The underwriting criteria for development are as follows:

• Rents: must be achievable in the market place
• Operating Expenses: generally between $2,900–$3,900 per unit
• Vacancy rate: must be related to market comparables
• Debt Ratio: must be no less than 1.15
• Development Budget: must verify construction numbers with construction contract
• Reserves: must include construction contingency, replacement, and operating (3–12 months debt service + operating expenses)
• New Construction: replacement reserves; Senior Housing—$300/unit; Family Housing—$350/unit
• Acquisition/Rehabilitation: requires capital needs assessment (reserve requirements may be higher)
• Development Team: must have experience in affordable housing
• Financial Capacity: for both developer and contractor

Standard Guarantees include:

• Construction completion and Operating Deficit 
• Tax Credit Adjuster/Recapture
• Payment of developer fees
• Right to recapture repurchase
• Indemnification

Financing Requirements:

• Permanent Loan with minimum term of 18 years
• Fixed rate (or an interest rate cap for Variable rate loans)
• Non-recourse (no guarantee back to owner or general partner)

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