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Low-Income Housing Tax Credits News Briefs - November 2013

CORRECTION

The Washington Wire column in the September 2013 issue of the Novogradac Journal of Tax Credits, “Congress Returns to Short, Crowded Calendar,” misidentified the party and state affiliation for Sen. Maria Cantwell, D-Wash. We regret the error.

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AFFORDABLE HOUSING INDUSTRY BRIEFS

On Sept. 26, the U.S. Department of Housing and Urban Development (HUD) released mortgage insurance premiums (MIPs) for the Federal Housing Administration (FHA) Multifamily, Healthcare Facilities and Hospital mortgage insurance programs. The fiscal year (FY) 2014 MIPs are the same as in FY 2013. Clarification for FHA-insured properties was also provided. The notice says that properties with existing low-income housing tax credits (LIHTCs) or new LIHTCs produced as a result of, or in conjunction with, a FY 2014-insured loan are eligible for the LIHTC MIPs. Also, the upfront or first-year MIP fee for FHA mortgage insurance is 50 basis points (bps) for both affordable and market rate properties for Multifamily, Healthcare Facilities and Hospital mortgage insurance programs. This is effective Oct. 1.

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The Internal Revenue Service (IRS) released Revenue Procedure 2013-31 on Sept. 16, which announced the reallocation of $2.5 million of unused LIHTCs from the national pool for 2013. The smallest amount was allocated to Vermont, with a little more than $6,000, and California received the largest award with more than $370,000. Rev. Proc. 2013-31 is available at www.taxcredithousing.com.

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The National Housing and Rehabilitation Association (NH&RA) released a report entitled, “A Variety of Approaches: New England State Agencies Differ in Needs, Priorities in their Housing Credit programs” in October. The report discusses recent and current tax credit allocation activity, project trends, state priorities, anticipated changes to 2014 state allocation plans for tax credits and which types of projects are most likely to be successful in obtaining LIHTCs in the New England states of Connecticut, New Hampshire, Maine, Massachusetts, Rhode Island and Vermont. The report is available at the National Housing and Rehabilitation Association.

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The Center for Housing Policy (CHP), released a summary of research conducted on public opinion, messages and language in early October. “Insights From Housing Policy Research; Building Support for Affordable Homeownership and Rental Choices: A Summary of Research Findings on Public Opinion and Messaging on Affordable Housing” lists four of the CHP’s goals: expanding awareness of the nation’s housing needs, identifying proven and promising solutions to the nation’s housing challenges, working to ensure a better understanding of the role that housing plays in advancing key societal goals and laying the foundation for the next generation of housing and related policies. There are two categories of the study: public opinion research and language and messaging. Public opinion findings include that housing cost issues tend to have the most traction in high-cost areas and housing cost concerns are often passive and do not translate into political support. In the language and messaging recommendations section findings include focusing on beneficiaries and appealing to core values such as choice, hard work, balance, fairness and opportunity. The summary can be found at the National Housing Conference.

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STATE BRIEFS

On Sept. 30 the IRS waived certain limitations for developments financed with LIHTCs or tax-exempt bonds for LIHTC property owners and operators so that they can provide housing to the victims of the severe storms, flooding, landslides and mudslides in Colorado that began Sept. 11. Details are available in Notice 2013-63 and Notice 2013-64. certain income limitation requirements are temporarily suspended under Section 142 and Section 42. The suspension is available to both qualified residential rental properties that are not subject to any LIHTC-related requirements (bond projects) and to qualified residential rental properties that are also subject to the LIHTC-related requirements. The suspension will apply to low-income housing properties in which vacant units are rented to displaced individuals. The notices are available at www.taxcredithousing.com

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On Sept. 24, Michigan Gov. Rick Snyder signed bill S.B. 347, which will shorten the gap between the equity a developer can provide and the percentage that banks are willing to lend on a development such as commercial mixed-use and multifamily residential developments. Sponsored by state Sen. Mark Jansen, the bill allows the Michigan State Housing Development Authority (MSHDA) to create the Michigan Mezzanine Fund. This will help MSHDA bring in outside capital to help fill funding gaps. It also makes available more funds for investment in affordable housing. The investment fund will have $25 million in non-taxpayer dollars that will leverage with an additional $75 million to $100 million in private investments. S.B. 347 is now Public Act 116 of 2013.

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On Oct. 12 Calif. Gov. Jerry Brown signed A.B. 952, which allows California Tax Credit Allocation Committee (CTCAC) to award state low-income housing tax credits (LIHTCs) to properties that serve special needs populations, even if such properties are also receiving additional federal LIHTCs by virtue of being located in qualified census tracts (QCTs) or difficult to develop areas (DDAs). The goal of the law is to allow deeper tax credit subsidies for low-income housing serving special needs populations. The new law allows CTCAC to award state LIHTCs to properties that are located in QCTs or DDAs if at least 50 percent of the units in the property are reserved for special needs populations. CTCAC can supplement federal LIHTCs with state LIHTC for as much as 30 percent of a development’s eligible basis. Previously, if CTCAC allocated state LIHTCs to a QCA/DDT property, it had to reduce its federal LIHTC bonus tax credits. Under the new law, if a property meets the above requirements, it can receive the entirety of its federal bonus LIHTC allocation as well as state LIHTCs.

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The Georgia Department of Revenue published an informational bulletin, “Fair Market Value of Qualified LIHTC Property” on Sept. 30. The document provides guidance to county appraisal staff for determining the fair market value of property that qualifies for LIHTCs. Under current Georgia law, the appraisal staff in each county is responsible for the valuation of all real property located within that county. Existing zoning of property, existing use of property, including any restrictions or limitations on the use of property, existing covenants or restrictions in deed dedicating the property to a particular use and any other existing factors provided by law or by rule and regulation must be factored in when determining the fair market value of real property. Appraisal staff must also consider three approaches: the sales comparison approach, the cost approach and the income approach.

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DEALMAKERS

On Sept. 17, Greystone, a company specializing in financing multi-family housing, closed a $117 million portfolio affordable housing transaction in Georgia. The portfolio, acquired by WWJ LLC an affiliate of Boyd Management Inc., consists of 44 affordable housing properties with 1,362 units will be financed. The properties span 30 counties across the state and the rehabilitation is expected to be completed within 12 months. The financing involved in the transaction was a combination of both public and private funding that included, but was not limited to, the following: a Fannie Mae Delegated Underwriting and Servicing (DUS) loan of $26.9 million, the issuance of more than $47.2 million in multifamily private activity tax-exempt bonds and the purchase of 4 percent state and federal LIHTCs. Rehabilitation plans include interior, exterior and electrical improvements. This includes new flooring, energy efficient appliances, hot water heaters, upgraded HVAC, new insulated double-pane windows, doors, gutters, siding and a new roof system. Costs will total more than $34 million.

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San Francisco Mayor Edwin M. Lee announced on Sept. 18 that Avenue Apartments, a property with 71 units for low-income families and transitional-age youth who have recently aged out of foster care, broke ground. More than one-third of the units will be available for transitional-age youth, while the remaining units will be available for families earning up to 50 percent of the local area median income (AMI). The building will be five-stories and will include studio, one-bedroom, two-bedroom and three-bedroom units with retail space on the ground-floor. Also included will be property management and resident social services, a common room, a multi-purpose room, laundry facilities, a small exercise room for residents and an outdoor play area. The development is expected to open in January 2015. Total costs will be $34 million, and funding will come from tax credit equity investments and construction financing from Bank of America, loans from the San Francisco Mayor’s Office of Housing and Community Development, the California Department of Housing and Community Development, California Housing finance Agency, Federal Home Loan Bank of San Francisco and a grant from Enterprise Community Partners. Avenue Apartments will be developed in conjunction with the reconfiguration of bus loop and public plaza development projects.

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Vinings at Greencastle Apartments, an affordable housing complex for seniors in Clarksville, Tenn. held a grand opening on Sept. 26. The complex has 80 units, including 68 two-bedroom and 12 one-bedroom units. Amenities include a community room and laundry facility. Vinings at Greencastle Apartments is available for seniors age 55 years and older. It is a $9.3 million project funded by UnitedHealthcare, U.S. Bank and the City of Clarksville. UnitedHealthcare provided $7.7 million in LIHTC equity through a partnership with U.S. Bank, the subsidiary U.S. Bancorp Community Development Corporation. U.S. Bank also provided a construction loan and a first mortgage.

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WNC, a national investor in real estate and community development initiatives, announced on Sept. 5 that it closed its fiscal year 2013 with six low-income housing tax credit funds. A total of $348 million in equity was raised through multi-investor national, state tax credit and propriety funds. The funds support 59 LIHTC properties with more than 4,900 units of low-income housing units in 25 states. Michael Gaber, executive vice president and chief operating officer of WNC, said that the company worked with 28 investors across the six funds. WNC’s funds financed properties such as the 32-unit Hope Cottages in Joplin, Mo., a 160-unit senior community in Honolulu, Hawaii, the rehabilitation of a 207-unit apartment complex in Baton Rouge, La. and the rehabilitation of a 106-unit complex in Los Angeles County, Calif. Also included was the resyndication of the Old Colony Phase One, a 116-unit family housing property constructed in Boston in 2011.

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On Oct. 1, R4 Capital, a national affordable housing syndicator and subsidiary of Regis Group, announced the closing of its second multi-investor fund and the launch of its third CRA-focused proprietary fund. R4 Capital closed $87.5 million of the $125 million R4 Housing Partners II LP fund. This fund includes 19 properties in 13 states with more than 1, 900 affordable housing units. The first transaction of the third CRA-focused proprietary fund includes a $12 million investment for the rehabilitation and adaptive reuse of the historic McDonogh School 16 in New Orleans. Sixty-four units of affordable senior housing will be made available. Meridian Investments Inc. assisted as the placement agent and Nixon Peabody LLP was the fund’s legal counsel.

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On Oct. 7, the Raymond James Tax Credit Fund (RJTCF), a national syndicator of affordable housing, announced the recently completed syndication of a $195 million LIHTC fund. The fund will finance the construction or rehabilitation of affordable housing developments throughout the country. RJTCF 40 LLC is funding the development of more than 2,000 units in 42 housing properties across 32 states. Units will be available to low-income families and seniors.

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On Oct. 9, Great Lakes Capital Fund announced the closing of the $109 million Great Lakes Capital Fund for Housing Limited Partnership XXVIII for affordable housing across the Midwest. Fund 28 had seven investors, including five banks and two insurance companies. The fund will support 17 community developments in Michigan, Illinois, Indiana and Wisconsin. There are 10 multifamily properties, two senior properties, two special needs properties and two properties that combine family and senior living, including one that combines multifamily and special needs. A total of more than 1,000 units will be available.

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PEOPLE IN THE INDUSTRY

Prestige Affordable Housing Equity Partners, a company of The Michaels Organization, hired Sebastian Corradino and Rick Slagle as president and vice president, respectively. The tax credit investment company located in Marlton, N.J. hired Corradino and Slagle, with more than 35 years of combined experience, to maintain the company’s increased capacity and operations. Corradino was previously the president of RBC Tax Credit Equity Group and RBC managing director. Prior to joining RBC, he founded MissionFirst Development, a Washington, D.C.-based real estate company. Corradino earned a master’s of public administration from Columbia University, School of International and Public Affairs, and juris doctors in law from Benjamin N. Cardozo School of Law, Yeshiva University and the George Mason University School of Law. Slagle was previously a director at Raymond James Tax Credit Funds. Before that, Slagle was a consultant to developers providing market and property feasibility services. Slagle received an MBA in real estate and finance from George Mason University School of Management.

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Mark C. Beisler, president and chief operating officer of RED Capital Group, has been appointed chairman of the Mortgage Bankers Association’s (MBA’s) Commercial Board of Governors (COMBOG) Multifamily Council. COMBOG leads the development of MBA’s commercial and multifamily policy and initiatives. Beisler has more than 25 years of multifamily/healthcare experience. Prior to this appointment, he was chair of the MBA’s multifamily steering committee and chair of the Fannie Mae DUS advisory council. He is also on the board of directors of the National Multi Housing Council in Washington D.C. Beisler graduated from Princeton University and earned an MBA from the Anderson Graduate School of Management at the University of California, Los Angeles.

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Community Housing Partnership (CHP) announced in September that Alex Armenta will be its new chief operating officer. She will oversee housing services and activity. Armenta has more than 17 years of nonprofit experience, but was most recently the associate director for Women’s Action to Gain Economic Security (WAGES). Before that, she directed program evaluation and fund development for WAGES. Armenta was also the director of development and evaluation at JUMA Ventures, and senior program associate at the S.H. Cowell Foundation. She graduated from the University of California, Santa Cruz with a bachelor’s degree in Latin American and Latino Studies.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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