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Low-Income Housing Tax Credits News Briefs - February 2017

LIHTC Industry

Julián Castro, the U.S. Department of Housing and Urban Development (HUD) secretary, issued an exit memo Dec. 30, 2016, as he prepared to vacate his post. In his memo, Castro highlighted the importance of housing as a platform for opportunity. He stated that the program is needed now more than ever as potential tax reform changes could reduce the value of the tax credits through the lowering of corporate tax rates. Castro also stated that tax reform needs to be done in such a way that it’s thoughtful about the impact it will have on the LIHTC program and the housing market in general. In addition, he said it’s important for states to be smart about their qualified application plans. Castro also said there is a lot of work that can be done at the state level to get more out of the LIHTC program. In an interview, Castro also highlighted some of the work done with the program. He noted the more nuanced work that has been done to the application of difficult development areas (DDAs) and the use of ZIP codes or census tracts instead of larger areas. He said this gives a boost to the areas where it is more difficult to get an affordable housing development completed.

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The federal bank regulatory agencies announced Dec. 29, 2016, the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank and intermediate small savings association under the Community Reinvestment Act (CRA) regulations. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks and savings associations unless they choose to be evaluated as a large institution. “Small bank” or “small savings association” means an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $1.226 billion. “Intermediate small bank” or “intermediate small savings association” means a small institution with assets of at least $307 million as of Dec. 31 of both of the prior two calendar years and less than $1.226 billion as of Dec. 31 of either of the prior two calendar years. The asset-size threshold adjustments are effective upon publication in the Federal Register. The changes are a result of the 0.84 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the period ending in November 2016.

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The National Affordable Housing Management Association (NAHMA) announced Jan. 6 four communities selected as the 2016 winners of its annual Communities of Quality (COQ) Awards program. GHC Housing Partners won the award for exemplary family development for Forest Green Apartments in Gainesville, Fla. Broadway Towers Inc. DBA Broadway Terrace won the award for exemplary development for the elderly for Broadway Terrace Apartments in Phoenix. St. Francis Academy won the award for exemplary development for residents with special needs for Bridgeway Apartments Phase 1 & 2 in Picayune, Miss. Emanuel-Morris Brown-Ebenezer Apartments Inc. won the award for outstanding turnaround of a troubled property for EME Apartments of Conway in Conway, S.C. The 2016 COQ Awards will be presented at NAHMA’s annual winter meeting, March 5-7, in Washington, D.C.

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On Dec. 2, 2016, the Office of the Comptroller of the Currency (OCC) released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the first quarter of 2017. The evaluation periods will be held in January, February and March. The OCC encourages public comment on the national banks and federal savings associations scheduled to be evaluated under the CRA. The OCC will consider all public comments received before the close of the CRA evaluation. The schedule is available on the OCC’s website at www.occ.gov.

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Hunt Mortgage Group announced Dec. 9, 2016, the opening of an office in Charleston, S.C. John Beam, managing director, will lead the local effort. He will also be leading the firm’s Atlanta office. Beam will focus on originating agency debt, including small balance loans under the Freddie Mac and Fannie Mae Small Balance Loan Programs, as well as bridge financing through Hunt Mortgage Group’s Proprietary Loan Group. 

LIHTC State

Five members of the California Assembly introduced four bills Dec. 19, 2016, to address the state’s affordable housing crisis–including one to boost the state’s low-income housing tax credit (LIHTC) to $300 million per year. A.B. 71 would eliminate the state mortgage deduction on vacation homes and apply the $300 million annual savings to the state LIHTC. The other bills (A.B. 72, A.B. 73, A.B. 74) address the enforcement of existing state housing laws, encourage the production of housing on infill sites around public transportation and create a program to pay for the cost of housing for certain chronically homeless residents on Medi-Cal. The legislators are David Chiu, Phil Ting, Anna Caballero, Miguel Santiago and Kevin Mullin. All are Democrats and Mullin is the assembly Speaker pro tempore, while Santiago is the majority whip. All four bills are available at www.taxcredithousing.com.

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Illinois Gov. Bruce Rauner signed S.B. 2921 into law Dec. 21, 2016. S.B. 2921 extends the sunset for the state affordable housing donation credit from Dec. 31, 2016, to Dec. 31, 2021. Under the program, a taxpayer who makes a donation to a qualified nonprofit affordable housing sponsor for an affordable housing development is entitled to an Illinois state income tax credit equal to 50 percent the value of the donation. The bill is available at www.taxcredithousing.com.

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California state Sens. Toni Atkins and Jim Beall introduced S.B. 2 on Dec. 5, 2016, and S.B. 3 on Dec. 6, 2016. The two bills were part of a package of four infrastructure bills for affordable housing. The Building Homes and Jobs Act (S.B. 2) would establish a permanent funding source for affordable housing to generate hundreds of millions of dollars annually for construction of housing and homeownership assistance through a $75 fee on real estate transaction documents. S.B. 3 would authorize a $3 billion statewide housing general obligation bond that would fund existing and successful affordable housing programs in California, with the intent of addressing the shortage of housing stock.

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In response to potential uncertainty in the LIHTC equity market, the Wisconsin Housing and Economic Development Authority (WHEDA) announced it would extend the application deadline for the 2017 LIHTC round. WHEDA issued a memo to LIHTC developers and management agents stating that it is aware that changes in LIHTC pricing have created funding gaps and delayed closings for properties with LIHTC allocations, and that the change in pricing is causing challenges for those assembling applications for the 2017 LIHTC round. The deadline was moved from Feb. 3 to 5 p.m. ET March 3. In addition, the application deadline for the 2018 LIHTC cycle is delayed from Nov. 17 to Dec. 8. WHEDA is also considering other LIHTC policy and process changes that could impact existing 2016 LIHTC awards and 2017 LIHTC applications. Any additional policy and process changes will be announced.

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The Connecticut Housing Finance Authority (CHFA) announced Dec. 6, 2016, that Global Green USA awarded the public housing agency a positive grade for building strategies. The national environmental organization awarded CHFA an A- for green building strategies that lower energy bills, improve indoor air quality and reduce operating costs. These strategies can be found in Connecticut’s qualified allocation plan (QAP) and its multifamily design, construction and sustainability standards and guidelines. Grading was based on the four criteria of smart growth, energy-efficiency, resource conservation and health protection. CHFA was among 11 states to receive a high score.

LIHTC Dealmaker

WNC, a national investor in real estate and community development initiatives, announced Dec. 13, 2016, the closing of WNC California Preservation Equity Fund. WNC expects its California Preservation Equity Fund to acquire and preserve $120 million of affordable housing communities, and anticipates the fund to be fully invested by the fourth quarter of 2017. This is the firm’s first institutional fund exclusively dedicated to preserving affordable housing communities in California.

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MassHousing announced Dec. 14, 2016, the $21.4 million allocation to Homeowners Rehab Inc. (HRI) for the rehabilitation of Auburn Court on the MIT Campus in Cambridge, Mass. MassHousing provided a $14.4 million tax-exempt construction and permanent loan and a $7 million tax-exempt equity bridge loan. In addition, Homeowners Rehab provided a $2.8 million sponsor rehabilitation loan and the transaction also received $8.7 million in low-income housing tax credit (LIHTC) equity. Financing will allow HRI to upgrade existing apartments as well as build nine new apartments. Auburn Court currently has 77 apartments in eight buildings. Once rehabilitation is complete, there will be 86 apartments, with 55 designated as affordable. Of the 86 apartments, there will be 17 one-, 46  two- and 23 three-bedroom apartments. Renovations planned for the property include new heating systems, new windows and new kitchens and bathrooms. Planned green technologies will include a rooftop solar thermal system and LED lighting. Construction is expected to be complete in early 2018.

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Dec. 16, 2016, SunTrust Banks Inc. announced that its subsidiary, SunTrust Bank, closed on the acquisition of substantially all of the assets of the operating subsidiaries of Pillar Financial LLC. This includes Fannie Mae, Freddie Mac and Federal Housing Administration Agency license transfer approvals. The acquired assets include Pillar’s multifamily lending business, which is comprised of multifamily affordable housing, health care properties, senior housing and manufactured housing specialty teams. Additionally, Cohen Financial’s commercial real estate investor services business was included in the transaction. Going forward, the Pillar Financial and Cohen Financial businesses will operate within SunTrust Bank as a component of the Commercial Real Estate (CRE) area at SunTrust.

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Enterprise Community Partners Inc. (Enterprise) announced Dec. 14, 2016, the Regional Equitable Development Initiative (REDI) Fund. The $21 million revolving loan fund provides critical, early, low-cost financing for nonprofit and for-profit developers for the acquisition and preservation of affordable housing, or to develop new affordable and mixed-income housing. The fund is available in King, Pierce and Snohomish counties in Washington. Each property acquired using the REDI Fund will be required to have a share of apartments affordable to households at or below 80 percent area median income (AMI) or 20 percent below market rent. In addition, 25 percent of all apartments built or preserved through the REDI Fund must be at or below 50 percent AMI, with an additional goal to include at least 15 apartments at 30 percent AMI. Enterprise Community Loan Fund provided $6.5 million to the fund. The Low Income Investment Fund provided $4 million, Living Cities Blended Catalyst Fund provided $3.5 million, the state of Washington provided $2.5 million, King County Housing Authority provided $2 million, the city of Seattle provided $1 million, King County provided $1 million and A Regional Coalition for Housing provided $500,000.

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Steele Properties, a national real estate investment company specializing in the acquisition, rehabilitation and new construction of affordable multifamily rental properties, announced Dec. 7, 2016, the acquisition and beginning of renovation of the Peoples El Shaddai Village and St. James Manor Apartments in Dallas. Planned renovations for each individual apartment will be $35,000, and will include upgrades to plumbing and electrical, paint, flooring, lighting and new energy-efficient appliances. Both properties also will receive safety upgrades including sidewalk repairs and replacement of existing smoke and carbon monoxide detectors. Additional upgraded amenities will include renovated laundry rooms, playgrounds, picnic areas and community rooms. Peoples El Shaddai Village was built in 1969, and is a 100-apartment, 100 percent project-based Section 8 property with 22 two-story walk-up townhome buildings on 6.13 acres. There are 20 one-, 20 two-, 30 three- and 30 four-bedroom apartments. St. James Manor Apartments was built in 1965, and is a 100-apartment, 100 percent Section 8 property with 20 two-story walk-up garden-style buildings on 6.34 acres. There are 20 one-, 40 two-, 30 three- and 10 four-bedroom apartments. The acquisition and renovation of both properties are expected to total $28.5 million. Renovations began in December 2016 and will be completed by the end of 2017. The renovation of the Peoples El Shaddai Village and St. James Manor Apartments will be financed with $4.4 million each in LIHTCs from the Texas Department of Housing and Community Affairs (TDHCA).

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MassHousing announced a $4.2 million tax-exempt construction and permanent loan and a $5.8 million bridge loan Dec. 20, 2016, for the rehabilitation and extension of affordability for Berkshire Peak Apartments in Pittsfield, Mass. Other financing was provided through several sources including state and federal LIHTCs, and Community Development Block Grant funds from the city of Pittsfield. Berkshire Peak Apartments, formerly named Riverview Homes, was originally constructed in 1972. Beacon Communities LLC is renovating the 120-apartment property and planned repairs include new play areas, repairs to building exteriors and entranceways, new roofs, new heating and hot water systems, community building improvements and renovations of apartment kitchens and bathrooms. There are 120 apartments, with 24 one-, 48 two-, 36 three- and 12 four-bedroom apartments. Apartments will be available to households earning at or below 60 percent of the AMI, with 18 apartments specifically reserved for households earning at or below 30 percent AMI and 12 apartments set aside for homeless families.

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Boston Capital announced Nov. 29, 2016, its investment in the construction of Saint Francis Apartments at Cathedral Square, a permanent supportive housing property in Denver. Saint Francis Apartments at Cathedral Square will be located on a 0.2-acre parcel of an existing parking lot. The property will feature 50 one-bedroom apartments in a six-story building. Amenities will include meeting/case management offices, a community kitchen and dining area, a library/computer lab, resident lounges and central laundry. Half of the apartments will be available to the chronically homeless. The remaining apartments will accommodate individuals with chronic mental illness, alcohol or drug addiction, physical or developmental disabilities (including HIV/AIDS) or victims of domestic violence. Saint Francis Apartments at Cathedral Square will be built with LIHTC equity.

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Conifer Realty LLC and Volunteers of America Upstate New York (VOAUPNY) celebrated Dec. 15, 2016, the grand opening for Cobblestone Place at Webster, a senior housing development in Webster, N.Y. Cobblestone Place at Webster is available to residents 62 and older. Of the 60 apartments available, 50 percent have been set aside for frail elderly residents, and 18 have been set aside for frail elderly residents at risk of homelessness. An additional nine apartments have been designed for those with special needs, including those with hearing and visual impairment. Development costs were approximately $12 million. The New York Home Community Renewal Housing Finance Agency provided $5.8 million in tax-exempt bonds to finance construction. Additional funding included a $6 million state MRT loan, $120,000 from the Monroe County Home Fund, $120,000 from the New York State Energy NYSEDRA, $300,000 from the Federal Home Loan Bank Loan and $2.9 million in LIHTC equity.

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Walton Communities, a privately held company that develops, owns and manages apartment communities, announced Dec. 8, 2016, that it secured more than $14 million in financing for the construction of an 80-apartment affordable apartment complex for seniors in Augusta, Ga. The transaction was completed with SunTrust Community Capital (STCC). Financing includes an $8.6 million federal equity investment from STCC, a $3.6 million equity investment from Walton Communities and a $1.9 million loan from Augusta Housing Authority. There will be one- and two-bedroom apartments, as well as an on-site community room, fitness center, and arts and crafts room. Construction began in December 2016 and is slated for completion by January 2018.

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KeyBank’s Community Development Lending and Investing (CDLI) group announced $95.2 million in tax-exempt bond financing Dec. 12, 2016, for the construction of affordable apartment homes in Auburn, Wash. Villas at Auburn and the Reserve at Auburn are being built by AVS Communities. The Villas at Auburn will offer 295 affordable apartments to families, and the Reserve at Auburn will offer 297 affordable apartments to seniors. Construction for both properties is being financed with 4 percent LIHTCs and will be available to residents earning no more than 60 percent of the AMI. Additional financing was provided by the CDLI group, which provided a $47 million construction loan for the Reserve at Auburn, with a $40.6 million Freddie Mac Tax Exempt Loan (TEL) arranged by Key’s Commercial Mortgage Group. Construction of Villas at Auburn is financed with a $48.2 million construction loan from CDLI, and a $40.9 million Freddie Mac TEL arranged by Key’s Commercial Mortgage Group.

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Gardner Capital Development announced a $4.7 million LIHTC allocation Dec. 7, 2016, from the Oklahoma Housing Finance Agency for the development of Ridgeview Heights Apartments in El Reno, Okla. The $6 million development will provide 46 one- and two-bedroom, duplex, villa-style apartment apartments for seniors. All apartments will be leased to seniors 62 and older, with some apartments available at 40 to 60 percent of the AMI. In addition, five apartments will be fully accessible for residents with physical handicaps. Construction is expected to begin in spring 2017, with completion slated for approximately 12 months after construction begins.

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The groundbreaking for Roaring Fork Apartments in Basalt, Colo., was Dec. 6, 2016. Developer RealAmerica Companies LLC received $10.9 million in LIHTCs for the construction of 56 apartments in a single, four-story complex. The property will provide 45 one- and 11 two-bedroom apartments. Of the 56 apartments, six will be available at 30 percent of the AMI, 11 will be available at 50 percent of AMI, 27 will be available at 60 percent of AMI. The remaining 12 apartments will be available at market rate. CHFA provided $11.1 million in LIHTCs. In addition, the city of Basalt contributed $175,000.

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The DC Department of Housing and Community Development (DHCD) awarded So Others Might Eat Inc. (SOME) $5.8 million in LIHTCs Dec. 8, 2016, for the construction of Altamont Place in Washington, D.C. SOME received $5.8 million in 9 percent LIHTCs and $1.4 million in federal funding from the Neighborhood Stabilization program. Altamont Place apartments will provide 38 apartments available at no more than 30 percent AMI. Completion is scheduled for fall.

LIHTC People

The National Affordable Housing Management Association (NAHMA) announced Nov. 28, 2016, the board of directors for 2017-2018. Officers’ terms are for two years and terms expire Oct. 31, 2018. Additionally, NAHMA announced the appointment of Juliana Bilowich Dec. 1, 2016, as its new coordinator of government affairs effective immediately. Bilowich will facilitate the development of public policy positons in coordination with the association’s director of government affairs, committee chairs, members and board of directors. She will also track and monitor federal legislation and regulations related to affordable housing. Before joining NAHMA, Bilowich was with the Maryland Public Interest Research Group, where she managed statewide issues campaigns. Previously, she was a teaching assistant in Morocco, as well as a construction crew leader for Habitat for Humanity.

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Scott Farmer was named executive director of rental investment of the North Carolina Housing Finance Agency (NCHFA), effective Jan. 1. Farmer has been with the NCHFA for 17 years, serving most recently as director of rental investment since 2005. Before joining the agency, he worked in mortgage banking servicing. Farmer serves on the board of the Community Investment Corporation of the Carolinas of the N.C. Bankers Association and on the N.C. Task Force on Ending Veterans Homelessness. He also is on a national task force on best practices for the LIHTC program. Farmer replaces Bob Kucab, who is retiring after 30 years of service.

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Lancaster Pollard’s housing group announced Jan. 5 that Adam Diehl will expand his territory in the mid-Atlantic and Northeast regions to cover  nine states. Diehl was promoted to vice president in early 2016 to provide investment and mortgage banking finance services to clients in Maryland, Virginia and Washington, D.C. With the new year, Diehl was also made responsible for clients in Massachusetts, Maine, New Hampshire, Rhode Island, Vermont and West Virginia. Diehl will be working out of Lancaster Pollard’s main office in Columbus, Ohio.

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The National Low Income Housing Coalition (NLIHC) announced individuals who will be honored at its 2017 leadership conference in April. Amy S. Anthony will receive the 2017 Cushing Niles Dolbeare Lifetime Service Award and J. Ronald Terwilliger will receive the 2017 Edward W. Brooke Housing Leadership Award. Each year, NLIHC recognizes two people who have demonstrated exceptional leadership in advancing socially just public policy to assure people with the lowest incomes have decent and affordable homes.

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The Georgia Department of Community Affairs (DCA) announced Dec. 19, 2016, that Philip Gilman has been named as the new director of housing finance. Gilman has been with DCA for three years and has led the development of housing policy. In addition, Andre Carmack, joined DCA Dec. 16, 2016, as a tax credit program manager in the housing finance and development division. Carmack will be responsible for managing the key processes of the LIHTC program.

Bond

MassDevelopment announced the $12.8 million award of tax-exempt bonds and $1.2 million in taxable bonds Dec. 6, 2016, to Ships Cover Preservation Partners for the acquisition and rehabilitation of Ships Cove Apartments in Fall River, Mass. The 201-apartment complex is one of two high-rise buildings that offer 100 one- and 101 two-bedroom apartments. Of the 201 apartments, 95 percent will be available to families earning less than 60 percent of the area median income (AMI). The renovation is expected to cost $8 million and take a year to complete.

Journal Category:

Low-Income Housing Tax Credits

Authors:

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