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Low-Income Housing Tax Credits News Briefs - October 2010

AFFORDABLE HOUSING INDUSTRY

The Treasury Department in response to a recent survey’s finding that state housing agencies sought further clarification on recapture events released guidance in August for Section 1602 low-income housing tax credit (LIHTC) exchange funds. The guidance covers the definition of a recapture event, how to calculate the amount of funds owed, the extent of an agency’s obligation to enforce program requirements, how to avoid noncompliance, and what to do in cases of noncompliance. The guidance contains a list of best practices state agencies can use when working with subawardees to avoid noncompliance. Provided the state agency takes appropriate actions under state law to recapture Section 1602 funds from a property in noncompliance, the Treasury clarified that it will not require the agency to return the recapture penalty. Download a copy of the guidance from www.taxcredithousing.com.

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The credit quality of Fannie Mae and Freddie Mac’s new mortgage acquisitions has improved substantially since the establishment of the conservatorships, a Federal Housing Finance Agency (FHFA) report revealed in August. The second quarter “Conservator’s Report on the Enterprises’ Financial Condition” also found that the single-family credit guarantee business segment was the key driver of the enterprises’ capital decline, accounting for 73 percent of the capital reduction from the end of 2007 through the second quarter of 2010. The investments and capital markets business segment accounted for 9 percent of the capital reduction during the same period. Released quarterly, FHFA’s report includes information on Enterprise presence in the mortgage market, credit quality of Enterprise mortgage purchases, sources of Enterprise losses and capital reductions, and Enterprise loss mitigation activity. View the full report online at www.novoco.com.

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VPM Management Inc. and developer KDF Post Street challenged an amendment to the city and county of San Francisco’s rent control ordinance, charging on appeal that the ordinance interfered with their ability to receive LIHTCs for a building the two companies respectively owned and managed in San Francisco, Calif. The amendment, which in effect subjected the building’s units to rent control, was upheld by the trial court and later the appellate court. Both courts found that it would be possible for the companies to comply simultaneously with the rent control ordinance and the statutes governing bonds and LIHTCs, rejecting appellants’ argument that it constituted an improper taking of their tax credits without just compensation. A copy of the ruling is available at www.taxcredithousing.com.

DEALMAKERS

Mid-Peninsula Housing broke ground on Fair Oaks Plaza, a 124-unit development for low- and very low-income seniors, on August 31. Google provided a $19 million LIHTC equity investment in the Sunnyvale, Calif. property. The community will feature a community center, fitness center and range of on-site services. Union Bank acted as manager credit syndicator for the transaction, which marks the search engine giant’s first affordable housing investment. Other financing for the $37.6 million deal was provided by the city of Sunnyvale, Housing Authority of Santa Clara County, California Department of Housing and Community Development, County of Santa Clara Department of Mental Health, and CalHFA. The property is scheduled to open next summer. Google recently made additional affordable housing investments through an $86 million LIHTC fund managed by U.S. Bancorp Community Development Corporation (USBCDC). The fund will provide a major source of capital for the construction and operation of 480 affordable rental units for low-income families and senior citizens in California, where Google’s headquarters is based, and the Midwest where investment has lagged in recent years. USBCDC originated seven investments with experienced LIHTC developers to oversee the completion and lease-up of developments in Waukegan, Ill.; Apple Valley, Minn.; Des Moines, Iowa; Milwaukee, Wis.; and Fontana, Palm Springs and Salinas, Calif.

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Developer Eden Housing Inc. and Healdsburg, Calif. officials celebrated the grand opening of Foss Creek Court, a 64-unit affordable development near downtown Healdsburg. The residential units in the development that features a community building, a computer learning center, a community garden and tot lots, are available to households earning 30 to 50 percent of the area median income. The property was financed by the city of Healdsburg, Silicon Valley Bank, low-income housing tax credit equity provided by syndicator U.S. Bancorp, and Federal Home Loan Bank Affordable Housing Program funds. Foss Creek is Eden Housing’s fifth Sonoma County development.

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Raymond James Tax Credit Funds partnered with the BOKF Community Development Fund to provide $6.9 million in low-income housing tax credit equity to construct two multifamily properties in McAlester, Okla. The deal’s closing marked the opening of the Raymond James Housing Opportunities Fund 11 LLC. Westridge Village will have 52 one-, two- and three-bedroom units for residents earning less than 50 percent of the area median income (AMI). Westside Apartments will feature 40 two- and three-bedroom apartments for households that earn less than 50 or 60 percent of AMI. Slated for completion in April 2011, both properties will include a clubhouse with a community room, library, computer room, picnic area and storage units.

STATE

Iowa Gov. Chet Culver announced more than $181.6 million in low-income housing tax credit and Community Development Block Grant (CDBG) awards to build or rehabilitate 1,597 affordable housing units. Administered by the Iowa Department of Economic Development (IDED), the CDBG awards are part of a $516.7 million plan to support the housing needs of those affected by flooding in 2008. The IDED and the Iowa Finance Authority allocated the collective funds to 29 developments. View the complete list of award recipients at www.iowafinanceauthority.gov.

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Oregon Housing and Community Services (OHCS) reported in September that it has preserved 270 affordable housing units under the Section 1602 LIHTC exchange program. Funds were used to rehabilitate affordable housing developments, including the preservation of 200 project-based rental assistance units. Developments that were awarded exchange program funding through OHCS are Seacrest in Bandon; Cedar Grove Apartments in North Bend; Linnhaven and Stonebrook in Sweet Home; Crest Butte Apartments in Bend; Sandhill Villa in Seaside; Hewitt Place in Troutdale; and Parkside Village in Roseburg. OHCS said that by the end of Oregon’s program, it will have assisted seven rural communities and retained or created more than 300 jobs.

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New York Gov. David Paterson announced $119 million in housing and community renewal awards to develop affordable housing, revitalize downtowns and upgrade infrastructure. The awards include $76 million in federal and state LIHTCs to construct or rehabilitate more than 2,500 affordable housing units; $28 million through the CDBG program to build or improve public health facilities, senior citizen centers and child-care centers; and $15 million under the New York Main Street program to revitalize the central business districts of 35 cities and towns. Nyhomes granted the awards to 130 projects out of the more than 400 funding applications it received. Lists of the awardees are available at www.nysdhcr.gov.

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The Mississippi Home Corporation (MHC) announced the award of more than $8 million in LIHTCs for the construction or rehabilitation of 589 units. Located in Jackson, Natchez, Columbus, New Augusta, Hattiesburg, Laurel and Starkville, the developments will create an estimated 500 jobs, providing nearly $13 million in construction wages and more than $67 million in related spending. MHC received 33 applications for the 2010 round, requesting a combined total of $17 million in LIHTCs.

PEOPLE IN THE INDUSTRY

Kimberly McKay has been named BRIDGE Housing’s executive vice president for Southern California. She was formerly a senior vice president at The Related Companies of California, where she managed the development of affordable multifamily properties with a focus on large public housing revitalization efforts. McKay has also held positions at Related Capital Company, Mid-Peninsula Housing Coalition and the Naval Facilities Engineering Command. She earned a bachelor’s degree from the University of California, Berkeley and a master’s degree in real estate development from Massachusetts Institute of Technology.

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John Walsh became Acting Comptroller of the Currency in August, succeeding John C. Dugan. Walsh, the Office of the Comptroller of the Currency’s (OCC’s) former chief of staff and public affairs, joined OCC from The Group of Thirty, a consultative group that focuses on international economic and monetary affairs. He served on the Senate Banking Committee staff from 1986 to 1992, and as an international economist for the U.S. Department of the Treasury from 1984 to 1986. Walsh also served with the Office of Management and Budget as an international program analyst, with the Mutual Broadcasting System, and in the U.S. Peace Corps in Guam. He holds a master’s degree in public policy from the Kennedy School of Government.

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Ted Wartell has been named director of community affairs policy for the OCC. He will be responsible for helping shape the OCC’s policies concerning national bank involvement in community and economic development initiatives as well as overseeing the community affairs department’s research and publications. Wartell most recently served as director of the office of policy at the U.S. Small Business Administration and as an affordable housing program budget analyst at the Office of Management and Budget. He holds a master’s degree in public policy from the University of Chicago.

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Robert Herz, Financial Accounting Standards Board (FASB) chairman, retired in August after more than eight years of leading the board. FASB appointed board member Leslie Seidman acting chairman effective October 1. The board of trustees also announced FASB’s expansion from five to seven members. FASB had previously operated with seven members until 2008.

BONDS

The Maryland Department of Housing and Community Development (DHCD) announced that construction has begun on its first projects funded through the New Issue Bond Program (NIBP). The four affordable rental developments are Indian Bridge Apartments in St. Mary’s County, La Plata Manor in Charles County, Parkview at Columbia in Howard County and Silverwood Apartments in Calvert County. DHCD is fully subscribed for its entire $92 million NIBP allocation, but the agency is still accepting applications for multifamily bond program financing on a first-come, first-served basis.

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Boston Capital invested in a planned 172-unit senior community in San Antonio, Texas. Developed and managed by NRP Group LLC, the Mirabella Apartments will feature 112 one-bedroom units and 60 two-bedroom units in four buildings, a passive hot water solar system, a pool, a community room, a business center and an exercise room. Units are available to seniors aged 55 or older who earn 60 percent or less of the area median income. The development received a $15 million bond allocation and a nearly $700,000 LIHTC allocation from the Texas Department of Housing and Community Affairs.

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The California Housing Finance Agency (CalHFA) used its first bond issuance under the New Issue Bond Program (NIBP) to help create a 185-unit senior development in San Jose. Slated for completion in fall 2010, Belovida at Newbury Park received a $24 million tax-exempt bond allocation. CalHFA officials said another 14 projects are in the pipeline to receive approximately $176 million in issuance under NIBP. A partnership of the Treasury and NIBP is making $380 million available to finance affordable multifamily developments in California.

Journal Category:

Low-Income Housing Tax Credits

Authors:

Novogradac

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