Low-Income Housing Tax Credits News Briefs - November 2012

Thursday, November 1, 2012

AFFORDABLE HOUSING INDUSTRY BRIEFS

On Aug. 16, the U.S. Government Accountability Office (GAO) released its housing assistance report, “Opportunities Exist to Increase Collaboration and Consider Consolidation.” The report examined the effectiveness and efficiency of rental housing and homeownership programs supported by the federal government. GAO found areas of fragmentation and inefficiency among the 160 housing assistance programs it audited. To reduce the burden on applicants and promote policy consistency among programs, the interagency Rental Policy Working Group was established in 2010. GAO found that the group has taken steps to remain consistent in key practices but that it lacked an enforced, standardized system of accountability. GAO recommended the group expand its guidelines to include statutory action across programs that would reduce redundancy. Another recommendation was for each agency participating in the group to document its goals, strategies and responsibilities so that further areas of collaboration or consolidation can be identified. The report is available at www.taxcredithousing.com

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In other GAO news, the agency in September released a report, “Fannie Mae and Freddie Mac’s Multifamily Housing Activities Have Increased.” GAO was directed to explore how multifamily loan activities have changed over the years. GAO looked at the roles of Fannie Mae and Freddie Mac (the enterprises) in multifamily financing and how their multifamily delinquency rates compare with those of other mortgage capital sources. The report found that multifamily financing contributes significantly to the enterprises’ affordable housing goals. Between 2005 and 2008, the enterprises’ serious delinquency rates were lower on multifamily loans than loans made by commercial banks and commercial mortgage-backed securities. Still, the Federal Housing Finance Agency (FHFA) identified deficiencies in their credit risk management. For instance, FHFA found deficiencies in Fannie Mae’s risk-management practices, delegated underwriting and servicing program, and information systems. FHFA also found room for improvement in Freddie Mac’s management of its lower-performing assets. Both Fannie Mae and Freddie Mac have taken initiative to address these deficiencies. Find the report at www.taxcredithousing.com.

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The Office of the Comptroller of the Currency published the 2012 Median Family Income (MFI) data calculated by the Federal Financial Institutions Examination Council (FFIEC). The report, which incorporates information from the U.S. Census Bureau’s American Community Survey, determines income levels of geographic areas in Community Reinvestment Act (CRA) performance evaluations. According to FFIEC, the five metropolitan statistical areas with the highest median family incomes are Nassau-Suffolk, N.Y. at $107,500, Bridgeport, Conn. at $106,700, Cambridge, Mass. at $106,400, Washington, D.C. at $105,700 and San Jose, Calif. at $105,000. Access the report at www.taxcredithousing.com.

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The U.S. Department of Housing and Urban Development (HUD) announced the 2013 Difficult Development Areas (DDAs) in the Federal Register last month. In compiling the list of DDAs, HUD compared housing costs with incomes in those areas. Puerto Rico tops the list of states/territories with the highest number of metropolitan DDAs at 11, followed by California with nine and Florida with eight. In the nonmetropolitan category, Texas has the most DDAs with 67, followed by Mississippi with 43 and Florida with 24. The announcement also stated that HUD decided to delay adoption of small area DDAs by one year after considering public responses to a proposed use of small area fair market rents (FMRs) for designating DDAs. Find the 2013 DDA designations at www.taxcredithousing.com.

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The Corporation for Supportive Housing (CSH) released “Housing Credit Policies in 2012 that Promote Supportive Housing,” a report assessing qualified allocation plan (QAP) policies and strategies that encourage supportive housing development. The report examines 54 QAPs. CSH found that most agencies encourage supportive housing policies and do so using threshold requirements, credit set-asides and potential scoring advantages for supportive housing services. CSH also discovered trends in QAP policy changes this year: an increase in the number of agencies using set-asides, additional incentives for developments using public housing authority resources and promotion of integrated housing. Find the report at www.taxcredithousing.com.

DEALMAKERS

Boston Capital partnered with Artimus Construction and L&M Development Partners to invest in the construction of Harlem River Point South, a 140-unit multifamily development in Manhattan, N.Y. The LIHTC-funded property will feature hardwood flooring and air conditioning in each unit, along with a communal recreation space, community room, laundry facility, rooftop patio, bike storage and playground area. Harlem River Point South will be within walking distance of shopping centers, community services, a hospital and public transportation. Housing will be available to families with incomes at or below 38 percent and 58 percent of the area median income (AMI). Boston Capital estimates that the construction will generate $14.4 million in local income and will create 212 Manhattan jobs.

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A new 70-unit affordable housing development for seniors will be built in Boston’s West Roxbury neighborhood. Investor Boston Capital is working with The Community Builders Inc. and the American Arabic Benevolent Association to develop Cheriton Heights Apartments using LIHTCs. The property will feature 64 one-bedroom and six two-bedroom apartments in a six-story building. Common amenities include a community room with kitchen, library/media room with kitchen, a beauty salon and patio space. An adjacent senior property’s community garden and picnic area will also be accessible to Cheriton Heights residents. According to a MassHousing press release, the development is slated to receive more than $7 million in LIHTCs, with other financing provided by HUD’s Section 202 program, MassHousing, the city of Boston and the state’s Department of Housing and Community Development.

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A groundbreaking ceremony was held at the former Century and Baker furniture factory in Grand Rapids, Mich. A $17 million rehabilitation will transform the century-old former factory into 12,500 square feet of commercial space and an 87-unit apartment complex for low-income families. The development is scheduled to be completed in two phases, with the first phase receiving a reservation of $1.4 million in LIHTCs. Developer LC Consultants LLC said the new apartments will have 10-foot ceilings, central air, stained concrete floors, dishwashers, appliances and in-unit washers and dryers. The building was constructed in 1910 and housed the Century Furniture Company until the early 1940s. Since then, it was used primarily as storage space.

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Boston Capital announced its investment in the construction of The Gardens Senior Apartments, a 55-unit development for low-income seniors in Baton Rouge, La. Financed with LIHTC equity, the two-story building will feature units with central air, walk-in closet space, emergency pull alarms, and washers and dryers. Common amenities include a community room with kitchenette, business/computer room, fitness center and a gazebo picnic area. General nonprofit partner The Humanities Foundation will offer tenants health services, social and educational activities and nutrition programs, as well as housekeeping and security services. The Gardens will be available to seniors 55 and older earning 60 percent or less of AMI. Construction is projected to generate $5.3 million in local income and create 80 local jobs.

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Developer Eden Housing hosted a groundbreaking event on Sept. 28 for Lafayette Senior Apartments in Lafayette, Calif. The new 46-unit affordable housing property will be available to senior households earning 20 to 50 percent of AMI. Lafayette Senior Apartments will offer independent living supportive services, and 17 of its units to accommodate seniors with physical disabilities. Property features include an on-site manager’s unit, a community room opening onto an outdoor patio and formal garden, two sunrooms overlooking a second courtyard, raised planters for gardening and a computer learning center with a library.

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Boston Financial Investment Management LP announced its recent closing of national multi-investor fund, Boston Financial Institutional Tax Credits XXXVIII LP. In June, the fund was offered at $130 million and all seven investors closed in September. The fund’s diversified portfolio consists of 20 operating partnerships with 1,800 affordable housing units in 13 states. These properties house about 6,000 low-income seniors and families around the country, resulting in 1,500 temporary and 350 permanent jobs. June was also when Boston Financial reached assets of nearly $9 billion spread among 126 tax credit fund investments.

STATE BRIEFS

The Colorado Housing and Finance Authority (CHFA) released its list of second round LIHTC awards. Of the 12 applications submitted to CHFA requesting $9.8 million in LIHTC, six developments were awarded $4.5 million in total. Allocation for the six developments will create or preserve 346 units. The biggest awardees were Avondale Apartments with $1.25 million, Mariposa Redevelopment Phase III with $1.05 million and TLC Washington Center Apartments with more than $960, 000.

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The Ohio Housing Finance Agency (OHFA) announced in August that it will publish weekly answers on its website to frequently asked questions about its 2013 QAP, federal and state funding and areas affected by foreclosure. Previous answers include definitions of technical terms, advice on projects applying for more than one type of tax credit and clarifications on the scoring process. OHFA also corrected and uploaded a new version of its carry-over cost certification form. Access the form and the FAQ at www.ohiohome.org.

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The Oklahoma Housing Finance Agency approved the final version of its 2013 affordable housing tax credits application and QAP. Changes to the original drafts were discussed on Aug. 9 at a public input session before the board of trustees approved the final versions on Sept. 9. The deadline for round one applicants is Jan. 10, 2013 at 4:30 p.m. and the deadline for round two is July 3, 2013 at 4:30 p.m. Access the QAP and application at www.ohfa.org.

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In early September, New York Gov. Andrew Cuomo announced that $72 million will be available for shovel-ready construction of affordable housing units through New York State Homes & Community Renewal (HCR). The application process for funds will be streamlined through HCR’s Unified Funding Application. Of the $72 million available for affordable housing, $25 million will be allocated in LIHTCs. There will be a $22,000 maximum allocation per unit and a $1.43 million maximum per development or $1.65 million maximum for developments in which at least 50 percent of the units will serve large families or residents with special needs. Of the remaining funds this round, $32 million will go to low-interest loans from the low-income housing trust fund program, $11 million will go to HOME capital and $4 million will go to state LIHTCs. Applications were due Oct. 25. The deadline for all other applications is Nov. 29 at 5 p.m. Information and applications are available at www.nyshcr.org.

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MassHousing set a new lending record in its 46-year history with nearly $1 billion in financing for affordable housing in FY 2012. The 12-month period, which ended June 30, saw an increase of 21 percent over last year and beat the previous best lending year of 2010 by 15 percent. MassHousing provided $334.4 million in loans to build six new affordable housing developments with 470 units and to preserve an additional 22 affordable communities with nearly 2,700 units.

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On Sept. 29, California Gov. Jerry Brown signed into law three key state housing bills. A.B. 1951 allows $30 million in existing Proposition 1C funds formerly allocated to the underutilized practitioners fund and construction liability insurance reform pilot program to be awarded through the Department of Housing and Community Development’s (HCD’s) multifamily housing program. A.B. 1585 transfers $25 million from Proposition 1C for awards through the infill infrastructure grant program, and an additional $25 million to the transit-oriented development program. A.B. 1699 gives HCD the authorization to extend certain loan terms issued under older rental housing programs and allows HCD to subordinate a department loan to new debt and invest tax credit equity. On the same day, Gov. Brown also vetoed three bills, citing the creation of new tax increment financing programs as premature. S.B. 1156 proposed creating new sustainable communities investment areas, a type of redevelopment tax increment tool. S.B. 214 would have allowed creation of infrastructure financing districts (IFDs) without voter approval and would have extended IFD bond terms to 40 years. A.B. 2144 would have allowed the creation of IFDs with a lowered voter approval threshold of 55 percent. Details about the approved and vetoed bills are available at www.gov.ca.gov.

PEOPLE IN THE INDUSTRY

Squire Sanders announced in September that Orlando Cabrera will lead its housing, tax credits and community development group within its real estate practice. Cabrera will be of counsel at Squire Sanders and will be resident in the Washington, D.C. office. Cabrera’s main responsibilities will include overseeing federal, state and local regulatory housing issues, as well as tax credit and bond financing. Prior to joining Squire Sanders, Cabrera was of counsel with Nixon Peabody LLP. He also formerly worked for the U.S. Department of Housing and Urban Development (HUD) as an assistant secretary for public and Indian housing.

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The Tennessee Housing Development Agency (THDA) appointed Ralph Perrey as its executive director. Perrey assumed his new role last month and left THDA’s board of directors, on which he has served almost continuously since 2001. Before joining THDA, Perrey worked at Fannie Mae in a number of positions, including director of the Tennessee community business center, coordinator of the company’s central Appalachian initiative and national co-lead of the public entities loan team. Prior to Fannie Mae, Perrey was a senior staff member of former Tennessee Gov. Don Sundquist, with policy and communication responsibilities.

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Raymond James Tax Credit Funds hired Andy Voress as its new director of institutional investment last month. Voress, who has more than 17 years of experience in the financial services industry, will primarily deal with business development opportunities involving companies interested in investing in LIHTC funds. He previously worked for a major insurance company, overseeing more than $500 million in multi-investor funds. Based in Chicago, Voress is also a chartered financial analyst charter holder and a certified public accountant.

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Nixon Peabody LLP has promoted to counsel Rebekka Hermans Or, a New York City tax credit finance and syndication attorney specializing in tax, real estate and partnership issues. She represents investors, developers and syndicators that are applying for federal and state LIHTC, federal and state historic rehabilitation credits and renewable energy credits. Or received her bachelor’s degree from Saint Anselm College and her J.D. from Suffolk University Law School. She is also a member of the Women’s Bar Association.