LIHTC Industry

Introduced March 7 in the U.S. Senate, the Neighborhood Homes Investment Act would create a tax credit for the rehabilitation of deteriorated single-family homes in distressed neighborhoods. The legislation would create a credit for the lesser of the excess of development costs over the sales price, 35% of development costs or 28% of the national median price for new homes. It would be available for qualifying homes sold at prices generally no more than four times the applicable area median income (AMI) to buyers whose income is no more than 140% of the AMI. The legislation–which was introduced in two previous sessions of Congress–calls for an annual state cap of $7 per capita or $9 billion, whichever is higher. The credits would be available after the homes are completed and sold to a homeowner. The legislation’s sponsors are Sens. Ben Cardin, D-Maryland; Todd Young, R-Indiana; Ron Wyden, D-Oregon; Jerry Moran, R-Kansas, and Sherrod Brown, D-Ohio.

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Sweeping legislation that would expand the 9% low-income housing tax credit (LIHTC), lower the financing threshold for private activity bond financing from 50% to 25%, create a Neighborhood Homes Tax Credit (NHTC), create a middle-income housing tax credit (MIHTC) and provide basis boosts for extremely low-income households, rural and Native American communities was introduced March 7 in the Senate by Wyden. The Decent, Affordable, Safe Housing for All Act would also provide a renter’s tax credit for affordable housing operators who provide homes to low-income tenants and a refundable first-time homebuyer tax credit. A Novogradac analysis of the 2021 version of the legislation concluded that it could finance the creation and rehabilitation of nearly 2 million affordable homes. Wyden’s office released a summary of the bill and a section-by-section summary. Earlier in the day, legislation to create the NHTC was introduced.

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The Federal Housing Finance Agency (FHFA) Feb. 28 announced that the Housing Trust Fund (HTF) and Capital Magnet Fund (CMF) will receive a combined $545 million for affordable housing initiatives this year. The funds will come from Fannie Mae and Freddie Mac. According to FHFA, the HTF will receive $354 million to be allocated to states and state-designated entities for the production or preservation of affordable housing. The CMF will receive $191 million for awards to affordable housing activities and related economic development activities and community service facilities. The funding comes from Fannie and Freddie’s new business purchases and due to 2022 market conditions, the amounts are significantly lower than last year’s totals, which were $740 million for HTF funding and $336.4 million for CMF awards.

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The Community Development Financial Institutions (CDFI) Fund Feb. 21 announced an update to its frequently asked questions page for the CDFI certification blackout period. The updated page supersedes a July 2022 page with new information on such subjects as when the blackout period will end, why the CDFI Fund paused acceptance of new CDFI certification applications and target market modifications and more. The updated page is available on the CDFI Fund website.

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Nonprofit developer Preservation of Affordable Housing in March unveiled a Trauma-Informed Housing Toolkit with the aim of helping mission-driven housing providers deepen, expand and adapt their approach to housing. The toolkit includes information about trauma-informed building design; how to improve polices and programs to produce better outcomes for residents, staff and properties; case studies; and tools for measuring the impact of such measures. To read and download the toolkit, visit traumainformedhousing.poah.org.

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Merchants Affordable Housing Corp. Feb. 14 announced its rebrand to RDOOR Housing Corporation as well as its relocation of its headquarters to Indianapolis. An official ribbon-cutting ceremony at the firm’s new location in downtown Indianapolis was slated for later in the spring. RDOOR’s portfolio includes 19 properties in Indiana.

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Red Stone Equity Partners raised $1.3 billion in tax credit equity in 2022, the firm’s most productive since its inception in 2007. The total included nearly $900 million in proprietary LIHTC fund format as well as $400 million in multi-investor LIHTC funds. Red Stone-sponsored investment funds in 2022 invested in 84 LIHTC properties with 64 developers in 23 different states plus the District of Columbia.

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Bank of America (BofA) provided $7.85 billion in financing in 2022, surpassing the financier’s previous record of $6.7 billion set a year prior. The figure includes loans, investments and other real estate-related financing, such as $200 million in investments in historic tax credits and new markets tax credits as well as more than 1,300 affordable and market-rate apartments. The financing included closing on the first transaction from BofA’s $60 million Black, Indigenous and People of Color fund for minority developers and communities.

LIHTC State

Texas Gov. Greg Abbott on March 3 rescinded three waivers related to applications for low-income housing tax credit (LIHTC) applications. The affected parts of the code apply to applications needing a resolution of no objection from a governing body to filing an application; applications for proposed developments within 1 mile of a property that received credits and will serve the same population; and applications involving a proposed development located in a municipality or county that has more than twice the state’s average of units per capita supported by LIHTCs or private-activity bonds at the time the application is submitted. The rescind order does not apply to applications before March 3.

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A bill introduced in February in the Utah Legislature would increase the annual state LIHTC cap to $10 million. H.B. 364 would change the annual cap from the current amount of 34.5 cents per capita, which would be approximately $1.2 million in 2023. The $10 million annual cap would begin in 2023.

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A bill introduced in February in the Illinois House of Representatives would create a state LIHTC with an annual cap of $35 million. H.B. 2044 would create the credit for taxable years beginning on or after Jan. 1, 2024. Of the cap, 75.5% would be allocated by the Illinois Housing Development Authority and 24.5% would be allocated by the City of Chicago Department of Housing. All state LIHTCs would go to properties where it was determined that the state credit is necessary for the financial feasibility of the development. The amount of the state credit allocation would be the decision of the allocating authority. Illinois currently has a state affordable housing credit that is a one-time credit for an affordable housing donation.

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Mississippi legislation that would have created a state LIHTC died in committee in February. S.B. 3057 would have created a state credit for properties for up to the amount of federal LIHTC allocation with a $4 million annual statewide cap. The bill failed to advance from the Senate Finance Committee. The credit would have applied to properties placed in service after July 1, 2023.

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A report released Feb. 16 by the Georgia Affordable Housing Coalition and the University of Georgia concluded that the cost of the state’s LIHTC is offset by the return generated. The Revisiting the Economic Impact of Low-Income Housing Tax Credits in Georgia report examined LIHTC developments between 2001 and 2019, finding that properties created or started in that window will generate more than $12 billion for the Peach State. For every net $1 of state income tax spent on LIHTCs, an additional $5.79 of economic activity was generated.

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A bill introduced in the Illinois House of Representatives would allow allocating agencies to award matching grants to sponsors who receive qualifying LIHTC donations. The Illinois LIHTC is for 50% of the value of a donation. Under H.B. 3878, the Illinois Housing Development Authority or the Chicago Planning and Development Department would be able to award grants for up to the amount of the tax credit received, subject to appropriation.

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A report issued in March from the University of Montana Bureau of Business and Economic Research shows that the addition of a state LIHTC would significantly increase use of federal 4% LIHTCs and would increase the number of LIHTC-financed homes across the state by 40.8% annually. An Assessment of the Potential Impacts of a Montana Low-Income Housing Tax Credit evaluated the effect of a state credit similar to one passed by the state Legislature but vetoed in 2021. The report finds “expected net positive impacts from the additional economic activity stimulated by expanding affordable housing development in the state.” No legislation has been introduced in the current session of the Montana Legislature to enact a state LIHTC.

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Legislation introduced in February in the North Carolina House of Representatives would reinstate the state LIHTC that expired in 2015. H.B. 208 would bring back a state credit for taxpayers that receive a federal LIHTC allocation. The state LIHTC would have a sliding scale for a percentage of basis for which the state credit is allowed, based on the type of set-aside elected by the development. The state LIHTC would not be available to bond-financed properties. The North Carolina LIHTC would be effective for taxable years beginning on or after Jan. 1, 2023, and would sunset Jan. 1, 2027. North Carolina previously had a state LIHTC from 2003 through 2015. Similar legislation was introduced in 2021.

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Legislation introduced in February in the New York Assembly would allow properties to be eligible for the state LIHTC under a new, higher-income set-aside. A.B. 1264 would allow properties to receive the state LIHTC if 60% of the residential units were occupied by residents earning 125% or less of the area median income (AMI). That would replace the current New York 40-90 set-aside, which requires at least 40% of units to be occupied by residents earning 90% or less of the AMI.

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A bill introduced in February in the Ohio House of Representatives declares the General Assembly’s intent to authorize a state LIHTC. H.B. 3 contains no details beyond the intent for an affordable housing credit. Ohio currently has no state LIHTC, although neighboring states Indiana and Pennsylvania each have a state credit.

LIHTC Dealmaker

Merchants Capital saw a 90% increase in its affordable housing debt production in 2022, rising to $5.9 billion from $3.1 billion a year prior. The financier set a company record for debt financing in 2022, totaling approximately $8.9 billion. The company’s previous high came a year earlier at $7 billion. The debt financing supported the production of market-rate, luxury and affordable housing developments across the country.

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Developers Lexton McDermontt and Kentro Group financially closed on $15.8 million in federal low-income housing tax credit (LIHTC) equity for Krisana Apartments in Denver. The $44 million, four-story midrise development will feature 151 all-electric homes, funded in part through a grant from the city’s New Buildings and Homes Electrification Pilot Program aimed at phasing out fossil fuels in homes and commercial buildings. The property is for residents who earn up to 60% of the area median income (AMI). Hunt Capital Partners syndicated the LIHTCs through a fund with UMB Bank, which also provided more than $30 million in loans. The property is due for completion in April 2024.

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Construction is underway in Miami’s Perrine neighborhood on Tucker Tower, an eight-story, $44 million property for those 62 and older. Residents will earn up to 25%, 30% and 60% of the AMI. Housing Trust Group and AM Affordable Housing, a nonprofit founded by NBA Hall of Famer and Miami Heat legend Alonzo Mourning. The tower’s capital stack includes $28.4 million in 9% LIHTC equity syndicated through Raymond James and purchased by Bank of America. The property is scheduled to open in early 2024.

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KeyBank provided $10.9 million in February for the acquisition/rehabilitation of Silver Lake Meadows in Perry, New York. The 52-unit, seven-building community hosts those earning up to 30%, 50% and 60% of the AMI. Rochester Cornerstone Group is developing the site with sponsor Wyoming County Community Action Inc. The financing will provide energy efficiency improvements. KeyBank provided $5.4 million in 9% LIHTC equity as well as a $5.5 million construction loan.

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Merchants Capital committed $90 million in financing for Solana Villas, a 200-apartment development in Buckeye, Arizona. Roers Companies is developing the site, which will host those earning up to 60% of the AMI. Merchants’ financing package includes a $27.8 million 4% LIHTC tax credit equity investment, a $33 million tax-exempt construction loan, a $24 million taxable construction loan and a $31.5 million Freddie Mac tax-exempt loan forward commitment for the permanent loan.

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The Lebanon Housing Authority received $1.9 million in permanent funding from Mascoma Bank in February for Heater Landing Apartments, a 44-apartment LIHTC property it developed in in Lebanon, New Hampshire. The property was fully leased in September 2022. Mascoma invested in Evernorth’s LIHTC equity fund, Housing New England Fund III, which supported the development.

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Spark, a $96 million, 200-apartment mixed-use, mixed-income housing development in Salt Lake City, began construction in February. One hundred of the apartments are for those earning 20% to 60% of the AMI. The other 100 are for those earning 70% to 80% of the AMI. Brinshore Development is developing the site, which received federal and state 4% LIHTCs.

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Developer MHT Housing broke ground in February on a pair of 100% affordable housing developments in Detroit. The $15 million mixed-use Brush Park Apartments will host 53 apartments for those earning up to 30%, 40% and 80% of the AMI. The property received a 9% LIHTC equity investment from CVS Health and CREA. The other property, the $9.5 million MLK on 2nd, will host 33 apartments and include ground-floor retail. Its residents will earn up to 30%, 40% and 60% of the AMI. CREA invested in 9% LIHTC equity for the development. Both are slated to open in early 2024.

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Core Tech International Corporation broke ground in February on two affordable housing developments on Guam. Summer Vista I in the Dededo village is a $5.4 million, 12-building, 96-apartment site, which is that area’s first LIHTC development. Summer Breeze I will host 64 apartments in Barrigada. The capital stack for both properties includes a LIHTCs.

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Vita of New Whiteland, a 102-apartment senior property in New Whiteland, Indiana, started construction earlier this year. Vita Investment Holdings is developing the site. The developer received $6.7 million in LIHTCs for the development in 2022. The development is expected to open 2024.

LIHTC People

Jesse Batus was named Feb. 16 as regional vice president for real estate development for the Community Builders. Batus joined Community Builders in 2007 and has overseen nearly half a billion dollars of investment in that time, including two notable efforts in New York: The Ridgeway in Yonkers and Beach 21st Street in Far Rockaway. Batus’ new role will see him leading all real estate development activities across the five boroughs of New York City as well as neighboring counties in the Empire State and northern New Jersey.

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Woda Cooper Companies in February announced a trio of staff updates in leadership positions. In addition to his role as vice president of development in the Norfolk, Virginia, office, Bruce Watts became the organization’s chief diversity officer. Frank Yankovich, previously CEO of SafeRent Solutions and CFO at CBC Companies, joins the company as its chief financial officer in March. Paige Woda, who joined the company in 2020, was promoted to acting people operations director.

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April Housing in February named Nina-Lee Jewell Alhambra as its chief operating officer and Brian Lee as chief financial officer. Jewell Alhambra brings more than two decades of experience to her role with April, where she will help mold the affordable housing developer’s strategy into action across its portfolio. She joins after serving as vice president at Lincoln Avenue Capital. Lee, who also brings 20-plus years of experience, will oversee all of the financial aspects of the company. Lee was previously executive vice president of finance for Caruso.

LIHTC Bond

Alamo Community Group in February received $38 million in 4% in low-income housing tax credits (LIHTCs) for Cattleman Square Lofts, a 138-apartment property in San Antonio. Twenty-one of the apartments are for those earning up to 30% of the area median income. The San Antonio City Council awarded $2 million to the development from the city’s 2022 housing bond. Construction is expected to start in the summer.

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The District of Columbia Housing Finance Agency (DCHFA) issued $43.1 million in tax-exempt bonds for the acquisition-rehabilitation of 202 affordable apartments across 16 buildings in Wards 7 and 8. DCHFA also underwrote $33.4 million in federal LIHTC equity and $6.4 million in District LIHTC equity for the redevelopment. National Housing Trust-Communities and IBF Development will rehabilitate the homes on behalf of the residents of the Villages of East River, which formed the Positive Change Tenants Association and exercised their rights under the D.C. Tenant Opportunity to Purchase Act. The total cost to develop the buildings, built between 1952 and 1967, is $95.9 million.