Low-Income Housing Tax Credits News Briefs - June 2018

Friday, June 1, 2018

The Internal Revenue Service published Revenue Procedure 2018-22 (Rev. Proc. 2018-22) April 30. Rev. Proc. 2018-22 reflects an increase in the state low-income housing tax credit (LIHTC) ceiling enacted through the Consolidated Appropriations Act of 2018. The amended state LIHTC ceiling is the greater of $2.70 multiplied by the state population or $3.105 million. The modifications are in effect for taxable years beginning in 2018. The guidance is available at www.taxcredithousing.com.

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The United States Department of Agriculture (USDA) issued a stakeholder announcement March 21 on proposed changes to eligibility of certain rural areas. The USDA released proposed ineligible area maps for the rural development, single-family housing and multifamily housing programs. The new ineligible areas were effective June 4. After the effective date, all properties for new applications must be located in an eligible rural area based on the new maps. However, a property that is located in an area being changed from rural to non-rural may be approved if the application is dated and received by the lender before June 4 and the loan estimate was issued by the lender within three days of application receipt; the applicant has a signed/ratified sales contract on a property that is dated before June 4; and the applicant meets all other loan eligibility requirements.

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Sen. Jeanne Shaheen, D-N.H., and Rep. Ann Kuster, D-N.H., introduced March 20 S 2574 and HR 5352, respectively, to provide rental assistance to low-income tenants of certain multifamily rural housing developments. The two bills were introduced as companion bills under the Rural Housing Preservation Act of 2018. The bills would help preserve affordable housing in rural communities by offering several provisions that extend rental assistance for the rural development (RD) rental housing programs of the USDA. The bills propose to allow the RD Section 521 rental assistance to be decoupled from the mortgage, allowing Section 521 rental assistance. The bills would also offer an RD Section 542 preservation voucher to households living on properties with maturing Section 515 or 514 mortgages. The bills would also ensure that RD policies are better aligned with the LIHTC program. Lastly, the bills would permanently authorize the multifamily housing revitalization program. S 2574 and HR 5352 are available at www.taxcredithousing.com.

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Regions Bank announced April 27 the integration of its affordable housing businesses, Regions First Sterling (formerly First Sterling) and Regions Community Investment Capital, into one division, Regions Affordable Housing. Regions Affordable Housing is a national LIHTC syndication firm that offers financing and asset management to new and existing developer and investor clients. 

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The Office of the Comptroller of the Currency released May 1 Community Reinvestment Act performance evaluations for 22 national banks and federal savings associations for April. Of the 22 evaluations, 20 rated as satisfactory, one rated as needs to improve and one rated as outstanding. A list of April evaluations is available at www.novoco.com/cra.

LIHTC State

The Kentucky Housing Corporation released revised LIHTC allocations April 5. Due to the recently passed federal omnibus spending bill including a provision that increases the LIHTC allocations by 12.5 percent for four years, KHC was able to fund two additional developments in the 2018 competitive funding round. The additional $1.2 million in LIHTCs will create or preserve 104 affordable apartments in Christian and Hart counties. A revised listing of awards is available at www.taxcredithousing.com.

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The Pennsylvania Housing Finance Agency (PHFA) announced April 12 the preliminary 9 percent LIHTC allocations for 2018. PHFA conditionally awarded $434 million to 39 properties. Funding will go to the preservation and creation of 1,941 rental apartments. Additionally, approximately $3.8 million in PennHOMES funding was made available. The full list of eligible properties is available at www.taxcredithousing.com.

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The Colorado Housing and Finance Authority (CHFA) announced April 17 the LIHTC allocations for the first round of 2018. CHFA awarded $47.5 million to eight developers. This funding will support the new construction or preservation of 533 affordable rental apartments throughout the state. Nine applications were received requesting $57 million. A complete list of the awardees is available at www.taxcredithousing.com.

LIHTC Dealmaker

Love Funding announced April 16 the closing of a $7 million loan for the refinancing and rehabilitation of Central Towers Apartments in Detroit. The affordable senior community will provide 232 one- and two-bedroom apartments in two high-rise buildings. Two-hundred-thirty apartments are currently covered by a Section 8 housing assistance payment (HAP), while the two remaining apartments are funded through LIHTCs and restricted at 60 percent of the area median income (AMI). Loans were secured through the U.S. Department of Housing and Urban Development’s 223(f) loan insurance program, and Central Tower Apartments received approval for payment in lieu of taxes.

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WNC closed on NC Institutional Tax Credit Fund 44 LP (WNC Corp. 44) April 3. WNC Corp. 44 is a $135 million LIHTC fund that includes 24 affordable housing properties for seniors and families in 18 states. There are 2,098 urban, suburban and rural affordable apartments scheduled for new construction and rehabilitation. The states included are Alaska, Arkansas, Arizona, California, Connecticut, Iowa, Illinois, Kansas, Louisiana, Minnesota, Mississippi, North Dakota, New Mexico, Rhode Island, Tennessee, Texas, Utah and Wisconsin. 

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RBC Capital Markets Tax Credit Equity Group announced April 13 the closing of RBC Tax Credit Equity National Fund-27. The $158 million fund is a multi-investor, multi-property national fund. There were eight institutional investors investing in 19 LIHTC properties. The multifamily and senior apartment communities represent 1,773 affordable apartments in 10 states and Washington, D.C. The states are Arkansas, California, Colorado, Massachusetts, Montana, North Carolina, South Carolina, Texas, Washington and Wisconsin.

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Hunt Capital Partners announced April 18, in collaboration with Highridge Costa Housing Partners, the closing of $12.5 million in LIHTC equity financing for five affordable housing developments in Central and Southern California. The properties are Summerhill Family Apartments and Sycamore Walk in Bakersfield, Seasons at Simi in Simi Valley, San Vicente Townhomes in Soledad and The Village at Madera in Madera. Hunt Capital Partners facilitated the investment of 4 percent federal LIHTCs through a combination of multi-investor and proprietary funds. Each property has garden-style or townhome buildings with LIHTC apartments available at 40, 50 and 60 percent of the AMI. In addition, each site has a community building and all properties are fully occupied. Summerhill Family Apartments provides 128 apartments. Hunt provided $3.8 million in LIHTC equity. Sycamore Walk provides 112 apartments. Hunt invested $2 million in LIHTC equity. Seasons at Simi provides 69 apartments. Hunt syndicated $2.6 million in LIHTC equity. San Vicente Townhomes provides 50 apartments. Hunt provided $2.2 million in LIHTC equity. The Village at Madera provides 75 apartments. Hunt invested $2 million in LIHTC equity. 

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The Massachusetts Housing Finance Agency (MassHousing) announced April 4 the closing of $1.6 million for the construction of a mixed-income development in Haverhill. 98 Essex Street will involve the redevelopment of the vacant, historic Shoe and Leather Association Building into 62 apartments for low- and moderate-income households. There will be seven apartments for formerly homeless families, as well as six workforce housing apartments. MassHousing provided a $1 million permanent loan and $600,000 from the agency’s Workforce Housing Initiative. Financing also includes $19.5 million in state and federal LIHTC equity, and the federal tax credits were syndicated by the Massachusetts Housing Investment Corporation, while the state tax credits were syndicated by Clocktower Tax Credits LLC. The Massachusetts Department of Housing and Community contributed an additional $2.5 million in direct affordable housing subsidy. The Affordable Housing Trust Fund contributed $1 million, while the City of Haverhill and the North Shore Home Consortium contributed an additional $365,365. Eastern Bank is providing $16.3 million in construction financing. There will be 15 one-, 41 two- and six three-bedroom apartments available between 30 percent and 80 percent of the AMI. There will also be commercial space. MassHousing’s million Workforce Housing initiative supports the creation of rental housing that is affordable for working families whose incomes are too high for subsidized housing but are priced out of market rents.

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MassHousing announced April 5 the closing of $49.3 million to affiliates of Preservation of Affordable Housing and the Madison Park Development Corporation for the ongoing construction of mixed-income affordable housing in Roxbury. Preservation of Affordable Housing will use this portion of financing, $27.4 million, to develop the 92-apartment Whittier at Cabot apartments. Concurrently, Madison Park Development Corporation will use $21.9 million of the MassHousing financing to develop the 76-apartment Madison Melnea Cass Apartments on Madison Park Village site. Both are part of the larger Whittier Street Apartments development under the Whittier Choice Neighborhoods Initiative. MassHousing financing for Whittier at Cabot apartments includes $14.7 million in permanent financing, an $11.2 million tax-exempt bridge loan and $1.5 million in Workforce Housing Initiative funding. Financing also includes $31.9 million in federal LIHTC equity, $1.3 million in direct support from the Massachusetts Department of Housing and Community Development (DHCD), $2.6 million from the city of Boston and $4.1 million in Choice Neighborhoods funding. MassHousing financing for Madison Melnea Cass Apartments includes an $11.2 million construction and permanent loan, a $9.9 million construction bridge loan and $1.9 million in Workforce Housing Initiative funding. Financing also includes $14.2 million in federal and state LIHTC equity, $3 million in direct support from DHCD, $2.3 million from the city of Boston and $1 million in Choice Neighborhoods funding. The Whittier Choice Neighborhoods Initiative represents a collaboration to increase economic prosperity and reduce the concentration of poverty in Lower Roxbury, while improving educational and economic outcomes for neighborhood residents.

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MassHousing announced April 17 the closing of $28.8 million for the adaptive reuse of the historic 1890s Pacific Mills cotton complex in Lawrence. Additionally, MassHousing provided a $14 million tax-exempt permanent loan, a $1 million taxable permanent loan, an $8.8 million tax credit equity bridge loan and $5 million from MassHousing’s $100 million Workforce Housing Initiative. The MassHousing financing produced $16 million in LIHTC equity and financing involved a $1.8 million allocation of state historic tax credits (HTCs), a $3.6 million seller note, a $2.5 million deferred developer fee and $210,000 in financing from the city of Lawrence. Pac 10 Lofts is the first phase of a two-phase redevelopment of the mill. The first phase will offer 180 mixed-income apartments. There will be 82 one-, 10 two- and 88 three-bedroom apartments. Of those, 18 will be available for household incomes at or below 30 percent of the AMI, 112 will be for household incomes at or below 60 percent of AMI, 40 will be workforce housing apartments for household incomes at or below 80 percent of AMI and 10 apartments will be rented at market rates. Amenities will include a fitness center, event space and each floor will have a conference room. MassHousing’s million Workforce Housing initiative supports the creation of rental housing that is affordable for working families whose incomes are too high for subsidized housing but are priced out of market rents.

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Developer The Szanton Company announced April 3 the planned construction of a 53-apartment complex in Auburn, Maine. The Maine State Housing Authority allocated $8.1 million in LIHTCs and the city provided $110,000 in federal HOME program funding and created a 30-year tax increment financing district. The four-story development will include 53 apartments with a range of one-, two- and three-bedrooms. There is a mix of 14 market-rate apartments and 39 lower-income apartments available to households earning at or below 60 percent of the AMI.

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Residents were moving into New Hope Housing at Harrisburg in Houston as of April 5. The 175-apartment single-room occupancy mixed-use apartment community serves single adults, including those displaced by Hurricane Harvey. The approximately $27 million development is financed with $10.4 million in LIHTCs awarded by the Texas Department of Housing and Community Affairs. Amenities include a communal kitchen, business center, library and theater/dining room. The development includes 4,000 square feet of retail space on the first floor and 7,000 square feet of office space on the fourth floor. The property will also house the New Hope Housing corporate headquarters. On-site support and recovery services will provide and include case management, access to primary and mental health care, legal assistance, health and nutritional counseling and financial education.

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A groundbreaking ceremony for Chestnut Square Senior Housing was April 18. The affordable senior housing property in Livermore, Calif., will be developed in two phases thanks to $20.5 million in 9 percent LIHTCs from the California Tax Credit Allocation Committee. The city of Livermore contributed $5 million toward the $37.3 million development. The property will provide 71 rental apartments and studios for low-income senior citizens 62 and older. There will be 69 one-bedroom apartments and two studio apartments. Of those apartments, five will be reserved for formerly homeless individuals. Amenities will include a community room with a common kitchen, computer lab and an arts-and-crafts room. Chestnut Square Senior Housing is expected to open summer 2019. The second phase to be developed will include 44 market-rate townhouses. The third phase will provide 42 rental workforce homes for families. 

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The Pennsylvania Housing Finance Agency allocated $8 million in LIHTCs to SEDA-COG Housing Development Corporation for the construction of Susquehannock Heights senior housing in Flemington, Pa. The property will provide 32 apartments, as well as community, craft and exercise rooms, a library, central laundry, computer cafe and outside sitting areas. Financing also included $200,000 from PennHOMES.

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Developers Chelsea Investment Group and Sudberry Properties broke ground on Siena and Stylus at Civita April 12. The two affordable housing properties in San Diego will provide a combined 306 apartments. Stylus will have 203 two- and three-bedroom apartments reserved for families or individuals earning between 50 percent and 60 percent of the AMI. Siena will have 103 one-bedroom and studio apartments reserved for seniors earning between 30 percent and 60 percent of the AMI. One seven-story building will house both Stylus and Siena. Both properties will include three courtyards, a clubroom with a fully equipped kitchen and barbecue areas. The general contractor is Emmerson Construction and the architect is KTGY Architecture + Planning. Siena and Stylus were financed using LIHTCs and bonds were distributed by the San Diego Housing Commission, as well as funds provided by Federal Home Loan Bank-San Francisco, City National Bank and Torrey Pines Bank. The development will be located on a 230.5-acre parcel that is expected to have up to 4,780 apartments and 900,000 square feet of retail and office space. There will also be 67 acres of parks, trails and open space. Development costs are expected to be $137.5 million.

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The official grand opening of the El Camino Real Apartments in Hatch, N.M., was April 12. The $9.6 million complex offers affordable housing to farmworkers. The multibuilding complex features 40 two-, three- and four-bedroom apartments designed for families. On-site amenities include a community common building, laundry facilities, computer lab, community garden, an orchard and two playgrounds. New Mexico Mortgage Finance Authority allocated $8.8 million in LIHTCs.

LIHTC People

BRIDGE Housing announced April 12 the appointment of Damon Harris as vice president of community development and Susan Neufeld as vice president of evaluation and resident program design. In his role, Harris will engage residents and partners to advance a shared vision of community revitalization that achieves improved social and economic outcomes. Before joining BRIDGE Housing, Harris was with the U.S. Department of Housing and Urban Development, and before that, he was the director of resident services for Mission Housing Development Corporation. Neufeld, who joined BRIDGE Housing in 2012, leads BRIDGE’s evaluation activities to measure impact across the portfolio. She and her team are responsible for designing resident programming and services for BRIDGE developments. Their appointments were effective April 2. 

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SunTrust Banks Inc. named Keitt King as president of SunTrust Community Capital (STCC) April 18. King succeeds Adam Oates, who was named the head of the company’s corporate real estate and workforce group. STCC is a wholly owned subsidiary of SunTrust Bank and provides debt and equity capital for real estate projects and businesses. Through STCC, SunTrust has provided nearly $4 billion to finance more than 40,000 affordable apartments for seniors and others throughout the community. 

LIHTC Bond

Steele Properties announced April 12 the $11.3 million acquisition and rehabilitation of Nettleton Manor in Bonner Springs, Kan. Rehabilitation will be financed with 4 percent low-income housing tax credits (LIHTCs) allocated by Kansas Housing Resources Corporation, tax-exempt bonds issued by Kansas Development Finance Authority, permanent and construction financing provided by Citibank and LIHTC equity provided by National Equity Fund (NEF). Planned renovations for the 76-apartments affordable complex include new roofing and doors, upgraded safety and security features, and updated elevators, as well as a renovated community room with kitchen and computer lab and Americans with Disabilities Act room conversions.  Built in 1979, Nettleton Manor is a project-based Section 8 senior and disabled property with one, six-story building and one and two-bedroom apartment homes located on 1.2 acres. Monroe Group Ltd., Steele’s management partner, will oversee property management at the property.