Low-Income Housing Tax Credits News Briefs - July 2016

Friday, July 1, 2016

Industry Briefs

The National Council of State Housing Agencies (NCSHA) submitted comments May 10 to the U.S. Department of Housing and Urban Development (HUD) on the Affirmatively Furthering Fair Housing (AFFH) Tool for States and Insular Areas. HUD will require states to use this tool to complete the Assessment of Fair Housing (AFH) under AFFH. NCSHA’s shared concerns about the state tool, which the organization says imposes unreasonable requirements and goes well beyond what is necessary for states to achieve meaningful fair housing planning. Concerns were also raised about the reliability and transparency of some datasets that HUD will incorporate in the mapping and data tool. NCSHA provided recommendations to HUD, encouraging the department to provide flexibility in the use of state and local data and make optional the analysis of non-housing policy areas. AFFH requires all entities that receive funding from HUD grant programs, such as the HOME program and the Community Development Block Grant (CDBG) program, as well as public housing authorities (PHAs) to take part in the AFH process.

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The U.S. Department of Agriculture, Rural Housing Service (RHS) released a, “Notice of Funds Availability for the Rural Community Development Initiative (RCDI) for Fiscal Year 2016,” May 23. The notice lists application information and contains revised evaluation criteria. The RCDI program provides funding to help nonprofit housing and community development organizations support housing, community facilities and community and economic developments in rural areas. The deadline for receipt of the application is 4 p.m. July 22.

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On May 22, the Bipartisan Policy Center’s (BPC) Senior Health and Housing Task Force released the report, “Healthy Aging Begins at Home,” which underscores the critical need for the United States to better integrate America’s health care and housing systems. BPC states that that by 2030, seniors 65 and older will comprise more than 20 percent of the U.S. population, up from 14 percent today, and that linking health care and housing can improve health outcomes for seniors, reduce health care costs and enable millions of Americans to age safely and comfortably in their own homes and communities. The task force suggests focusing on building affordable housing for seniors, making homes and communities age-friendly, integrating health care and supportive services with housing and promoting widespread adoption of health technologies to support successful aging. To reach these goals, the task force proposes significantly expanding the low-income housing tax credit (LIHTC), as well as implementing a federal program for senior supportive housing that uses project-based rental assistance and LIHTCs to finance new construction and attract funding from health care programs. The report is available at www.taxcredithousing.com.

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The Office of the Inspector General (OIG), Department of the Treasury, released, “OIG-16-044: Audit of California Tax Credit Allocation Committee’s Payment Under 1602 Program,” May 20. OIG found that the California Tax Credit Allocation Committee (CTCAC) did not fully comply with Treasury’s 1602 Program requirements at the time of review. CTCAC substantially met the eligibility and compliance requirements, but did not meet all requirements for sub-awarding those funds to low-income housing developments. The audit was conducted as part of an ongoing oversight of the Treasury payments to states for low-income housing developments in lieu of LIHTCs for 2009. The audit is available at www.taxcredithousing.com.

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State

The Wisconsin Housing Economic Development Authority (WHEDA) announced May 5 the award of more than $140 million in low-income housing tax credits (LIHTCs) for the construction of 28 affordable housing developments throughout the state. A total of 1,307 affordable apartments will be constructed in the cities of Bayfield, Colby, Fond du Lac, Grand Chute, Madison, Merrill, Milwaukee, Nekoosa, New London, Oshkosh, Prairie du Chien, Sheboygan, Sparta, Superior and Wausau. WHEDA received 39 applications requesting $194 million in LIHTCs. The full list of awards is available at www.taxcredithousing.com.

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Massachusetts Gov. Charlie Baker announced May 17 a new $100 million MassHousing fund for the creation of workforce housing. The program will increase rental housing opportunities for households earning between 61 and 120 percent of area median income (AMI)–those who have incomes too high for subsidized housing but are priced out of affordable market rents. MassHousing is working cooperatively with the Baker-Polito Administration to commit $100 million in new resources designated for the creation of workforce housing throughout the state. The program will provide up to $100,000 of subsidy per workforce housing unit to create 1,000 new units of workforce housing statewide. The fund also leverages strategic opportunities to use state-owned land.

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Colorado Gov. John Hickenlooper signed Colorado H.B. 1465 June 6. The bill extends Colorado’s LIHTC program by another three years, from the end of 2016 through the end of 2019. The state program has been successful in directly supporting the development of more than 1,900 new affordable rental homes, leveraging $185 million in private sector investment in Colorado, helping the Colorado Housing Finance Authority (CHFA) support nearly 300 permanent supportive homeless housing units and enables CHFA to double the number of affordable rental housing homes supported last year using state and/or federal LIHTCs. The bill is available at www.taxcredithousing.com.

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The California Housing Finance Agency (CHFA) announced May 13 the first allocation round of 2016 LIHTC awards. A total of twelve developments will receive LIHTCs that will support the new construction or preservation of 1,062 affordable rental housing apartments throughout the state. A total of nineteen affordable rental housing developers requested $15.4 million in state LIHTC, competing for the $5 million available. Awards ranged from $404,795 to $1.1 million in state LIHTCs, and $373,620 to $1.2 million in 4 percent federal LIHTCs. A complete list of awards is available at www.taxcrdithousing.com.

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On June 6, the Government Accountability Office (GAO) released the report, “Low-Income Housing Tax Credit: Some Agency Practices Raise Concerns and IRS Could Improve Noncompliance Reporting and Data.” The report is based on GAO’s review of all agencies’ 2013 Qualified Allocation Plans (QAPs) and site visits. GAO found that allocating agencies generally have processes to meet requirements for allocating credits, reviewing costs and monitoring developments. However, some of these practices raised concerns. GAO noted that more than half of the QAPs did not explicitly mention all selection criteria and preferences that Section 42 of the Internal Revenue Code requires. In addition, allocating agencies notified local governments about proposed projects as required, but some also required letters of support from local governments. Also, allocating agencies can increase the eligible basis used to determine allocation amounts for certain buildings at their discretion. However, they are not required to document the justification for the increases. Because of these concerns, GAO made three recommendations for executive action in the report, focusing on Internal Revenue Service (IRS) oversight of the program. The IRS Commissioner should collaborate with allocating agencies to clarify when those agencies must file Form 8823, the IRS should ensure that staff from the small business/self-employed division participate in the physical inspection alignment initiative of the interagency Rental Policy Working Group and the IRS Commissioner should evaluate how IRS could use HUD’s Real Estate Assessment Center databases, including how the information in those databases might be used to reassess reporting categories on Form 8823. The report is available at www.taxcredithousing.com

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Dealmaker

The Wisconsin Housing and Economic Development Authority (WHEDA) allocated $2.7 million in low-income housing tax credits (LIHTCs) in early May for the adaptive reuse of Badger Lofts in Wausau, Wis. Badger Lofts will offer 29 homes, with 15 one-, six two- and eight three-bedroom apartments. Construction cost is estimated to be $5.3 million, with an anticipated start date of December and completion in November 2017. Badger Lofts was one of 28 developments throughout the state to receive LIHTC allocations.

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A ribbon-cutting ceremony was May 5 for the completed renovation of Sutterview Apartments and Sierra Vista Apartments in Sacramento, Calif. BRIDGE Housing and the Sacramento Housing Authority Repositioning Program Inc. (SHARP) partnered for the rehabilitation, which included retrofitting of the exterior of the buildings, replacing nearly all major systems and installing solar energy systems. In addition, the community space at Sierra Vista was expanded, while Sutterview received a new community room, including a new rooftop terrace. Both properties were originally placed in service in 1971. Renovation costs for Sutterview were $22.1 million and Sierra Vista totaled $23.4 million.

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WNC, a national investor in real estate and community development initiatives, announced the closing of WNC Institutional Tax Credit Fund 10 California Series 14, L.P. (CA 14) May 9. CA 14 is a $113 million institutional low-income housing tax credit (LIHTC) fund that will be used to acquire nine properties throughout California. The properties, located within Alameda, Contra Costa, Los Angeles, Placer, Riverside, San Diego and Santa Clara counties, will offer a 1,305 affordable rental homes to individuals and families. CA 14 includes 10 institutional investors and is WNC’s 19th fund closed in California.

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Boston Capital announced its investment May 10 in the construction of Solutions Escondido Apartments. Solutions Escondido Apartments, a 33-home affordable community in Escondido, Calif., will be financed with LIHTC equity. Of those 33 apartments, 23 will be specifically designated for special needs tenants, including homeless and formerly homeless families. The remaining 10 rental homes will be available to large families. There will be 22 two-bedroom and 11 three-bedroom apartments in a three-story building. Amenities will include a two-story community building with a common room and kitchen, a computer lab, a meeting room, a lobby and a central laundry room. The property will also feature 1,250 square feet of commercial space.

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The grand opening of Sol Naciente in Fort Morgan, Colo., was May 9. Colorado Housing and Finance Authority (CHFA) awarded $8.8 million in federal LIHTCs in 2014 to support the development. The property provides 50 apartments and is available at no more than 60 percent of the area median income (AMI). For a household’s income to qualify, 65 percent of the income must come from agricultural labor. Development costs were approximately $13 million.

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The Yampa Valley Housing Authority (YVHA) announced May 13 the development of the Reserves at Steamboat Springs, a $16 million property in Steamboat Springs, Colo. Financing included nearly $13 million in LIHTCs from the YVHA, which partnered with Overland Property Group for development. There will be 24 two- and 24 three-bedroom homes, which will be available to families earning between 40 and 60 percent of the AMI. Amenities will include a clubhouse, a fitness facility, a community room and a library. Construction is expected to be complete in April 2017.

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Alden Capital Partners LLC announced May 13 the closing of Alden Capital Partners Tax Credit Fund 20, LP (ACPTCF 20), a $117.7 million tax credit equity fund. The fund, which comprises 16 affordable housing properties in nine states, had six institutional investors representing the financial and insurance sectors. Of the 16 properties, 11 are for families, with the remaining five properties for seniors. More than 1,200 affordable rental homes will be available to residents who make at or below 60 percent of the AMI.

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The groundbreaking for the Foundry Apartments in Englewood, Colo., was May 10. Developer SW Development Group received $9.7 million in federal LIHTCs from CHFA. The affordable housing complex will be built on the former General Iron Works site, with redevelopment of the property to include a three-story building with 70 affordable housing apartments, with 42 one- and 28 two-bedroom rental homes available to individuals and families earning between 30 and 60 percent of the AMI. Future redevelopment phases are to include commercial and retail space, and additional multifamily homes. Development costs are projected to be approximately $15 million. The Foundry Apartments are scheduled to open April 2017.

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On May 31, Pembrook Capital Management LLC, a commercial real estate investment manager and balance-sheet lender, announced a $16.6 million loan to the NHP Foundation for the acquisition of the Mark Twain Hotel in Chicago. The loan, given through Pembrook’s third commercial real estate debt fund, will aid in the preservation of 152 affordable homes in the Single-Room Occupancy (SRO) property. Constructed in 1932, the Mark Twain Hotel also provides more than 9,000 square feet of retail space on the ground floor. The NHP Foundation is working on the redevelopment phase for the property, with plans to add kitchens to each apartment, and community space to the property. Construction is expected to begin in 2017.

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On May 16, the New Hampshire Housing Finance Authority (NHHFA) approved financing for two multifamily developments. Chandler Place in Plaistow, and Kensington Lane in Bedford, will together provide 66 affordable rental homes for seniors, veterans and families. Chandler Place is the first of a proposed two-phase development. When complete, this first phase will include a mix of 23 one- and two two-bedroom homes. The building will be located on an 11-plus-acre site. Kensington Place will provide 41 newly constructed affordable workforce homes, of which 20 percent of the apartments will be targeted to veterans. When complete, Kensington Place will provide 17 one- and 24 two-bedroom homes situated in one building on 3.5-acre site. Funding for the properties includes federal LIHTCs, federal HOME funds, state Affordable Housing Fund financing. The program provides low interest loans and grants for the construction, rehabilitation and/or acquisition of housing affordable to households of low and moderate income.  These two developments were part of the original six awarded a combined total of $31 million in LIHTCs in November 2015.

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Boston Capital announced May 24 its investment in the construction of Maple Grove Commons, an 80-home affordable apartment community for families in Madison, Wis. Maple Grove Commons will be built with LIHTC equity and will feature 12 rental homes at market-rate, while the remaining 20 apartments will be set aside for individuals requiring supportive services, specifically targeting tenants with long-term disabilities and eligible military veterans and their families. Homes will be available to families earning 60 percent or less of the AMI. Amenities will include a community room with kitchen facilities, a fitness center, a business center and a large playground area.

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A farewell event was held May 20 at two Catholic schools, St. Mary and St. Joseph, in Fond du Lac, Wis., as the K-12 campuses said goodbye to their former campuses, which will be transformed into 47 affordable housing apartments. WHEDA awarded $5.6 million in LIHTCs for the new Parish School Apartments. The property will be a mix of new construction and adaptive-reuse, with apartments available to families. The former downtown school buildings will be called Parish School Apartments. Additional financing will include historic tax credits (HTCs). The three-story buildings will offer one, two and three-bedroom apartments, with the opening scheduled for fall 2017.

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People

Enterprise Community Investment Inc. announced the promotion of Kari Downes to senior vice president of capital markets. In this role, Downes will oversee the company’s key investor relationships for low-income housing tax credits (LIHTCs) and develop and implement all LIHTC fund strategies. Downes has worked at Enterprise for 14 years. Before joining Enterprise in 2002, she was an underwriter with Lennar Affordable Communities, and before that, a market analyst for Lend Lease.

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Conifer Realty welcomed Brian Ivy to the company May 9 as property finance director. Before he joined Conifer, Ivy was a partner in the banking and financial services group at Phillips Lytle LLP. Joan Hoover, executive vice president of Conifer Realty, said in a press release that Ivy is a recognized and accomplished attorney in the LIHTC industry. His expertise and professionalism will add depth to support Conifer’s development and capital transaction activity.

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Hunt Mortgage Group announced May 9 the acquisition of the staff of 1410 Partners LLC, an advisor to private and nonprofit development firms for the financing of multifamily housing developments. John McAlister joins the firm as managing director, West Coast team leader. Sean Spear was also named a managing director. McAlister and Spear will be based in the new Pasadena, Calif., office. McAlister was the founder and principal of 1410 Partners LLC and Spear served as a managing director. Before starting 1410 Partners LLC, McAlister was a founder and principal of M Squared Partners LLC, a Los Angeles-based real estate investment firm. Before that, he served as president of Steadfast Companies and was a managing director at Newman & Associates. Spear served as a local and state government leader for more than 10 years. He was also the executive director to the California Debt Allocation Committee (CDLAC), and before joining CDLAC, Spear was the director of major projects for the City of Los Angeles Housing Department.

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On May 18, the National Affordable Housing Management Association (NAHMA) Educational Foundation announced William M. Kargman, president of First Realty Management, as the 2016 Inspiration Award recipient. The award recognizes individuals for their longtime commitment to the advancement of educational opportunities for those working within the affordable housing industry and the residents they serve. Kargman is being recognized for his passion, vision and the impact he has had in advancing education in affordable housing communities. The 2016 Inspiration Award was presented during the foundation’s annual dinner June 15 in San Francisco.

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Earlier this year, Dominium announced the promotion of Terry Sween to development associate at its Plymouth, Minn., headquarters. In his new position, Sween will be responsible for overseeing design, constructions and financing of new and existing apartment communities throughout the United States. Before his promotion, Sween was a staff associate.

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Bond

MassDevelopment announced May 22 a $28 million tax-exempt bond issued on behalf of Washington Heights Preservation Limited Partnership for the acquisition and renovation of Washington Heights. The multifamily apartment complex in Worcester, Mass., which is sponsored by real estate firm Related Companies, provides 404 affordable rental homes. The 21-acre property provides 34 three-story garden-style buildings with 196 one-bedroom homes, 180 two-bedroom homes, 18 three-bedroom homes and 10 four-bedroom homes. A total of 336 rental homes will be available for residents earning no more than 60 percent of the area median income (AMI), and 36 apartments will be available to residents earning no more than 95 percent of the AMI. There will also be two market-rate apartments. Renovations are planned for bathrooms and kitchens, as well as electrical upgrades including new air conditioning units and security system. The Massachusetts Department of Housing and Community Development also approved federal low-income housing tax credits (LIHTCs), which are expected to produce approximately $16.2 million in equity for renovations.