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Low-Income Housing Tax Credits News Briefs - January 2022

LIHTC Industry

The multiplier for the state per-capita allocation of 9% low-income housing tax credits (LIHTCs) in 2022 will be $2.60 and the private activity bond (PAB) multiplier will remain at $110, based on Revenue Procedure 2021-45, released Nov. 10, 2021, by the Internal Revenue Service. The small-state minimum for LIHTCs will be $2,975,000 and the small-state minimum for PABs will be $335,115,000. The 9% LIHTC figure is a decrease from 2021, the final year of a four-year 12.5% boost in allocation amount, although a provision to extend that boost is included in reconciliation legislation being considered by Congress. The PAB small-state minimum is an increase of $10,120,000 over the 2021 figure.

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The California Debt Limit Allocation Committee released Nov. 19, 2021, a memorandum with an application deadline for properties in difficult development areas (DDAs) and qualified census tracts (QCTs) that expired in 2021. New DDAs and QCTs took effect Jan. 1. The deadline was in December for affordable housing properties financed by PABs and 4% LIHTCs located in 2021 DDAs or QCTs that lose that status this year.

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Increasing funding for LIHTCs was among the policy recommendations in a report Enterprise Community Partners and the National Housing Partnership Foundation released Nov. 16, 2021. “A Decade of Rental Housing Vulnerability: Lessons Learned from Financial Crisis to Coronavirus,” was based on a survey of more than 100 individuals from across the affordable housing industry. Other suggestions included easing regulatory burdens and redoubling efforts to assist underserved populations.

LIHTC State

Colorado Housing and Finance Authority announced Nov. 9, 2021, its second round of 2021 federal and state 4% low-income housing tax credits (LIHTCs). Fourteen developments in Arvada, Aurora, Brighton, Boulder, Colorado Springs, Denver, Estes Park, Keystone, Limon and Sheridan will receive funds. The awards aim to construct or preserve more than 1,300 affordable apartments. Flo, a senior affordable housing property developed by Denver Housing Authority, received the largest federal 4% allocation with $38.7 million; four properties received a maximum $10 million each in state credits.

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The Indiana Housing and Community Development Authority announced Nov. 18, 2021, its LIHTC recipients for 2022. More than $170 million was awarded to 17 developments to create or preserve 895 homes. Eighty-two homes will serve those who have experienced homelessness. The largest of the 17 developments is Franklin Cove, a new construction in Franklin, Indiana, with 108 homes.

LIHTC Dealmaker

Merchants Capital secured more than $102 million in combined debt and equity financing in December 2021 to redevelop the 265 homes at Granada Homes in San Antonio, Texas, which serves low-income seniors. Financing includes a $43 million Merchants Bank of Indiana construction loan, $35 million in Merchants Capital syndicated tax credit equity and a $24 million Merchants Capital forward commitment for a Fannie Mae loan with a mortgage-backed security purchased by the American Federation of Labor and Congress of Industrial Organizations. The property was initially constructed as the Plaza Hotel in 1927. Canopy and the Granada Trade Council Housing Inc. are redeveloping the property.

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The Aurora Housing Authority (AHA) in November 2021 received $9.7 million in state low-income housing tax credits (LIHTCs) to build the second phase of the Peoria Crossing affordable housing development in Aurora, Colorado. AHA also received federal LIHTCs. The developer plans to break ground in fall 2022 on the $25 million development. Serving households earning between 30% and 60% of the area median income (AMI), Peoria Crossing is a transit-oriented development less than half a mile from two Regional Transportation District stations.

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The Denver Housing Authority and Brothers Redevelopment Inc. financially closed in October 2021 on Valor on the Fax in Denver. The four-story, 72-home supporting housing development is financed by a LIHTC equity investment from Enterprise. The development is scheduled to open in late 2022. The property will serve those who have experienced brain injuries as well as their families.

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MassHousing financially closed in November 2021 on $35.3 million in financing to Urban Edge for the refinancing and renovation of the 78-home Bancroft Dixwell Apartments in Boston. Urban Edge is merging properties in Roxbury and Jamaica Plain into one scattered-site entity. MassHousing provided Urban Edge with approximately $16.5 million in tax-exempt construction and permanent financing along with $18.8 million in bridge loan financing. The endeavor also received $22.7 million in federal LIHTC equity financing, $3.1 million in federal historic tax credit (HTC) equity financing, $1.1 million in state HTC equity financing and an $18.9 million seller note. Enterprise Housing Credit Investments LLC is the tax credit syndicator and investor.

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Monarch Private Capital announced in November 2021 it invested LIHTC equity in a $30 million property in Summerville, South Carolina. The rehabilitation of Redemption Towers, an existing 96-home complex, will be for seniors 62 and older earning up to 60% of the AMI. Mansermar Development LLC will partner with Monarch in the development and management along with George-based nonprofit ReBuild America Inc. Renovations will improve kitchens and bathrooms with an eye toward energy efficiency.

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Woda Cooper and co-developer nonprofit Parallel Housing Inc. in November 2021 were allocated LIHTCs from the Indiana Housing and Community Development Authority to build Stanley Terrace in Plainfield, Indiana. The 60-home, $13.2 million community near Indianapolis will host residents earning between 30% and 80% of the AMI.

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The E’Port Family Homes opened in November 2021 in Elizabeth, New Jersey. Genesis Companies partnered with the Housing Authority of the City of Elizabeth to develop the property. The $18 million development hosts apartments for those earning up to 60% of the AMI. The project was financed with approximately $13 million in LIHTCs.

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KeyBank provided in November 2021 $40.6 million for the development of Finca Serena in Porterville, California. KeyBank delivered a $15 million investment in LIHTC equity along with a $23.1 million construction loan and a $2.5 million permanent loan. Seventy-eight of the 80 homes are for those earning between 15% and 60% of the AMI. UPholdings LLC. and Self-Help Enterprises are developing the property.

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Pacific Crest Affordable Housing and the National Equity Fund (NEF) started construction in October 2021 on Phase 2 of the Canal Commons development, adding 48 homes in Bend, Oregon. Completion of Phase 2 construction is anticipated in October. The apartments are for those earning between 30% to 53% of the AMI. The first phase, also with 48 apartments, finished in December 2019. NEF secured LIHTCs to build the $15 million property, which was awarded an estimated $9 million in 9% LITHC equity in 2020.

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NEF closed in November 2021 on $85 million for its Emerging Minority Developer Fund, which aims to finance and embolden LIHTC developers who are Black, Indigenous and/or People of Color. Ally Bank, BMO Harris Bank, CIBC, Comerica Bank, Fifth Third Bank, KeyBank, PNC Bank, Truist and U.S Bank committed to the first round of funding. The fund’s initial goal was $100 million.

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Atlanta-based TBG Residential broke ground in November 2021 on Legion Park, an affordable housing property in Warrenton, Georgia. The 72-home, $15 million complex received $9 million in 9% LIHTCs. The homes are available to those earning between 40% and 80% of the AMI. Construction on the 14.4-acre property is expected to finish in January 2023 with one-, two- and three-bedroom apartments.

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Construction started in the fall of 2021 on Belknap Place in Grand Rapids, Michigan. The 50-apartment affordable housing complex received $9.1 million in LIHTCs in 2020. Grand Valley State University leased the land, which hosted since-demolished single-family homes, to developers Third Coast Development LLC and PK Housing and Management Co. The $12 million development is scheduled for completion in September.

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Homeward Central Harlem, a $22 million property in Harlem, New York, broke ground in November 2021. The development is an LGBTQ-affirming property for formerly homeless young adults between ages 18 and 24 and will have 50 apartments and on-site supportive services. Funding includes $14 million in federal LIHTC equity. Construction completion is expected in 2023. Type A Projects and Azimuth Development Group are developing the site.

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Broadway Cove and 735 Davis, a pair of affordable housing developments in San Francisco, opened their doors in November 2021. BRIDGE Housing and The John Stewart Company served as co-developers on the multibuilding endeavor. The 125 apartments of Broadway Cove serve those earning between 30% and 120% of the AMI. 735 Davis, with 53 homes, will serve seniors, with a Senior Operating Subsidy program cutting rents in half for 13 of the homes. The two developments combined for $140 million, with Bank of America providing more than $125 million in debt and equity financing.

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Developers broke ground in the fall on Newcomb Senior Housing in Vineland, New Jersey. The $35 million development is financed in part with federal LIHTCs. Eastern Pacific Development and Brookfield Construction will build two, four-story, 66-apartment midrise buildings for those 55 and older. The previously hosted Newcomb Medical Center. The development, which was initially to begin construction in 2019 with 70 apartments, endured setbacks due to a rise in building costs as well as the COVID-19 pandemic. The first phase is due for completion before the end of this year.

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Hunt Capital Partners committed $19.8 million in federal and state LIHTC equity financing in November 2021 for the new construction of 56 affordable housing apartments. Kaiāulu O Halele'a II is located in Kīhei, Hawai'i, on the island of Maui. Ikaika 'Ohana and Urban Housing Communities are developing the first two phases of the property. Hunt Capital Partners syndicated the federal and state LIHTCs through two proprietary funds. Total development costs for the second phase, set for completion in December, are $39 million.

LIHTC People

Joaquin Altoro was appointed Nov. 9, 2021, as administrator of the Rural Housing Service within the U.S. Department of Agriculture’s Rural Development Agency. The agency provides numerous programs aimed at rural areas, with an eye toward building or improving housing and community facilities. Altoro spent the past two years as the chief executive officer and executive director of the Wisconsin Housing and Economic Development Authority.

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Belinda Oakes was announced Nov. 15, 2021, as the chief financial officer of Community Preservation Partners. Oakes will oversee the development, oversight and maintenance of financial policies and accounting systems and functions, ensuring proper financial controls are in place. Previously, Oakes spent more than 19 years at Highridge Costa Companies in a series of roles, including as vice president of accounting and taxation. Earlier in her career, she spent time at Novogradac, Oracle and Arthur Andersen.

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Renee M. Willis was named Nov. 9, 2021, as the National Low Income Housing Coalition’s (NLHIC’s) first senior vice president for racial equity, diversity and inclusion. Willis will endeavor to emphasize NLIHC’s commitment to those issues in its policies, programs and practices. Previous, Willis was NLIHC’s vice president for field and communications. Willis has more than two decades of experience at the local, state and national levels working on affordable housing for diverse communities.

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KeyBank in November 2021 appointed Brian Maddox as head of its newly created Community Development Financial Institutions (CDFI) team and Ted Witt as senior banker. Maddox’s team will aim to broaden economic possibilities for low-income families and communities through marketing, lending and investing as well as delivering banking products and services to CDFI partners. Witt will focus on community development in the North Central states, part of KeyBank’s effort to expand its commitment to affording housing across the country.

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The Millennia Companies Nov. 12, 2021, promoted Angela Sinito to vice president. Sinito will lead portfolio growth strategy, lead key asset management functions, establish new debt and equity platforms, and complete tax-exempt bond and low-income housing tax credit transactions. Sinito will continue to oversee Millennia’s institutional investor relations activities as well as manage Year 15 and market-rate multifamily development endeavors.

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Cinnaire announced a pair of promotions Nov. 12, 2021, elevating Josh Ghena to senior vice president of equity business funding and Mike Witt to senior vice president of asset management. Witt, who joined Cinnaire in 2020, will lead the growth and development of Cinnaire’s asset management team and oversee Cinnaire investments in multifamily developments across multiple business lines. Ghena, who joined Cinnaire in 2014, will manage the company’s investment strategies and provide oversight of its equity funds, investor due diligence and fund modeling.

LIHTC Bond

Private activity bond (PAB) issuance for multifamily housing increased to a new record in 2020, according to a report released in November 2021 by the Council of Development Finance Agencies (CDFA). Issuance of multifamily PABs–which can be combined with 4% low-income housing tax credits (LIHTCs) in multifamily housing–reached $17.2 billion in 2020, up from the previous record of $16.4 billion in 2019. The jump in multifamily PAB issuance comes despite a decrease in overall PAB issuance. After reaching an all-time high of $30.5 billion issuance in 2019, PAB issuance dropped to $27.7 billion in 2020, according to the CDFA Annual Volume Cap Report. The CDFA report said 20 states were oversubscribed for cap allocation in 2020, meaning bond issuers requested more cap allocation than what is available, forcing states to ration the cap.

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The Internal Revenue Service issued a revenue ruling and a revenue procedure Dec. 1, 2021, concerning three 4% low-income housing tax credit (LIHTC) scenarios. Revenue Ruling 2021-20 holds that buildings are not subject to the minimum 4% floor for draw-down bonds issued before 2021, a de minimis Internal Revenue Code Section 42(h)(4)(A) obligation issued after Dec. 31, 2020, or a de minimis allocation of LIHTC funds occurring after Dec. 31, 2020. Revenue Procedure 2021-43 clarifies this ruling. A building’s financing is not deemed de minimis if the aggregate amount of the post-2020 obligations is at least 10% of the total amount of all obligations that finance the building. A post-2020 allocation of LIHTCs is not deemed de minimis if the allocation is at least 10% of the total allocations to the building that have been made on or before the date of the allocation in question.

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Developer Community Preservation Partners (CPP) announced the financial closing Nov. 1, 2021, of 218 homes across six properties in central New Mexico, completing a grouping of 654 homes in 20 properties across 10 counties in the state since 2019. The 20-property portfolio had a cost of $63 million with nearly $30 million in bond financing. The latest purchase of six properties for $7.3 million comprises developments in the cities of Las Vegas, Portales, Artesia, Belen and Ruidoso Downs. The transaction includes a 4% tax credit equity investment of $8 million. CPP will oversee a $32,000-per-unit renovation by August, when it will hand the properties over to J.L. Gray Company to own and operate.

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Starnes Senior Residences opened Nov. 4, 2021, in Clarkston, Georgia. The property hosts 128 apartments in four midrise buildings for those 62 and older and was financed with 4% LIHTC equity as well as private activity bonds. The Housing Development Corporation and the Beverly J. Searles Foundation developed the property.

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Pasadena Studios LP announced Nov. 16, 2021, it had financially closed and started building 180 affordable micro-units in Pasadena, California. The development is funded via tax-exempt bonds and LIHTCs. The units are for those earning between 30% and 60% of the area median income. The endeavor is due for completion in spring 2023. The equity partners are Alliant and Sugar Creek, and the tax-exempt bonds were provided by Citi Bank. Pasadena Studios LP is a collaboration between Community Builders Group LLC and Bridge Financial Advisors.

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Claremont, a seven-story, mixed-income affordable housing property in The Bronx, completed construction in November. The development boasts 115 homes, with 45 for low-income seniors and families. The capital stack includes $6.5 million in tax-exempt bonds as well as an allocation of $17.7 million in federal LIHTCs. Total construction costs are approximately $48 million.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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