Low-Income Housing Tax Credits News Briefs - June 2015

Monday, June 1, 2015

AFFORDABLE HOUSING INDUSTRY BRIEFS

On May 5, the U.S. Department of Housing and Urban Development (HUD), Office of Policy Development and research released the report, “Effect of QAP Incentives on the Location of LIHTC Properties.” The report researches how qualified allocation plans (QAPs) can shape the site patterns of LIHTC developments by examining how the changes in state QAPs correlate to the changes in the types of neighborhoods where tax credit developments are sited within a given state. QAPs outline the selection criteria the state will use when awarding the 9 percent tax credits. States are allowed to adopt additional criteria that further the state’s housing policy and other goals. The report addresses two specific issues: whether changes in QAP priorities between 2002 and 2010 associated with changes in the poverty rates of the neighborhoods where LIHTC developments are built; and whether different priority structures appear to be more effective in driving the location of LIHTC developments. The report is available at www.taxcredithousing.com.

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On April 15, the National Low-Income Housing Coalition (NLIHC) submitted comments to the Senate Committee on Finance’s Community Development and Infrastructure Working Group regarding modification of the LIHTC program. In the letter, NLIHC proposed to better align federal housing resources with the needs of extremely low-income households that face a shortage in affordable and available rental units. NLIHC recommends changing the federal LIHTC statute to provide for a third income targeting criterion to allow developers to better use cross subsidization. NLIHC recommends changing the federal LIHTC statute to provide a 50 percent basis boost for properties that use NLIHC’s proposed third criterion of income averaging. The comment letter is available at www.taxcredithousing.com.

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On April 15, 122 members of the U.S. House of Representatives sent a letter to House Speaker John Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif., concerning proposals to eliminate or cap the deduction on tax-exempt municipal bonds. Reps. Randy Hultgren, R-Ill., and Dutch Ruppersberger, D-Md., authored the letter, and began it by extolling the benefits of municipal bonds, stating that the bonds have funded more than $1.9 trillion of infrastructure construction, and writing that in 2013 alone, more than 11,000 tax-exempt bonds financed more than $330 billion in infrastructure spending. However, the president’s 2016 Fiscal Year (FY) budget proposes to cap the tax deduction at 28 percent. The letter says that capping or eliminating the current deduction would severely curtail state and local governments’ ability to invest in themselves. It would also increase borrowing costs to public entities and shift costs to local residents through tax or rate increases. The representatives closed the letter by saying they hope the proposals are rejected and that while government spending should be reduced, the tax-exempt bond status of municipal bonds should not be altered.

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On May 1, Make Room launched a nationwide campaign to end the rental affordability crisis. Make Room, sponsored by Enterprise Community Partners, works with and convenes corporations, policymakers, nonprofit organizations and advocates to raise awareness in support of families struggling to make rent. To highlight the issue, top musical artists are brought in to play in the living rooms on the first of every month for families struggling with rent. That is the typical day rent is due. More information is available at www.makeroomusa.org.

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On April 8, Boston Capital announced the closing of Boston Capital Corporate Tax Credit Fund XL. The $120 million fund comprises 21 affordable apartment properties located in 13 states. There are 17 properties available for families and four developments available for seniors. Fund XL adds 1,068 apartment units to Boston Capital’s portfolio. The real estate investment and advisory firm expects Fund XL will result in the creation of nearly 870 local jobs and will produce nearly $54 million in local salaries.

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Bellwether Enterprise Real Estate Capital LLC announced May 5 the company was designated a Fannie Mae Delegated Underwriting and Servicing (DUS) Lender. The designation was made through its wholly owned subsidiary Enterprise Mortgage Investments LLC. Bellwether Enterprise joins a network of 24 DUS lenders nationwide. Full DUS lenders are authorized by Fannie Mae to underwrite, close and deliver most loans without pre-review, which allows for more efficient service to clients.

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The Office of the Comptroller of the Currency (OCC) released Community Reinvestment Act (CRA) evaluations for 33 national banks and federal savings associations May 1. The evaluation period was April 1 to April 30. Of the 33 evaluations, 10 were rated as outstanding, 22 were rated as satisfactory, one was rated as needs to improve and none were rated as substantial noncompliance. The evaluation is available at www.occ.gov.

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On May 1, the Urban Land Institute Washington awarded the Arlington Mill Community, Senior Center and Residences with the 2015 Urban Land Institute Washington Trends Award for excellence in housing development. The award recognizes Arlington Mill as a model of excellence because of the long-term collaboration between the community, Arlington County, Arlington Partnership for Affordable Housing and the development team. The excellence in housing development category recognizes all types of housing developments, such as multifamily rental, attached and detached for-sale, affordable or subsidized housing. Arlington Mill Community, Senior Center and Residences were selected out of 70 submissions. There were 22 award winners

STATE BRIEFS

California A.B. 1335 was passed to the Senate Appropriations Committee May 4 for approval. The bill, introduced by Democratic Assemblywoman Toni G. Atkins, would enact the Building Homes and Jobs Act, which would create a permanent funding source for affordable-housing. AB 1335 would use a pay-as-you-go approach. The bill is expected to generate hundreds of millions of dollars annually for affordable housing through a $75 fee on real estate recorded documents. The fee is capped at $225 on a per-parcel, per-transaction basis. A.B. 1335 is a part of the Assembly Democrats’ affordable-housing package.

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The Wisconsin Housing and Economic Development Authority (WHEDA) announced its 2015 low-income housing tax credit (LIHTC) awards April 23. WHEDA allocated $12.5 million after it received requests for $27.9 million. Credit awards ranged from $141,681 to $850,000. The complete list of developments is available at www.taxcredithousing.com.

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On May 7, state Sen. Kirk Watson introduced Texas S.B. 1658. The bill requires the Texas Department of Housing and Community Affairs (TDHCA), assisted by the Office of the Comptroller of the State of Texas, to study the feasibility, methods and costs of establishing a LIHTC program in Texas. The questions to be answered include how the program would generate tax savings for Texas businesses, areas of funding that could be used for such a program and how to best produce the greatest availability of affordable housing. The report would be submitted to the legislature by Sept.1, 2016. S.B. 1658 would be effective upon passage or Sept.1, 2015, and would expire Sept.1, 2017. The bill is available at www.taxcredithousing.com.

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Rhode Island Housing announced April 17 the three recipients of the 2015 federal LIHTC round. The properties are the Greenridge Apartments in Burrillville, the Revitalize SouthSide development in Providence and Amherst Gardens in Olneyville. A total of nine applications were received. Of those units, 75 townhouse apartments, known as Greenridge Commons, will be built on 9 acres. Greenridge Apartments will provide 96 new affordable homes on two sites in Burrillville’s Pascoag Village. Greenridge Downtown will include 21 apartments in three mixed-use buildings. Financing for the development includes $1.07 million in 2015 9 percent LIHTCs; a forward commitment of $1.07 million in 2016 or 2017 LIHTCs; and a first mortgage of $1.9 million. The Greenridge Apartments will also have more than 8,000 square feet of new commercial space located on the ground level. Development costs are expected to total $28 million.

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On March 26, the Housing Development Center (HDC) released the study, “Washington State Affordable Housing Portfolio Study: A Study of the Physical Condition of the Housing Trust Fund and Low-Income Housing Tax Credit Portfolios.” The report was prepared for the Washington State Department of Commerce and the Washington State Housing Finance Commission and the study examines the need for additional capital investments in rental properties funded by the Housing Trust Fund (HTF) and the LIHTC program, as well as the expected needs of two departments’ multifamily housing portfolios over the next five years. HDC estimates the financial capacity of development owners to address those needs and also estimates resources required of the departments in order to preserve their investments in the stock of affordable housing.

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The California Tax Credit Allocation Committee (TCAC) released a Redevelopment Agency (RDA)-related application requirement clarifications memo May 7. TCAC provided clarification about the definition of RDA funds, as well as when a Final and Conclusive Determination letter (FCD) or other Department of Finance (DOF) written confirmation is necessary for TCAC application review purposes. RDA funds include assets transferred to a successor agency and these assets include existing loans, land, or other resources. TCAC applicants must submit both the Housing Asset Transfer (HAT) and the letter from the DOF approving the HAT. This is in lieu of the FCD or other written communication from DOF. The notice is available at www.taxcredithousing.com.

 

DEALMAKERS

BRIDGE Housing and SparkPoint Contra Costa, a financial education center that helps individuals and families who are struggling to make ends meet, held the rededication May 11 of Richmond City Center Apartments in Richmond, Calif. Financing for renovations and new construction was provided by U.S. Bank, Raymond James, Richmond Housing Authority, California Department of Housing and Community Development and LIHTCs allocated by the California Tax Credit Allocation Committee. Richmond City Center provides 64 affordable apartments to families with low incomes. Renovations included converting ground-floor commercial space into a community room for programs and upgrades and repairs to interiors of apartments and exterior building systems. Construction costs totaled $10.5 million.

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On May 8, BRIDGE Housing held the grand opening of Victoria and Paseo at COMM22 in San Diego. Financing for the properties at COMM22 was provided by the San Diego Housing Commission, HOME Investment Partnerships Grant funds, CalHFA/County of San Diego - Behavioral Health Services, SANDAG, Bank of America and more. Paseo at COMM22 provides 130 apartments for families earning as much as 30 to 60 percent of the AMI. There are one-, two- and three-bedroom units. Victoria at COMM22 provides 70 apartments for seniors aged 62 years or older and earning up to 30 to 50 percent of the AMI. There are 40 studio apartments and the remaining 30 units are one-, two- and three-bedrooms with U.S. Department of Housing and Urban Development (HUD)-subsidized rent. Both properties are located on a 4-acre, former San Diego Unified School District maintenance facility site. Construction costs totaled $85 million.

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On April 28, The Woda Group Inc. announced the destruction of the Mary Harvin Center. The building, which would have provided 61 senior housing units and service, counseling, and job training space of Baltimore, caught fire. The Mary Harvin Center was approximately 45 percent complete. All of the framing as well as most of the elevator shafts and concrete slabs were completely lost. The Woda Group Inc. said in a press release that it and partner Southern Baptist Church are committed to completing the Mary Harvin Center and is determined that the Mary Harvin Center will be open for occupancy in the spring of 2016. The groundbreaking was October 2014.

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Boston Capital announced May 6 the investment in the construction of Constitution Court Apartments in Copperas Cove, Texas. The investment will go toward the second phase of development, which will provide 72 affordable units to individuals and families earning 60 percent or less of the area median income (AMI). There will be 20 one-, 32 two- and 20 three-bedroom units in six, two-story garden-style buildings. Amenities will include a playground, a gazebo and a barbecue/picnic area. Constitution Court Apartments will also share amenities constructed as part of phase I, including a clubhouse containing leasing offices, a community room, kitchen, common laundry room and exercise room. Construction of the second phase is expected to produce more than $5.1 million in local salaries and create nearly 80 new jobs.

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U.S. Bank announced May 5 the investment of $49 million in the construction of Plaza Roberto Maestas in Seattle. U.S. Bank invested $22.3 million raised from federal LIHTCs through its U.S. Bancorp Community Development Corporation, and raised $27 million in construction debt loaned by the bank’s Community Lending Division. The development will provide 112 units of affordable housing that will also include a daycare center, offices and retail space and two managers’ units. There will be 35 one-, 53 two- and 22 three-bedroom units. The apartments will be leased to tenants with incomes between 30 percent and 60 percent of the AMI. Groundbreaking for Plaza Roberto Maestas was March 6, with construction expected to be complete by mid-2016.

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On May 4, Preservation of Affordable Housing (POAH), Rhode Island Housing and their funding and community partners celebrated the ongoing renovation and preservation of Grace Apartments in downtown Providence, R.I. Developed in 1978 as a HUD 202 development, Grace Apartments will remain affordable thanks to POAH’s acquisition. The property provides 101 rental homes for seniors. The acquisition was made possible by $4.1 million in LIHTC equity from the Massachusetts Housing Investment Corporation (MHIC) and Federal Housing Administration (FHA) loan backed by tax-exempt bond financing from Rhode Island Housing. Renovation costs are expected to total more than $3.6 million, including new windows, replacement of all substandard kitchens and baths, improved ventilation in apartments and fire safety upgrades. Amenities include a hobby room, a library, a fitness room and management offices. Grace Apartments also features a commercial kitchen operated by Cookie Place Café Inc., a nonprofit organization that provides food-service job training to veterans and adults with developmental disabilities.

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Housing Visions Consultants Inc. and New York State Homes and Community Renewal (HCR) held the groundbreaking May 4 for Salina Crossing in Syracuse, N.Y. Renovation of the mixed-used development was made possible with $900,000 in LIHTCs and $800,000 from the city of Syracuse. Other funding partners include New York Housing Trust Fund Corporation and the Community Investment Fund. Salina Crossing encompasses 10 sites and will provide 49 affordable housing units for low-income households. This includes a mix of 27 one-bedroom, 11 two-bedroom, six three-bedroom and five four-bedroom units. Of these units, five will accommodate people with mobility impairments and two additional units will be adapted for those with hearing and/or vision impairment. There will also be 5,900 square feet of commercial space.

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On May 1, developer PIRHL Development LLC broke ground on Gateway Senior Housing in Waynesburg, Pa. The property is being developed with $878,050 in LIHTCs, with total cost estimated at $10 million. Gateway Senior Housing will provide 52 affordable units for residents 62 years and older whose income is 60 percent or less of the AMI. There will be 31 one-bedroom units and 21 two-bedroom apartments. Construction is expected to be complete summer 2016.

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RBC Capital Markets Tax Credit Equity Group announced April 30 the closing of National Fund 21. The fund had six investors and total equity of $127.6 million. There were 14 multifamily properties and five senior properties in the fund. This provided 1,529 units of affordable housing. Fund 21 comprised 19 affordable housing properties in 11 states and Puerto Rico. The states are California, Missouri, South Carolina, Florida, New York, Tennessee, Georgia, North Carolina, Texas, Minnesota and Wyoming.

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On April 30, REACH CDC announced the completion of preservation of Towne Square Apartments in Washougal, Wash. Towne Square is comprised of 40 affordable homes for low-income families. The Washington State Housing Finance Commission issued a bond for $3.55 million and allocated $1.76 million in federal LIHTCs. Permanent financing is provided by North Cascades Bank through the Washington Community Reinvestment Association. Acquisition and renovation costs totaled $7 million. Built in 1977 with funding from USDA Rural Development, Towne Square was nearing the end of its rental subsidy contract.

PEOPLE IN THE INDUSTRY

Patrick Nash, managing director of housing investments for JP Morgan Capital Corporation, announced his retirement after 25 years, effective in July. He also served as chairman of Community Investment Corporation. Bill Pelletier will assume the role of managing director, JPMorgan Capital Corporation. Mark McCann will succeed Pelletier as head of single investor fund origination.

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Red Capital Group LLC and parent company Orix USA Corporation announced April 10 that Edward (Ted) J. Meylor will assume the role of chief executive officer (CEO) for RED Capital Group. Meylor takes over from Mike Moran, who will transition back to CEO of ORIX Capital Markets at ORIX USA. Meylor joined Red in May 2014 as executive chairman. Before that, he was a senior consultant at Aozora Bank, and before that, Meylor spent 16 years with Lehman Brothers as the CEO of Lehman Brothers Bank, FSB and in the Global Real Estate Group.

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The U.S. Department of Housing and Urban Development (HUD) announced April 13 that Harriet Tregoning is now the principal deputy assistant secretary for the Office of Community Planning and Development (CPD). The role includes overseeing the National Housing Trust Fund, HOME Investments Partnership, Community Development Block Grant, Housing for Persons with AIDS and homeless assistance programs. Before assuming this role, Tregoning was the director of HUD’s Office of Economic Resilience (OER). Before joining HUD, Tregoning was the director of the District of Columbia Office of Planning.

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BRIDGE Housing announced March 2 that Constance “Connie” B. Moore was elected to the board of directors of the nonprofit developer, owner and manager of affordable housing. Before joining BRIDGE Housing, she served as president and CEO of BRE Properties Inc. Moore also served as a member of BRE’s board of directors since 2002. Before that, she was the managing director of Security Capital Group & Affiliates. Moore was also the 2009 chairwoman of the National Association of Real Estate Investment Trusts; the chairwoman of the policy advisory board for the Fisher Center for Real Estate & Urban Economics at UC Berkeley; a member of the Urban Land Institute; a member of the San Jose State University Tower Foundation and its executive committee; and a member of the board of directors of Tri Pointe Homes.

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Citizens Bank announced April 30 the addition of Molly J. Skilton as vice president for the community development lending team. Before joining Citizens Bank, Skilton was a vice president and commercial real estate lender for The Bancorp Bank. Before that, she served in various roles at Republic Bank and at S&T Bank in Indiana.

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The Preservation of Affordable Housing (POAH) announced May 1 the appointment of Aaron Gornstein as the new president and chief executive officer (CEO). Before he joined POAH, Gornstein was an undersecretary for the Department of Housing and Community Development (DHCD), and before that, he was executive director of Citizens’ Housing and Planning Association. His appointment is effective June 10.

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Raymond James Tax Credit Funds (RJTCF) announced April 13 the addition of Kelly Henderson as vice president, director of acquisitions for the Northeast region. Henderson will focus on property acquisitions, managing existing business and cultivating relationships with developers and investors for the national affordable housing syndicator. Before joining Raymond James, she was senior vice president, legal affairs at WNC & Associates, and before that, she was vice president of acquisitions, senior counsel at Alliant Asset Management.