This language is vague. NPH requests clearer standards in HCD has altered this section for clarity. regulation or guidelines. HCD has addressed this in the revised proposal, see the When the commercial space is master leased, many lenders response to MPH. understand there is no need to underwrite with any vacancy at all. HCD needs to address this. CE See above comment. See the response to NPH. NPH’s CHW General clarification needed, especially for the layout being See responses to above comments, particularly to MPH. The to and creditworthy revised proposal is intended to be less subjective. “highly suitable prospective tenants” “highly tenant”. §8310c MPH The TCAC operating expense is a satisfactory minimum as long HCD is not proposing to allow adjustments for bond / 4% projects as HCD adjusts for bond / 4% credit projects. In addition, the for the following reasons: (1) This adjustment makes most sense TCAC methodology should be reviewed and refined to ensure it for very large, less deeply targeted bond / 4% projects, which represents a minimum, not an average or median. often have lower operating expenses. However, bond / 4% HCD’s credit projects rarely fall into this category they tend to be much – more like 9% projects (where this adjustment is not TCAC’s allowed). (2) experience suggests that issues associated HCD’s with underestimating operating expenses are more common and more significant than those resulting from over-subsidization of projects that manage to operate well with low operating expenses. PH Allow a waiver of TCAC minimums. See response to similar MHP comment above. NPH Delete this section incorporating the TCAC minimum operating See response to similar MHP comment above. HCD perceives expense because TCAC minimums have increased in recent the risk associated with under-estimating operating expenses to years. Also, TCAC allows exceptions, which the UMRs do not. outweigh the benefits to be gained from being less conservative in As an alternative, HCD should underwrite using comps provided this area. by applicant and its own portfolio. CE See above comment. See response to NPH comment. NPH’s
This language is vague. NPH requests clearer standards in regulation or guidelines. When the commercial space is master leased, many lenders understand there is no need to underwrite with any vacancy at all. HCD needs to address this. HCD has altered this section for clarity. HCD has addressed this in the revised proposal, see the response to MPH. CE See NPH’s above comment. See the response to NPH. CHW General clarification needed, especially for the layout being “highly suitable to prospective tenants” and “highly creditworthy tenant”. See responses to above comments, particularly to MPH. The revised proposal is intended to be less subjective. §8310c MPH The TCAC operating expense is a satisfactory minimum as long as HCD adjusts for bond / 4% credit projects. In addition, the TCAC methodology should be reviewed and refined to ensure it represents a minimum, not an average or median. HCD is not proposing to allow adjustments for bond / 4% projects for the following reasons: (1) This adjustment makes most sense for very large, less deeply targeted bond / 4% projects, which often have lower operating expenses. However, HCD’s bond / 4% credit projects rarely fall into this category – they tend to be much more like TCAC’s 9% projects (where this adjustment is not allowed). (2) HCD’s experience suggests that issues associated with underestimating operating expenses are more common and more significant than those resulting from over-subsidization of projects that manage to operate well with low operating expenses. PH Allow a waiver of TCAC minimums. See response to similar MHP comment above. NPH Delete this section incorporating the TCAC minimum operating expense because TCAC minimums have increased in recent years. Also, TCAC allows exceptions, which the UMRs do not. As an alternative, HCD should underwrite using comps provided by applicant and its own portfolio. See response to similar MHP comment above. HCD perceives the risk associated with under-estimating operating expenses to outweigh the benefits to be gained from being less conservative in this area. CE See NPH’s above comment. See response to NPH comment.