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Low-Income Housing Tax Credits News Briefs - October 2016

Industry

On Aug. 26, a U.S. District Court in Texas dismissed a disparate impact claim by The Inclusive Communities Project (ICP) against the Texas Department of Housing and Community Affairs (TDHCA) in TDHCA’s allocation of low-income housing tax credits (LIHTCs) in the Dallas metropolitan area. The decision comes more than a year after the Supreme Court issued a landmark ruling in the case that disparate impact claims could be recognized under the Fair Housing Act. The 32-page decision by the U.S. District Court for the Northern District of Texas rules that ICP did not prove a prima facie case of disparate impact, so it could not proceed in its claim. The Supreme Court ruling was a 5-4 decision allowing complaints to be made under the Fair Housing Act based on “disparate impact,” which is when a policy that appears to be neutral has a discriminatory effect on a protected class. More information is available at www.taxcredithousing.com.

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The Federal Housing Finance Agency (FHFA) announced Aug. 18 an additional increase to the 2016 multifamily lending caps for Fannie Mae and Freddie Mac (the Enterprises). This increases the caps from $35 billion to $36.5 billion for each Enterprise, effective immediately. The adjustment is consistent with FHFA’s 2016 scorecard for the Enterprises, in which FHFA committed to review the estimates for the size of the multifamily finance market each quarter and increase the caps, if warranted. The adjustment is based on increased estimates of the overall size of the 2016 multifamily finance market. 

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On Aug. 22, the United States Department of Agriculture (USDA) Rural Development department released the report, “USDA Rural Development Multifamily Housing Comprehensive Property Assessment.” The report outlines the costs to maintain and upgrade the Rural Housing Services’ (RHS’s) inventory of multifamily housing properties. The USDA found that for the inventory of 14,650 apartments, the department will need $5.6 billion more than current funding levels to address basic capital improvements through the next 20 years. These improvements would include roof repairs, insulation, accessibility improvements, plumbing and electrical repairs. USDA estimated in the report that the Section 515 portfolio of 384,216 apartments has an estimated 20-year replacement reserve deficit of $4.7 billion. The report closes with an outline for the department to collaborate more effectively with partners, policymakers, and lawmakers to preserve affordable housing for low income rural residents who rely on RD to meet their housing needs. CoreLogic Inc. and RSM US LLP prepared the report for the USDA and released it March 1.

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The Internal Revenue Service (IRS) released Revenue Procedure 2016-48 Aug. 26. The document provides guidance to taxpayers regarding certain extenders under the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The revenue procedure provides guidance for three items that were extended by the PATH Act. These are the deduction under Section 179(f) of up to $500,000 of specified real property additions; the extension of the placed-in-service date per Section 168(k)(2) to qualify for the 50 percent additional first-year depreciation deduction; and the election by some corporations to increase their AMT credit limitation under Section 53(c) if they forego the 50 percent additional first-year depreciation deduction. Revenue Procedure 2016-48 is available at www.taxcredithousing.com.

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Urban Institute released a report and six case studies Aug. 25 called, “Anatomy of a Preservation Deal.” Urban Institute’s goal was to better understand how affordable housing preservation happens. The report states that the United States needs more affordable housing, and that between 2001 and 2013, 2.4 million market-rate and subsidized rental housing apartments were affordable to people making less than 50 percent of area median income (AMI). Urban Institute highlights the need for collaborative relationships and the importance of communicating successes and the policies that made them possible to other interested groups around the country. The report and the accompanying case studies are available at www.urban.org.

State

The California Tax Credit Allocation Committee (TCAC) and the California Debt Limit Allocation Committee (CDLAC) announced Aug. 15 ideas from the High Cost Task Force to address high-cost housing developments. The task force released a list of eight ideas, with two ideas that would be pursued administratively and six to be proposed as regulations. The two administrative changes are to omit the value of donations from the sources-and-uses budget and total cost calculations for 4 percent low-income housing tax credit (LIHTC) developments and to add a line to staff reports that calculates the lifetime rent benefit of a development. The six ideas that will be proposed regulations are to limit the bond allocation on a per-unit basis, to provide a developer fee incentive to minimize costs for new construction financed by 9 percent LIHTCs, to propose regulations to eliminate the ability for most high-cost development to proceed  in the competitive tax rounds with the approval of the committee, to reduce minimum-unit size for apartments based on the number of bedrooms, to allow rehabilitation projects to seek waivers for the community space minimum-size requirement and to not allow basis for the cost of parking over the state’s established parking ratio standards for certain types of developments. The full list and explanations are available at www.taxcredithousing.com.

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Massachusetts Gov. Charlie Baker and Lt. Gov. Karyn Polito announced Aug. 15 awards to fund the development, renovation and preservation of affordable rental housing throughout Massachusetts. A total of 26 developments receiving awards will create or preserve 1,420 rental apartments, including 1,334 affordable apartments, in 16 communities. The Massachusetts Department of Housing and Community Development awarded more than $31 million in state and federal LIHTCs. Additionally, more than $59 million was awarded in housing subsidy funds, including federal HOME funds and state capital funds. The developments will serve individuals and families transitioning out of homelessness, persons with disabilities and the elderly.

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The South Carolina State Housing Finance and Development Authority (SC Housing) released the 2016 LIHTC awards Aug. 22.  SC Housing allocated $12.3 million for the new construction and rehabilitation of 897 affordable apartments. Allocations ranged from $1.8 million to $7.5 million.

Dealmaker

Boston Capital announced July 26 its investment in the construction of The Germania, a 90-apartment community for families in Milwaukee. The Germania will feature 44 affordable apartments available to families earning 60 percent or less of the area median income (AMI) and 46 market-rate apartments in an eight-story building. There will be 38 one- and 52 two-bedroom apartments. The first floor of the building will include 8,500 square feet of commercial space. Amenities will include a leasing office, a community room with kitchen, a fitness center and tenant storage lockers. The Germania will be financed with tax credit equity from the low-income housing tax credit (LIHTC) and federal and state historic tax credit (HTC) programs. The building, built in 1896, is listed on the National Register of Historic Places.

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Alden Capital Partners announced the acquisition, rehabilitation and new construction Aug. 2 of Crest Manor in Abington Township, Pa. Alden Capital Partners received $12 million in federal LIHTCs from the Pennsylvania Housing Finance Authority (PHFA) for the development. In addition, Alden Capital Partners received more than $12 million in tax credit equity through its Alden Capital Partners Tax Credit Fund 16. Renovation plans for Crest Manor, which was built in 1962, include substantially rehabilitating 15 two-story duplex buildings, demolishing seven buildings and the construction of three apartment buildings and a combined community and maintenance building. On 4.48 acres, the property will provide 46 apartments, 34 of which will be renovated and 12 will be built for low-income families. Amenities will include a computer lab, a tot lot, a playground and a social room and supportive services will be offered. Construction costs are expected to be $17.6 million, with completion slated for March 31, 2018.

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On Aug. 4, New York Mayor Bill de Blasio, Bellwether Enterprise and accompanying city and federal agencies announced $135 million for the renovation and preservation of five affordable housing properties in Harlem, N.Y. Bellwether financed the loan through a Fannie Mae bond credit enhancement. A total of 549 apartments in 18 buildings will be rehabilitated and financing will allow the apartments to remain affordable for 40 years. The five properties are Gladys Hampton Houses, New West I and II and Riverside I and II. Financing will fund extensive renovations including roof replacement, new windows and boilers and updates to common areas, as well as updates to apartment interiors with new kitchen cabinets, appliances, flooring and bathroom fixtures. the New York City Department of Housing Preservation and Development provided a loan of of $15.2 million, $35.9 million in LIHTC equity and tax-exempt bonds which resulted in $62.3 million in construction financing from Bellwether Enterprise. This financial commitment is part of Blasio’s 10-year housing plan to create and preserve 200,000 affordable housing units in New York City.

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Love Funding announced Aug. 16 the closing of $51.2 million in loans to refinance four mixed-income apartment communities in Texas. The four properties refinanced are Villas in the Pines, Villas at Pine Lake and Villas on Woodforest in Houston; and Villas by the Lake in Fort Worth. The properties offer 908 apartments, all of which had been financed with LIHTCs. Financing was secured through the U.S. Department of Housing and Urban Development’s (HUD) 223(f) loan insurance program.

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WNC announced July 27 the completion of Cypress Springs. The affordable housing community in Baton Rouge, La., provides 144 apartments to seniors. The property comprises three buildings with 76 one- and 68 two-bedroom apartments. Amenities include a fitness center, a central laundry facility, an activity room/clubhouse, a computer center, a tenant storage area, a sauna and a picnic area. WNC provided approximately $6.1 million in LIHTC equity.

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The Richman Group announced July 26 the completed construction of Ventana, an affordable housing community for seniors in downtown Fullerton, Calif. The mixed-use property has 95 apartments and 3,200 square feet of retail space. The six-story, 130,000-square-foot building has one- and two-bedroom apartments, a clubhouse, a fitness center, a kitchen for community events and an outdoor terrace. Construction for Ventana was financed with 4 percent LIHTCs and tax-exempt bonds, with costs of $28 million.

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On Aug. 9, Hunt Mortgage Group, a financier of commercial real estate throughout the United States, announced a $15 million Fannie Mae loan to refinance a bridge loan on Magnolia Creek Apartments, a multifamily property in Dallas. Magnolia Creek Apartments, formerly Surrey Row Apartments, consists of 28 three-story residential buildings on 14.4 acres of land. Built in 1988, the property provides 436 apartments with one-, two- and three-bedrooms. Amenities include a laundry facility, a leasing office with a lounge and fitness center, a swimming pool and two playgrounds.

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WNC, a national investor in real estate and community development initiatives, announced the closing Aug. 23 of WNC Institutional Tax Fund 42 LP (WNC Corp. 42). WNC Corp. 42 will fund the new construction and rehabilitation of 17 family and senior housing communities. The properties will be located in 12 states: Arkansas, California, Iowa, Idaho, Louisiana, Massachusetts, Minnesota, New Jersey, South Dakota, Tennessee, Texas and Wisconsin. The $102 million institutional LIHTC fund is estimated to provide 1,504 affordable housing apartments.

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Carrfour Supportive Housing, a nonprofit affordable housing developer, and The Pride Center, a nonprofit LGBT community center, announced Aug. 23 plans to develop The Residences at Equality Park in Wilton Manors, Fla. The residential development will provide permanent affordable housing and supportive services for low-income senior adults, with a special focus on members of the lesbian, gay, bisexual and transgender (LGBT) community. Development will take place in two phases, with the first phase to include 48 apartments. Of those apartments, 34 will be designated seniors living with disabling conditions, such as physical illnesses or disabilities due to complications from HIV/AIDS. The remaining apartments will be available to seniors earning less than 60 percent of the AMI. The proposed second phase will include an additional 74 apartments. Plans also call for a new multi-use center, a new outdoor pavilion and a new boathouse café and a picnic area. Additional parking structures also are planned. Equality Park currently includes 30,000 square feet of office and meeting space for programs and services, encouraging synergy among other local nonprofit organizations, and is on 5 acres. The first phase of construction is scheduled to begin in the fourth quarter of 2017 and be complete in late 2018.

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UnitedHealthcare announced Aug. 3 a $16.9 million investment for the construction of both New Parkridge and Prestwick Village. New Parkridge, an affordable housing community in Ypsilanti, Mich., will provide 86 apartments and will include on-site supportive services to help improve residents’ access to health care, education, job training and child care. UnitedHealthcare is investing $8 million in this $17.2 million development. Prestwick Village is an affordable housing community in Holt, Mich., and will provide 66 apartments, as well as supportive services for individuals and families, including veterans struggling with homelessness and people with disabilities. UnitedHealthcare is investing $8.9 million in this $10.7 million development.

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Alliant Capital Ltd. announced July 18 the closing of the $105 million low-income housing tax credit (LIHTC) fund, Alliant Tax Credit Fund 85. The multi-investor fund is comprised of  11 properties and will finance the construction or rehabilitation of approximately 1,200 units in nine states. The properties will be available to families, seniors and farm workers.

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People

Dominium, an apartment development and management company, announced Aug. 8 the addition of Mike Brempell as a director of asset management and Christo Stavrou as a construction supervisor. Brempell will work out of Dominium’s headquarters in Plymouth, Minn. His responsibilities will include working with sales, refinances and LP buyouts. Brempell has held several positions with Dominium, including leasing agent, asset analyst and senior asset analyst. His work included the disposition of assets within the portfolio, facilitation of budget processes and the eventual oversight of all asset analysts within the asset management department. In his new role, Stavrou will oversee the construction processes on new and existing properties. Before joining Dominium, Stavrou owned Christo Renovations and acted as a residential general contractor and remodeler for 13 years. Before that, he was a project manager for residential general contractor Stonehouse Designs Inc.

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On Aug. 4, Ed Yandell was named the interim head of Tennessee Housing Development Agency’s (THDA) multifamily division. Yandell joined THDA in 1993 as a senior housing credit advisor. Before joining THDA, he was a manager for a residential property management company.

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Bond

The Tennessee Housing Development Agency (THDA) released a memo Aug. 30 proposing changes for the 2017 multifamily tax-exempt bond authority program description. The proposed changes include the topics of modifying the county needs score, requesting additional funding, implementing a modification fee, applications with unresolved eligibility and local jurisdiction downsizing. Comments were due Sept. 6.

Journal Category:

Low-Income Housing Tax Credits

Authors:

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