Low-Income Housing Tax Credits News Briefs - September 2015

Tuesday, September 1, 2015

AFFORDABLE HOUSING INDUSTRY BRIEFS

The National Association of Home Builders (NAHB) Housing Credit Group released the study, “The Economic Impact of Repealing or Limiting Section 1301 Like-Kind Exchanges in Real Estate,” June 22. Included in the study are highlights of the role that the tax code’s like-kind exchange rules play in the real estate sector, as well as the construction of new residential and commercial properties. Like-kind exchange rules allow taxpayers to defer tax when they exchange one property held for investment or business use for other property of a like kind. The study examined more than 1.6 million real estate transactions that took place in an 18-year period. NAHB found that among all commercial real estate transactions, multifamily-related sales recorded the highest use of like-kind exchanges based on both unit and dollar volumes. Results also showed like-kind exchanges encourage investment, contribute significant federal tax revenue, lead to job creation and result in less debt. The report is available at www.rer.org.

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On July 22, Moody’s Investor Service released the report, “State Housing Finance Agencies: HFAs Prepared to Withstand Shift in Multifamily Subsidy Types.” Moody’s determined that the nature of subsidies supporting the multifamily portfolios of state housing finance agencies (HFAs) has gradually shifted in the past 15 years. The investor service found that HFA multifamily programs have a significant financial cushion and strong asset management to mitigate revenue volatility from the shift in subsidy types. The report stated Section 8 and other rental subsidies provide revenue stability for multifamily properties in HFA portfolios. In addition, the report stated that other forms of support, such as low-income housing tax credit (LIHTC) equity, Section 236 or low-interest-rate loans reduce debt service costs, but don’t provide ongoing rental subsidies. The report is available at www.taxcredithousing.com.

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The Council of Development Finance Agencies (CDFA) released the report, “CDFA Annual Volume Cap Report: An Analysis of 2014 Private Activity Bond & Volume Cap Trends,” July 30. The data represents the best available figures as reported by each state to CDFA or as posted in the state’s year-end private activity bonds report. CDFA found that in 2014, the volume cap for each state was equal to the greater of $100 per capita or $296.8 million. In addition, the 50 states and the District of Columbia received more than $34.5 billion in new volume cap allocation, which is a 5.5 percent increase from 2013. The report also states that the total amount of private activity bonds issued throughout the U.S. in 2014 increased to $11.6 billion from 2013’s total of $8.8 billion. For more information, see the report at www.taxcredithousing.com.

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On Aug. 5, the Office of the Comptroller of the Currency (OCC) released Community Reinvestment Act (CRA) performance evaluations for 33 organizations. Of the evaluations issued, eight rated as outstanding, 24 rated as satisfactory, one rated as needs to improve and none were rated substantial noncompliance. National banks, federal savings associations and insured federal branches of foreign banks were reviewed. The evaluation period was July 1 through July 31.

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The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) released July 8 the 2015 list of distressed or underserved nonmetropolitan middle-income geographies. These areas are designated by the agencies in accordance with their CRA regulations and reflect local economic conditions, including unemployment, poverty and population changes. The list is available at www.occ.gov.

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On July 30, the National Housing Conference (NHC) released the report, “Making Inclusionary Housing More Flexible: Four Ideas for Urban Settings.” The report finds that interest in inclusionary housing has increased in recent years, particularly in cities where rents are rising faster than incomes. Several factors are listed as being the cause of the increasing interest. These include high rent burdens; housing capacity; concern over the loss of displaced, longtime residents; and localities looking for better tools to disperse affordable and mixed-income housing opportunities. The report is available at www.nhc.org.

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The United States Drug Administration fiscal year (FY) 2016 spending bill, S. 1800, was introduced July 16. The bill makes appropriations for agriculture, rural development and Food and Drug Administration programs. These programs include the Rural Housing Service. A total of $900 million will be available for direct loans and $24 billion will be available for unsubsidized guaranteed loans. The appropriations will be made for the FY ending Sept. 30, 2016. S. 1800 is available at www.congress.gov.

STATE BRIEFS

On July 14, the Kentucky Housing Corporation (KHC) released its draft 2016 qualified allocation plan (QAP) and draft 2016 multifamily finance competitive application score sheet. KHC also hosted an open forum July 15, during which feedback for the draft QAP and scoring sheet could be submitted. The documents are available at www.taxcredithousing.com.

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The Wisconsin Housing and Economic Development (WEHDA) announced July 13 updated census tracts for the employment center and/or high-needs areas for the 2016 low-income housing tax credit (LIHTC) cycle. The updated document is available at www.taxcredithousing.com.

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On July 15, the New Jersey Housing and Mortgage Finance Agency (HMFA) approved financing for 11 multifamily housing developments throughout the state. Of the 11 developments, six will be financed through HMFA’s Multifamily Conduit Bond program with $82 million and five will receive $49 million through the Community Development Block Grant (CDBG)-Disaster Recovery, Fund for Restoration of Multifamily (FRM) program. The Multifamily Conduit Bond program enables developers to issue bonds through the agency on a pass-through basis. The FRM program provides developers with subsidies in the form of zero- and low-interest loans to finance the development of affordable housing in areas most impacted by Hurricane Sandy. The developments will be available to working families and individuals with special needs. Construction is expected to produce approximately $315 million in one-time economic output and 1,880 direct and indirect/induced full-time equivalent jobs.

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The Colorado Housing Finance Authority (CHFA) announced Aug. 4 the winners of the third round of 2015 LIHTCs. There were 31 applications submitted requesting approximately $28 million in LIHTCs. Of those, 14 developments were selected and received $12.9 million. Awards ranged from $299,561 to $1.25 million. A total of 901 affordable housing units will be constructed. The complete list of winners is available at www.taxcredithousing.com.

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On July 30, the Ohio Housing Finance Agency (OHFA) announced the approval of $24 million in multifamily bonds for affordable housing developments throughout the state. There are 59 buildings with 324 units of affordable housing. PIRHL Developers received $19 million for the acquisition and rehabilitation of Coopermill Manor in Zanesville. The Woda Group Inc. received $5 million for the new construction of Wheatland Crossing in Columbus, which will produce 42 units in one three-story building for seniors.

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On July 30, the Texas Department of Housing and Community Affairs (TDHCA) awarded $63.5 million in 2015 LIHTCs to developers for the 64 affordable rental properties. The credits will produce nearly $635 million in equity financing. Financing will go toward the construction or rehabilitation of 5,502 privately-owned rental units serving households earning up to 60 percent of the area median income (AMI). The complete list of awardees is available at www.taxcredithousing.com.

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The New Hampshire Community Development Finance Authority (CDFA) awarded $5.5 million in fiscal year 2016-2017 low-income housing tax credits (LIHTCs) to 16 developments throughout the state. A total of $14 million was requested. Awards ranged from $105,000 to $750,000.

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DEALMAKERS

City Real Estate Advisors (CREA) announced July 16 the closing of CREA Corporate Tax Credit Fund 43 LLC (Fund 43). Fund 43 raised $238.6 million in capital through 13 investors. The fund provided capital to 28 properties in 15 states, with 2,714 units of affordable housing.

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The California Tax Credit Allocation Committee (CTCAC) awarded the Karuk Tribe with $874,302 in federal LIHTCs and $3.41 million in California state LIHTCs for the construction of Karuk Homes in Yreka, Calif. The 30 affordable homes will be built within the existing Yreka Subdivision on Karuk Tribe Trust Land and will be a mix of three-, four- and five-bedroom homes. This development was also made possible by CTCAC’s Native American Pilot Apportionment, which reserved $1 million in annual federal credits in each 2014 and 2015 for applications proposing properties on land held in trust or to be held in trust by a Native American tribe. Construction costs will total $11.4 million, with construction slated to begin in early 2016.

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Bank of America Merrill Lynch announced July 21 the company was selected as lender and tax credit investor for the preservation of 1,400 public housing units in San Francisco under the U.S. Department of Housing and Urban Development’s (HUD) Rental Assistance Demonstration (RAD) program. Bank of America Merrill Lynch was selected by the city of San Francisco, San Francisco Housing Authority and their development partners. Through HUD’s RAD program, Bank of America Merrill Lynch will provide new community-based nonprofit owners access to approximately $770 million in financing, in partnership with Freddie Mac. Bank of America Merrill Lynch’s winning bid included, but was not limited to, approximately $350 million in construction financing, approximately $300 million in LIHTC equity, $500,000 to Enterprise Community Partners to assist the RAD developers and approximately $100 million in permanent financing from Freddie Mac. Construction is anticipated to begin by Nov. 1, with a projected end date scheduled between August 2016 and April 2017.

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On July 23, BRIDGE Housing and Mission Housing Development Corporation announced the development for 1950 Mission in San Francisco. The property, currently the homeless Navigation Center at 1950 Mission St., will yield approximately 165 apartments for low-income families. Units will be available to families earning between 45 and 60 percent of the area median income (AMI). Construction costs are expected to total $80 million. Amenities will include a courtyard, a community room and kitchen, a media lab and supportive services spaces. There will also be artist studios and a proposed mural walkway. The property will also provide dedicated space for Mission Neighborhood Centers’ Head Start, Early Head Start and Mission Girls programs.

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Lancaster Pollard announced July 23 two affordable housing transactions. Lancaster Pollard provided a $4.2 million loan to National Church Residences for the refinancing of Parkside Manor in Pittsburgh. The loan will be used with 9 percent LIHTCs for the substantial rehabilitation of the 77 units. The affordable senior housing property will be refinanced using the FHA Sec. 221(d)(4) program, and was originally constructed using a Sec. 202 direct loan in 1982. Parkside Manor’s Section 8 housing assistance payment (HAP) contract was also renewed for 20 years as part of the transaction. Lancaster Pollard also announced a case study on Northgate Terrace, an 11-story Section 202 affordable senior housing property in Oakland, Calif. Lancaster Pollard worked on a sell-side merger and acquisition package for the financing. WNC acquired the 200-unit property with $27.5 million. WNC plans on performing a complete renovation of the existing property, which will include a new facade, seismic upgrades, general plumbing improvements, a new community room, medical exam space and gym and upgrades to the building’s elevators.

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Testa Companies, a commercial and residential construction company, along with ICAN Housing Solutions, held the grand opening for Stone Ridge Village Senior Housing July 16. Amenities for the 40-unit property in Louisville, Ohio, includes three laundry areas, a fitness room, library and computer room, multipurpose room, lounge and lobby and an outdoor patio area. Financing for the $8 million development came in the form of $735,617 in LIHTCs, $500,000 in housing assistance development program (HDAP) funds and a $1 million housing development loan (HDL) from the Ohio Housing Finance Agency (OHFA). Funding also included a construction loan through Huntington National Bank, HOME funding through Stark County and funding from USDA Rural Development.

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On July 20, OHFA announced the groundbreaking for Commons at Little Bark Creek in Fremont, Ohio. Commons at Little Bark Creek is a 66-unit new construction senior/multigenerational housing development. Commons at Little Bark Creek was developed with a combination of $8.4 million in LIHTCs and a $350,000 HDAP loan provided by OHFA. A construction loan was also provided by Riverhills Bank. The three-story senior elevator building is expected to cost $10 million to develop. Amenities will include an exercise room, a computer center, a large outdoor patio, a media room, a library, a community room with kitchen, a laundry facility, a dog park, a picnic area with grill, a garden area, social services and activities, a wellness room, a game room, and a tot lot.

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On Aug. 11, Mi Casa, a nonprofit focused on helping working families, held the groundbreaking of Terraza del Sol, a 42-unit, mixed-use affordable housing development in Denver. Development was financed with an annual LIHTC award of $915,504. The Colorado Department of Local Affairs also provided $425,000 through a 2014-2015 housing development grant. The units will be two and three-bedrooms and will available to residents earning between 30 percent and 60 percent of the AMI. The 71,000 square-foot building is situated on 1.3 acres and will provide amenities such as a fitness room, interior bike storage, a large outdoor terrace, a community lounge and a media room. Mi Casa Resource Center will occupy the main floor, providing the new organizational headquarters and Family Economic and Education Center. Development costs are expected to total $15 million. Construction is expected to be complete in late 2016.

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On July 21, Raymond James Tax Credit Funds (RJTCF), a national syndicator of affordable housing, announced the completion of the syndication of the Raymond James California Housing Opportunities Fund IV LLC. Fund IV provided a $98 million in equity financing for the construction or rehabilitation of 12 affordable housing developments throughout California. Approximately 850 units will be provided in the counties of Humboldt, Los Angeles, Orange, Riverside, Sacramento, San Diego, Santa Clara, Sonoma and Ventura. Raymond James California Housing Opportunities Fund IV LLC had 12 investors.

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The Virginia Community Development Corporation announced July 2 the closing of $54 million Fund 19. The funds will aid in the redevelopment of nearly 10 properties for low- to moderate-income residents throughout Virginia and one in West Virginia. Properties that have already received approval for redevelopment through Fund 19 include William Byrd Apartments in Richmond, the Frank Roane Apartments in Lynchburg and the Huntington Gardens Apartments in Huntington, W.Va. The fund had 23 investors, with eight being first-time investors with the organization.

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WNC announced July 22 the closing of WNC Institutional Tax Credit Fund X California Series 13, LP (WNC Cal 13). The $75 million institutional LIHTC fund had seven investors and nine family and senior housing properties in California. WNC Cal 13 yields 978 units.

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On July 10, the Michigan State Housing Development Authority (MSHDA) announced $1.49 million in LIHTCs for the renovation of the historic Holy Family Orphanage building, which will be transformed into affordable housing for families in Marquette. The Grandview Marquette will provide 56 units in a five-story building. Of those units, 14 will be reserved for permanent supportive housing, serving homeless individuals with incomes at or below 30 percent of the AMI. Restoration plans also include the chapel in the building.

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On July 9, the Woda Group announced the planned transformation of the Old School Manor apartment building in Portland, Maine. The property was previously the Portland High school, originally constructed in 1919. The Woda Group was awarded $543,980 in LIHTCs through the Michigan State Housing Development Authority for renovations. Old School Manor will provide six one-bedroom units, 18 two-bedroom units and five three-bedroom units. There will also be a 550-square-foot community room. The anticipated start date is Nov. 1.

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Boston Capital announced July 14 investment in the rehabilitation of Court Street Veterans Housing in Boston. The 97-unit apartment community is available to the formerly homeless and at-risk veterans in Boston. Court Street Veterans Housing will be rehabilitated with the help of LIHTCs. The property will occupy seven floors of the 11-story building. Rehabilitation plans include the construction of 37 new permanent supportive studio apartments and one additional single room occupancy unit (SRO). There will also be moderate renovation of the existing 59 SROs. All resident veterans will have access to services available at the New England Center for Homeless Veterans, which also occupies the building. This includes daily meals, case-managed support, counseling and employment assistance. Units will be available to veterans earning 60 percent or less of the AMI. The rehabilitation of Court Street Veterans Housing is expected to yield nearly $14 million in local salaries and create nearly 150 new jobs.

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PEOPLE IN THE INDUSTRY

Hunt Mortgage Group, a commercial real estate lender, announced July 17 the addition of Paul Weissman as a senior managing director. He will be responsible for building and leading the affordable housing originations team from the firm’s Denver office. Before joining Hunt, Weissman was a senior vice president at Dougherty & Company/Dougherty Mortgage, and before that he was vice president at PNC Financial Service. At the beginning of his career, he served as director, senior vice president at Credit Suisse/Column Financial; vice president at Newman & Associates Inc.; and director at Simpson Housing Solutions LLC.

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WNC, a national investor in real estate and community development initiatives, announced the promotion Aug. 5 of Michael Simmerman to project manager. In addition, Kamisha McCargo and Jessica Cometa joined the company as project manager and originator, respectively. Simmerman joined WNC in 2010, working as regional asset manager. Before joining WNC, he was a director of property management with an urban development and historic preservation company. McCargo previously served as vice president of acquisitions with a national finance and investment firm. Cometa will be responsible for assets in the Western U.S. She previously worked at a community development financing firm.