** YEAR EXTENDED USE 
					FRACTION*		CREDIT PERIOD		PERIOD TERMINATES		

     		                        	      %		     			                         

     		                         	     %			     			       

     		                       	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                        	     %			     			       

     		                        	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

     		                         	     %			     			       

*The building applicable fraction stated on this form must match the building applicable fraction stated on Minnesota Housing form HTC 28, Building Map.

**Extended Use Period means, with respect to any building that is part of the Project, the period beginning on the first day in the Compliance Period on which such building is part of a qualified low-income housing Project and ending on the date that is 15 years after the close of the Compliance Period (i.e., December 31 of the year the Extended Use Period terminates).  

EXHIBIT C
Declaration of Land Use Restrictive Covenants
Minnesota Housing Project Summary and Additional Restrictions

This Allocation of Low-Income Housing Credits (the “Credits”) is based upon the following:

1.	Project Name:       

2.	Project Number:       	Supplemental Number:       

3.	Project Location:       

4.	Total Units:       		Tax Credit Units:       

5.	Partnership Name:       

6.	Partnership Address:       

7.	Name(s) of General Partner(s):	     

						     

8.	Name(s) of Non-Profit General Partner(s):	     

							     

9.	Owner Taxpayer I.D. No.:       

10.	Non-Profit Tax I.D. No.:       

11.	Type of Credits:       

12.  Minimum Set- Aside:      
(NOTE: Further details for each minimum set-aside election below) 

(1)	20% at 50% means: At least 20 percent or more of the total residential units in each IRS project, as defined by the IRS and irrevocably elected by the Owner on line 8b of IRS form 8609 and, where applicable, described on the statement attached to form 8609, are both rent-restricted and occupied by individuals whose income is at or below 50 percent of the Multifamily Tax Subsidy Project (MTSP) income limits.

(2)	40% at 60% means: At least 40 percent or more of the total residential units in each IRS project, as defined by the IRS and irrevocably elected by the Owner on line 8b of IRS form 8609 and, where applicable, described on the statement attached to form 8609, are both rent-restricted and occupied by individuals whose income is at or below 60 percent of the MTSP income limits.

(3)	Average Income Test means: At least 40 percent or more of the total residential units in each IRS project, as defined by the IRS and irrevocably elected by the Owner on line 8b of IRS form 8609 and, where applicable, described on the statement attached to form 8609, are both rent restricted and occupied by individuals whose income does not exceed the imputed income limitation designated by the taxpayer with respect to the respective unit as set out in 42(g)(1)(C).  The imputed income limitation of any unit designated shall be 20 percent, 30 percent, 40 percent, 50 percent, 60 percent, 70 percent or 80 percent of the MTSP income limits (including adjustments for family size) as determined in accordance with Section 42 of the Code.  The average of the imputed income limitations designated by the Owner with respect to the low-income units shall not exceed 60 percent of the MTSP income limits. Subject to any then-applicable guidance from either Treasury or the IRS and the Owner’s obligation to ensure compliance with the Code, the Owner may change from time to time the Owner’s designations.

13.	Qualified Census Tract Number:       
	Difficult Development Area:      
	State Designated Basis Boost Applied:      Yes        No

14.	Total Eligible Basis:  $ 
(NOTE: Total includes excess basis and high cost adjustment of basis)

15. Total Qualified Basis:  $
(NOTE: Total includes excess basis)

16. Applicable Percentage:      

17.	Annual Tax Credit Amount:  $

Owner represents, warrants and covenants that throughout the term of this Agreement:

The following performance items are indexed with a square  to the left side of their text.  If this square is checked (X), the performance item is a requirement of the Agreement.  The development (Project) Owner is responsible for ensuring that the Project fully complies with all of the terms of the requirements.

GENERAL REQUIREMENTS

18.	Subsidy Layering:
	If this item is checked, Section 911 of the Housing and Community Act of 1992 require that specific procedures be followed for subsidy layering review when housing tax credits and HUD assistance are combined in a single Project.

19.	Tax Credits and Federally Funded Grants:
	Eligible Basis Adjustments, Federally Funded Grants, Treatment of New Buildings as Federal Subsidized: 

	a.   This Project includes a building or buildings costs financed with the proceeds of a federally funded grant.  Pursuant to 42(d)(5), the eligible basis of this Project does not include any costs financed with the proceeds of a federally funded grant.
 
	b.   This Project includes a new building or new buildings which directly or indirectly use, for the building(s) or the operation of the building(s) the proceeds of an outstanding obligation which is tax exempt under Section 103.  Pursuant to 42(i)(2)(A), these buildings are being treated as federally subsidized.

	c.   This Project includes a new building or new buildings which directly or indirectly use for the building(s) or the operation of the building(s) the proceeds of an outstanding obligation which is tax exempt under Section 103.  Pursuant to 42(i)(2)(B), these buildings are not being treated as federally subsidized because the taxpayer elected to exclude the proceeds of such obligation from the eligible basis of the building.

20.	Qualified Non Profit General Partner:
	The Project partnership has received tax credits associated with the non-profit set-aside and must involve as a General Partner, a qualified Nonprofit Organization (see item 8 of this exhibit) as defined in the Housing Tax Credit Program Procedural Manual. A Qualified Nonprofit Organization (as defined in Section 42(h)(5)(C) of the Code) will own an interest in the Project and materially participate in the operation of the Project throughout the compliance period as required by Section 42(h)(5) of the Code. This entity must remain a General Partner and must materially participate in the development and operation of the Project for the full term of the extended use period.

21.	Extended Duration of the Compliance Period:

Minimum Requirement 9% Tax Credit Projects
Tax credits from the state of Minnesota’s tax credit volume cap must waive qualified contract provisions.

	Owner agrees that the provisions of Section 42(h)(6)(E)(i)(II) and 42(h)(6)(F) (which provisions would permit Owner to terminate the restrictions under the Agreement at the end of the 15-year compliance period in the event that Minnesota Housing does not present Owner with a qualified contract for the acquisition of the Project) do not apply to the Project, and that the Section 42 and Minnesota Housing income, rental, and occupancy restrictions must apply for a period of 30 years beginning with the first day of the compliance period in which the building is a part of a qualified low-income housing Project.

Minimum Requirement 4% Tax Credit Projects
Tax credits in association with Tax Exempt Bonds, with the exception of those with applications for non-competitive tax credits in association with Tax Exempt Bonds submitted prior to October 1, 2016 and for which Minnesota Housing has not recommended non-selection as of October 19, 2016, must waive qualified contract provisions for a minimum of 20 years.

 	Owner agrees that the provisions of Section 42(h)(6)(E)(i)(II) and 42(h)(6)(F) (which provisions would permit Owner to terminate the restrictions under the Agreement at the end of the 15-year compliance period in the event that Minnesota Housing does not present Owner with a qualified contract for the acquisition of the Project) do not apply to the Project, for a minimum of 20 years, beginning with the first day of the compliance period in which the building is part of a qualified low-income housing project. Section 42 and Minnesota Housing income, rental restrictions, and occupancy restrictions must apply for a period of 30 years beginning with the first day of the compliance period in which the building is a part of a qualified low-income housing Project, unless terminated through the qualified contract process after year 20.

22.	Affirmative Fair Housing:
	The Affirmative Fair Housing Marketing policy requires that each applicant carry out an affirmative marketing program to attract prospective buyers or tenants in the housing market area regardless of race, creed, color, religion, sex, national, origin, marital status, status with regard to public assistance, disability, sexual orientation, or familial status. At the time of 8609 and throughout the extended use period as directed by Minnesota Housing, all applicants must submit an Affirmative Fair Housing Marketing Plan documenting an acceptable plan to carry out an affirmative marketing program.
 
MINIMUM THRESHOLD REQUIREMENTS 
For housing tax credit Projects with an allocation from Round 1

23. 	 In the Metropolitan Area: 
		New construction or substantial rehabilitation in which, for the term of the extended use period (term of the Declaration of Land Use Restrictive Covenants), at least 75% of the total tax credit units are single room occupancy units with rents affordable to households whose income does not exceed 30%  of the Area Median Income (AMI);

		New construction or substantial rehabilitation family housing Projects that are not restricted to persons 55 years old or older in which, for the term of the extended use period (term of the Declaration of Land Use Restrictive Covenants), at least 75% of the total tax credit units contain two or more bedrooms and at least one-third of the 75% contain three or more bedrooms; OR

		Substantial rehabilitation Projects in neighborhoods targeted by the city for revitalization

24.		Outside the Metropolitan Area:
		Projects which meet a locally identified housing need and which are in short supply in the local housing market as evidenced by credible data such as a local council resolution submitted with the application. 

25.		Projects that are not restricted to persons of a particular age group and in which, for the term of the extended use period (term of the Declaration of Land Use Restrictive Covenants), a percentage of the units are set aside and rented to persons:
		With a serious and persistent mental illness as defined in Minnesota Statutes § 245.462, Subdivision 20, paragraph (c);

		With a developmental disability as defined in United States Code, Title 42, Section 6001, paragraph (5), as amended;

		Who have been assessed as drug dependent persons as defined in Minnesota Statutes § 254A.02, Subdivision 5, and are receiving or will receive care and treatment services provided by an approved treatment program as defined in Minnesota Statutes § 254A.02, Subdivision 2;

		With a brain injury as defined in Minnesota Statutes § 256B.093, Subdivision 4, paragraph (a); OR

		With permanent physical disabilities that substantially limit major life activities, if at least 50% of the units in the Project are accessible as provided under Minnesota Rules Chapter 1341.

26.		Preserve Existing Subsidized Housing:
		Projects, whether or not restricted to persons of a particular age group, which preserve existing subsidized housing, if the use of tax credits is necessary to (1) prevent conversion to market rate use;  or (2) to remedy physical deterioration of the Project which would result in loss of existing federal subsidies; OR

27.		Rural Development:
		Projects financed by Rural Development, which meet statewide distribution goals.

SCORING CRITERIA

Greatest Need – Tenant and Affordability Targeting 

28.	Household Targeting:
	The Project must comply with the provisions checked below for the full term of the extended use period.
	
			a.  Large Family Housing – The Project must provide family housing that is not restricted to persons 55 years or older. The tenant selection plan must give preference to families with minor children.  

           At least 75% of the total tax credit units (      units) contain two or more bedrooms. 

    For Greater Minnesota projects were at least one-third of the 75% contain three or more bedrooms. (      units)  

	b.   Single Room Occupancy Housing – The Project must provide single room occupancy 
housing.
	
		At least 50% of the total tax credit units (      units) must be one bedroom or less with rents affordable to persons with income not to exceed 30% of the HUD Area Median Income (AMI).

	Household Targeting Selection Priority (HTSP) Relief Provisions 

Specific performance requirement relief provisions are available for Projects receiving points under the Single Room Occupancy Housing categories of the Household Targeting Selection Priority of the Self-Scoring Worksheet (HTSP Unit(s)). 

If, for a particular unit meeting the criteria and receiving points under the Single Room Occupancy Housing categories of the Household Targeting Selection Priority (“HTSP Unit(s)”), the necessary rental assistance or operating support (collectively, “HTSP Unit subsidy”) is (i) withdrawn or terminated due to reasons not attributable to the actions or inactions of Owner; (ii) such withdrawal or termination materially adversely impacts the financial feasibility of the Project; (iii) alternative funding is unavailable; and (iv) the Project is otherwise in full compliance with all the terms of the funding for the Project, Owner may petition Minnesota Housing to eliminate its requirements for the affected HTSP Unit(s). Such petition will contain all material facts and supporting documentation substantiating owner’s request including, but not limited to, items (i), (ii) and (iii) above. Upon confirmation of such facts, which such confirmation will  not be unreasonably withheld or delayed, owner will  no longer be required to treat such HTSP Unit(s) as HTSP Unit(s) but must convert the rents of those units to the 50 percent Tax Credit rent limit; provided that more restrictive threshold, selection priority or funding requirements, if any, do not apply. If such conversion occurs, in order to retain the Tax Credit allocation, the above described 50 percent Tax Credit rent limit and the Section 42 minimum set-aside elected for the Project by Owner must be maintained for the remainder of the Tax Credit compliance and extended use periods. 

If Minnesota Housing , at any time, in its sole discretion, determines that an HTSP Unit(s) Subsidy may be available for the remainder of the Tax Credit compliance and extended use periods, and that it would not adversely affect the full availability of the Tax Credit allocation, and would permit the HTSP Unit(s) to again serve 30 percent income households, then at Minnesota Housing’s request, Owner  will  promptly apply for such HTSP Unit(s) subsidy for the HTSP Unit(s), upon terms reasonably acceptable to Owner, and if such HTSP Unit(s) subsidy is obtained, will  again set aside such HTSP Unit(s), when and to the extent then available, to income qualifying individuals.

29.	Permanent Supportive Housing for Households Experiencing Homelessness:
	Owner  agrees that      % (      units) of the total units of the Project will be set-aside and rented to Households Experiencing  Long-Term Homelessness (LTH) as defined in Minnesota Rule 4900.3705, Subpart 10a.and further defined in the Homeless Rider to Declaration attached to this Declaration, targeted to single adults.  

	Owner  agrees that      % (      units) of the total units of the Project will be set-aside and rented to (i) Households Experiencing Long-Term Homelessness (LTH) as defined in Minnesota Rule 4900.3705, Subpart 10a.and further defined in the Homeless Rider attached to this Declaration; (ii) Households at Significant Risk of Experiencing Long-Term Homelessness; or (iii) households as prioritized for permanent supportive housing by the Coordinated Entry System; targeted to families with children or youth.  . Subsections (i), (ii) and (iii) are collectively referred to as “Homeless Unit(s).”
	
Bonus 
 	5% or more (rounded up to the next full unit), but no fewer than four units,      % (      units) will target families with children or youth experiencing long-term homelessness, at significant risk of long-term homelessness, or as prioritized for permanent supportive housing by the Coordinated Entry System

	Continuum of Care Household Type Priorities
	   	5% or more, but no fewer than four units, targeted to Continuum of Care Household Type Priority One.

Rental Assistance for Supportive Housing Units 		
  The Project has committed project-based rental assistance (e.g., Section 8, McKinney Vento Continuum of Care, site-based Housing Support (a.k.a Group Residential Housing), Section 811 Project-based Rental Assistance (811 PRA), or other similar programs approved by Minnesota Housing) for at least 5 percent of total Project units, but no fewer than four units, for units that will serve Households Experiencing Homelessness.	

Homelessness Relief Provisions

Specific performance requirement relief provisions are available for Projects receiving points under the Permanent Supportive Housing for Households Experiencing Homelessness category for (“Homeless Units.”)
	If, for a particular Homeless Unit(s) the necessary rental assistance or operating support (collectively “Homeless Unit Subsidy”) is (i) withdrawn or terminated due to reasons not attributable to the actions or inactions of Owner; (ii) such withdrawal or termination materially adversely impacts the financial feasibility of the Project; (iii) alternative funding is unavailable; and (iv) the Project is otherwise in full compliance with all the terms of the funding for the Project, Owner  may petition Minnesota Housing to eliminate its requirements for the affected Homeless Unit(s). Such petition will contain all material facts and supporting documentation substantiating owner’s request including, but not limited to, items (i), (ii) and (iii) above. Upon confirmation of such facts, which such confirmation will  not be unreasonably withheld or delayed, owner will  no longer be required to treat such Homeless Unit(s) as Homeless Unit(s) but must convert the rents of those units to the 50% Tax Credit rent limit, provided that more restrictive threshold, selection priority or funding requirements, if any, do not apply. If such conversion occurs, in order to retain the Tax Credit allocation, the above described 50% Tax Credit rent limit and the Section 42 minimum set-aside elected for the Project by Owner must be maintained for the remainder of the Tax Credit compliance and extended use periods. 
	
	If Minnesota Housing, at any time in its sole discretion, determines that a Homeless Unit Subsidy may be available for the remainder of the Tax Credit compliance and extended use periods would not adversely affect the full availability of the Tax Credit allocation and would permit  the Homeless Unit(s) to again serve Households Experiencing Homelessness, then at Minnesota Housing’s request Owner  will  promptly apply for such Homeless Unit Subsidy for the Homeless Unit(s), upon terms reasonably acceptable to such Owner, and if such  Homeless Unit Subsidy is obtained, will  again set aside such Homeless Unit(s), when and to the extent then available, to Households Experiencing Homelessness.

	If, for a particular Homeless Unit(s), the necessary tenant support services funding is (i) withdrawn or terminated due to reasons not attributable to the actions or inactions of the owner; (ii) alternative funding or an alternative service provider is unavailable; and (iii) the Project is otherwise in full compliance with all the terms of the funding for the Project, Owner  may petition Minnesota Housing to modify its requirements for the provision of such tenant services for the affected Homeless Unit(s). Such petition will contain all material facts and supporting documentation substantiating owner’s request including, but not limited to, items (i) and (ii) above. Upon confirmation of such facts, which such confirmation will not be unreasonably withheld or delayed, owner will modify such tenant support services for the affected Homeless Unit(s).

	Owner agrees to comply with the reporting requirements contained in the Homelessness Rider to Declaration of Land Use Restrictive Covenants For Low-Income Housing Tax Credits.
	
30.	 People with Disabilities:
	The Project must provide housing with income limits at 30% AMI and that is not restricted to persons of a particular age group and in which, for the term of the extended use period (Declaration of Land Use Restrictive Covenants), that      % (      units) of the total units of the Project are set aside and rented to persons with any of the following disabilities: 

a.   A serious and persistent mental illness as defined in MN Statutes Section 245.462, Subdivision 20, Paragraph (c ); or

b.   A developmental disability as defined in United States Code, Title 42, Section 6001, Paragraph (5), as amended; or

c.  Assessed as drug dependent persons as defined in MN Statute Section 254A.02, Subdivision 5, and are receiving or will receive care and, treatment services provided by an approved treatment program as defined in MN Statute Section 254A.02, Subdivision 2; or

d.   A brain injury as defined in MN Statute Section 256B.093, Subdivision 4, paragraph (a); or

e.   Permanent physical disabilities that substantially limit major life activities, if at least 50 percent of the units in the Project are accessible as provided under Minnesota Rules, Chapter 1341.

Rental Assistance for Supportive Housing Units 		
  The Project has committed project-based rental assistance (e.g., Section 8, McKinney Vento Continuum of Care, site-based Housing Support (a.k.a  Group Residential Housing), Section 811 Project-based Rental Assistance (811 PRA), or other similar programs approved by Minnesota Housing) for at least 5% of total Project units, but no fewer than four units, for units that will serve People with Disabilities. 

	People with Disabilities Selection Priority (PDSP) Relief Provisions:

Specific performance requirement relief provisions are available for Projects receiving points under the People with Disabilities categories of the People with Disabilities Selection Priority of the Self-Scoring Worksheet for PDSP Units. 

If, for a particular unit meeting the criteria and receiving points under the People with Disabilities Selection Priority (“PDSP Unit(s)”), the necessary rental assistance or operating support (collectively, “PDSP Unit subsidy”) is (i) withdrawn or terminated due to reasons not attributable to the actions or inactions of Owner; (ii) such withdrawal or termination materially adversely impacts the financial feasibility of the Project; (iii) alternative funding is unavailable; and (iv) the Project is otherwise in full compliance with all the terms of the funding for the Project, Owner  may petition Minnesota Housing to eliminate its requirements for the affected PDSP Unit(s). Such petition will contain all material facts and supporting documentation substantiating the Owner’s request including, but not limited to, items (i), (ii) and (iii) above. Upon confirmation of such facts, which such confirmation will not be unreasonably withheld or delayed, Owner will no longer be required to treat such PDSP Unit(s) as  PDSP Unit(s) but must convert the rents and incomes of those units to the 50 percent Tax Credit rent and income limit; provided that more restrictive threshold, selection priority or funding requirements, if any, do not apply. If such conversion occurs, in order to retain the Tax Credit allocation, the above described 50 percent Tax Credit rent and income limit and the Section 42 minimum set-aside elected for the Project by Owner must be maintained for the remainder of the Tax Credit compliance and extended use periods. 

If, for a particular PDSP Unit(s), the necessary tenant support services funding is (i) withdrawn or terminated due to reasons not attributable to the actions or inactions of Owner; (ii) alternative funding or an alternative service provider is unavailable; and (iii) the Project is otherwise in full compliance with all the terms of the funding for the Project, Owner  may petition Minnesota Housing to modify its requirements for the provision of such tenant services for the affected PDSP Units(s). Such petition will contain all material facts and supporting documentation substantiating owner’s request including, but not limited to, items (i) and (ii) of this paragraph. Upon confirmation of such facts, which such confirmation will not be unreasonably withheld or delayed, Owner will modify its provision of such tenant support services for the affected PDSP Unit(s) in a manner consistent with Minnesota Housing’s modified requirements for the provision of tenant services for the PDSP Unit(s), provided that more restrictive threshold, selection priority or funding requirements, if any, do not apply.

If Minnesota Housing , at any time, in its sole discretion, determine that a PDSP Unit Subsidy may be available for the remainder of the Tax Credit compliance and extended use periods, that would not adversely affect the full availability of the Tax Credit allocation and would permit the PDSP Unit(s) to again serve People with Disabilities households, then at Minnesota Housing’s request Owner  will  promptly apply for such PDSP Unit subsidy for the PDSP Unit(s), upon terms reasonably acceptable to such Owner, and if such PDSP Units subsidy is obtained, will  again set aside such PDSP Unit(s), when and to the extent then available, to People with Disabilities needs qualifying individuals.

In addition, if Minnesota Housing will , at any time thereafter, in its sole discretion, determines that PDSP Unit tenant support services funding may be available for the remainder of the Tax Credit compliance and extended use periods, that would not adversely affect the full availability of the Tax Credit allocation and would permit the affected PDSP Unit(s) to again provide tenant support services to  households targeting People with Disabilities, then at Minnesota Housing’s request, Owner  will  promptly apply for such  PDSP Unit tenant support services funding for the affected PDSP Unit(s), upon terms reasonably acceptable to such owner, and if such PDSP Unit tenant support services funding is obtained, will  resume providing  PDSP Unit tenant support services, when and to the extent then available, to People with Disabilities needs qualifying individuals.

31.	Serves the Lowest Income Tenants:
	The Project must not exceed the following gross rent levels for the required period below.  The period begins following the last placed in service date for any building in the Project as required by the 2018 Qualified Allocation Plan (QAP) and Housing Tax Credit Program Procedural Manual.  After the applicable five OR 10 year period has expired, rent may be increased to the 40 or 60 % rent limit over a three year period, with increases not to exceed the amount listed in the table below, provided that more restrictive selection priority, funding or bond requirements do not apply.
	
Applicable Rent Restrictions:
	     % (      #) of HTC Units at 30% of 30% of HUD Area Median Income (AMI) adjusted by unit size for a period of five years following the last placed in service date for any building in the property
     % (      #) of Tax Credit units at 30% of 50% of HUD Area Median Income (AMI) adjusted by unit size for a period of [five years /  ten years] following the last placed in service date for any building in the property

		30% of 50%	30% of 30%
	Year	Rent Levels	Rent Levels

	  1-5	30% of 50%	30% of 30%
	6	30% of 53%	30% of 33%
	7	30% of 57%	30% of 37%
	8	30% of 60%	30% of 40%	

		30% of 50%	
	Year	Rent Levels	

	  1-10	30% of 50%	
	11	30% of 53%	
	12	30% of 57%	
	13	30% of 60%
32.  	Rental Assistance:
	Owner  and the Local Housing  Authority (Public Housing Authority, HRA or other similar entity having jurisdiction for the type of units identified below) have agreed to include project-based assistance (or units effectively project-based by written contract (e.g. NAHASDA) for the Project as follows:

	       Units of project-based assistance (or units effectively project-based by written contract (e.g. NAHASDA).

  A minimum 10 year new or remaining contract with the Local Housing Authority for the above project-based assistance. 

  A 4 to 9 year new or remaining contract with the Local Housing Authority for the above project-based assistance.

 The Project must comply with all program requirements for the assistance for which priority points were given including maintaining rents within the appropriate payment standard for the project area in which the Project is located for the full compliance and extended use period of the housing tax credits.

 For project-based rental assistance in conjunction with a binding commitment for an “extended term contract”, the applicant must have submitted a binding commitment for the “extended term contract” for project-based assistance for a minimum of four or 10 years, which is signed by the Local Housing Authority. As a condition of Carryover or 8609, the applicant must submit a fully executed copy of the “extended term contract” for the project-based assistance to be included in the Project.

	Owner and the Local Housing Authority have agreed to provide other rental assistance to the Project as identified in the agreement between Owner and the Local Housing Authority and found to be acceptable by Minnesota Housing.

33.  	Long-Term Affordability - Eligible for 4% tax credit Projects only:  
  	Owner agrees to waive their right to Qualified Contact for a minimum of 30 years.  
Owner  agrees that the provisions of IRC §§ 42(h)(6)(E)(i)(II) and 42(h)(6)(F) (which provision would permit Owner  to terminate the restrictions under this agreement at the end of the compliance period in the event Minnesota Housing does not present Owner  with a qualified contract for the acquisition of the Project) do not apply to the Project, for 30 years beginning with the first day of the compliance period in which the building is a part of a qualified low-income housing project. 
	
  	Owner agrees to waive their right to Qualified Contract for a minimum of 25 years.  
Owner  agrees that the provisions of IRC §§ 42(h)(6)(E)(i)(II) and 42(h)(6)(F) (which provision would permit Owner  to terminate the restrictions under this agreement at the end of the compliance period in the event Minnesota Housing does not present Owner  with a qualified contract for the acquisition of the Project) do not apply to the Project,  for 25 years beginning with the first day of the compliance period in which the building is a part of a qualified low-income housing project. 

Areas of Opportunity
 
34. 	Access to Higher Performing Schools:
	The Project serves families and increases the supply of affordable housing in a location that provides access to higher performing schools as identified in the HTC Program Procedural Manual and as presented in the Project’s application and Self-Scoring Worksheet. 

The Project must provide at least 25%of total Tax Credit units, with a minimum of 15 units, must contain two or more bedrooms, and Owner  must  agree to  market the units to families with minor children. 

Supporting Community and Economic Development 

35. 	Eventual Tenant Ownership:
	The Project owner agrees to transfer ownership and sell 100% of the Tax Credit units to eligible Tax Credit unit tenant buyers at the end of the 15-year compliance period. Owner agrees to comply with the HTC Program Procedural Manual and the Eventual Tenant Ownership (ETO) guide and provide the final conversion plan.

The final conversion plan, to be submitted by the 15th year of initial compliance, must incorporate an ownership exit strategy, a third party Property Capital Needs Assessment report and budget for capital improvements, and services including homeownership education and training. A final conversion plan complying with all of the requirements of the ETO Guide must be submitted to, and approved by, Minnesota Housing prior to commencing the conversion.

Until the time the Tax Credit units are purchased by qualified tenants or in the event that not all Tax Credit units are acquired by qualified tenants, Owner will extend the duration of low-income use for the full extended use period (30 years). 

The Declaration of Land Use Restrictive Covenants will contain provisions ensuring compliance with these ETO commitments by the owner, including a right of first refusal allowing tenants to purchase their units. (Refer to the Eventual Tenant Ownership (ETO) Guide and also to Chapter 3W of the HTC Program Procedural Manual for additional information.)

36. 	Preservation of Existing Federal Assistance: 
	The Project preserves a minimum of ( # )       Existing Federally Assisted units as identified in the Project’s selected application for Tax Credits and Self-scoring Worksheet and must meet the conditions identified in the HTC Program Procedural Manual.

	Owner must continue renewals of existing project-based housing subsidy payment contract(s) for as long as the assistance is available. Except for “good cause,” Owner must not evict existing subsidized residents and must continue to renew leases for those residents.

Building Characteristics

37. 	High Speed Internet Access:
	The Project must provide High Speed Internet access via installation of all appropriate infrastructure and connections for cable, DSL or wireless Internet service to every unit in the Project.

38. 	Smoke Free Buildings:
	The Project must institute and maintain a written occupancy policy prohibiting smoking in all of the units and all common areas within the building(s) of the Project.  A non-smoking clause must be included in the lease for every unit/household.  The Project must maintain the smoke-free policy for the term of the HTC Declaration of Land Use Restrictive Covenants.

39. 	Joint Powers Agreement:
	The Project falls within the jurisdiction of a suballocator of tax credits, which is party to a current Joint Powers Agreement with the Minnesota Housing Finance Agency.

40.	Additional Conditions
	List: