MULTI-FAMILY PROJECT BOND FINANCING PROGRAM
Overview
The Housing Division is the designated issuer of tax exempt housing revenue bonds in Nevada. Bond financing for affordable housing projects is a method of financing in which tax exempt and taxable mortgage revenue bonds are utilized to fund permanent mortgages for affordable housing projects.
Bond financing requires both regulatory approvals as well as outside credit enhancement. The benefit of bond financing,for an affordable housing project, is the lower cost of capital versus conventional financing methods. Additionally, an eligible project may be entitled to non-competitive 4% (approximate) tax credits for the qualifying projects.
Multi Family Bond Financing Program Process
The bond financing program for multifamily projects was created under Nevada Revised Statutes 319 and is designed to provide a method for financing affordable housing projects.
Bond financing for an affordable housing project begins at the local government level. All bond financing applicants must obtain local government endorsement (via council resolution) of their project prior to applying to the State. Additionally, all bond financed projects are required to obtain 50% or more of the needed bond issuance authority from the local government. Each local government has its own methods and time frames for allocation of private bond authority. You should check with the local city and county governments, where your planned projects will be located, to obtain details.
Once local governmental endorsement and transfer of 50% or more of the needed bonding authority have been obtained, project sponsors can apply to the Housing Division. State law requires credit enhancement on bond financed projects and developers are advised to get their credit enhancement (must be Aa/AA or Aaa/AAA long term rating) firmed up simultaneously with their application to the Housing Division. See the List of Credit Enhancers who have completed bond financing with the Housing Division.
Upon completion of the application review and underwriting process, successful applicants will be required to provide both a binding letter of commitment, from an approved credit enhancer, as well as a deposit on costs of issuance for completing the bond financing. The deposit will be applied towards the costs of legal and tax counsel review, bond rating and Official Statement preparation. In the event that the legal and tax review uncover insurmountable legal problems, which the developer is unable to resolve, any unexpended portion of the deposit will be refunded to the applicant.
Following completion of the underwriting, legal, and tax review, approved applications will be forwarded to the State Director of Business and Industry's Ad Hoc Private Activity Bond Authority Allocation Committee. If unused bond authority is available, the Committee will be asked to transfer both the initial 50% of bonding authority from the local government as well as the remaining amount needed to complete the financing. If unused Bond Authority is available and approved, the Housing Division's "Findings of Facts" are forwarded to the State Board of Finance, which must approve all debt issuances for the Housing Division.