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Low-Income Housing Tax Credits News Briefs - December 2013

AFFORDABLE HOUSING INDUSTRY BRIEFS

The Internal Revenue Service (IRS) released LIHC Newsletter #53 on Oct. 18. The newsletter includes information on developer fees for low-income housing tax credit (LIHTC) properties and addresses four basic issues to consider when examining developer fees: character of the services to be provided; services actually provided; reasonableness of the fee amount; and method of payment. LIHC #53 also provides discussion on situations such as when the developer actually performed the services, concurrent versus consecutive developers and substantiation of services performed. The newsletter is available at www.taxcredithousing.com.

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Moody’s Investor Service issued a report on Oct. 8, in which it upgraded U.S. State Housing Finance Agencies’ (HFAs’) Industry Outlook from negative to stable. Moody’s cited the products that many HFAs have employed to expand business models in response to rapidly declining home values and cheap market lending rates as one of the reasons for the upgrade. The report also lists increasing profitability and stable positioning of HFA portfolios as contributing factors. Changes HFAs have made include diversifying loan financing strategies, utilizing new bond structures to lower borrowing costs and lending to new customer bases for both single family and multifamily programs. These changes, the report states, are expected to stabilize the HFAs. The report can be viewed at www.taxcredithousing.com.

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The Housing Assistance Council (HAC) announced on Oct. 11 the second round of funding made available through the Home Depot Foundation. The grant will go to the Affordable Housing for Rural Veterans (AHRV) initiative, which is an effort to increase the capacity of nonprofits in rural areas to provide affordable housing for veterans in their communities. HAC will use the grant to provide training to housing developers and advocates in rural areas, increase the capacity of local organizations to address veterans’ housing needs and improve the quality and quantity of information about the housing conditions of veterans in rural areas.

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The Urban Land Institute and Enterprise Community Partners together released a report on Nov. 6 entitled, “Bending the Cost Curve on Affordable Rental Development: Understanding the Drivers of Cost.” This report looks at the factors and challenges involved in developing affordable rental housing. Key areas include project scale, design and construction, financing and underwriting and complex deal structures. The report includes interviews and roundtable discussions from more than 150 developers, financiers and policy makers from across the United States. This report is the first section of an analysis that is expected to be released early next year by Enterprise and the Terwilliger Center. The 2014 report will offer recommendations on lowering developing costs.

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STATE BRIEFS

The U.S. Department of Labor, Wage and Hour Division (DOL-WHD) in October released Memorandum No. 213 New Requirements for Analyzing, Submitting and Seeking Approval of Proposed Worker Wage Classifications to all contracting agencies of the federal government and the District of Columbia. The memorandum, providing additional classification guidance, discusses the conformance process and reasonable relationships, and lists steps that contracting agencies will take when proposing a wage rate for a classification to be conformed to an existing wage determination. Previously, the department used the lowest trade wage amount listed on the General Wage Determination for the county in which the property was located. This memo states that, effective immediately, all worker classification wage requests seeking DOL-WHD final determination must adhere to the new DOL-WHD requirements for analysis and submission. Worker classifications are divided into four categories: skilled crafts (trades), power equipment operators, truck drivers and laborers, and that the median wage of the applicable category will establish the minimum wage required for the worker classification under consideration by DOL-WHD.

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On Oct. 12, California Gov. Jerry Brown signed into law Assembly Bill (A.B.) 952, which amends certain sections of the revenue and taxation code, relating to taxation, to take effect immediately. A.B. 952 authorizes the California Tax Credit Allocation Committee (CTCAC) to allocate state tax credits for buildings located in designated difficult development areas (DDA) or qualified census tracts (QCT) that are restricted to having at least 50 percent of its occupants be special needs households even if the taxpayer receives specified federal credits. Read more about A.B. 952 in the Oct. 23 post on the Notes from Novogradac blog.

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On Oct. 10, California Gov. Jerry Brown signed into law legislation expanding housing opportunities for veterans. Assembly Bill (A.B.) 639, the Veterans Housing and Homeless Prevention Bond Act of 2014, would amend the Veterans’ Bond Act of 2008, as approved by voters to reduce the amount of bonds authorized from $900 million to $300 million. A.B. 639repurposes $600 million of existing veterans’ housing bond funds to use for multifamily, transitional and supportive housing. The legislation will be on the June 2014 primary ballot. He also signed two additional veterans’ assistance bills.. A.B. 151 authorizes the governing board of a county to grant financial assistance, relief and support to a disabled veteran. A.B. 556 adds “military and veteran status,” to the list of categories protected from employment discrimination under the Fair Employment and Housing Act. The legislation can be viewed at www.taxcredithousing.com.

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On Oct. 16, the Partnership for Strong Communities released a report entitled, “HousingInCT2013.” The report presented information on the status of the Connecticut housing market. The researchers used data collected from the U.S. Census Bureau to determine that Connecticut’s housing is expensive and scarce. The Census Bureau ranked Connecticut’s median monthly housing costs as the sixth most expensive in the nation and its median home values as eighth in the nation. The report found that income earners in the bottom 20 percent have seen their incomes drop by more than 4 percent since 2006. The report also stated that homelessness remains a challenge for Connecticut with more than 14,000 residents experiencing homelessness in 2012. This was a 10 percent increase from 2010, according to data from the Connecticut Coalition to End Homelessness (CCEH). The report is available at www.taxcredithousing.com.

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The Wisconsin Housing and Economic Development Authority (WHEDA) and the Wisconsin Department of Veteran Affairs (WDVA) announced on Oct. 14 the recipients of a special round of LIHTCs. Veterans High Impact Projects (HIP) credits were awarded to Green Bay Veterans Manor in Green Bay in the amount of $350,000 and Community for Returning Women Soldiers in Milwaukee received more than $333,000 in credits. High Impact Project Reserve (HIPR) program credits were awarded to Milwaukee Prosperity Harambee in the amount of $350,000 and Grand Central Plaza in Superior received more than $400,000. The properties were selected in a special round after the normal selection round that was announced in April 2013. The 2013 Special LIHTC Awardees Fact Sheet is available at www.taxcredithousing.com.

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Willow Bend Estates LLC and Woodyard Gardens LLC v. Humphreys County Board of Supervisors and Margaret Parks, Tax Assessor for Humphreys County, Miss. (Humphreys), has been heard by the Mississippi Supreme Court. The court determined that tax credits cannot be included in determining the assessed value of an LIHTC property because the statute requires assessors to follow the methodology set forth in the Department of Revenue’s manual. The case resulted from a dispute regarding local ad valorem taxes on real estate developments that use federal LIHTCs to construct and maintain restrictive properties that rent only to lower-income households. The question is whether local governments may include the value of federal tax credits in their valuation of the properties for tax assessment purposes. The Supreme Court held that Mississippi Code Section 27-35-50(4)(d) prohibits them from doing so. The court reversed a lower court’s decision and ordered the county to refund the taxes it had collected erroneously from the property.

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The California Tax Credit Allocation Committee (TCAC) released a memo in October announcing that the 2013/2014 proposed program schedule and deadlines are posted to the TCAC website. The memo can be found at www.taxcredithousing.com.

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On Oct. 16, the Mississippi Home Corporation announced the allocation of nearly $8.7 million in LIHTCs to 20 developments across 11 counties. There are a total of 959 units. Construction is expected to create roughly 50 construction jobs. A list of the 2013 award winners is available at www.taxcredithousing.com.

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New Hampshire Housing (NHH) presented Affordable Housing, Education and Development (AHEAD), a housing development organization in Littleton, N.H., with the Bringing You Home Award. NHH bestowed the award for AHEAD’s rehabilitation and preservation of housing for seniors and the disabled. AHEAD renovated three historic properties: Lisbon Inn in Lisbon; the Opera Block in Woodsville; and the McKee Inn in Lancaster. Renovations included energy efficiency improvements, new windows, removal of underground storage tanks, new appliances and upgrades to major building systems. The award honors those who achieve excellence in affordable housing.

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CTCAC released a memo on Oct. 28 discussing proposed regulation changes for 2014. Sent to tax credit stakeholders, the memo also included initial statement of reasons. The memo highlights what CTCAC staff proposes to present to the committee for their adoption in January 2014. Changes proposed would affect policies and procedure. Public hearings were conducted throughout November to solicit comments. The memo is available at www.taxcredithousing.com.

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The New Hampshire Housing’s board of directors approved the 2014 LIHTC funding. A total of five communities with more than 200 units will receive credits. Mast Landing, Dover, will provide 32 units; Quail Hollow, Lebanon, will have an additional 62 units constructed; the first phase of the Townhomes at Whittemore Place, Londonderry, will offer 38 units; River’s Edge, Laconia, will provide 32 units; and One Meeting Place, Exeter, will have 39 units.

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DEALMAKERS

Boston Capital announced in October its investment of LIHTC equity in the construction of Manor South in Baltimore, Md.’s Upper Park Heights neighborhood. The development will have 90 units in a four-story building. There will be 53 one-bedroom units and 37 two-bedroom units. Amenities will include common areas with a community room and kitchen, a computer room and an outdoor patio. Units are available to residents age 62 or older earning 60 percent or less of the area median income (AMI). The developer is Comprehensive Housing Assistance Inc., and construction is expected to create more than 130 new jobs.

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A merger between the Delaware Community Investment Corporation (DCIC) and Great Lakes Capital Fund (GLCF) was announced on Oct. 30. The collaboration between the two organizations makes it possible for DCIC, which works towards community revitalization by investing in housing, and GLCF, a community development finance institution, to expand into new markets and increase reinvestment in Delaware communities. Jim Peffley, DCIC’s president, said that the merger will enable DCIC to expand their shared business model to support communities in surrounding states.

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The Community Preservation and Development Corporation (CPDC) announced on Oct. 30 the completion of the redevelopment of The Larkspur, a 76-unit affordable housing community in Arlington County, Va. The $26 million development retains 46 units at or below 60 percent AMI, 15 units at or below 50 percent AMI, eight units at or below 40 percent AMI and seven market-rate units. As the market-rate units become vacant, they will be converted into affordable units, making The Larkspur 100 percent affordable. During redevelopment, CPDC expanded unit size, added a new community room and increased energy efficiency. CPDC received interim bridge financing from the Low Income Investment Fund and permanent subordinate financing from Arlington County Affordable Housing Initiative Funds (AHIF). CPDC also acquired a new first mortgage and 9 percent LIHTCs from the Virginia Housing Development Authority. Hudson Housing syndicated the LIHTCs. Additionally, the property received $15.5 million in specialized financing from Capital One Bank via a construction loan and subordinate debt form AHIF.

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Quincy Corridor, in Boston, Mass.’s Dorchester Bay neighborhood broke ground on Oct. 23. The redevelopment is a 129-unit affordable housing property with construction costs that will total $90 million. 10 buildings comprised of 80 units will be renovated, with 49 new units in seven buildings being constructed. Thirteen of these new units will be set aside for the homeless or formerly homeless. Enterprise Community Partners made a $19.9 million equity investment and provided a $250,000 loan form Enterprise Community Loan Fund. All units are also designed to be energy-efficient and meet the Enterprise Green Communities criteria.

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North Sky I Apartments broke ground in October. The North Dakota Housing Finance Agency (NDHFA) provided the Fargo, N.D. property with $1.14 million through a Housing Incentive Fund (HIF) commitment in July. Total cost is anticipated to reach $2.9 million. The first phase of the development will include seven one-bedroom, 12 one-bedroom with den and five two-bedroom apartments. Units are available to residents age 55 and older. Developer BSI, a nonprofit developer of affordable housing, expects the development will be completed in the fall of 2014.

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City Center Apartments in Sioux Falls, S.D. held its grand opening on Oct. 21. There will be a total of 44 units; 34 one-bedroom and 10 two-bedroom. Amenities include a community room, library and a multipurpose room. Units will be available for residents age 62 and older. CitiHousing Inc. invested $4.2 million in the development, with Citi Community Capital providing the construction loan. Total development cost will be $5.4 million. The Good Samaritan Society will manage the property and provide services to residents.

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Dominium, an affordable housing development and management company, has acquired Traditions Apartments in Highlands Ranch, Colo. Dominium purchased the property on Oct. 4 and includes 96 units. Dominium will renovate the development. Renovations include new cabinets, countertops and flooring, constructing a new fitness facility, new kitchens and a new leasing office.

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Carrfour Supportive Housing and Pinnacle Housing Group will open the the Amistad Apartments in Miami-Dade County, Fla. in January. Units will be available for the formerly homeless and low-income families in Miami’s Little Havana. A total of 89 units will be available, with 45 units designated for residents earning at or below 28 percent of the AMI. The remaining 44 units are designated for residents earning 60 percent of the AMI. Carrfour and Bruno Barreiro, Miami-Dade county commissioner, held a lottery drawing for the 44 available affordable units. Carrfour will begin the screening process for the last 45 units once the property is operational.

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On Oct. 16, WNC announced the completion of Park Landing Apartment Homes. Located in Buena Park, Calif., the property received $7.5 million in LIHTC equity from WNC, a national investor in real estate and community development initiatives. The 70-unit, four-story affordable, energy efficient housing development in Orange County will cost a total of $22 million. Units are one, two and three bedrooms, and are available for families earning between 30 and 60 percent of the AMI. Amenities include an outdoor patio area, children’s play area, barbecue and picnic areas and a basketball court. Park Landing Apartment Homes also received a tax credit allocation under California’s Title 24 energy conservation regulation. The property is expected to achieve greater than 21 percent energy efficiency. The property also received a $3.5 million construction loan from U.S. Bank, and $4.8 million from the California Department of Housing & Community Development Multifamily Housing program. The 2-acre site was purchased from the Buena Park Redevelopment Agency for $3.6 million.

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On Oct. 25, Meridian Investments announced the closing of R4 California Housing Partners LP. The initial closing was $43.4 million. The portfolio is worth $53.5 million, and includes eight multifamily properties with 553 units located throughout California. Units were either newly constructed or rehabilitated for seniors and families. The properties are in Yucca Valley, Van Nuys, Lindsay, Fresno and Los Angeles.

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PEOPLE IN THE INDUSTRY

Thaddeus Miles, director of public safety at MassHousing, was awarded the FBI Director’s Community Leadership Award in October for his involvement in and advocacy for public safety at housing communities and surrounding neighborhoods across Massachusetts. The annual award goes to dedicated and selfless individuals and organizations that make extraordinary contributions to their communities. Miles was recognized for his work with law enforcement, communities and youth programs. He worked to design and implement crime prevention strategies.

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Richard McQuady, Kentucky Housing Corporation’s CEO, announced his retirement in October. McQuady was with the organization for 28 years and worked on the coordination, preparation and implementation of corporate strategic plans. He also worked with finance and program areas such as homeownership programs, rental assistance programs, multifamily production, HOME Investment Partnership programs and specialized housing resources programs. McQuady is a member of the Kentucky Society of CPAs and the American Institute of CPAs. He received a bachelor’s degree in accounting and a master’s degree in business administration from Easter Kentucky University. His final day was Nov. 30..

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Dave Jamison, Iowa Finance Authority executive director, was elected to the board of directors of the National Council of State Housing Agencies (NCSHA) in October. The NCSHA held the election during its 43rd Annual Conference in New Orleans, La. Previously, Jamison worked as Story County (Iowa) Treasurer. While he was treasurer, Jamison served as president of the Iowa State County Treasurers Association (ISCTA) and co-chair of the ISCTA website task force. Jamison received a bachelor of business administration in management from Iowa State University.

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The Virginia Housing Development Authority (VHDA) board of commissioners saw new additions in October. Kit Hale, managing broker at MKB Realtors, was elected board chair. He currently serves in a leadership role with the National Association of Realtors. Timothy M. Chapman, managing member of Chapman Development LLC, was appointed vice chair. Douglas R. Fahl was elected chair of the programs committee. Fahl is executive vice president of Dewberry Consultants LLC. Marjorie N. Leon was appointed chair of the audit and operations committee. Leon is a housing counselor with Prince William County’s Virginia Cooperative Extension Office. VHDA’s Board of Commissioners is composed of 11 members.

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TAX-EXEMPT BOND

The Ohio Housing Finance Agency (OHFA) board announced on Oct. 17 the allocation of $15 million towards affordable housing options in designated communities. A total of $6.7 million was issued through the multifamily bond program. The board also awarded $1.35 million through the Housing Development Assistance program (HDAP) to provide low-interest financing for developments. An additional $7 million in funding was provided through the Housing Development Loan program (HDL). Some of the approved communities include Eastway Village in Whitehall, Arlington by the Lake in Toledo, Ashley Grove Senior Residence in Mt. Orab and Fair Park Apartments in Sardinia.

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Victory Court, an 86-unit mixed-income community located in Rockville, Md., was dedicated in October by Donald Cardinal Wuerl, Archbishop of Washington. Available to adults age 62 and older, the development was financed with tax-exempt bonds issued by the Housing Opportunities Commission and purchased by Capital One N.A., along with a loan from Montgomery County. Amenities include a library, community room, café, arts and crafts room, wellness center, billiards room and fitness room. Isiah Leggett, Montgomery County executive, and Nancy Navarro, Montgomery County Council president were also present for the dedication.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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