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Low-Income Housing Tax Credits News Briefs - July 2014

AFFORDABLE HOUSING INDUSTRY BRIEFS

On June 10, former U.S. Senate Majority Leader George Mitchell and former U.S. Senator Christopher Bond issued a statement supporting H.R. 4717. The bill would amend the Internal Revenue Code of 1986 to make permanent the 9 percent credit rate floor for new construction, and create a new 4 percent credit rate floor for investment in existing developments. The co-chairs of the Bipartisan Policy Center Housing Commission said that by leveraging the resources of the private sector, the low-income housing tax credit (LIHTC) has helped finance roughly 2.6 million affordable rental units since the program was first created. The co-chairs stated that the aggregate foreclosure rate of LIHTC properties is less than 1 percent. They add that, due to rent amounts increasing, and with the shortage of affordable rental housing now at crisis levels, the need for LIHTC programs has never been greater. In the statement, Mitchell and Bond urge the House Ways and Means Committee to pass H.R. 4717. The bill is available at www.taxcredithousing.com.

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The U.S. Department of Housing and Urban Development (HUD) updated its LIHTC Database on May 1. HUD created the database in 1997 and it contains information on 39,094 properties and nearly 2.5 million housing units placed in service between 1987 and 2012. The May 2014 update included data for properties placed in service through 2012 in addition to revisions made to previous years’ data. A total of 633 properties and 44,992 units placed in service in 2012 were added to the database, and 558 properties and 65,107 units that were placed in service between 1987 and 2011 were also added to the database. The database and its updates are available at the HUD User Home Page.

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On May 19, Moody’s Investor Service, the bond credit rating business of Moody’s Corporation, released its updated methodology for assigning issuer ratings to housing finance agencies. The methodology provides general guidance to help issuers, investors and other interested market participants understand how qualitative and quantitative risk characteristics can affect rating outcomes. The new methodology incorporates a score card and has a new credit factor that addresses the issuer’s risk profile. The assessments are based on the analysis of financial position, loan portfolio, risk profile and management operating environment. The report is available at at Moody's.

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The Office of the Comptroller of the Currency (OCC) on June 2 released a list of Community Reinvestment Act (CRA) performance evaluations for national banks, federal savings associations and insured federal branches of foreign banks. There were 36 evaluations for the period of May 1 to May 31. A total of eight entities received outstanding evaluations, 28 rated as satisfactory and none rated as needs to improve or substantial noncompliance. The list of evaluations is available the OCC.

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STATE BRIEFS

The New York fiscal year 2014-2015 budget plan was enacted on May 13. The budget includes an increase in the cap for the state LIHTC program. The cap is now $56 million, effective March 31, increased from $48 million. The cap will increase again to $64 million effective April 1, 2015. In addition, under the budget plan, businesses that are part of the SUNY Tax-Free Areas to Revitalize and Transform Upstate NY (START-UP NY) program will also be eligible for a telecommunication services excise tax credit. START-UP NY is an initiative to transform SUNY campuses and other university communities across the state into tax-free communities for new and expanding businesses. The budget plan is available at www.taxcredithousing.com.

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A ceremonial signing was held for Kentucky’s H.B. 175 on May 21. The bill gives certain corporate powers to the Kentucky Housing Corporation (KHC) to provide affordable housing solutions for families and communities. KHC will now be able to service mortgage loans, administer federal or state program contracts and perform other housing activities. This will enable KHC to facilitate the delivery or preservation of affordable housing for lenders, holders, housing finance agencies or other third-party entities that are located within or without state boundaries. In addition, KHC will be exempt from the regulations of the Department of Insurance and the laws of the commonwealth relating thereto. The bill is available at www.taxcredithousing.com.

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On May 20, the Ohio Housing Finance Agency (OHFA) announced the 2014 LIHTC program award recipients. More than $27 million in federal LIHTCs was awarded to 46 developments. Awards ranged from $1.5 million to $3.5 million. The affordable housing developments located in 31 counties will be available to low-income families, seniors and individuals with disabilities. The list of award recipients is available at www.taxcredithousing.com.

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The Minnesota Housing Finance Agency (MHFA) announced on May 22 that as much as $110 million is available in 2014 bonds. Of that total, $100 million is available for housing, with $80 million in housing infrastructure bonds proceeds and $20 million in government obligation bond proceeds. Applications for the 2014 multifamily request for proposals (RFPs) and for 2015 LIHTC Round 1 were due by 5 p.m. on June 10. Funding awards will be approved by the Minnesota Housing board on Oct. 23.

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The Colorado Housing Finance Agency (CHFA) announced on May 23 the completion of the first LIHTC allocation round of 2014. A total of 26 applicants requested more than $25 million in LIHTCs. Of these applicants, six will receive awards totaling $6.8 million and are expected to produce 381 affordable rental housing units. Awards ranged from $539,165 to $1,178,762. A list of the award recipients is available at www.taxcredithousing.com.

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On May 26, the Wyoming Community Development Authority board of directors approved $2.8 million in grants for affordable housing. A total of $1.3 million in LIHTCs and $1.5 million in HOME Investment Partnership program funding was approved, benefiting 110 rental units in three multifamily properties. Valley Hills Apartments in Casper provides 36 units, Rehabilitation of Cedar Creek Apartments II in Jackson provides 27 units and Fox Farm Townhomes in Cheyenne provides 47 units. The deadline to apply for a second round of funding is Aug. 22, and final decisions will be made Nov. 13.

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The California Housing Partnership Corporation (CHPC) and the Southern California Association of Non Profit Housing (SCANPH) released the report, “How Los Angeles County’s Housing Market is Failing to Meet the Needs of Low-Income Families,” in late May. The report, which is a supplement to the statewide CHCP report published in February, found that Los Angeles County has the largest deficit of affordable housing for low-income families in California. The report also found that there is a shortfall in Los Angeles County of nearly 500,000 affordable homes; median rents in Los Angeles County increased by 25 percent between 2000 and 2012, while the median income declined by 9 percent; there are currently 39,400 men, women and children facing homelessness in LA County; and one in nine homeless people is a veteran; and 91 percent of Los Angeles County’s very low-income renter households pay more than 30 percent of income in rent. The report provides recommendations to local and state leaders to improve this deficit. These recommendations include, but are not limited to, replacing exhausted state housing bonds by passing legislature and making a general fund investment in existing rental housing production programs; authorizing a new local tax increment financing program; replacing lost redevelopment funds; and expanding the supply of permanent supportive housing for homeless individuals and families. The reports are available at www.taxcredithousing.com.

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DEALMAKERS

Dominium, an apartment development and management company, announced May 19 the acquisition of Redland Arms Apartments. The affordable housing property, located in Homestead, Fla., was acquired in March. The property is comprised of 66 units that will undergo internal and external upgrades. Upgrades include improvements to the fitness room, new furniture and fixtures for the community room, and landscape improvements.

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On May 20, Boston Capital announced its investment in the construction of The Millennium, an affordable multifamily development in McKinney, Texas. The property, developed by GroundFloor Development, will be built with low-income housing tax credit (LIHTC) equity. The Millennium will provide 164 units situated in seven, four-story buildings. There will be 48 one-bedroom, 92 two-bedroom and 24 three-bedroom units, with 34 units offered at competitive market rents. Affordable units will be available to families and individuals earning 60 percent or less of the area median income (AMI). Amenities will include a clubhouse building with a leasing office, a fitness center, a media room, a community room, a swimming pool, a sports court, a playground and barbeque grills and picnic tables. Construction is expected to generate $16.9 million in local salaries and create close to 250 new jobs.

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Lancaster Pollard on May 21 announced financing for the rehabilitation of The Haciendas Apartments. Originally the Falcon Point Apartments, the multifamily affordable housing property located in Indianapolis, was declared uninhabitable after it was damaged by a May 2008 tornado. Financing for this rebuild was provided through a $7.7 million Federal Housing Administration Sec. 221(d)(4) program loan. Additional financing includes a 4 percent LIHTC; a $10 million Community Development Block Grant-Disaster (CDBG-D) for construction and acquisition costs; and tax-exempt bonds issued by the Indiana Housing & Community Development Authority (IHCDA). Lancaster Pollard created a competitive bidding process that provided a low, fixed interest rate on the bonds. Rehabilitation of The Haciendas Apartments will transform the property into a 15 building, two-story walk-up style apartment complex with 200 one-, two- and three-bedroom units. Renovations will include new roofs, doors, windows, plumbing and electrical, as well as a new playground, new gazebos and a new splash park.

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Renovations of the Kings Valley Senior Apartments were completed May 28. The affordable housing property was originally built in 1973, and acquired and rehabilitated the property as part of the EAH Housing Stewardship program, a program designed for the planning and management of a property. The 99-unit property received water- and energy-efficient upgrades and solar photovoltaic panel installation. For the exterior, siding on the community building, apartment balcony decks and railings have also been replaced. Construction and rehabilitation costs totaled $8.5 million, and the rehab was financed with a tax-exempt bond loan from Citi Community Capital, equity provided by Enterprise Community Investment, Sonoma County HOME funds and Affordable Housing program funds awarded by the Federal Home Loan Bank of San Francisco.

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WNC announced June 2 the closing of WNC Institutional Tax Credit Fund X California series 12 LP (WNC Cal 12). The $48.5 million LIHTC fund had 11 investors and will acquire nine properties in Los Angeles, San Diego, San Bernardino and Kern counties. There are seven properties for families and two properties for seniors providing 714 units of affordable housing.

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On June 5, developer DHIC Inc. announced the completion of the redevelopment for Water Garden in Raleigh, N.C. The property includes 148 affordable apartments for seniors and families. The property is an intergenerational community, where multiple generations reside and in which all individuals are an integral and valued part of the setting. Construction costs totaled $22 million and construction was completed in two phases. The first phase, Water Garden Village, is a 60-unit development with one-, two-, and three-bedroom apartments. Units are available for households earning 60 percent or less of the AMI. Costs totaled $10 million, with funding provided from the City of Raleigh, Wake County and PNC, and equity raised from a LIHTC award from the North Carolina Housing Finance Agency. This first phase was complete in November 2012. The second phase, Water Garden Park, is an 88-unit development for seniors age 62 and older. Costs totaled $12.1 million, and construction was financed using LIHTCs awarded by the North Carolina Housing Finance Agency. In addition, financing from the City of Raleigh, Wake County, the Community Affordable Housing Equity Corporation and Wells Fargo Bank was also provided. This property opened in January 2014. Both phases feature on-site management, fitness rooms, laundry facilities and business centers.

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On June 4, LDG Development and the Texas Department of Housing and Community Affairs (TDHCA) announced the development of Newport Village in Crosby, Texas. The affordable multifamily housing property will yield 80 garden-style one-, two- and three-bedroom apartment units. TDHCA provided $7.5 million in tax credits and additional funding came from First Sterling Bank, Community Bank of Texas, the Harris County Housing Finance Corporation and LDG Multifamily LLC. Construction costs are expected to total $13.5 million. Amenities will include covered patios/balconies, a playground, a fitness center and a business center equipped with computers and Wi-Fi. Capstone Real Estate Services will manage the property, and at press time, it was expected that pre-lease applications would be accepted in the near future.

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PEOPLE IN THE INDUSTRY

On May 15, Red Capital Group LLC (RED) announced that Todd A. Rodenberg was appointed chief credit officer. Rodenberg’s responsibilities will include coordinating all loan underwriting, processing and closing activities. He will be in the Dallas office. Rodenberg will also be chief underwriter for RED’s Fannie Mae transactions, pending Fannie Mae approval. Previously, Rodenberg was a managing member and consultant for Bene Immobili LLC, a real estate consulting firm. He was also chief credit officer and executive vice president for Alliant Capital LLC, managing director for Churchill Capital Company LLC and director of agency lending for KeyBank Real Estate Capital. Rodenberg was also a member of the Fannie Mae DUS Advisory Committee; he sat on the Freddie Mac Seller Servicer Advisory Board; he was a member of the Fannie Mae Product Development Forum; he was chair of the Fannie Mae DUS Chief Underwriters Forum; and he sat on the Freddie Mac Technology Subcommittee. He currently is a member of the Mortgage Bankers Association of America.

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Tracy Peters, senior managing director of affordable housing for RED, has been appointed vice president of the Ohio Housing Council board of trustees. The Ohio Housing Council helps professionals involved in the affordable housing industry to increase their participation in public policy debates and to guide proposed regulatory requirements. Before joining RED, Peters was an audit senior at Ernst & Young. He holds a degree in finance and accounting from Miami University.

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On May 22, First Sterling announced that Brian Blanchard will oversee its west coast operations. Blanchard is the business development officer for the affordable housing syndicator. Prior to joining First Sterling, Blanchard was vice president at Marino Capital Partners, a merchant banking firm. He is a member of the California Bankers Association, and holds a bachelor’s of science degree from Nicholls State University.

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Andy Warnock, director of multifamily originations for RED, is the 2014 recipient of the Columbus Business First’s Forty Under 40 Award. The Forty Under 40 recognizes honorees under the age of 40 who have had significant community service impact, outstanding career achievements and have received other awards and recognition. Warnock first joined RED in June 2006. He has served as a co-chair for Ohio Wesleyan University’s Annual Fund and is a board member of the Columbus Apartment Association. Warnock’s community service includes roles in Leadership Hilliard, the YMCA of Central Ohio, Movement Church and Dot’s Tots, a foundation named for his grandmother, Dorotha, who was a lifelong educator. Warnock holds a master’s degree in finance from Ashland University.

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BOND

On June 3, Californians voted to pass the Veterans Housing and Homeless Prevention Bond Act of 2014 (Proposition 41; A.B. 639). The act authorizes the sale of $600 million in general obligation bonds to fund affordable multifamily housing for low-income and homeless veterans. A.B. 639 also amends the Veterans’ Bond Act of 2008 to reduce the amount of authorized bonds from $900 million to $300 million; established reporting requirements for the Department of Housing and Community Development and the Department of Veterans Affairs to evaluate any program; authorizes the Department of Housing and Community Development to provide specified assistance to veterans; and authorizes the state to provide local governments, nonprofit organizations and private developers with financial assistance, such as low-interest loans, so that they may construct, renovate and acquire affordable multifamily housing for low-income veterans and their families. The fiscal impact increases state bond repayment costs averaging roughly $50 million annually over 15 years. The bill is available at www.taxcredithousing.com.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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