Journal of Tax Credits May 2014

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Also in this Issue

  • Johnson-Crapo Housing Finance Reform Bill Could Significantly Increase Affordable Housing Resources

  • LIHTC Working Group Update May 2014

  • LIHTCs Bring Opportunity For Home Ownership to Roosevelt, Utah

  • Focus On: Trenton, N.J.

  • HUD Funding, 4 Percent LIHTCs Revive Affordable Housing in Denver, Colo.

  • Texas Attorney General Clarifies HTC Certification Issues

  • NMTCs Finance Biomass Facility on Former Michigan Air Force Base

  • Houston Krill Factory Catches $28 Million in NMTCs

  • NMTC Qualified Equity Investment Report

  • The Current: Dangers of Double-Dipping: Section 1603 Grants and Tax Credits Don’t Mix

  • Renewable Energy Power Awards


May 2014, Volume V, Issue V Published By Novogradac & Company LLP


AFFORDABLE HOUSING INDUSTRY BRIEFS

On March 27, Rep. Maxine Waters, D-Calif., Ranking Member of the Financial Services Committee, released the Housing Opportunities Move the Economy (HOME) Forward Act of 2014. The legislation would create a secondary mortgage market reform and end Fannie Mae and Freddie Mac. The act would replace Fannie Mae and Freddie Mac by establishing a new lender-owned mortgage securities cooperative. Fannie Mae and Freddie Mac will be faded out over a five-year period. The legislation text and topline summary are available at www.novoco.com/hottopics.

The United States District Court for the Northern District of Texas March 24, released a ruling on an appeal regarding The Inclusive Communities Project v. Texas Department of Housing and Community Affairs. The primary issue on appeal was the correct legal standard to be applied in disparate impact claims under the Fair Housing Act. The court reversed and remanded the original ruling, after adopting the standard in U.S. Department of Housing and Urban Development (HUD) regulations regarding the burdens of proof in disparate impact housing discrimination cases and remand to the district court for application of this standard in the first instance. Originally, the Inclusive Communities Project (ICP) filed suit claiming that the distribution of LIHTCs in Dallas were disproportionate, and ICP wanted a partial summary judgment to establish standing and a prima facie case of discrimination. The court ruled that ICP established that its clients are of a protected class and that Texas Department of Housing and Community Affairs disproportionately approved the tax credits. The new and original rulings are at www.taxcredithousing.com.

On April 7, the U.S. Department of Agriculture’s Rural Housing Service (RHS) released a notice announcing that teleconference and/or web conference meetings for Section 538 Guaranteed Rural Rental Housing program 2014 Industry Forums are now taking place. The first meeting was held in March, with the remaining meetings scheduled for July and November. The notice lists the objectives for the meetings, which include enhancing the effectiveness of the Section 538 program, updating industry participants and RHS staff on developments involved in the program, enhancing RHS’ awareness of the market and other factors impacting the program. Discussion topics include updates on program activities, perspectives on the current state of debt financing and its impact on the program, enhancing the use of Section 538 financing with the transfer and/or preservation of Section 515 developments and the impact of LIHTC program changes on Section 538 financing. Registered parties will receive the dates and times for these meetings via email. The notice is available at www.taxcredithousing.com.

In late March, the National Low Income Housing Coalition released the report, “Out of Reach 2014,” which determined that in no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at the fair market rent. The report studied the gap between wages and rents across the country, finding that an individual needs to earn $18.92 an hour, also known as the “housing wage,” to afford a two-bedroom rental unit at fair market rent. This figure is more than two-and-a-half times the federal minimum wage and is 52 percent higher than it was in 2000. The report also found that one in every four renter households are extremely low-income.

On March 18, the U.S. Environmental Protection Agency (EPA) announced a plan to develop an energy star score for existing multifamily properties. The 1 to 100 score will allow owners and managers to compare the energy performance of their multifamily housing properties against similar properties across the country. It will also provide information to help track improvements. The score will be based on the results of analyses of national survey data collected by Fannie Mae. Jeffery Hayward, senior vice president and head of Fannie Mae’s multifamily mortgage business said in press release that the energy star score will help the industry identify and implement energy-efficient methodologies that will improve property performance and conditions of multifamily properties. The managing tool is expected to be available in the fall.

BRIDGE Housing Corporation and affiliates BRIDGE Property Management Company and Bay Area Senior Services Inc. relocated March 31. The new headquarters is located on 600 California Street, Suite 900, San Francisco, Calif., 94108. Direct-dial phone numbers and email addresses remain the same.




STATE BRIEFS

Georgia H.B. 954 was sent to the governor on March 26. The bill amends the Official Code of Georgia Annotated to change the definition of fair market value of property. The bill requires tax assessors to consider rent restrictions on LIHTC, federal and state subsidized affordable housing developments for assessment purposes. The criteria a tax assessor shall apply to determine the fair market value of real property would include the existing zoning of the property, existing covenants or restrictions, bank sales, decreased value of the property and rent limitations. The bill is available at www.taxcredithousing.com.

On Feb. 12, the California Housing Partnership Corporation (CHPC) released “How California’s Housing Market Is Failing to Meet the Needs of Low-Income Families.” The report provides recommendations to state leaders about the lack of affordable housing, particularly the rental housing market. The report found that investment in affordable housing has been reduced by more than $1.5 billion annually, creating a deficit of more than 950,000 affordable housing units. Recommendations in the report included passing the Homes and Jobs Act to provide $500 million per year for the production and preservation of homes affordable to low- and moderate-income households; making a general fund investment in the state’s existing rental housing production program to provide housing for those at risk of homelessness; and giving local governments the tools and ability to replace lost funding and to meet their S.B. 375 obligations to create and reserve affordable homes.

Connecticut Gov. Dannel P, Malloy on March 27 released the report, “State-Sponsored Housing Portfolio Capital Plan,” outlines affordable housing goals and his intended use for allocating $300 million in funding, and for leveraging private capital to create long-term stability. The $300 million will go to the revitalization of more than 340 properties with more than 13,800 units. Revitalization of the units will occur during the next 10 years. The units are part of the State-Sponsored Housing Portfolio, state-funded affordable housing that includes rental housing for families, the elderly and the disabled. The report will be used by the Connecticut Housing Finance Authority and the Connecticut Department of Housing to help direct affordable housing development efforts. It provides recommendations on the work needed to make the properties sustainable in the long-term, timelines for capital investments at each property throughout the 10-year period and training in project management, technical assistance, compliance with regulatory requirements. The type of revitalization work the report recommends include upgrades for kitchens and bathrooms, roof replacement and improvement to windows, doors, lighting, and sites overall. The report is available at www.chfa.org.

In early April, the Nevada Housing Division (NHD) released its annual multifamily survey, “Taking Stock: Nevada’s 2013 Affordable Apartment Survey.” In the survey, NHD evaluates the housing program’s effectiveness and then determines where to direct funding for affordable housing throughout the state. Data that the survey analyzed included rent pricing, vacancies, housing cost burden and veterans housing. The report found that since the program’s inception, the LIHTC has been used to build or renovate more than 10,000 units. The survey also found that Nevada has a higher than average number of LIHTC units per household compared to the national average; senior housing had lower vacancy rates than multifamily housing; an estimated 1,463 veteran households live in LIHTC units; and the Nevada rate of rent burden for the group studied exceeds the national average. The report is available at www.taxcredithousing.com.

The Kentucky Housing Corporation (KHC) announced on April 3 new funding available through the Olmstead Housing Initiative Pilot program. KHC will be partnering with the Cabinet for Health and Family Services (CHFS) to provide $1.2 million of funding for Olmstead households. The funding will be allocated through a competitive application round. Eligible applicants for the funds are nonprofit service agencies with housing experience, or for-profit housing agencies who form a single-asset partnership with an experienced nonprofit service agency. There are more than 600 qualifying individuals on the waitlist for rental housing units. All proposed properties must be new construction developments with no more than 6 units consisting of a duplex and/or a four-plex. The online application system opened April 14, and applications are due June 16. KHC expects the award(s) to be announced in July. Olmstead households are defined as households having a member at least 18 years of age who has been diagnosed with a severe mental illness and is in an institution, or has a history of institutionalization and is capable of living independently in communities of their choosing, if appropriate supportive services are made available.

On March 20, Raymond A. Skinner, secretary of the Maryland Department of Housing and Community Development (DHCD) announced that the DHCD will award more than $19.6 million in rental housing funds, and nearly $17 million in federal LIHTCs for 14 affordable rental housing properties. A total of 971 rental housing units will be created or preserved throughout the state. In addition, more than 2,600 jobs will be created, and more than $230 million will be put into the local economy. The units will be available for working families, senior citizens and individuals with special needs in Baltimore City and nine counties. Properties receiving awards in fall 2013 round include Bon Secours-Gibbons Apartments, Mulberry at Park, Sinclair Way, Riverwoods at Tollgate, City Arts II, Cannery Village and Booth Street Apartments, Phase I.

On March 20, the Ohio Housing Fnance Agency (OHFA) board awarded more than $6 million for the development of affordable housing in Franklin, Hamilton, Jefferson and Lucas counties. OHFA awarded more than $1.3 million through the Housing Development Assistance program (HDAP) and $1 million through the Housing Development Loan (HDL) program and $1 million through the Recycled-Tax Credit Assistance program (R-TCAP). Commons at Garden Lake in Toledo was awarded $600,000 in HDAP and $1 million in R-TCAP for the construction of a 75-unit permanent supportive housing community for homeless and disabled veterans. Lighthouse Haven in Steubenville was awarded $750,000 in HDAP for the new construction of a permanent supportive housing community. Losantiville Apartments in Cincinnati was awarded $1 million in HDL for the acquisition and rehabilitation of 14 historic buildings for families located in. OHFA also approved an award of more than $3.4 million through the Capital Funding to End Homelessness Initiative to the Van Buren Shelter in Columbus to help single adults experiencing homelessness for the first time.

The Iowa Finance Authority (IFA) board of directors announced March 12 the allocation of more than $82.4 million in federal LIHTCs and HOME program awards. The awards will go to the construction and preservation of 15 affordable rental properties that will produce 650 units in 13 counties. Properties are located in the counties of Black Hawk, Cass, Cerro Gordo, Clinton, Crawford, Jefferson, Linn, Mahaska, Marion, Poweshiek, Sioux, Washington and Woodbury. IFA awarded more than $7.6 million for the 2014 tax credit round, and the credits are allocated annually over a 10-year period. IFA had more than $7.7 million to allocate and remaining 2014 credits will be used to assist developments currently under construction that have sustained cost increases. IFA received 44 applications requesting more than $23.2 million in LIHTCs. LIHTC awards ranged from $182,346, to $800,000. In addition, IFA awarded more than $5.5 million in state HOME funds to six rental housing developments.

On March 14, the Missouri Housing Development Commission approved $137 million in state tax credits for 29 developments. Developments that received LIHTCs include the Bluff View Apartments, which received $11.4 million in state and federal credits over 10 years to develop a 40-unit senior housing complex in Festus; Gateway at 39th received credits to construct three four-plexes available for rent to seniors; eight properties in St. Louis County received credits, with the properties including a 53-unit complex for seniors in Pine Lawn in northern St. Louis County and a development with 35 apartments and town houses available to low-income families in St. Louis.




DEALMAKERS

On March 13, Oppenheimer Multifamily Housing & Healthcare Finance Inc. announced the financing package for the Wesley Village Retirement Community in Oklahoma City, Okla. The development was financed with a Federal Housing Administration (FHA) 221(d)(4) construction loan and with 4 percent tax-exempt bonds and federal LIHTCs. The property will function as a Section 8 housing development. This transaction is the first collaboration with Oppenheimer’s FHA group, Oppenheimer’s Public Finance group and Oklahoma City’s U.S. Department of Housing and Urban Development (HUD) office. The retirement community will offer independent living homes, independent living apartments, home nursing services, a health care center and a rehabilitation unit featuring a nursing/Medicare wing. Costs totaled more than $8 million.

The Red Cliff Chippewa Housing Authority (RCCHA), located in Bayfield, Wis., announced in March that it closed Red Cliff Rehab I. Investor RBC Capital Markets will provide about $5.2 million during construction. RCCHA also received $320,000 in affordable housing program grant funds from the Federal Home Loan Bank of Chicago. Total construction cost is $7.3 million. Travois worked with the Affordable Housing program grant applications and will oversee construction and aid in the renting process for qualified families. A mix of single-family and duplex units, Red Cliff Rehab I will include renovations of heating and air conditioning systems, plumbing and electrical systems, and kitchens. Three new community playgrounds will also be constructed, with construction expected to be complete by spring 2015.

On March 20, Centerline Capital Group announced it provided a $6.26 million Fannie Mae loan for the refinance of CaSienna Apartment Homes. The garden-style apartment complex, located in Orlando, Fla., will provide 160 one-, two- and three-bedroom units in 16 buildings. The property will also feature a newly constructed management office and clubhouse.

Boston Capital announced March 19 an investment in the construction of Riverwalk Apartments in Santa Cruz, Calif. The 21-unit development will be constructed with LIHTC equity. The property will comprise four one-bedroom, seven two-bedroom and 10 three-bedroom units available for families earning up to 60 percent of the area median income (AMI). Amenities will include a community building with office space, a kitchen and a computer area. Supportive services will also be available, including free classes for resume building, employment skills, computer skills and financial literacy. The developer is For the Future Housing Inc. Construction of Riverwalk Apartments is expected to produce $2.1 million in local salaries and create more than 32 new jobs.

EAH Housing and the City of Turlock, Calif., announced March 20 the grand opening of Avena Bella. Chase Community Development Banking, the Federal Home Loan Bank Affordable Housing Program and the California Tax Credit Allocation Committee also provided financing. Avena Bella has 80 multifamily affordable apartments in eight Mediterranean-themed buildings. Amenities include a community center, a community garden, a play area and a swimming pool. The property also has solar powered heating pumps for heating and cooling. EAH plans to build 61 additional units during a second phase of construction.

Legacy Senior Residences of Fort Collins held its grand opening March 20. The Colorado senior affordable-housing community received $13 million in LIHTC equity from UnitedHealth Group. U.S. Bank also provided a $7.6 million construction loan. Total construction cost was $14.7 million. The development, located on 1.97 acres, provides 72 units to residents aged 55 years old and older. Developed by Cornerstone Associates and the Fort Collins Housing Authority, the property offers 35 one-bedroom and 37 two-bedroom units. Amenities include a community room, a library, a fitness center and a craft room.

Boston Capital announced the closing of Boston Capital Corporate Tax Credit Fund XXXVIII March 25. The portfolio, which includes 10 developments for senior citizens and 33 properties for families, will produce 2,651 affordable housing units. The developments are located throughout 16 states. More than 1,800 jobs were created and it is anticipated that close to $141 million in local income will be generated. The fund has $235 million in equity.

On April 9, Boston Capital announced an investment in the construction of 409 Cumberland Avenue Apartments. The 57-unit development is available for families and is located in Portland, Maine. Construction will be funded with LIHTC equity and is expected to generate $5.8 million in local salaries. More than 87 jobs are also expected to be created. The property will comprise 21 studios, 32 one-bedroom and four two-bedroom units. Of these, 46 units will be available to families earning 60 percent or less of AMI and 11 will be market rate. Amenities include a multipurpose room, an instructional kitchen and a resident services office.





PEOPLE IN THE INDUSTRY

Kutak Rock LLP on March 21 announced that Ellen O’Brien, Mark Maichel and Melissa Bleser have joined the corporate practice group in its Denver, Colo. office. They will assist investors and syndicators in affordable housing transactions developed with federal and state tax credits. O’Brien represents real estate developers and investors in affordable housing developments. She works on structuring and syndicating affordable housing developments with tax-exempt bonds (TEBs), historic tax credits (HTCs), state credits and LIHTCs. She holds a law degree from Chicago-Kent College of Law. Maichel advises participants in LIHTC and HTC transactions, as well as renewable energy, and other state and federal tax credit projects. Maichel earned a law degree from the University of North Dakota. Bleser focuses on representing investors and syndicators in LIHTC, state tax credits and tax-exempt bond transactions. She structures transactions, negotiates deal terms, performs due diligence and drafts stock and asset purchase agreements. She holds a law degree from Washburn University.

On March 19, two new members were appointed to the Wyoming Community Development Authority (WCDA) board of directors by Gov. Matt Mead. George Parks and Kristin Lee will serve four-year terms. Parks was previously the executive director for the Wyoming Association of Municipalities from 1998 to January 2014. He also served on the Casper City Council from 1991 to 1998, and was Mayor of Casper in 1993. Lee is the director of legislative and regulatory affairs for CenturyLink, a communications company. Prior to her work at CenturyLink, Lee worked for the Attorney General’s Office and was appointed to the Wyoming Public Service Commission. She is a graduate of the University of Wyoming Law School.

On April 3, the Colorado Housing and Finance Authority (CHFA) announced Charles Knight has been appointed board chair for the 2014-2015 term. He began serving on CHFA’s board of directors in 2011. Knight is a founding partner of Venture Law Advisors LLC, a legal advisory firm representing Colorado and California companies involved in renewable energy development, financing and real estate. He can practice law in California, New York and Colorado. Knight holds an MBA and a J.D. from the University of California, Los Angeles.

Delaware Community Investment Corporation (DCIC), a Great Lakes Capital Fund (GLCF) company, announced April 3 that Susan Frank, formerly a director in Fannie Mae’s multifamily group, joined DCIC as vice president and managing director of business development. She will be involved in maximizing the opportunities presented by the merger between GLCF and DCIC in October 2013. Frank was with Fannie Mae for 12 years. Prior to that, she was executive director of Delaware’s State Housing Finance Agency for eight years. Frank was also a legislative adviser on Capitol Hill.

On April 1, McCormack Baron Salazar (MBS), a U.S. real estate development firm, announced that Louis Bernardy will be vice president and director of development for Texas. Bernardy, who is based in MBS’s San Antonio office, will be project executive for the company’s development portfolio in Texas. He originally joined the firm in 2007 in the West Coast office and is currently MBS’s project manager for the East Side Choice Neighborhood Initiative in San Antonio, an inter-related series of program and project strategies that will redefine this neighborhood from a distressed area into a healthy neighborhood, which includes the development of 417 new mixed-income homes in a mixed-use community. Bernardy will continue his role as project manager for the initiative. Previously, Bernardy was the president and chief executive officer of Los Angeles Housing Partnership (LAHP), a regional non-profit housing development corporation.

Red Mortgage Capital LLC announced April 3 that Benjamin M. Frank will be director of senior housing and health care originations. He will be based in Orange County, Calif., and will be involved in growing the senior housing business line and balance sheet lending. He will also assist with growing RED’s Federal Housing Administration, Fannie Mae and proprietary lending. Previously, he was an executive vice president and chief lending officer for Sunwest Bank and a relationship manager for Commercewest Bank. Frank is a graduate of Chapman University, The George L. Argyros School of Business and Economics.

On March 28, BRIDGE Housing announced the promotion of Ann Silverberg as executive vice president of the company, and Emily Weinstein to BRIDGE Housing’s community development director of Potrero Annex-Terrace. Silverberg is based in San Francisco, Calif., and oversees the company’s real estate development activity in Northern California. She also focuses on rehabilitation work and capital markets debt and equity placement. Prior to her promotion, she was senior vice president and worked on portfolio management and capital markets. Silverberg originally joined BRIDGE in 1990. Silverberg serves on the board of trustees and the investment committee of the National Affordable Housing Trust and is a member of the investment committee for the Housing Partnership Equity Trust. She earned a master’s degree in city and regional planning from the University of California, Berkeley. Weinstein oversees Rebuild Potrero, a revitalization plan that will produce retail areas, parks, community services and more than 1,400 homes on San Francisco’s Potrero Hill.

BOND

Centerline Capital Group announced March 18 that it provided financing for the acquisition and renovation of Woodlake Apartments. Woodlake Apartments, located in West Palm Beach, Fla., is an affordable multifamily property. Centerline provided a $15.2 million fixed-rate Fannie Mae Moderate Rehabilitation loan to use in conjunction with equity from 4 percent low-income housing tax credits. A state apartment incentive loan from Florida Housing Finance Corporation (FHFC) in the amount of $2.35 million was also provided. Financing included tax-exempt bonds in the amount of $13.5 million, issued by the Housing Finance Agency of Palm Beach County, and PNC Bank provided equity in the amount of $8.5 million in LIHTC equity. Upgrades to the building exteriors, unit interiors and the community building will preserve and maintain the property. Woodlake Apartments comprises 14 two-story buildings with 224 units. Amenities include a community pool, a tennis court, a playground, a volleyball court and a newly remodeled fitness center.