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FAQ's
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To help you get started with Multifamily Programs, read these commonly asked questions...
Who can apply for multifamily finance programs? What types of entities? Can individuals apply?
Not-for-profit, for-profit entities and individuals are eligible to apply for multifamily finance programs to develop affordable rental housing. The applicant must be a single asset entity; the only interest in real estate to which the borrower can hold title must be the subject development. In all cases, IHDA will assess all applicants as to their mortgagability under IHDA’s programs.
How would I know which programs to apply for?
Different developments are appropriate for different financing. Typically, smaller projects or with less experienced owners apply for Trust Fund loans. IHDA staff can also make recommendations regarding the most appropriate funding source.
Are certain programs specified at different areas of the state, populations, or types of Sponsors?
All multifamily programs are open to all areas of the state and to all types of sponsors.
Are there areas that need developments more than others?
It is important for a developer to fully understand the rental housing market and need in the proposed community. A market research analyst can be useful to assess these needs. Refer to Illinois’ Tax Credit Qualified Allocation Plan and Consolidated Plan, as well as the Illinois Annual Comprehensive Housing Plan compiled by the Governor’s Housing Task Force for an indication of housing funding priorities. All these documents are available on the IHDA downloads page.
What resources, programs, “breaks” are available to non-profit organizations?
Lower application fees and additional points under Illinois’ Tax Credit Qualified Allocation Plan are available to non-profits. Certain funding sources also have set aside funds for non-profit developers.
How much does it cost to get a deal done?
Transaction costs vary depending on the size of the development (# of units), type of development, and sources of financing. See the Development Budget sheet of the IHDA Multifamily Common Application for an itemization of costs to be considered.
What is the timeline:
·from project conception to IHDA involvement? (At what point in the development process can I submit an application to IHDA?)
Check the IHDA Multifamily Common Application Checklist for those items which must be part of an application for funding to IHDA. This will give you an indication of when an application is ready to be sent to IHDA.
·and then IHDA processing?
Generally 2 to 3 months from initial application to a preliminary determination of feasibility. The timeframe from this point to final IHDA Loan Committee and Board of Director approval is largely dependent on the applicant’s ability to provide IHDA with the requisite materials needed to complete underwriting and processing.
·and then board approval to lease up?
Projects typically initially close within 3 months of Board approval. Construction may take 12 to 18 months depending on the size of the development, at which point lease up may start.
If I see a building I want to work on, what is the first thing to do in the process?
Determine what you want to do with the building, determine the costs and income of the project, and determine what type of financing is needed to make the project feasible.
What is the definition of “multifamily programs” and the difference to “single family programs”?
Multifamily typically denotes 5 or more units at one location with no owner-occupied units. Single family typically consists of single-family homes and 2, 3, and 4-flats with at least one unit occupied by the owner.
What other local, state or federal agencies can assist in affordable housing development?
HUD, Illinois Department of Commerce and Economic Opportunity, Federal Home Loan Bank, municipal and county community development departments.
What is a standard interest rate on an IHDA Multifamily loan?
Interest rates depend on the source of financing. Interest rates are determined on a case by case basis depending on what the development can support, but can be as low as 1% interest for Trust Fund or HOME loans if needed. Interest rates for credit enhance mortgages vary with the taxable and tax exempt interest rate market.
Can I get a grant to rehabilitate a development?
Not typically. IHDA funds are primarily given out as affordable loans for multifamily financing through IHDA.
What percentage of the development must be dedicated to “affordable housing” to be acceptable to IHDA?
The percentage of required affordable units varies by funding source and amount of IHDA funding. See the IHDA website at www.ihda.org for more details.
How much of my development team must be in place before I can come to IHDA?
Part of the financing review includes the capability of the development team. Therefore, the entire development team must be in place before making an application to IHDA. See the Team sheet of the IHDA Multifamily Common Application for an indication of development team members.
Do we have to put in our own money in order to develop a multi-unit complex or can IHDA cover all the costs?
Owners are expected to contribute equity in some fashion to the development. The amount depends on the dynamics and financial feasibility of the individual development.
Can IHDA help us pay for pre-development/consultant/architectural costs?
If the project is ultimately financed by IHDA, most predevelopment costs will be included as part of the end financing, however IHDA cannot pay for the costs as they are incurred prior to final commitment by IHDA and initial closing.
What levels of federal and state codes for construction do we need to follow?
Local building codes (BOCA), the federal Fair Housing Act, Illinois Accessibility Code, federal Americans with Disabilities Act, Section 504 of the 1973 Rehabilitation Act, and IHDA’s construction standards must be followed.
Can IHDA recommend a good consultant to help us structure our deal?
IHDA does not provide a list of recommended consultants. We suggest you talk to other housing developers for their recommendations.
What is a good size development (# of units) in IHDA’s eyes?
The number of appropriate units for a development depends on many factors including area demand for housing, zoning, owner and development team ability and capacity, and financial feasibility. There is no set number or range of appropriate units.
Are there taxes on affordable units? Public housing units? What happens to project income and taxes in a mixed-income residence?
Real estate taxes are applicable to affordable developments, though some developments may be eligible for real estate tax reductions. Contact the county assessor’s office in the locality in which the project is located for more information regarding affordable housing tax assessments and tax abatement.
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