Low-Income Housing Tax Credits News Briefs - October 2013

Tuesday, October 1, 2013

The Internal Revenue Service (IRS) released Notice 2013-47 on July 10. The notice, “Expanded Eligibility for Temporary Housing for Individuals Displaced by Severe Storms, Flooding, and Tornadoes in Oklahoma,” expands on Notices 2013-39 and 2013-40. The previous notices provide temporary housing relief to permit affordable housing properties to house individuals displaced by severe storms and tornadoes that occurred in Oklahoma between May 18 and May 27. Notice 2013-47 reflects the actions of the Federal Emergency Management Agency (FEMA), which extended the incident period to be May 18 through June 2, and expanded the incident type for the disaster to include flooding. The notice was effective May 20 and appeared in Internal Revenue Bulletin 2013-31 dated July 29.

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Rapoza Associates released a report on Aug. 13 entitled, “The Low-Income Housing Tax Credit: Overcoming Barriers to Affordable Housing in Rural America.” The report focuses on the effect of the low-income housing tax credit (LIHTC) program on rural communities. Results show that 7.3 million rural families live in housing with at least one affordability, quality or crowding issue. It also states that more than 270,000 rental units have been preserved or developed since the program began in 1986. The report concludes that more than 3 million rural renters spend more than 30 percent of their monthly income on rent, while nearly half of the households pay more than 50 percent. The report contains information on 37 case studies. Rapoza Associates partnered with several members of the National Rural Housing Coalition to produce the report.

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The Federal Housing Finance Agency (FHFA) is requesting public comments on strategies and alternatives for reducing Fannie Mae and Freddie Mac’s presence in the multifamily housing finance market in 2014. Topics about which comments are sought include restrictions on available loan terms, simplification and standardization of loan products, limits on property financing, limits on business activities and other options that FHFA should consider to contract the Enterprises’ multifamily businesses. The FHFA’s 2013 Conservatorship Scorecard included strategies such as reducing their volume of new multifamily business by 10 percent relative to 2012. The FHFA expects this reduction to be achieved through more limited product offerings and stronger underwriting standards. Input must be received no later than Oct. 8. The complete list of strategies and alternatives is available at www.taxcredithousing.com.

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STATE BRIEFS

On July 23, North Carolina Gov. Pat McCrory signed into law H.B. 998, the Tax Simplification and Reduction Act. H.B. 998 will allow the state’s LIHTC to remain in place as is, but will allow it to expire in 2015. According to the fiscal note for the bill, the plan will reduce collections by $87 million in 2013-14, $438 million in 2014-15 and more than $600 million each following year. Local governments would receive an estimated $14.6 million in additional revenue in 2013-14 and $36.2 million in 2014-15.

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On July 16, the board of the Pennsylvania Housing Finance Agency (PHFA) approved $19.5 million in LIHTCs for the construction of 20 affordable multifamily housing developments. A total of 1,517 units of affordable rental housing will be provided. The developments that are being awarded are located in Montgomery, Chester, Delaware, Bradford, Lackawanna, Cumberland, Adams, Lancaster, Franklin, Centre, Allegheny, Mercer and Elk counties.

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The Ohio Housing Finance Agency (OHFA) board awarded more than $7.7 million in state LIHTCs on July 17. Two initiatives were approved to be financed through the Housing Investment Fund (HIF). Permanent Supportive Housing received more than $540,000, while Life Skills Facility received $180,000. The initiatives are expected to produce 40 units for underserved populations, 20 units for rural communities and 50 units through the Home for Good program. The board also approved $1.75 million through the Recycled-Tax Credit Assistance program (R-TCAP) for four properties across Ohio, $2 million through the Housing Development Loan (HDL) program and roughly $813,000 in LIHTCs and a HDL in the amount of $2.5 million for the new construction of Trabue Crossing in Columbus.

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The Wisconsin Housing and Economic Development Authority (WHEDA) made changes to its Emerging Business manual, program requirements and documents that are required to be submitted for monthly reporting. All employers are now required to submit a completed “LIHTC Certificates of Employee and Employer Workforce Development Program” form for all new employees. The employer and the employee must complete portions of the form. All three pages must be submitted, including a copy of the employee’s application for employment and proof of the employee’s principal residence. For employees that the employer wishes to retain and transfer to a new LIHTC development, the employers will need to complete and submit the LIHTC “Certificate of Employee Job Site Transfer Workforce Development Program” form. WHEDA also created a checklist for the reports that are due by the 20th of each calendar month following the beginning of construction for a LIHTC development. This checklist identifies the documents that are to be submitted, along with the required back up documents for the monthly Emerging Business and Workforce Development reports. All of the changes to the manual and program requirements are available at www.taxcredithousing.com.

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Minnesota is in the process of developing its annual action plan for 2014, and its Consolidated Annual Performance and Evaluation Report (CAPER) for 2013. The Minnesota Housing Finance Agency announced a series of public hearings and comment period for the action plan and CAPER. The first meeting to gather input for the Action Plan was held July 24 and a second is slated for Sept. 11. Comments are due by end of business day Sept. 13. The draft is available at www.mnhousing.gov.

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The New Mexico Mortgage Finance Authority released the list of winners for its 2013 Low Income Housing Tax Credit design competition. The competition showcases quality and innovation in affordable housing projects throughout the state and is open to affordable housing developers who have applied for LIHTCs. Andalusia in Clovis is the first place winner. The development was completed by developers Tierra Realty Trust and Golden Spread Rural Frontier Coalition, and architect WAMO Studios. Crosstown Station in Las Cruces took second place, and was developed by Thomas Development Group and Tierra del Sol Housing Corporation, with architect WORKSHOP8. Third place went to the Village in the Bosque, in Bernalillo, which was developed by the Santa Fe Civic Housing Authority with architect Autotroph.

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DEALMAKERS

Guardian Real Estate Services completed a $12.1 million rehabilitation and new construction development that produced 80 units. The grand re-opening of the Sunrise Estates, located in the Dalles, Ore., took place on July 11. Guardian partnered with Oregon Housing and Community Services and the U.S. Department of Agriculture Rural Development (USDA RD) to renovate 60 units and construct 20 new ones. Renovations included window and door replacements, new energy efficient appliances, new kitchen cabinets and countertops and upgrades for Americans with Disabilities Act compliance, among others. Amenities include a new community room, playground, garden beds, laundry facilities and a management office. The rehabilitation and construction was funded with $3.5 million in state credits and $8.7 million in federal LIHTCs, along with a $3.5 million loan from a First Republic bank.

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Mercy Housing Northwest (MHNW), a developer and operator of affordable housing in Washington, completed three senior affordable housing developments on July 12. Located in the cities of Tenino, Centralia and Winlock, the developments will produce a total of 92 units with full renovations and energy efficiency upgrades. MHNW partnered with the USDA-RD and private funders to complete the rehabilitation. Renovations included new roofs and siding, upgrades to appliances and fixtures, and improved plumbing and electrical systems. Key Bank Community Development Corporation provided $9.5 million in LIHTC investment. Residents are lower-income seniors and disabled residents who earn no more than $11,000 annually.

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On July 12, the Housing Authority of the City of El Paso (Texas), Hunt Companies and Investment Builders Inc. (IBI) broke ground on Eastside Crossings, a mixed-income apartment community. The property will include a total of 188 units: 64 public housing units, 79 affordable housing units and 45 market rate units. Amenities will include a clubhouse with a fitness center, a swimming pool, barbecue grills, a walking trail, a covered playground and covered parking spaces. The development was financed through a public-private partnership, including a 9 percent LIHTC through the Texas Department of Housing and Community Affairs (TDHCA). Construction of the community is expected to be completed in fall 2014, and is anticipated to cost $22 million.

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Boston Capital is providing $10.7 million in LIHTC equity to Old Town Commons in Alexandria, Va. This fifth and final phase will produce a 54-unit development for families. Old Town Commons will comprise 40 two-bedroom and 14 three-bedroom units. Amenities will include dishwashers, central air and washers and dryers. The development is expected to yield $5.6 million in local income and establish nearly 82 jobs. Residents earning 60 percent or less of the area median income (AMI) will be eligible for units. Boston Capital partnered with the Virginia Housing Development Authority (VHDA) to complete the development.

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On July 23, the Richman Group announced the closing of two institutional funds totaling $291 million in LIHTC equity. The sponsor closed U.S.A. Institutional Tax Credit Fund LXXXIX LP, a $166 million fund, and U.S.A. Institutional Tax Credit Fund XCV LP Fund, a $125 million fund. Fund 89’s property portfolio spans 18 states, and investors include 11 institutional investors comprised of insurance companies and banks. Fund 95’s main goal was the acquisition of affordable housing tax credit developments in New York, N.Y.’s five boroughs. It had four banking institutions as investors. Properties acquired by Funds 89 and 95 will provide affordable housing for families, seniors and special needs tenants.

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The National Development Council (NDC) Corporate Equity Fund announced the beginning of its 11th LIHTC fund, NDC Corporate Equity Fund XI LP. The NDC CEF has been creating affordable housing in rural and urban communities for 19 years. Fund XI is $60 million. NDC also announced a newly designed website, www.ndccef.org.

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Dominium announced the acquisition of Sahuarita Mission Apartments in Sahuarita, Ariz. on Aug. 18. The development includes 52-units of a LIHTC-financed complex. Dominium also announced it is investing $125,000 to update the units, as well as financing deferred maintenance projects on the property. Dominium will manage the property.

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On Aug. 7, Centerline Capital Group (Centerline) announced that it provided a $1.1 million loan facility to refinance Hargrove Estates Apartments. Located in Columbus, Miss., Hargrove Estates is comprised of 41 three-bedroom, two-bathroom, single-family home rental units. Property amenities include a clubhouse with leasing/management offices and business center, swimming pool and playground area. Construction began in 2010 and was completed in 2011 using conventional debt and 9 percent LIHTCs. The property was developed by New Horizons Development LLC.

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PEOPLE IN THE INDUSTRY

Bellwether Enterprise Real Estate Capital LLC, the commercial and multifamily mortgage banking subsidiary of Enterprise Community Investment Inc. (Enterprise), announced the addition of Adrian Corbiere and John Powell. Corbiere will be a consultant and director overseeing the company’s production activities. Corbiere will be involved in implementing new initiatives to increase Bellwether Enterprise’s national platform. Powell joined as director of agency production, effective Aug. 12. His responsibilities include expanding the company’s Fannie Mae, Freddie Mac and FHA production platform and will open a new Bellwether Enterprise office in Chicago. Before joining Bellwether Enterprise, Corbiere was an executive vice president with Cohen Financial, and senior vice president in charge of the multifamily division with Freddie Mac. Powell previously worked as senior managing director at Red Capital Group in Chicago, and prior to that, as co-head of production.

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Eden Housing hired Diane Luther for the newly created position of vice president of resident programs and advocacy. Luther’s responsibilities will include overseeing and integrating resident services, fundraising, communications and advocacy. Prior to working at Eden Housing, Luther was with the Hamilton Family Center as executive director. She was also the assistant director at Sacramento Housing and Redevelopment Agency, the housing director for Multnomah County, Ore., and the executive director for Northwest Housing Alternatives.

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Nicole Peterson joined the Bridge Housing team as Pacific Northwest director. Peterson undertook the newly created position immediately. Peterson’s responsibilities include leading the organizations real estate development in the Pacific Northwest region. Peterson was previously with the Seattle-Northwest Securities Corporation. Before that, she was a project manager for Williams & Dame Development and she served on Portland’s South Waterfront Greenway Project Advisory Team and the Portland-Milwaukie Light Rail Extension Advisory Committee.

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On July 15, Bernard Felder, LIHTC industry veteran, announced the launch of Sanctuary Residential, a real estate company that will provide affordable and mixed-income multifamily housing. Based in Charlotte, N.C., the company will work with families and seniors in Virginia, North Carolina, South Carolina and Georgia. Sanctuary Residential will create new communities and rehabilitate neglected neighborhoods.

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John Wurster joined Affirmed Housing in July as project manager. He will be a part of the development team and will oversee the affordable and market-rate developments. Wurster has knowledge in the development of single-family, multifamily, mid-rise and high-rise properties. Wurster was previously the broker and owner of Platinum Moon Properties from 2009 until to 2013, and prior to that, he was community manager at K. Hovnanian Homes. He graduated from the University of San Diego with a degree in business administration.

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BOND

Colorado Housing and Finance Authority (CHFA) closed $31.5 million in multifamily bond refunding on July 2. An HFA multifamily pass-through revenue bond issue was included. The bonds are being used to refund outstanding fixed-rate multifamily bonds backed by 542(c) FHA risk share loans. All of the bonds were purchased by CRA, CMBS and other taxable buyers. CHFA partnered with Barclays on the transaction, whose estimates of the pass-through structure allowed CHFA to reach a cost of capital.