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Low-Income Housing Tax Credits News Briefs - August 2013

AFFORDABLE HOUSING INDUSTRY BRIEFS

Enterprise Community Partners Inc. announced the launch of a seven-year study on the effects of green building practices in affordable housing on resident health. The study explores links between green standards in affordable housing development and improved health outcomes in New York, N.Y., Cleveland, Ohio and San Francisco, Calif. It is designed to analyze improvements in health parameters, overall quality of life and health care use among residents of affordable apartment buildings that receive green renovations. The study will be funded by the JPB Foundation, the Kresge Foundation and Wells Fargo. Mount Sinai School of Medicine will provide technical assistance.

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On June 28, members of the U.S. House of Representatives sent a letter to Speaker of the House John Boehner and Minority Leader Nancy Pelosi. The letter, initiated by Rep. Dutch Ruppersberger, D-Md., and Randy Hultgren, R-Ill., expresses concerns regarding proposals to eliminate or cap the deduction on tax-exempt municipal bonds in the fiscal year (FY) 2014 budget proposal. The representatives’ letter notes that for more than a century, municipal bonds have had tax-exempt status and have been the primary method by which state governments and local municipalities finance public capital improvements and infrastructure construction. The lawmakers say it is imperative that this tax-exempt status remain the same. The letter says that over the last decade, municipal bonds had funded more than $1.9 trillion worth of infrastructure construction, and financing went to schools, hospitals, airports, affordable housing, water and sewer facilities, public power utilities, roads and public transit. Members argue that the proposed cap of 28 percent would increase borrowing costs to public entities and shift costs to local residents through tax or rate increases, and that eliminating or capping the current deduction on municipal bonds would slow the growth of job-creating infrastructure projects. The letter is available on the Novogradac & Company website’s hot topics page under tax reform at www.novoco.com/hottopics.

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The National Housing & Rehabilitation Association (NH&RA) released a report June 27 titled, “Diverse Needs: A Look at Housing Credit Programs in the ‘Four Corners’ Region.” The report discusses affordable housing in Arizona, New Mexico, Colorado and Utah. The report also includes allocation and development activity, agency priorities, anticipated changes to 2014 state allocation plans for tax credits and which types of projects are most like to be successful in obtaining LIHTCs.

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Boston Capital released a newly redesigned website. Intended to provide the public with a user-friendly, interactive site, www.bostoncapital.com is compatible with both browsers and mobile devices. Jack Manning, president and CEO of Boston Capital, said that the company’s new website has improved navigation and functionality. The introduction of the redesigned website coincides with the company’s celebration of its 40th year in the real estate business.

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STATE BRIEFS

The Ohio Housing Finance Agency (OHFA) and the Ohio Development Services Agency (ODSA) released a report on the Ohio Appalachian Housing Initiative. The report identifies strategies for overcoming affordable housing barriers in Ohio’s Appalachian region, which encompasses 32 counties. The research identified a number of challenges including a lack of funding, low area median incomes, population density and an aging and substandard housing stock. Strategies were identified and recommendations provided for addressing the barriers to increasing the availability of affordable housing in the region. These strategies include engaging in capacity building for nonprofit developers and local governments, establishing an Appalachian set-aside in the qualified allocation plan and formalizing a pre-application guidance process for LIHTC applications. A copy of the report is available at www.taxcredithousing.com.

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The Ohio Housing Finance Agency’s (OHFA) Office of Affordable Housing Research and Strategic Planning published a series of reports examining housing markets in Ohio regions affected by shale oil development. The results are broken down into four separate reports: assessing the impact of the shale energy boom on Ohio local housing markets; the impact of horizontal shale well development on housing; the impact of shale development on housing in Carroll County; and rental housing assessment of Carroll, Columbiana, Tuscarawas and Stark counties. Researchers gathered data on the impacts of shale development on rental housing availability and cost, along with its impacts on homelessness. The reports were intended to aid OHFA in choosing Ohio communities to monitor in the long-term. The reports are available at www.ohiohome.org.

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Kentucky Housing Corporation (KHC) updated its cost containment guidelines for multifamily projects. The guidelines were established based on the HUD 221(d)(3) maximum mortgage limits. The revised guidelines must be used when completing the underwriting model for 2014 applications. The cost containment guidelines are available at www.kyhousing.org.

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The California Tax Credit Allocation Committee (TCAC) released a memorandum June 20 regarding clarification on the advisory guidance to second round LIHTC applicants. The clarifications address collected rent for manager’s unit, charging fees for parking garages, lots or storage space, purchase price in excess of appraised value, mental health service act funds for competitive scoring, lowest income point category and environmental clearance for readiness scoring. The memo can be found at www.taxcredithousing.com.

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The Kentucky Housing Corporation (KHC) introduced new multifamily construction and bridge loan products. KHC partnered with HOPE of Kentucky LLC (HOPE) to offer reduced interest rates. Properties can be either new construction or rehabilitation to qualify for the loans. For the 2014 LIHTC application round, up to $36 million will be available for construction and bridge financing. KHC dedicated up to $12 million at 3.5 percent and HOPE committed $24 million. Rates will be fixed for up to 12 months.

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The Alaska Housing Finance Corporation (AHFC) will award $7.6 million in LIHTCs and federal grants to Volunteers of America National Services, Volunteers of America Alaska and development partners Trapline LLC and V2 for the development, Vista Drive. The property will provide 40 units, with 25 available to families who earn between $21,000 and $48,000, as well as families with disabilities. The organizations also received a grant from the Rasmuson Foundation, a private foundation that promotes a better life for Alaskans, and an AHFC mortgage to make up the difference in cost. The total cost of the development is anticipated to exceed $10 million.

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Released in June, the “2013 Residential Rental Cost Survey,” explores rental costs across New Hampshire and the status of the rental market. The purpose of the survey is to monitor rental housing costs in the state, to provide information to housing data users and to support New Hampshire’s housing program administration. Results were compiled from statewide telephone surveys conducted by the University of New Hampshire Survey Center for the New Hampshire Housing Finance Authority.

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The Ohio Housing Finance Agency (OHFA) awarded 34 Ohio developments $24.4 million in LIHTCs. The recipients, spanning across 18 counties, included 15 senior communities, 15 family developments and four permanent supportive housing communities. A total of 2,110 units will be funded.

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DEALMAKERS

Centerline Capital Group (Centerline) announced June 12 that the company provided an $11.4 million Fannie Mae Delegated Underwriting and Servicing (DUS) loan to refinance a multifamily property in Riverdale, Md. The property, Auburn Manor, is a 261-unit multifamily development with 11 brick garden-style buildings. Amenities include laundry centers in each building, a community pool, two children’s playgrounds and picnic areas. Units are available to residents earning no more than 60 percent of the area median income (AMI) based on family size. The loan provided by Centerline covered the existing debt of $8.3 million, and will also go to funding repairs and replacement reserve escrows of $600,000. Bryan Cullen, director at Centerline Capital Group, said that the new loan put into place carries a 15-year fixed rate of 4.55 percent.

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On June 13, Enterprise Community Investment Inc. announced the grand opening of Grace Ridge, an affordable family housing development in Auburn, Ala. The development consists of eight buildings with 40 two-bedroom and 16 three-bedroom houses. Amenities include a clubhouse with solar panels, which saves the property approximately $2,000 per year, a computer center, a fitness center and a picnic area. Enterprise provided $7.7 million in LIHTC equity, while the Alabama Housing Finance Authority provided $1.4 million in HOME funds. The Alabama Multifamily Loan Consortium provided roughly $600,000 as a permanent loan and more than $971,000 in LIHTCs and AuburnBank provided the $6.8 million construction loan.

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When completed, McIntosh Homes will offer new affordable housing for seniors in Leakesville, Miss. The property will comprise 50 units, which includes 35 one-bedroom units and 15 two-bedroom units, available for residents 50 years and older with household incomes of less than 50 percent of the AMI. Twenty-five units will be public-housing units, and 25 units will be operated as project-based voucher units. Amenities will include a community center with computers and fitness equipment, and each unit will be wheelchair accessible. Total development cost is expected to be around $9 million and funding was raised primarily thorough LIHTC equity. McIntosh Homes will be developed through a public-private partnership between South Mississippi Housing and Development Corporation and The Michaels Development Company of New Jersey.

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The Catherine Booth Residence broke ground in mid-June in Cincinnati, Ohio. Located in the College Hill neighborhood, the development will provide 96 single-bedroom affordable housing apartments for seniors, and will be run by the Salvation Army in Greater Cincinnati. The development is named after Catherine Booth, co-founder of the Salvation Army. Enterprise Community Investment Inc. is providing nearly $6.3 million in LIHTC equity, and Fifth Third Bank is providing construction financing.

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WNC announced June 12 that it closed Institutional Tax Credit Fund X, California Series 11 LP. The $46 million institutional tax credit fund was closed to acquire 10 LIHTC properties in California. There are nearly 800 units of affordable housing in the 10 properties, which are spread across and five counties. The properties include senior and family housing, and consist of both new construction and rehabilitated developments.

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Boston Financial Investment Management LP closed its Boston Financial Institutional Tax Credits XXXIX LP (ITC 39) in June. A national multi-investor fund, ITC 39 closed with $86 million in LIHTC investments. The fund included seven investors and 16 properties totaling 1,109 units of affordable housing for families and senior citizens. Boston Financial projects 1,300 temporary and 300 permanent jobs will be created as a result of the properties’ construction and rehabilitation.

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Affordable Investment Advisors LLC (AIA) closed its LIHTC Opportunity Acquisition Fund June 17. Designed to provide flexible, risk-based capital for low-income housing developments, the investment fund’s first transaction, the acquisition of an existing Section 8 property with mezzanine financing, was slated to close in July.

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Wexford Way and Carlow Court of Emerald Vista, an affordable housing development located in Dublin, Calif., had its grand opening in May. The 24-acre Arroyo Vista public housing site was renovated and is now a mixed-use, mixed-income property. Amenities include a community center, child center and access to a regional trail along Alamo Creek. There are 180 units of housing available, which is an increase of 30 units. Homes are available to families and seniors earning 30 percent to 55 percent of the Alameda County AMI for a four-person household. The city of Dublin, the Housing Authority of the county of Alameda, Wells Fargo, California Community Reinvestment Corporation, Federal Home Loan Bank of San Francisco and Silicon Valley Bank partnered to fund the development.

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UnitedHealth Group Inc. partnered with Enterprise Investment Community Inc. and Aetna Inc. for a $22 million LIHTC investment in three New Mexico rental housing development communities. Stage Coach Apartments in Santa Fe, Robledo Ridge Apartments in Las Cruces and Mountain View Apartments in Deming will provide 179 affordable housing units for low-income families, people with special needs, seniors and people who are at risk of becoming homeless. A ribbon cutting was held on June 27 for the Santa Fe and Las Cruces developments. Stage Coach provides 60 units for people with special needs, people who are hearing impaired and families transitioning out of homelessness or earning 30 percent to 60 percent of the AMI. Robledo provides 71 units of multifamily rental apartments and will serve special needs households and families at 30 percent to 50 percent of the AMI. Mountain View Apartments in Deming has 48 units of rental apartments for aging adults and people with special needs at 50 percent of the AMI.

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PEOPLE IN THE INDUSTRY

Charles Werhane, president and CEO of Enterprise Community Investment Inc. was recognized as National Real Estate Executive of the Year at the 2013 American Business Awards on June 17. He was presented with a Gold Stevie award in recognition for his help engineering the merger between Enterprise’s multifamily mortgage finance business and Bellwether Real Estate Capital.

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Kent Mehring was appointed vice president of asset management at WNC. Mehring has 14 years of experience with the LIHTC program and is now responsible for the oversight of WNC’s asset management division, including stabilized asset management and compliance monitoring. Previously, Mehring worked with Wentwood Capital Advisors and MMA Financial (Boston Financial). Before that, Mehring worked in AEW Capital Management’s hotel and senior living divisions. He has degrees in finance and business administration from Northeastern University, and is a member of the National Association of Home Builders and holds the organization’s Housing Credit Certified professional designation.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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