Low-Income Housing Tax Credits News Briefs - March 2010

Monday, March 1, 2010

AFFORDABLE HOUSING INDUSTRY

The National Housing Conference (NHC) will honor the Federal Home Loan Banks’ Affordable Housing Program (AHP) with the 2010 “Housing Program of the Year” Award at its 38th annual gala in Washington, D.C. on June 9. AHP has provided $3.7 billion for the creation of more than 670,000 affordable rental and owned homes for low- to moderate-income families. Since 1990, the Federal Home Loan Banks have used 10 percent of their income to fund AHP through their local member financial institutions, working with not-for-profit organizations and developers to serve a range of community needs. AHP allows funds to be used in combination with other funding sources, such as low-income housing tax credits and community development block grants. Additionally, the program’s grants often take the form of gap funding, providing the final funding necessary to complete a project. AHP is one of a handful of programs to be selected to receive the NHC award, considered to be one of the highest honors in the housing industry.

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A series of teleconference and/or web conference meetings regarding the U.S. Department of Agriculture Section 538 Guaranteed Rural Rental Housing program are scheduled to occur in April, July and October. Topics for discussion will include but are not limited to: updates on the USDA Section 538 program’s activities for the 2009-2010 fiscal year; perspectives on the current state of debt financing and its impact on the Section 538 program; and enhancing the issue of Section 538 financing with the transfer and/or preservation of Section 515 developments. Any member of the public who wishes to register for the calls and obtain the call-in number, access code, web link and other information for any of the meetings should contact James F. Carey, Financial and Loan Analyst, Multifamily Housing Guaranteed Loan Division, Rural Development, United States Department of Agriculture, 202-401-2307 (phone), 202-205-5066 (fax) or e-mail james.carey@wdc.usda.gov. Specific dates and times for the meetings will be announced via e-mail to registered parties.

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Kansas Housing Resources Corporation (KHRC) announced in January the award of $62.4 million in stimulus funds to support the construction of 842 affordable rental housing units statewide. The funds come from the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and the Tax Credit Assistance Program (TCAP), two initiatives established by the Recovery Act. KHRC received $43.3 million through the exchange program, which it used to convert previously awarded LIHTCs into cash grants and low-interest deferred loans and to jump start stalled housing developments. Through TCAP, the U.S. Department of Housing and Urban Development allocated $17.1 million to Kansas. To date, KHRC has closed a total of eight TCAP and 19 exchange program developments.

STATE

Kansas Housing Resources Corporation (KHRC) announced in January the award of $62.4 million in stimulus funds to support the construction of 842 affordable rental housing units statewide. The funds come from the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and the Tax Credit Assistance Program (TCAP), two initiatives established by the Recovery Act. KHRC received $43.3 million through the exchange program, which it used to convert previously awarded LIHTCs into cash grants and low-interest deferred loans and to jump start stalled housing developments. Through TCAP, the U.S. Department of Housing and Urban Development allocated $17.1 million to Kansas. To date, KHRC has closed a total of eight TCAP and 19 exchange program developments.

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The Minnesota Housing Finance Agency has awarded approximately $50 million to create or preserve 3,335 affordable housing units. The agency’s board of directors approved the funding for 56 developments through deferred and below-market loans, low-income housing tax credits, operating subsidies and rental assistance. More than $7 million was contributed by Greater Minnesota Housing Fund, Metropolitan Council, Department of Human Services, Department of Employment and Economic Development, and Minnesota Green Communities. For a detailed breakdown and listing of funding awards, visit www.mnhousing.gov.

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Bill Lockyer, California’s state treasurer, announced in January the final distribution of more than $800 million of federal stimulus money to help build more than 9,600 affordable housing units for low-income families. The California Tax Credit Allocation Committee (CTCAC), chaired by Lockyer, awarded $72 million to 21 developments. CTCAC approved the cash awards in exchange for previously awarded and unused tax credits. For more information about CTCAC, visit www.treasurer.ca.gov/ctcac.

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The Ohio Housing Finance Agency (OHFA) board in January approved more than $49 million in tax credit exchange and Tax Credit Assistance Program (TCAP) funds, together with more than $4 million from OHFA’s Housing Development Assistance program (HDAP). The funding will support the development of 13 multifamily residential properties serving low- and moderate-income residents throughout the state. Developments include James R. Williams Tower in Akron, which received $3.5 million from TCAP and more than $1.5 million in exchange funds; and Marion Rotary Towers in Marion, which received nearly $2.8 million in exchange program funding and $3 million in TCAP funds. Both are rehabilitation developments for seniors. Additional funding awards will be announced periodically during the next several months and posted to www.ohiohome.org.

PEOPLE IN THE INDUSTRY

The Affordable Housing Investor’s Council (AHIC) has named Karen J. Muchin as the association’s first executive director. She assumed her duties as executive director on January 15 and will participate in AHIC’s spring meeting in Washington, D.C. on March 10-12. Muchin worked as an originator in the direct affordable housing unit at JPMorgan Chase for the past 12 years. She has closed numerous low-income housing tax credit transactions and has worked closely with industry participants. Prior to working at JPMorgan Capital Corporation, Muchin worked for the Illinois Facilities Fund and as co-director of the Congressional Human Rights Caucus. She holds a bachelor’s degree from the University of Michigan and a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government.

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Brian Lawlor was appointed in January to serve as acting commissioner of the New York State Division of Housing and Community Renewal (DHCR). Lawlor has served as the executive deputy commissioner since January 2007, supervising staff and developing and implementing DHCR’s programs. During his career in public service, Lawlor has been assistant secretary to the governor for housing, counsel to the state director for housing and deputy counsel for community development. He co-founded the New York State Bar Association’s committee on low-income and affordable housing and acted as its first Upstate co-chair. The bar association named Lawlor the advocate of the year in 2005.

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The Affordable Housing Tax Credit Coalition (AHTCC) elected its 2010 board of directors at the annual meeting in January. Joseph Hagan, National Equity Fund Inc., replaced Ronne Thielen of Centerline Capital Group as the coalition’s president. Vice presidents are John P. Casey, Meridian Investments Inc.; Alan S. Cohen, Paul Hastings Janofsky & Walker LLP; Todd Crow, PNC MultiFamily Capital; Emily Evers, RBC Capital Markets; Robert J. Greer, Michaels Development Company; Wayne H. Hykan, Ballard Spahr; Daniel L. Kraus, Greenberg Traurig; James McDermott, Holland & Knight LLP; and Michael J. Novogradac, Novogradac & Company LLP. Peter Lawrence of Enterprise Community Partners was elected secretary; Beth Mullen of Reznick Group PC was named treasurer; Thielen is the immediate past president and chairman of the board; Richard S. Goldstein will fill the general counsel seat; and James F. Miller of Winston & Strawn LLP will serve as legislative counsel.

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Community Housing Partnership selected Gail Gilman to become its executive director effective March 1. Gilman, a nationally recognized expert on homelessness, has 15 years of experience working in supportive housing. She began her career as a counselor at Community Housing Partnership, then left to run the Bridge Project, a housing program for homeless adults with HIV. After returning to Community Housing Partnership in 2002, Gilman served as the director of tenant services for the past eight years. She holds a master’s in non-profit administration from the University of San Francisco and a bachelor’s degree in political science from San Francisco State University.

DEALMAKERS

Morgan Stanley has committed $110 million to finance affordable rental housing construction and expects the funds to underpin 3,300 homes for low-income households. In partnership with the National Equity Fund (NEF), Morgan Stanley is capitalizing a $50 million low-income housing tax credit (LIHTC) investment fund and providing $60 million to finance several hundred million dollars in additional NEF housing fund investments. Morgan Stanley’s investment also effectively leverages federal stimulus dollars from the Tax Credit Assistance Plan (TCAP) and the Section 1602 LIHTC exchange program.

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Illinois Gov. Pat Quinn said in January that $7.5 million in state and federal funding will help fund the construction of a Marion, Ill. location of River to River Residential Community, a supportive living facility for low-income seniors. The Illinois Finance Authority (IFA) provided $5.7 million in tax-exempt bonds. An additional $1.8 million in American Recovery and Reinvestment Act funding through the Illinois Housing Development Authority (IHDA) leveraged more than $2 million in equity. The state’s supportive living program offers an affordable alternative to nursing home care for seniors and persons with disabilities who are enrolled in Medicaid. River to River will contain 50 single- and double-occupancy units, management offices, a computer room, a hair salon, a resident-managed convenience store, an exercise room, a rose garden and a walking path. For more information about supportive living, visit www.slfillinois.com.

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With infrastructure in place and construction set to begin on 30 affordable duplex homes in Socorro, Tex., the Ysleta del Sur Pueblo (Pueblo) is the first tribe in the state to successfully use low-income housing tax credits (LIHTCs). The duplexes will provide 60 units for income-qualified tribe members, 230 of whom are on a low-income housing waiting list. The property will feature energy efficient appliances, separate landscaped yards, a police substation and a community meeting room. The $7.4 million development received an LIHTC award of $781,794 from the Texas Department of Housing and Community Affairs (TDHCA) and a $5.5 equity investment through Bank of America Merrill Lynch. The U.S. Department of Housing and Urban Development (HUD) committed $2.9 million through the Title VI Loan Guarantee program to fund the infrastructure. HUD’s Indian Housing Block Grant program, a Bureau of Indian Affairs’ road grant and Indian Health Service sewer and water grants supplied additional funds. Remaining costs are offset in part by a $600,000 program grant that Bank of America Merrill Lynch obtained from the Federal Home Loan Bank of San Francisco.

BONDS

The Internal Revenue Services’ Tax Exempt Bonds office should be vigilant to ensure that bonds under the American Recovery and Reinvestment Act of 2009 (Recovery Act) are not issued in excess of annual limits, according to a report released on January 19 by the Treasury Inspector General for Tax Administration (TIGTA). The Recovery Act authorizes state and local governments to issue more than $45 billion in new bonds, some with tax incentives to bond issuers or bondholders, and some with volume caps on the dollar amounts that can be issued. TIGTA warns that if annual limits are exceeded, the federal government risks losing future tax revenue because excess Recovery Act bonds may not be eligible for tax credits or may be taxable. A copy of the report can be found online at www.taxcredithousing.com, by clicking on News > Hot Topics > American Recovery and Reinvestment Act of 2009.

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CLARIFICATION

The article “Rural Renters Face Challenges of Poverty, Diminishing Supply of Housing Units,” on page 27 of the February 2010 issue of the Novogradac Journal of Tax Credits, stated that owners of Section 515 properties who received their loans prior to 1989 have the option of pre-paying their loan balances and converting the units to market-rate. This statement was based on analysis, “Rural Rental Housing Characteristics,” published by the Housing Assistance Council in November 2009. However, it should be noted that other analyses, including the “Second Position Paper by the Council for Affordable and Rural Housing on the Aging Multifamily Rural Housing Portfolio” dated December 2009, finds that prepayment and conversion to market-rate rents is not a realistic option for most of the Section 515 portfolio. For more information, please see www.carh.org/images/stories/aging_portfolio_position_paper_2009.pdf.