As a former Construction Specialist for the Colorado Housing and Finance Authority, I analyzed hundreds of LIHTC applications’ cost estimates and development budgets. Each deal had intricacies that prompted CHFA to issue a request for clarification. To avoid this additional step, applicants should consider including a summary description. Following are just three examples of scenarios that could result in a clarification request, where including a brief explanation at the start ensures a complete application.
1. Design Fees
CHFA reviews design fees for abnormal variances and to ensure that all design disciplines are budgeted. Applicants often provide a single line item for architecture, leaving other design fees blank. For the reviewer, determining whether all other standard design fees, like civil engineering, are included is challenging. In cases where an architect provides a full-service fee for all design, I recommend addressing this in the summary to confirm that all design fees are included, as well as discussing specific challenges that increase design cost.
2. Site Conditions
If your project has difficult site conditions, describing your strategy to mitigate site work risk is critical. During review CHFA spreads cost estimates across the CSI Master Format Divisions and compares to in-house cost data for similar projects. Site work will always vary from project to project, but significant variances may draw attention. Explaining why site work costs are elevated will be helpful to the reviewer.
3. Green Construction Costs
Clearly identifying “green” construction costs can help justify their inclusion when weighed against limited tax credit availability. Projects with green improvements where the cost premium isn’t broken out from typical construction will likely have higher MEP costs. Using the green construction line item in the development budget template allows CHFA to evaluate typical construction costs and green costs separately, and understand how those costs contribute to eligible basis.
In summary, providing CHFA with additional information can help eliminate many clarification requests and strengthen the overall application.