Low-Income Housing Tax Credits News Briefs - October 2021

Friday, October 1, 2021

LIHTC Industry

The U.S. Supreme Court ended the Centers for Disease Control and Prevention’s (CDC’s) eviction moratorium Aug. 26, ruling that Congress must specifically authorize any extension of the moratorium. The unsigned ruling in Alabama Association of Realtors vs. Department of Health and Human Services came as a 6-3 decision. The CDC instituted the original eviction moratorium in September 2020 in reaction to the COVID-19 pandemic. The moratorium received multiple extensions, the most recent Aug. 3 by President Joe Biden’s administration.

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The Biden administration announced Sept. 1 a suite of changes geared at creating 100,000 affordable homes during the next three years. The administration’s fact sheet put the emphasis on the lower- and middle-income sectors of the market. Among the announcements was the relaunch of the Risk Sharing Program, a partnership between U.S. Department of the Treasury’s Federal Financing Bank and the U.S. Department of Housing and Urban Development (HUD) that delivers low-cost, Ginnie Mae-comparable financing to housing finance agencies; boosting the low-income housing tax credit (LIHTC) equity cap for Fannie Mae and Freddie Mac; making $383 million available to Community Development Financial Institutions and nonprofits under the Capital Magnet Fund; prioritizing homeownership in the sale of Federal Housing Administration-insured properties; expanding an exclusivity period in the sale for HUD, Fannie Mae and Freddie Mac’s real-estate-owned sales; working with state and local governments to boost their housing supply by leveraging existing federal funds and more.

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The House of Representatives approved the fiscal year 2022 budget resolution Aug. 24, unlocking forthcoming $3.5 trillion reconciliation legislation that will likely include a significant expansion of the LIHTC, creation of the neighborhood homes tax credit (NHTC) to incentivize the development and rehabilitate single-family housing in distressed neighborhoods and more funding for a wide variety of HUD programs. In addition to these resources, the reconciliation legislation possibly could include the creation of the middle-income housing tax credit (MIHTC) to serve renters earning just above LIHTC income limits and expansion and enhancement for the federal historic tax credit, permanence and expansion of new markets tax credit, extension and substantial expansion of renewable and clean energy tax credits. The Senate previously approved the budget resolution, which clears the way for Democrats to use budget reconciliation to pass legislation without having to account for a Senate filibuster. The resolution includes instructions for the House and Senate committees handling the legislation to write a reconciliation bill that has a price tag as high as $3.5 trillion.

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Senate Finance Committee Chairperson Ron Wyden announced sweeping housing legislation Aug. 18 that included enhancements to the LIHTC and the introduction of the MIHTC and NHTC. The Decent, Affordable, Safe Housing for All Act–which was slated for formal introduction in September–would provide an expansion of 9% LIHTC annual allocation, provide a 50% basis boost for properties for extremely low-income renters; reduce for four years the 50% financed-by test for tax-exempt-bond-financed properties, provide a potential 30% difficult development area basis boost for rural and Native American properties and more. The legislation would also create a 5% and 2% MIHTC for rental properties serving tenants with incomes between 60% and 100% of the area median income (AMI), create an NHTC worth up to 35% of the qualified development cost or 80% of the national median sale price for new homes, whichever is less; create a renter’s tax credit for affordable housing operators who provide housing to tenants with monthly incomes below 30% of the AMI; and create a first-time homebuyer refundable credit for 20% of the purchase price of a home up to $15,000.

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The Federal Housing Finance Agency (FHFA) announced Sept. 1 that it would increase by $350 million each the amount Fannie Mae and Freddie Mae can invest annually in LIHTC equity, effective immediately. Previously, each of the enterprises was capped at $500 million. The news release also stated that FHFA requires any investments above $425 million in a given year to be in markets it has identified as having difficulty attracting investors, marking an increase to 50% of the cap from the previous requirement of 40% of Fannie and Freddie’s cap that must be made to meet affordable housing objectives. The announcement was part of a broader initiative announced Sept. 1 by the Biden administration to increase the supply of affordable housing.

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Treasury announced Aug. 25 several additional policies to encourage the delivery of Emergency Rental Assistance (ERA) to eligible households. The latest Treasury data shows that about 1 million ERA payments were made by the end of July, boosting the total of payments to more than $5.1 billion of the $25 billion allocated under the first round of ERA. However, the Treasury announcement said, “too many grantees have yet to demonstrate sufficient progress in getting assistance to struggling tenants and landlord,” and provided new guidance. The policy announcements included clarification that self-attestation can be used in documenting each household’s eligibility for ERA, that state and local grantees may advance assistance to landlords and utility providers based on estimated eligible arrears and five other policies.

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FHFA Aug. 18 issued a proposed rule with housing goals for Fannie Mae and Freddie Mac for 2022-2024 that include an increase in mortgage purchases of low-income multifamily properties. The 2022-2024 Enterprise Housing Goals proposed rule for Fannie and Freddie is to purchase mortgages on low-income multifamily properties with 415,000 units annually for 2022 through 2024, an increase from the annual goal of 300,000 since 2018. The proposed rule includes two subgoals: to annually purchase mortgages for very-low-income properties with 88,000 units (currently 60,000) and small multifamily low-income properties with 23,000 units (currently 10,000). Comments will be accepted for 60 days after the proposed rule is published in the Federal Register.

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FHFA in a July 30 statement encouraged property managers of properties backed by Fannie Mae or Freddie Mac to apply for ERA before starting the process of eviction for nonpayment of rent. The funds were made available to help tenants cope with economic hardships created by the COVID-19 pandemic. For more information, visit FHFA.gov or CFPB.gov/housing.

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California Sens. Dianne Feinstein and Alex Padilla sent a letter Sept. 3 asking to strengthen the 4% LIHTC to address the affordable housing shortage in the state and across the nation. The senators’ letter encouraged Sen. Chuck Schumer, D-New York, the chamber’s majority leader, along with Sen. Ron Wyden, D-Oregon, chairperson of the Senate Finance Committee, to reduce to 25% from 50% the minimum threshold for tax-exempt bonds needed to receive an automatic 4% LIHTC award.

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A group of 111 House Democrats sent a letter Aug. 26 to House Speaker Nancy Pelosi, D-California, and House Minority Leader Kevin McCarthy, R-California, asking that the Affordable Housing Credit Improvement Act (AHCIA, H.R. 2573, S. 1136) be included in budget reconciliation legislation being considered by Congress. The AHCIA would increase the amount of LIHTC allocation, decrease the 50% test for private activity bond-financed housing and make other changes to the LIHTC. Lead signatories on the letter were Reps. Suzan DelBene, D-Washington, and Don Beyer, D-Virginia, both members of the House Ways and Means Committee.

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The National Council of State Housing Agencies (NCSHA) issued a letter Aug. 13 asking the Internal Revenue Service (IRS) and the U.S. Department of the Treasury to extend and/or make permanent select temporary housing credit relief provisions in IRS Notice 2021-12 due to the COVID-19 pandemic. The letter encouraged allowing allocating agencies to satisfy qualified allocation plan public approval requirements via telephonic and virtual platforms. NCSHA also asked for an extension of provisions such as the carryover allocation 10% test deadline, the minimum rehabilitation expenditure deadline, the placed-in-service deadline, the restoration period for properties suffering casualty loss, occupancy obligations, the noncompliance corrective action period, compliance monitoring tenant file review and physical inspection requirements, and closure of property amenities and common space facilities.

LIHTC State

The District of Columbia Council approved in August budget support legislation that included a tax exemption for low-income housing tax credit (LIHTC) properties owned or controlled by nonprofit organizations. B24-0285 includes an exemption from deed, recordation, real property tax and payment-in-lieu-of-taxes for property financed with LIHTCs. The exemption is for properties acquired between Oct. 1, 2012, and leased before Oct. 1, 2021. The bill was transmitted Sept. 13 to D.C. Mayor Muriel Bowser.

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The North Carolina Housing Finance Agency announced Aug. 13 its state LIHTC awards for 2021, with 35 developments in 29 counties totaling 2,518 homes. Among the recipients are developments receiving Community Development Block Grant-Disaster Recovery funds from the North Carolina Office of Recovery and Resiliency to fund new multifamily rental homes in counties most impacted by Hurricane Matthew in 2016 and Hurricane Florence in 2018. Twenty-six tax-exempt bond endeavors also received awards, combining with a February award to approach 5,000 such homes for the year.

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Former New York Gov. Andrew Cuomo signed legislation Aug. 13 that allows the state to finance the acquisition and/or conversion of distressed hotels and commercial office properties by nonprofits to increase affordable housing. S.B. 5257 aims to ease the state’s affordable housing burden by financing the purchase of said properties for use as permanent affordable housing. The Housing Our Neighbors with Dignity Act is geared toward low- and moderate-income households experiencing homelessness, setting aside at least 50% of homes in the properties for those earning up to 80% of the area median income.

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Illinois Gov. J.B. Pritzker signed a bill July 29 to create an affordable housing grant program to encourage the construction and rehabilitation of rental housing for low-income and moderate-income households in the state. H.B. 2621 is a response to housing complications concerning the COVID-19 pandemic, aiming to create as many as 3,500 homes before Dec. 31, 2024. The legislation is effective through April 1, 2025. The bill also extends the tax credit for affordable housing donations to Dec. 31, 2026; it was set to expire this year. The legislation changed the valuation of developments that qualify for the LIHTC, among other changes to tax codes.

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A group of Kentucky affordable housing advocates announced its formation in July to pass a state LIHTC bill in the next session of the state Legislature. Two sponsors of legislation that would create a state LIHTC, Republican Reps. Randy Bridges and Kim Banta, joined the advocates at the event in support of the creation of a state LIHTC. H.B. 142 was introduced in January and would create a state LIHTC for taxable years beginning on or after Jan. 1, 2024, in the amount equal to the federal LIHTC up to a statewide cap of $12.5 million per year. The Kentucky Legislature adjourned without taking action on the bill.

LIHTC Dealmaker

Alliant Capital announced Aug. 5 the closing of a $160 million low-income housing tax credit (LIHTC) fund to create and preserve 14 properties, approaching 1,300 affordable apartments across the country. More than 330 homes are slated for senior housing with nearly 600 eyed for new construction across eight of the properties. The developments are in 11 states, including Texas, California, Pennsylvania, Wisconsin, Michigan and Florida.

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Merchants Capital announced Aug. 18 it secured $89 million for the Thetford Portfolio, a seven-property LIHTC pilot transaction in North Carolina. Merchants secured $31.9 million in acquisition bridge loans and $57.8 million in seven separate U.S. Department of Housing and Urban Development mortgage loans. Vitus, an affordable housing developer based in Washington, also took part in the transaction. More than 90% of the homes in the seven properties receive Section 8 subsidy.

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Woda Cooper Companies opened Aug. 31 its Robinson Overlook development in Columbia, Maryland. The $18.7 million property delivers 48 homes, 43 of which are for those earning up to 60% of the area median income (AMI). Robinson Overlook features one-, two- and three-bedroom apartments. Financing for the development included a $13.6 million allocation in federal 9% LIHTCs.

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Dominium closed Aug. 5 on an acquisition/rehabilitation of two properties in Lawrenceville, Georgia. The development, which will rebrand as the Groves of Lawrenceville, is a 322-home property with townhomes and garden-style homes. Rehabilitation costs are $11 million and the total development cost is approximately $51 million. The pair of developments, formerly known as the Greens at Hillcrest, were built in 2001 and 2002 using 9% and 4% LIHTCs.

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Alberta Place, a 46-apartment senior affordable housing development in Amherst, New York, was recently completed.  New York State Homes and Community Renewal (HCR) provided nearly $9.3 million in LIHTC equity. The homes are available to those earning as much as 50% and 60% of the AMI.

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HCR announced Aug. 12 the completion of Westminster Commons in Buffalo, New York. The development cost $23.2 million and has 84 senior apartments for those 55 and older. Financing included $14 million in LIHTC equity as well as $927,000 in federal and state historic tax credits. Residents will earn up to 60% of the AMI. Formerly the Westminster Settlement House, the two-story, L-shaped, red-brick building was built in 1893.

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Together, We Grow (TWG) Development started construction in August on Residences at West Haven, a senior affordable housing development in West Haven, Utah. The 40 one-bedroom homes are for those 62 and older, with an emphasis on military veterans, those with disabilities and those who have experienced homelessness. Seniors living at Residences at West Haven will earn between 30% and 80% of the AMI. TWG expects construction on the $9.5 million development to be completed in fall 2022.

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The Urban League of St. Louis broke ground Aug. 9 on a $10 million senior affordable development in Dellwood, Missouri. The three-story development will have 44 one- and two-bedroom units. The Urban League received LIHTCs in 2019 from the Missouri Housing Development Commission. The Urban League plans to begin development in early 2022. The site previously hosted an AutoZone that burned during civic unrest following the 2014 shooting death of Michael Brown in nearby Ferguson, Missouri.

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Fairfield Homes Inc. and the Avondale Development Corp. have combined to build Blair Lofts, a $15.5 million affordable housing property in Cincinnati. The Ohio Capital Corporation for Housing invested in the federal LIHTCs. The four-story property will serve those earning between 30% and 60% of the AMI. The 64 homes are scheduled for completion in summer 2022.

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Construction is underway on Shawnee Lofts, a 54-apartment affordable housing complex being built in Lima, Ohio. Developer St. Mary Development Corporation’s property costs $12.3 million and received LIHTCs. Completion of construction is slated for July 2022. The homes are reserved for those earning between 30% and 70% of the AMI.

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Former middle school and high school grounds are set to become Gatewood Village apartments in Cozad, Nebraska. The 15 three-bedroom apartments in five buildings will go to those earning up to 60% of the AMI. Mesner Development received LIHTCs to build the property, which is slated for completion in summer 2022.

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A groundbreaking took place Aug. 26 for Casa Sueños, a 181-home development in Oakland, California. The Unity Council and BRIDGE Housing are developing the property, which will deliver one-, two- and three-bedroom apartments for those earning between 20% and 80% of the AMI. Forty-six of the homes are for those who have experienced homelessness. The development marks the third phase of the Fruitvale Transit Village. The development received more than $42 million in LIHTC equity.

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Dominium closed Aug. 27 on The Commons, a $20 million, 50-apartment property in Colorado Springs, Colorado. The homes are geared toward those experiencing homelessness. Morgan Stanley invested in the federal 9% LIHTCs through Enterprise Housing Credit Investments. Homeward Pikes Peak is developing the property.

LIHTC People

CREA LLC announced Aug. 9 it added Ed Stone as its chief credit officer. Stone will lead and develop CREA’s credit and underwriting functions as well as its construction feasibility and monitoring group. Stone brings more than 20 years of low-income housing tax credit (LIHTC) experience spanning acquisitions, credit and asset management, including recently working as senior director of equity investments at a government-sponsored enterprise.

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CREA named Aug. 18 Arvetta Jideonwo as its executive director and head of social impact. Jideonwo has experience in the philanthropic sector as well as 20 years of executive-level experience in the health care, human services and education fields. Jideonwo will oversee CREA Foundation Inc., which provides opportunities for students living within CREA communities financial scholarships and other opportunities.

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Merchants Affordable Housing Corp. announced Aug. 16 that Bruce R. Baird would escalate to become the nonprofit’s president and chief executive officer. Baird has worked with MAHC since 2014, serving on its board of directors and, since 2019, as chair of the board. MAHC primarily focuses on developing affordable housing in Indiana, but is looking to grow its sphere of influence.

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The Millennia Companies introduced Sept. 1 Brad Blake as the company’s chief information officer. Blake brings more than 24 years of experience, including eight in the real estate industry. Blake’s goals with Millennia will include crafting a strategy to meets the business’s infrastructure and support needs. Blake has previously done similar work with hospitals and health care systems.

LIHTC Bond

The Internal Revenue Service Aug. 31 issued a revenue procedure that further extends the ability to hold certain hearings concerning private activity bonds (PABs) by telephone due to the ongoing COVID-19 pandemic. Rev. Proc. 2021-39 extends that time until March 31, 2022, for hearings concerning PABs, which can be used to fund affordable housing in conjunction with 4% low-income housing tax credits (LIHTCs).

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The Millennia Companies unveiled Aug. 17 Valencia Way, a $145 million rehabilitation of four properties in Jacksonville, Florida. “The Jacksonville Four”–previously known as Eureka Garden, Moncrief Village, Southside Apartments and Washington Heights; now, respectively, Valencia Way, The Weldon, Palmetto Glen and Calloway Cove–are 768, 100% affordable homes. Among the capital stack was nearly $50 million in 4% LIHTCs awarded in 2020 along with $81.6 million in housing bonds from the Jacksonville Housing Finance Authority.

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The Wisconsin Housing and Economic Development Authority (WHEDA) announced Aug. 6 that it was lowering interest rates for tax-exempt bond financing for affordable housing and for other affordable housing financing tools. For tax-exempt bond-financed affordable housing properties closing in 2021, WHEDA locked the tax-exempt rate at 4.25% for long-term bonds and 2.5% for short-term bonds. Projects must close by Nov. 30, with one extension to Dec. 15. For projects closing in 2022, the tax-exempt underwriting rate will be 4.35% for long-term bonds and 2.75% for short-term bonds, with projects anticipated to close by April 30, 2022. WHEDA also adjusted permanent financing for 9% LIHTC developments from 5.35% to 4.95%.

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Jefferson Avenue Apartments, an affordable housing complex in Buffalo, New York, was completed in August. The $31 million, mixed-use property has 90 homes and 16,500 feet of commercial space. It received $12.5 million in LIHTC equity, along with bonds. People Inc. and Sinatra & Company Real Estate LLC developed the property, which is part of New York’s wider Buffalo Billion effort to invest $1 billion in the city’s economy through grants and tax relief.

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Dominium announced Aug. 10 it closed on Osprey Village, a $116 million development with 383 senior affordable homes in the Orlando, Florida, area. AEGON made an equity investment in 4% LIHTCs for the property. Dominium also received assistance from the Florida Finance Corporation with the 4% credits.

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Three nonprofit developers combined in August to build a 41-apartment affordable housing complex in Washington, D.C. Legacy Real Estate Development, Domaine and The NHP Foundation received $10.3 million in bond financing and $8.8 million in 4% LIHTCs. Construction began Aug. 9. The homes are for those earn up to 50% of the area median income.

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Dominium announced Sept. 2 it had financially closed on plans to rehabilitate City of Parc at West Oaks, a housing property in Houston. The affordable housing owner, developer and manager announced plans for a $7 million rehabilitation of the 168-home development, which was built in 2003 with equity from 4% LIHTCs. Dominium acquired general partner interest in the property in 2011 and has owned and operated it since. Financing included a Freddie Mac tax-exempt loan serviced by Merchants Capital Corporation, an equity bridge loan provided by Merchants Bank of Indiana and an equity investment from Merchants Capital Investments in the 4% federal LIHTCs.

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Merchants Capital announced Sept. 2 it had secured a $35 million construction loan to build Union at the Loop, a 248-home development in Lawrence, Kansas. The homes, to be built with 4% LIHTCs, are for those earning up to 60% of the AMI. Merchants also acted as servicer for $22.3 million Freddie Mac tax-exempt loan forward permanent commitment. Construction began in August, with plans for completion in October 2022.

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The Lawson Companies closed Aug. 10 on a 21-acre piece of land in Woodbridge, Virginia. The developer plans to build The Landing at Mason’s Bridge, hosting 342 affordable, multifamily apartments using a financing package that includes 4% LIHTCs. The home–a mix of 56 one-bedroom, 159 two-bedroom and 127 three-bedroom apartments–will serve families earning up to 60% of the AMI. Lawson plans to open the homes in summer 2023.

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Housing for Hope Inc. and Trinity Housing Development will team to build a 300-home affordable housing property named Mesquite Terrace in Phoenix. Funding for the $63.6 million development includes bonds and 4% LIHTCs with a combined $29 million in equity. Construction is expected to be completed in 2023. Housing for Hope is an affiliate of Catholic Charities Community Services.

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The Millennia Companies closed Sept. 2 on a $52 million rehabilitation of Corda Courts Apartments in Opa-locka, Florida. The renovation includes a renovation of the property’s eight residential buildings, community spaces and swimming pool. Millennia acquired the development in 2016 and made $2 million in capital improvements in the past five years. The renovation is financed with 4% LIHTCs, with construction costs totaling more than $20 million.

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A grand opening took place Aug. 20 for Rolling Sage, a new affordable housing property in Madras, Oregon. The 23-home, two-building property received 4% LIHTCs. Residents will earn between 30% and 60% of the AMI. Construction financing and equity was provided by Washington Federal Bank.

Journal Category: 
Low-Income Housing Tax Credit
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