Low-Income Housing Tax Credits News Briefs - May 2021

Monday, May 3, 2021

LIHTC Industry

The Internal Revenue Service (IRS) March 15 published the Internal Revenue Bulletin No. 2021-11, which includes calendar year 2021 resident population figures to calculate state allocations of the 9% low-income housing tax credit (LIHTC) and private activity bond (PAB) cap. Notice 2021-19 includes population figures for 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S Virgin Islands. Nationally, 9% population-based LIHTC allocations will increase by 0.4% ($3.7 million) in 2021 and PAB allocations will increase by 0.5% ($182 million). Based on the population figures, Alaska, Delaware, the District of Columbia, Montana, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming will receive the small-state 9% LIHTC minimum of $3,245,625. Those states, plus Arkansas, Hawaii, Idaho, Kansas, Maine, Mississippi, Nebraska, New Hampshire, New Mexico and West Virginia, will receive the small-state PAB minimum of $324,995,000.

***

President Biden March 12 signed the American Rescue Plan Act, a $1.9 trillion COVID-19 relief bill that includes $27.4 billion for rental housing assistance. Rental housing assistance includes $21.55 billion for emergency rental assistance, $5 billion in emergency housing vouchers, $750 million for tribal housing needs and $100 million for rural housing. The legislation also includes $5 billion to assist people experiencing homelessness. The bill includes $1,400 individual stimulus checks and $300 weekly unemployment insurance payments through Sept. 6.

***

The Center for Disease Control and Prevention (CDC) announced an extension March 29 of the federal COVID-19 eviction moratorium through June 30. After the CARES Act provided an eviction moratorium that expired July 24, 2020, the CDC issued an order that prohibited evictions of renters who meet certain requirements through Dec. 31, 2020, an order that was extended to Jan. 31 and then March 31 before the March 29 extension.

***

The Federal Housing Finance Agency (FHFA) announced March 4 that Fannie Mae and Freddie Mac will offer COVID-19 forbearance to qualifying multifamily property owners through June 30. The forbearance was scheduled to end March 31 and is subject to the continued tenant protections FHFA imposed during the pandemic. Property owners with Fannie- or Freddie-backed multifamily mortgages can enter a new or modified forbearance if they experience a financial hardship due to the COVID-19 emergency.

***

A report issued March 15 by the United States Government Accountability Office (GAO) studies the impact of COVID-19 eviction moratoriums and recommends that the Centers for Disease Control and Prevention (CDC) implement an outreach plan to help renters better understand its eviction moratorium. “COVID-19 Housing Protections: Moratoriums Have Helped Limit Evictions, but Further Outreach is Needed” evaluated 63 jurisdictions and found that eviction rates were 74% lower in the final week of July 2020 than the previous July. The CDC eviction moratorium has been in place since September 2020 and is scheduled to expire June 30. The GAO report says renters and property owners may be unaware of the CDC eviction moratorium and says the CDC lacks a communication and outreach plan. The report calls on the CDC to develop and implement such a plan.

***

The IRS issued a notice in the April 5 Internal Revenue Bulletin providing a more precise reference citation for a section of previous guidance that provided COVID-19 relief and clarifying how increases in qualified occupancy six months after year-end affect the ability to claim LIHTCs. Notice 2021-17 specifically cites IRC Section 42(f)(3)(A)(ii) in a provision of Notice 2021-12 that provided an extension for LIHTC properties to satisfy occupancy obligations. In Notice 2021-12, the IRS merely cited IRC Section 42(f). The new notice citation clarifies that increases in qualified occupancy six months after year-end help property owners avoid two-thirds LIHTCs in the future, but cannot be used to claim additional LIHTCs in the first year.

***

The IRS answered five frequently asked questions March 25 concerning the Emergency Rental Assistance (ERA) program. The questions relate to whether ERA payments are includable in gross income for various stakeholders in different situations. The answers highlight that renters do not include ERA payments in their gross income, while landlords and utility companies do.

LIHTC State

Virginia Gov. Ralph Northam March 31 signed into law legislation creating a state low-income housing tax credit (LIHTC). S.B. 1197 creates the Virginia housing opportunity tax credit, which will have a $15 million annual allocation for five years, applying to taxable years beginning on or after Jan. 1, 2021. The state credit will match federal 4% and 9% LIHTC allocations. Virginia becomes the 21st state (plus the District of Columbia) with a LIHTC. Legislation to create a state LIHTC has been introduced this year in Arizona, Indiana, Iowa and Montana.

***

Legislation introduced in the Iowa Senate March 23 would create a state LIHTC and would double the cap for the state’s workforce housing tax incentive. S.F. 295 would create a 4% Iowa LIHTC with an annual cap of $15 million plus any unallocated or recaptured credits from previous years. The legislation would also increase the state workforce housing incentive cap from $25 million to $50 million for the period of July 1, 2021, through June 30, 2024, with $20 million reserved for small cities.

***

The South Carolina Department of Revenue released a revenue ruling March 1 to provide guidance for the state LIHTC, which was enacted in May 2020. Revenue Ruling 21-5 provides an overview of the federal and state LIHTC. The revenue ruling provides questions and answers on such issues as what constitutes a qualified project, information about an eligibility statement, details about how to take the tax credit and other provisions. The ruling applies to qualified projects placed in service Jan. 2, 2020, through Dec. 30, 2030.

***

The Alaska Supreme Court ruled that a developer that received LIHTCs from the Alaska Housing Finance Corporation in 2001 is ineligible to exercise a qualified contract option to exit the agreement after
15 years
, because the developer claimed extra points in its LIHTC application by agreeing to provide an additional 15 years of affordability. In Creekside Limited Partnership; Creekside-Alyeska LLC and Community Development Inc. v. Alaska Housing Finance Corporation, the developer sued after the housing agency denied its desire to end affordability restrictions after 15 years. Creekside argued that it didn’t sign a contract to waive its right to the qualified contract option, but a lower court ruled that in accepting the six-point application scoring advantage for agreeing to do so, Creekside agreed to the 15-year extension. The Supreme Court upheld the lower court’s ruling.

***

Legislation introduced in the Texas Legislature Feb. 3 would change the scoring system for the state’s competitive LIHTC to encourage development near veteran’s hospitals. H.B. 1558 would require the state’s ranking system to grant bonus points for properties located not more than 5 miles from a veteran’s hospital that provide a preference for leasing units to low-income veterans.

***

Legislation introduced in the Vermont House of Representatives would create a surcharge on property transfers of more than $1 million, with a portion of the funding going for purchasing and restoring manufactured homes through the state LIHTC. H. 437 would institute a tax of 1.25% of the value of property transferred in excess of $1 million, with the state LIHTC allocating agency using some of the funds to make an additional $2.5 million in annual allocations for manufactured home purchase and replacement.

***

Legislation introduced in the Nevada Legislature March 22 would lift the sunset date on the ability to transfer state LIHTCs, but would require the transfer to take place before a property is completed. S.B. 284 would require that the final application for transferable tax credits be submitted at least 45 days before the project is closed and would give the Housing Division of the Department of Business and Industry the right to determine whether the amount of credits should be lowered based on the cost. The legislation would eliminate a provision that forbids the application to transfer credits after July 1, 2023. The legislation also caps the amount of transferrable credits over the lifetime of the program at $40 million.

***

Kentucky Housing Corporation opened applications March 18 for 2021 tax-exempt bonds and 4% LIHTCs. Applications must be submitted through the Universal Funding Application.

LIHTC Dealmaker

Enterprise Housing Credit Investments and Sugar Creek Capital announced March 3 an $11 million investment in The Refinery Apartments in Abbeville, South Carolina. The development is the first affordable housing property to close using South Carolina’s state low-income housing tax credits (LIHTCs), which launched in 2020. The development will provide 51 affordable apartments for families who earn up to 60% of the area median income (AMI) and nine market-rate apartments.

***

MassHousing announced March 22 that it closed on $1.8 million in affordable and workforce housing financing for the nonprofit Home City Development Inc. The financing will help transform the former Elias Brookings School in Springfield, Massachusetts, into 42 affordable apartments for households that earn up to 80% of the AMI.

***

Woda Cooper Companies announced March 31 the near complete lease-up of Rivergate Greene in Charlotte, North Carolina. The development provides 72 affordable apartments for households that earn less than 30% and 60% of the AMI. The development was allocated LIHTCs by the North Carolina Housing Finance Agency.

***

Enterprise Housing Credit Investment announced March 16 the recent closing of the Enterprise Housing Partners Fund XXXIV (34). The multi-investor fund includes more than $199 million in LIHTC equity. The fund will support the development of 1,794 affordable homes across 14 properties in 10 states.

***

Southport Financial Services announced March 12 that it expects to purchase a property in Springfield, Florida, for the development of Parkview Commons. The development will provide 122 affordable homes for tenants who earn up to 60% of the AMI. The development was allocated 9% LIHTCs from Florida Housing Finance Corporation. Construction is expected to start by the end of 2021 and is slated to be completed within a year.

***

Winter Gardens in St. Louis is slated for redevelopment and will provide 112 apartments for seniors. The development cost is $23 million, and will be supported by more that $10 million in LIHTC equity.

***

Boston Financial Investment Management announce March 26 that it has closed a $173 million LIHTC fund. Boston Financial Institutional Tax Credits 54 Limited Partnership includes 19 tax credit investments and will finance more than 1,500 affordable homes across 19 developments.

***

WinnDevelopment announced April 1 that it has begun construction to convert the reminder of the historic Cliftex Mill building in New Bedford, Massachusetts, into 71 mixed-income apartments for adults 55 and older. The development will provide homes for seniors who earn at or below 60% of the AMI. Financing for the development includes federal and state LIHTCs as well as state historic tax credits.

***

Wendover Housing Partners held a groundbreaking March 31 for Hawthorne Park in Orlando, Florida. The development will provide 120 affordable homes for seniors. The redevelopment will replace a portion of an underused shopping center and will become the new anchor for revitalization in the Pine Hills neighborhood. The development was allocated $2.3 million in LIHTCs from Florida Housing Finance Corporation.

***

KeyBank’s Community Development Lending Investment announced April 5 that it has provided $23 million in financing for the construction of an affordable senior housing development in Canonsburg, Pennsylvania. Financing from KeyBank includes $12 million in LIHTC equity. The Pennsylvania Housing Finance Agency also provided a $1.3 million permanent loan.

LIHTC People

Hunt Capital Partners announced March 22 seven new strategic hires across the acquisition, project management, asset management and underwriting teams. The following will be joining Hunt Capital Partners to help execute their new strategy: Joshua Anderson, vice president, underwriting; Matthew Dillis, director, construction risk management; Michael Dengler, senior director, asset management; My Nguyen, director, asset management; Don Snyder, director, acquisitions; Aiza Galdo, director, HCP property holdings; Shane Gonzales, associate, project management.

***

Cooper Housing Institute, a nonprofit that supports research and programs that address housing affordability and homelessness, announced March 31 that it has selected five notable academic and advocacy leaders in the housing community to serve on its advisory board. The Cooper Housing Institute Advisory board includes Dr. Robert Dietz, Denise Muha, Dr. Norweeta Milburn, Dr. Sam Tsemberis and Pamela West.

***

Bellwether Enterprise Real Estate Capital announced April 6 that Kamara Green has been hired as national director of affordable analytics and sales. Green will join the company’s National Agency Team and will be based in the Los Angeles office. Green will manage the affordable analytics team, overseeing Fannie Mae, Freddie Mac and private placement deals.

***

BRIDGE Housing announced April 2 that Daryl J. Carter has been elected to the board of directors. Carter is the founder, chairman and CEO of Avanth Capital Management LLC and brings 40 years of experience in the commercial real estate industry to the board.

Journal Category: 
Low-Income Housing Tax Credit
Authors: