Low-Income Housing Tax Credits News Briefs - December 2014

Monday, December 1, 2014

AFFORDABLE HOUSING INDUSTRY BRIEFS

The Internal Revenue Service (IRS) released Revenue Procedure 2014-61 (Rev Proc 2014-61) Oct. 30. Rev Proc 2014-61 lists the annual inflation adjustments for low-income housing tax credits (LIHTCs) and private activity bond caps for fiscal year (FY) 2015. For the state LIHTC ceiling, the state population multipliers will remain the same as FY 2014. It will be the greater of state population multiplied by $2.30, or $2.68 million. The small-state minimum increased for FY 2015 by 1.71 percent from $2.6 million for FY 2014. For private activity bond volume cap, it will be the greater of the state population multiplied by $100, or $301.5 million. The small-state minimum increased for FY 2015 by 1.58 percent, up from $291.9 million. Rev Proc 2014-61 is available at www.taxcredithousing.com.

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On Oct. 17, the Office of the Comptroller of the Currency (OCC) released its newest Insights newsletter, “Community Development Loan Funds: Partnership Opportunities for Banks.” The Insights newsletter explains the partnership between national banks and federal savings associations and community development loan funds (CDLFs) and how that relationship can better reach low- and moderate-income and underserved populations. The report explains the four types of community development financial institutions (CDFIs) and how banks can find the appropriate CDLF with which to partner. Also included in the report are the potential risks and regulatory matters to be considered when structuring partnerships. The report is available at www.occ.gov.

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The Mortgage Bankers Association (MBA) released its “2013 Annual Report on Multifamily Lending” in mid-October. The report is based on its surveys of multifamily lenders and the recently released Home Mortgage Disclosure Act (HMDA) data. The data includes multifamily loans made by many smaller lenders, particularly commercial banks. MBA found that in 2013, 2,898 multifamily lenders provided $172.5 billion in new mortgages for apartment buildings with five or more units. The report also found that 2013 mortgages value represented an 18 percent increase from 2012, and that 62 percent of the active lenders made five or fewer multifamily loans over the course of the year. MBA provides a summary of the $172.5 billion multifamily market; profiles of market segments, including the very-small loan lender segment; and a breakout of 2013 multifamily lending volume by investor group. In addition, the report includes a listing of metropolitan areas and the volume of very-small loans made in each area in 2013. The report is available at www.mbaa.org.

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STATE BRIEFS

On Oct. 14, the California Tax Credit Allocation Committee (TCAC) released the report “California Affordable Housing Cost Study: Analysis of the Factors that Influence the Cost of Building Multifamily Affordable Housing in California.” The study examines social and economic impacts of affordable housing and explores the indirect benefits from investment in subsidized affordable housing. Data was collected and analyzed from multifamily developments completed in California from 2001 to 2011. The developments provide housing to single people, large families, people with special needs and seniors. TCAC found the high cost of constructing housing in California is a public policy issue affecting the state’s economic growth, environment and the health of its citizens. It also found that California’s housing costs are among the highest in the nation and that by increasing the supply of affordable housing, trends can be seen in improved educational attainment and health of the residents, as well as an increase in economic activity and reduction in social services costs. TCAC also found that local factors, building quality and durability and types of units all affect cost. The study indicates development costs could be lower for affordable housing in California, and that structured tax credit award process incentives could lower average costs per unit.

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The Massachusetts Department of Housing and Community Development (DHCD) announced Oct. 23 an award of more than $10 million to build or preserve three developments in Amherst, Mass. Funding included more than $1.7 million in federal LIHTCs, $4.2 million in state LIHTCs and $5 million in state and federal housing program subsidies. In addition, the town of Amherst is supporting the developments with an investment from the Community Preservation Act. A total of 348 units will be preserved or created, and 163 will be available to affordable to low- and moderate-income individuals and households, while 27 units will be reserved for extremely low-income families, including those making the transition from homelessness. The properties receiving awards include Harrison Tower in Boston, which is an affordable-housing preservation property for families and features 102 family rental units. DHCD will provide tax credits and subsidy funds. Rolling Green in Amherst is an existing 204-unit property currently featuring both market rate and affordable rental units, and will offer 41 affordable rental units over time. DHCD will provide state LIHTCs. Bixby Road in Spencer is a new construction development and will offer 42 units of family housing, including 11 units reserved for families earning less than 30 percent of the AMI.

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On Oct. 22, Connecticut Gov. Dannel P. Malloy, Evonne M. Klein, Department of Housing (DOH) commissioner and Eric Chatman, Connecticut Housing Finance Authority (CHFA) president and executive director, announced more than $25 million for the rehabilitation of six affordable-housing properties throughout the state. Investments included $22.5 million in federal 4 percent LIHTC credits and $3.9 million in CHFA tax-exempt bond financing. The properties, which yield a total of more than 500 affordable units, were selected through the fifth round of the Competitive Housing Assistance for Multifamily Properties (CHAMP) initiative. CHAMP helps owners and developers of multifamily rental developments expand or rehabilitate affordable and supportive housing. The properties are Crescent Crossing in Bridgeport, Kirtland Commons in Deep River, Billings Forge Apartments in Hartford, 122 Charles Street in Meriden, Cargill Falls Mill in Putnam and Northside Terraces Apartments in Torrington. DOH awards from CHAMP funds ranged from $3 million to $5 million, and CHFA awards ranged from $1.34 to $2.58 million in tax-exempt bond financing, with $3.4 million to $4.4 million in 4 percent LIHTC net proceeds. More information is available at www.chfa.org.

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The Minnesota Housing Finance Agency (MHFA) board approved $162 million in LIHTCs for 78 affordable housing properties throughout the state Oct. 28. A total of 4,000 units will be constructed or preserved, with 154 units reserved as new supportive housing for veterans. In addition, a $20 million 2014 bonding bill will be awarded in January 2015 to repair aging housing. More than 5,700 jobs will be created.

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DEALMAKERS

UnitedHealthcare and Enterprise Community Investment, Inc. announced Oct. 9 a $5.1 million investment for the construction of the Walnut Avenue Apartments. The property, a new affordable-housing development in Boston, will be redeveloped from a vacant three-story commercial building into an apartment community for individuals struggling with homelessness. Walnut Avenue Apartments will provide 30 studio apartments, a 20-bed medical support facility and on-site social services for residents. Services will include counseling, assistance in daily-living skills, job-readiness training, home budgeting, case management and crisis intervention. Jamaica Plain Neighborhood Development Corporation, in collaboration with Boston Health Care for the Homeless Program (BHCHP) and the Pine Street Inn, is developing the property. The investment is part of a $175 million UnitedHealthcare initiative to construct affordable housing.

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On Oct. 22, Enterprise Community Investment Inc. announced the closing of a $6 million LIHTC transaction for the construction of seven affordable housing properties and for the acquisition and rehabilitation of four existing developments in Philadelphia. The properties will yield a combined 99 affordable units. The rehabilitation work of the existing properties in Center City, West Philadelphia, River Wards and North Philadelphia, done by developer Mission First Housing Group, will include replacement of windows, improving masonry, adding new interior and exterior paint, new hot water heaters and plumbing fixtures, increased insulation, installation of programmable thermostats, new flooring in kitchens and living areas and new appliances.

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TIAA-CREF, a full-service financial company, and Jonathan Rose Companies announced the Rose Affordable Housing Preservation Fund LLC on Oct. 22. The $51.6 million fund will go toward the acquisition and rehabilitation of affordable and mixed-use housing in metropolitan areas throughout the United States. Nathan Taft, director of acquisitions for Jonathan Rose Companies, said in an article in the magazine Commercial Property Executive that the fund is focused on investing in existing affordable housing and mixed-income housing in select markets nationally. Jonathan Rose Companies, a green real estate policy, planning, development and investment firm, will manage the fund. The fund will concentrate on markets including Washington, D.C., Boston, Chicago, Denver, Los Angeles, San Francisco, Portland, Ore. and Seattle. The fund is targeting developments in the $25 million to $50 million range of total capitalization, particularly mixed-income, LIHTC and Section 8 properties, as well as properties that have expiring affordability restrictions.

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On Oct. 27, Great Lakes Capital Fund (GLCF) announced the closing of the $138.5 million fund, GLCF for Housing Limited Partnership 29 (Fund 29). Money will go toward the construction of 23 community developments in Michigan, Illinois, Indiana, Minnesota and Wisconsin. A total of 2,119 affordable units will be made available. Fund 29, which had 13 investors, is composed of 12 banks and one insurance company. The 23 properties to be constructed includes 12 multifamily properties, six senior living properties, three properties for both multifamily and senior living and two properties for both multifamily and special needs.

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Red Capital Group LLC announced Nov. 3 the completion of a $16.5 million tax credit equity bridge loan with The Michaels Development Company (MDC) for Sugar Estates Apartments. The loan will fund the construction of the 80-unit affordable senior housing property in St. Thomas, U.S. Virgin Islands. Prestige Affordable Housing Fund and Boston Financial Investment Management served as co-syndicators. Construction costs are expected to total $31 million.

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PEOPLE IN THE INDUSTRY

WNC, an investor in real estate and community development initiatives, announced Oct. 6 that Daniel Garrett joined the firm as vice president, originations. Garrett is also the president and chief executive officer of Garrett Development Company. Previously, he was executive vice president and director of asset management for Midwest Housing Equity Group. He received a master’s degree from Drake University and holds a Housing Certified Credit Professional designation. He has also been a member of the city of Des Moines Housing Appeals board since 2010.

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Hunt Mortgage Group, a commercial real estate lender, announced Oct. 23 the addition of Daniel Eibler as director. He will lead the effort to expand Hunt Mortgage Group’s product offering locally and throughout the Midwest. Eibler will work in the newly opened commercial mortgage financing office in Cleveland. The office will focus on areas such as Indianapolis; Minneapolis; Detroit; Grand Rapids, Mich.; Nashville, Tenn.; Knoxville, Tenn.; Memphis, Tenn.; Chicago; Omaha, Neb.; St. Louis; Des Moines, Iowa; Little Rock, Ark.; Oklahoma City, and Sioux Falls, S.D. Eibler will concentrate on Fannie Mae DUS, Freddie Mac, FHA and Bridge Loans, CMBS and other loan vehicles beyond Hunt Mortgage Group’s traditional multifamily properties. Prior to joining Hunt, he was a director at Red Mortgage Capital LLC, and before that, he was a vice president at KeyBank Real Estate Capital, a first vice president at Love Funding Corporation and a director at Column Financial Inc. He holds a Bachelor of Science degree in business administration in real estate and finance from Kent State University, and is a member of the Mortgage Bankers Association and the International Council of Shopping Centers.

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On Nov. 4, WNC announced the promotion of Melanie Wenk to senior vice president of the national investor and real estate community development. Wenk joined the company in 2003 as accounting manager and quickly moved up from vice president, portfolio management and accounting, to chief financial officer in 2009. She holds a Bachelor of Science degree in accounting from California State Polytechnic University, Pomona.

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BOND

On Oct. 16, the Louisiana State Bond Commission awarded $25 million in multifamily housing revenue bonds to the Louisiana Community Development Authority for community redevelopment. A portion of the funds will go toward the acquisition and rehabilitation of Tanglewood Apartments, a 384-unit multifamily housing complex in Jefferson Parish of Westwego, La. The bonds will be available in one or more series, at no more than 8 percent interest for 40 years. The complex previously closed in 2009 after the owner, National Housing Partnership, announced it could not afford to rehabilitate the apartments following Hurricane Katrina. The award was part of $143 million in funding for local developments.