Low-Income Housing Tax Credits News Briefs - April 2017

Monday, April 3, 2017

LIHTC Industry

Sen. Maria Cantwell, D-Wash., Orrin Hatch, R-Utah, and 11 other U.S. senators introduced March 7 the Affordable Housing Credit Improvement Act of 2017. The legislation would include a 50 percent increase in the annual LIHTC allocation, establish a minimum 4 percent credit rate, allow income-averaging, allow states to grant a 30 percent basis boost if needed for bond-financed developments and several other provisions, including renaming the LIHTC as the “Affordable Housing Tax Credit.” The legislation was expected to be introduced in the House of Representatives. Cantwell’s office also released a report, “Meeting the Challenges of the Growing Affordable Housing Crisis,” which highlighted the impact on affordable housing of the record increase of 9 million renters in the past decade, the relatively low rate of rental housing construction, the removal of 13 percent of affordable housing homes since 2001 and stagnant wages.

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The Internal Revenue Service published Notice 2017-19 Feb. 27, listing its 2017 calendar-year resident population figures. The figures are used to determine the 2017 LIHTC ceiling for states, as well as the tax-exempt private activity bond caps. Under Rev. Proc. 2016-55, each state’s LIHTC ceiling for 2017 is the greater of $2.35 multiplied by the state population or $2.71 million. Its tax-exempt bond volume cap will be the greater of $100 multiplied by the state population or $305,315,000.

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Reps. Keith Ellison, D-Minn., and Erik Paulsen, R-Minn., Feb. 16 introduced H.R. 1145 to allow homeless youths and veterans who are full-time students to qualify to live in LIHTC housing. A companion bill (S. 434) was introduced by Sens. Al Franken, D-Minn., and Rob Portman, R-Ohio. The bills would allow students who were homeless youths within seven years to live in a LIHTC unit. The same provision would extend to students who were homeless veterans within five years. H.R. 1145 was referred to the Ways and Means Committee, while S.434 was referred to the Finance Committee.

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Rep. Keith Ellison, D-Minn., introduced Feb. 7 the Common Sense Housing Investment Act of 2017, which would reduce the mortgage interest deduction to a flat 15 percent tax credit for the first $500,000 of debt and redirect the revenue to LIHTCs and other affordable housing programs. The current deduction would be gradually phased out and the revenue would also be directed to Section 8 rental assistance, the Public Housing Capital Fund and the Housing Trust Fund. The bill was assigned to the House Financial Services Committee. H.R. 948 is posted at www.taxcredithousing.com.

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The National Low Income Housing Coalition released its annual report, “The Gap: A Shortage of Affordable Homes,” March 2 on the availability of affordable rental homes for extremely low-income households. The NLIHC found that the nation has a shortage of 7.4 million affordable and available rental homes for extremely low-income renters–finding that there are just 35 such homes for every 100 extremely low-income renters. The report also concluded that 71 percent of extremely low-income renters spend more than half their income on rent and utilities. The NLIHC suggested improvements to the LIHTC, such as income-averaging, to encourage a greater mix of incomes in LIHTC properties. It also suggested a 50 percent basis boost for tax credit properties that set aside 20 percent of their units for extremely low-income renters. The report is available at www.taxcredithousing.com.

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The Office of the Comptroller of the Currency (OCC) released March 1 a list of Community Reinvestment Act (CRA) performance evaluations that became public in February. Of the 17 evaluations, one was outstanding, 15 were satisfactory and one was rated as needing to improve. The list includes national banks, federal savings associations and insured federal branches of foreign banks that received ratings.

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The OCC March 7 released its schedule of CRA evaluations for the second quarter of 2017. A total of 87 banks and savings associations in 30 states will be evaluated and the OCC seeks comments on those scheduled to be evaluated under the CRA.

LIHTC State

Legislation was introduced Feb. 20 to establish a Minnesota state low-income housing tax credit (LIHTC). SF1181 and HF1249 were each introduced by bipartisan groups of legislators to establish a state LIHTC with a cap of $7 million per year. The credit would begin in 2017 and sunset in 2022 and credits would be allocated to developments that are eligible for the federal LIHTC, but not feasible without a credit. The state LIHTC would be worth one-sixth of the allowable federal credit. SF1181 is posted at www.taxcredithousing.com.

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The Indiana Housing and Community Development Authority Feb. 22 awarded nearly $14 million in LIHTCs and $6 million in additional funding to 16 multifamily developments throughout the state. The IHCDA says the funding will support more than 700 housing units statewide. Indiana Lt. Gov. Suzanne Crouch, chairwoman of the IHCDA board of directors, highlighted the fact that the 16 developments are located in 12 counties throughout the state. 

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A Texas state legislator introduced a bill Feb. 14 that would require developers of LIHTC properties in the state to “conspicuously identify the development as ‘low-income government-subsidized housing’” in communications and to notify all neighborhood groups within 5 miles of a proposed development 90 days before submitting a LIHTC allocation application. Rep. Valoree Swanson’s HB 1792 would require the government to consider negative opinions of neighborhood groups and would require an independent study of a development’s anticipated effects on schools, crime rates, governmental revenue and other factors.

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Oregon Housing and Community Services announced Feb. 10 that it will not issue a 2017 LIHTC and HOME notice of allocation authority (NOAA), in order to make $7.6 million in 9 percent LHTC awards to additional 2016 applicants and reserve some credits for gaps in 9 percent developments that already received 2016 awards. The agency cited uncertainty in the LIHTC market for its decision and stressed that the agency does not plan to fill the entirety of any funding gap.

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The Wisconsin Housing and Economic Development Authority (WHEDA) released Feb. 7 an updated version of its qualified allocation plan (QAP) frequently asked questions (FAQs) and guidance to include the 2017 LIHTC cycle. FAQs topics include the application process, scoring categories, credit amounts and set-asides. In addition, WHEDA stated that 2017 LIHTC applications should include a reduced LIHTC credit sale price of $0.85 to $0.94. The FAQs are available at www.taxcredithousing.com.

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The California Tax Credit Allocation Committee (CTCAC) received 76 applications for 9 percent LIHTCs and nine applications for 4 percent LIHTCs in time for its 2017 first-round deadline March 3. The CTCAC estimates that it will have slightly more than $76 million in LIHTCs to award in the two rounds for 2017. The deadline for the second round of LIHTCs is June 28.

LIHTC Dealmaker

Developers broke ground in late February on a $52.3 million affordable and supportive housing development in the Bronx, N.Y., that will include 126 apartments. The development will also offer a commercial kitchen for residents to learn about healthy meal preparation, on-site playground and exercise equipment, a community room with a computer lab, free Wi-Fi and on-site support services. Developer Community Access hopes to build at least 1,000 new units of supportive housing in the area. Funding for the development includes $22 million in low-income housing tax credit (LIHTC) equity from City Community Capital and others, as well as $15 million in capital from the New York State Office of Mental Health and $22 million in permanent financing from other state resources. The development is projected to open in 2018.

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Construction began in February on the renovation to turn the former Everts Middle School in Circleville, Ohio, into an affordable 49-apartment complex for seniors. The Ohio Capital Corporation for Housing is investing $9.1 million in LIHTCs, as well as $2.2 million in federal historic tax credits (HTCs) for the property, which was built in 1916 and was scheduled for demolition in 2016 before The Woda Group Inc. stepped in to propose the apartment complex. It will include a community garden, greenhouse, café and other on-site services.

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Conifer Realty announced Jan. 31 the opening of Conifer Village at Oakcrest, a senior apartment community in District Heights, Md. Conifer Village at Oakcrest provides 120 apartments to seniors 62 and older. Of those 120 apartments, seven are accessible for people with disabilities, and three apartments are for the hearing and visually impaired. There are one- and two-bedroom apartment homes, and each apartment includes energy-efficient appliances and a patio or balcony. Amenities include a fully equipped fitness room and a community room. Financing for the development included $9.2 million in LIHTC equity from Red Stone Equity Partners, a $12.1 million loan from Prudential, a $2.5 million loan from Maryland Department of Housing and Community Development and a $2.2 million loan from Prince George’s County’s HOME Program funds. Development costs totaled more than $26.5 million. 

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MassHousing announced plans Feb. 1 to repair Pequot Highlands, a 250-apartment complex in Salem, Mass. There are 41 one-, 150 two- and 59 three-bedroom apartments. Amenities include playgrounds, gazebos, a basketball court and a computer center. Improvements to the property will include a new façade with a modern, insulated and energy-efficient metal paneling and windows, which is expected to reduce the property’s energy costs by at least 10 percent. Renovations to the two high- and mid-rise buildings are expected to cost approximately $20 million. MassHousing provided $41.2 million tax-exempt construction and 40-year permanent financing. The Massachusetts Department of Housing and Community Development (DHCD) provided $14.3 million in LIHTC allocation. Of the 200 affordable apartments, 125 are supported by a Section 8 housing assistance payment contract. There are 49 apartments rented at market rates and one occupied by a property manager.

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The opening of Aurora St. Charles Senior Living in Aurora, Ill., was Jan. 31. Evergreen Real Estate transformed the former historic St. Charles Hospital into 60 affordable apartments, a community room, a fitness room and walking paths and community gardens for seniors. The apartments are a mix of studio, one- and two-bedroom floor plans. Financing for the rehabilitation included $10.7 million in LIHTCs from the Illinois Housing Development Authority (IHDA), as well as federal HTCs. In addition, approximately $3 million in funding was provided through the River Edge Redevelopment Zone program. Rehabilitation costs totaled $24 million. Work on this building is part of a larger redevelopment that began in December 2015. 

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On Feb. 3, New York community leaders held the ribbon-cutting for Van Cortlandt Green, an affordable senior independent living housing in the Bronx, N.Y. The 11-story building offers 85 studio apartments and one two-bedroom apartment for the superintendent. Eight apartments are subsidized through a 15-year project based Section 8 contract from New York State Homes and Community Renewal (NYSHCR). Amenities include a rooftop community room, adjoining terrace, laundry facilities and on-site parking. There is also 4,000 square feet of community facility space which is under lease to a social adult day care center, which is scheduled to open this spring. On-site services include physical activity and wellness programs, volunteer opportunities, social events and connections to community-based resources that offer meals, home care and case management. NYSHCR provided $13.2 million in mortgage financing in the form of short- and long-term tax exempt bonds through the New York State Housing Finance Agency (HFA) for the development. In addition, the HFA provided $8.9 million in subordinated mortgage subsidy funding. Enterprise Community Investment also provided a predevelopment loan and syndicated $11.4 million in LIHTC equity and brownfield tax credits. Development costs totaled $26.3 million.

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The Woda Group Inc. announced Feb. 9 the start of construction on Mallalieu Pointe, a mixed-use apartment complex in east Point, Ga. There will be 67 one-, two- and three-bedroom apartments, as well as ground-level retail and commercial space. Amenities will include a fitness room, outdoor terrace, computer center, bicycle storage and a community room. Apartments will be available to residents earning between 50 and 60 percent of area median income (AMI). The Georgia Department of Community Affairs (DCA) provided federal and state LIHTCs for construction, and RBC Capital Markets is investing $12.5 million in LIHTC equity. Bank of America provided the $10.7 million construction loan and the $525,000 permanent long-term debt loan. The $13.5 million development is being co-developed by The Woda Group Inc. and Parallel Housing. 

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On Feb. 9, Aegon Asset Management U.S. announced the closing of Garnet LIHTC Fund XLVIII LLC. The $105 million national LIHTC fund is the 51st fund sponsored by Aegon USA Realty Advisors LLC (AURA), which is a member company of Aegon Asset Management and the global investment management division of the Aegon Group. AURA expects the fund to include investments in 12 properties located in six states throughout the United States. This fund was one of six funds 2016 AURA funds, which brought the total to more than $700 million of capital raised.

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On Feb. 15, the National Affordable Housing Trust (NAHT) announced the closing of the first two properties in its Pay for Success Fund: Abbey Church Village in Dublin, Ohio, and Hillside View Apartments in Schenectady, N.Y. NAHT closed on both properties in partnership with Goldman Sachs Bank, National Church Residences and The Community Builders. Abbey Church Village is a 160 one-, two- and three-bedroom apartment community. In addition to rehabilitating existing apartments, there will be an expansion of the community space to accommodate a new resident services coordinator. Hillside View Apartments has 58 apartments in eight buildings. Development will include the adaptive reuse of two historic school buildings, the renovation of three duplex buildings and the new construction of one four-family residence and two six-family residences. Equity financing for the renovation of Abbey Church and the rehabilitation of Hillside is being provided by the Strong Families Fund (SFF). SFF uses a Pay for Success model to include resident service coordination as a part of the development plan. SFF is structured to stimulate and support innovative strategies to design, deliver and measure the impact of resident service coordination for families, with a long-term goal of identifying new and sustainable funding models and strategic partnerships to support the delivery of effective resident service coordination. 

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The office of New York Gov. Andrew Cuomo announced Feb. 14 that a former middle school in Auburn, N.Y., will be converted into a 59-apartment affordable housing development, thanks to LIHTCs, Housing Trust Fund assistance, federal and state HTCs and other financing. The West Middle School campus will include 20 homes for single adults with psychiatric disabilities who receive services form the state’s office of mental health. The school has been closed since 2012. Two Plus Four management and construction company will oversee the development, along with Lakewood Development. Residents will receive on-site services from Unity House of Cayuga County, which will move its offices into the building.

LIHTC People

The National Low-Income Housing Coalition announced March 8 that it would honor Amy S. Anthony and J. Ronald Terwilliger as 2017 Housing Leadership Awardees. Anthony is the founder and former CEO of Preservation of Affordable Housing (POAH) and will receive the 2017 Cushing Niles Dolbeare Lifetime Service Award for her years of dedication, service and innovative leadership. Terwilliger, founder of the J. Ronald Terwilliger Foundation for Housing America’s Families, will receive the 2017 Edward W. Brooke Housing Leadership Award for his contributions to elevating the national discussion on recalibrating federal housing policy. Both will be honored April 4 in Washington, D.C.

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Moises Loza will retire as executive director of the Housing Assistance Council (HAC), the organization announced Feb. 24. Loza has served as the HAC executive director since 1989, acting as a powerful voice on behalf of affordable housing in rural America. His career at the organization ran from 1973 to 1978, then from 1981 until now. The HAC board of directors established a search committee to replace Loza and he said he will remain at HAC through the process. 

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In mid-February, Dominium announced the promotions of Ron Mehl to vice president and project partner, Eric Omdahl as development associate, Russell Condas to senior development associate, William Boulay to development associate and Owen Metz to vice president and project partner. Mehl will be responsible for originating and overseeing new project development, financing and acquisitions. Omdahl will be responsible for overseeing design and construction, securing financing and placing equity for investments in new and existing apartment communities. Condas will be responsible for new project development, acquisition and financing. Boulay will be responsible for overseeing design and construction, securing financing and placing equity for investments in new and existing apartments. Metz will be responsible for originating and overseeing new project development, financing and acquisitions. All four will be based in the apartment development and management company’s Plymouth, Minn., headquarters. 

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On Feb. 20, Conifer Realty LLC announced the addition of Betty Perry as regional vice president of property management. Perry will oversee the Long Island region and join the property management leadership team. Before starting with Conifer, Perry was with Related Management Company.

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Enterprise Community Partners announced March 1 the 2017-2019 class of its Enterprise Rose Architectural Fellowship, which partners emerging designers with community developers for three years. The six designers in the class are Daniel Greenspan, Nick Satterfield, Michelle Stadelman, Kristen Chin, Lea Oxenhandler and Kelsey Oesmann. Each will work with a different agency. Since its launch in 2000, the fellowship has supported 69 fellows that have helped preserve or produce 11,000 affordable homes, according to Enterprise.

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Emmet, Marvin & Martin announced March 1 that Eric Usinger was promoted to partner. Usinger is a member of the firm’s real estate and real property finance practice area, where he specializes in community development and construction financing, including LIHTC and new markets tax credit (NMTC) transactions. He graduated from the State University of New York at Buffalo Law School in 2003.

LIHTC Bond

The California Debt Limit Allocation Committee (CDLAC) released a memo Feb. 8 on bond issuance and post-issuance compliance policy requirements and guidelines. The purpose of the memo is to advise issuers of new bond issuance and post-issuance compliance policy submission requirements. These requirements can be found in CDLAC Regulation 5031(c), which was adopted Dec. 15, 2016. New issuers and issuers who have not received an allocation since January 2013 must submit their policies and supporting documentation before applying to CDLAC to receive allocation. A waiver may be requested until Dec. 31 by issuers with a pending 2017 development. Issuers that received an allocation of bonds after January 2013 must submit their policies no later than Dec. 31. The submission of an issuer’s policies, required supporting documents and CDLAC’s approval of the policies are a prerequisite for allocation eligibility. In addition, the memo provides suggested guidelines for issuers in developing their bond issuance and post-compliance policies. Also included is a list of all issuers who have issued bonds from January 2013 to date.