Capital Area Housing Finance Corporation

Rules for Loans
in Connection with Obtaining Tax Credits for
Multifamily Residential Rental Projects

Article I.  Purpose and Scope

Capital Area Housing Finance Corporation (the “Corporation”) was created as a public non-profit corporation under the provisions of the Texas Housing Finance Corporations Act, Texas Local Government Code, Chapter 394, as amended (the “Act”).  The Corporation’s primary purpose is to assist individuals of low and moderate income to obtain decent, safe, sanitary, and affordable housing.  The Corporation is authorized by the Act to make loans to further its purposes thereunder. Applications for loans will be considered in connection with developments located in one or more of the following:  Counties of Bastrop, Blanco, Burnet, Caldwell, Fayette, Hays, Lee, Llano and Williamson (collectively, the “Program Area”) or in locations outside of the Program Area with the consent of the applicable Local Political Subdivision as evidenced by an executed Interlocal Agreement.  The Corporation has adopted these Rules to set forth the general requirements and procedures applicable to qualifying for a loan in connection with obtaining tax credits from the Texas Department of Housing and Community Affairs (the “TDHCA”) in connection with applicant’s residential development.  The Corporation makes no representation or warranty that the loan will comply with the rules and regulations of the TDHCA.

A.  Application of Rules.  These Rules apply to specific multifamily rental residential developments for which an applicant or a Local Political Subdivision on behalf of an applicant requests the Corporation to make a loan to obtain tax credits in connection with such development

B.  Waiver of Rules.  Specific provisions of these Rules may be waived by a majority vote of the Board of Directors of the Corporation

C.  Amendment of Rules.  These Rules may be amended, revised, repealed or otherwise altered by a majority of the Board of Directors of the Corporation at any time and from time to time and with or without notice.

Article II.  General Requirements

The Corporation will not make a loan of funds to any applicant in connection with any financing for any residential development that has not satisfied, as determined by the Corporation, general requirements set forth in these Rules.  The Corporation reserves the right to impose additional specific requirements with respect to any particular residential development.  Compliance with these Rules does not and shall not be deemed to constitute a commitment or assurance that financing will be provided by the Corporation.  In completing and executing the Application for Loan attached hereto, the applicant hereby represents and warrants or covenants with respect to the residential development for which tax credits are being obtained as set forth herein.

Article III.  Filing and Procedural Requirements

A.  Preliminary Applications.  Any person desiring that the Corporation make a loan to facilitate obtaining tax credits in connection with the financing or refinancing for a residential development shall complete and file with the Corporation an Application for Loan attached to these Rules as Exhibit A.  Such Application for Loan shall be accompanied by:  (1) a completed copy of the Residential Development Financing Questionnaire attached to these Rules as Exhibit B; (2) the nonrefundable Loan Commitment Fee and Initial Legal Review Fee described in Article IV of these Rules; (3) an executed copy of the Indemnity Agreement attached to these Rules as Exhibit C; and (4) a copy of the Pre-application or Intent to Request submitted to the Texas Department of Housing and Community Affairs in accordance with the applicable Qualified Allocation Plan (as hereinafter defined).  The original application and all attachments shall be filed with the Corporation by mailing or delivery to:

Executive Director
Capital Area Housing Finance Corporation
4101 Parkstone Heights Drive
Suite 280
Austin, Texas  78746

A separate Application for Loan shall be filed for each residential development.  The Corporation will consider such completed Application for Loan on scheduled meeting dates.  Applications will be considered administratively complete when all required items are received by the Corporation. The requirements described herein are separate and apart from the requirements of the Corporation to obtaining multifamily bond financing for qualified residential rental projects.  In order to apply for such financing from the Corporation a different application must be completed and submitted to the Corporation.

B.  Preliminary Approval.  If the Corporation finds that the Application is correct and complete, the Corporation shall submit to the applicant a term sheet containing the significant terms and conditions of the loan.  After written approval of the term sheet by the Corporation and the applicant, the Corporation will consider such completed Application for Loan and the adoption of resolution approving the loan based on the terms and conditions contained in the term sheet on the next scheduled meeting date for which proper notice can be given.  The Corporation will notify the applicant’s contact of the date, time and place of the meeting.  If requested by the Corporation, a representative of the applicant may be required to appear at the Board of Directors’ meeting to answer questions about the project and the loan.  The Corporation’s adoption of a resolution does not obligate the Corporation to make the loan.  No person may represent, directly or indirectly, or to anyone, except the TDHCA, that the Corporation has agreed to make a loan to the applicant. 

C.  Additional Filing Requirements.  Following the adoption by the Corporation of a resolution declaring the Corporation’s intent to make a loan to the applicant, the applicant shall file with the Corporation such additional materials as the Corporation may reasonably request in writing.

D.  Preparation of Documents.  Upon approval of the Application for Loan and the adoption of the resolution authorizing the Corporation to make the loan to the applicant, the Corporation’s legal counsel shall prepare and deliver to the applicant the loan documentation based on the terms and conditions contained in the term sheet approved by the applicant and the Corporation.  On or prior to the closing of the loan, the applicant shall deliver fully executed original signature pages to all loan documentation.  In connection with loans issued for (or on behalf of) developments outside the Program Area, the applicant will also be required to provide the Corporation with an Interlocal Agreement in the form of Exhibit D hereto, executed by a Local Political Subdivision acceptable to the Corporation.  Following execution of the loan documentation, the Corporation, the applicant, and other parties involved in the transaction shall proceed to close the loan at a time and place to be determined by the Corporation.

E.  Rejection of Application.  The Corporation may reject the Application for Loan in its sole discretion for any reason, including but not limited to, if it is not received by the Corporation on or before the application deadline; if it is not accompanied by the Loan Commitment Fee or Legal Review Fee or if the application is incomplete and the applicant fails to complete it within a reasonable time after the Corporation’s request for completion.

F.  Expiration of Application.  An Application for Loan expires if it is withdrawn by the applicant; if the Corporation does not adopt a resolution within 90 days from the date of the application; or if the applicant does not close on the financing for its project by the date specified in the application (unless such date is extended and agreed to by the Corporation in its sole discretion).  The Corporation’s action taken on an Application for Loan becomes void when such Application for Loan expires.

G.  Sale of Residential Developments.  Any loan made by the Corporation to the applicant is not assumable and must be prepaid in full upon transfer of the residential development.

Article IV.  Fees and Costs

A.  Loan Commitment Fee.  The non-refundable Loan Commitment Fee is payable by check in the amount of $4,000, payable to the Corporation at the time of submission of the request for a loan.  The loan request will not be processed until such fee is paid.  A separate Loan Commitment Fee must be paid for each loan and there will not be any reduction in the Loan Commitment Fee for multiple projects.

B.  Initial Legal Review Fee.  The Initial Legal Review Fee is payable by check in the amount of $1,500, payable to Chapman and Cutler LLP, and is due at the time of submission of the request for a loan.  A separate Initial Legal Review Fee must be paid for each loan and there will not be any reduction in the Loan Commitment Fee for multiple projects.

C.  Closing Fees and Costs.  The applicant is responsible for any of the Corporation’s legal counsel’s fees in the amount of $7,500 per loan and expenses incurred in connection with preparing the loan documentation.  These fees and costs are payable at closing and are separate and apart from the Loan Commitment Fee, the Initial Legal Review Fee and the Loan Origination Fee as described herein.  A separate legal counsel fee must be paid for each loan and there will not be any reduction in the Loan Commitment Fee for multiple projects.

D.  Collateral for the Loans.  The loan shall be secured and collateralized by a Demand Deposit Account placed with Pioneer Bank, SSB in the amount equal to the loan amount from the Corporation plus six months of interest.  This amount will be non-interest bearing and shall remain in place for the duration of the loan. 

E.  Loan Origination Fee.  The Loan Origination Fee will equal 5.25% of the principal amount of the loan payable to the Corporation at the time of the Loan closing.

F.  Loan Term and Interest Rate.  The term of the loan shall be 12 months or the placed in service date, whichever is later, with an interest rate equal to the Applicable Federal Rate (AFR) in effect at the time of the loan closing.

The applicant understands that neither the Corporation nor any person representing the Corporation has made any representation to it, and accepts no responsibility with respect to whether the Loan qualifies the applicant for the award of points by the Texas Department of Housing and Community Affairs pursuant in the applicable Housing Tax Credit Program Qualified Allocation Plan and Rules (the “Qualified Allocation Plan”).