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Novogradac Journal of Tax Credits Volume 4 Issue 11

The November 2013 issue of the Novogradac Journal of Tax Credits

Journal cover November 2013

Articles

Michael J. Novogradac

Friday, November 1, 2013

Location is nearly everything when determining the growth of 4 percent low-income housing tax credits (LIHTCs).“It depends on where you are looking,” said Mark Shelburne, senior manager at Novogradac Consulting LLP. “What’s interesting is to look at particular states where they make policy to help [with 4 percent LIHTC-bond transactions]. Colorado is a headliner. The state brought back the state credit and upon doing so, they set production records year after year. They are using the state credit for bond deals. Another state is Georgia–because of their policy changes, they’ve been putting in state resources.”There’s more.“I think it varies not only from state to state, but year to year and QAP [qualified allocation plan] to QAP,” said Jack Aronson, director of development acquisitions at Community Preservation Partners in San Francisco. “What you see across the West is more focus on bond housing. You’re seeing [local] measures passing.”In many locations, the presence of a state LIHTC is a game-changer.“State credits are a critical gap-filler,” said Anthea Martin, senior vice president with Bellwether Enterprise in Denver. “Colorado is like the rest of the nation: there’s a housing crisis, but [it does have] a state LIHTC.”The affordable housing crunch has created momentum for local initiatives ranging from a $258 million housing bond in Portland, Ore., to a $74 million bond in Asheville, N.C., to a $50 million bond in Rhode Island to a series of local sales tax increases or

Mark O’Meara

Friday, November 1, 2013

The Seattle Asian Art Museum is receiving a facelift to preserve its history, expand its footprint and bring the building up to 21st century standards. Located in Seattle’s Volunteer Park, the Seattle Asian Art Museum was built in partnership with the city of Seattle in 1933. “This is a great opportunity to renew the building and activate the park,” said Michael Shiosaki, director of planning and development at Seattle Parks and Recreation. “It’s been a great partnership between the Seattle Art Museum and the city.” While the city owns the building, the museum has been the sole tenant, operating under a long-term lease agreement. As part of the rehabilitation, the city renewed its lease with the museum for another 55 years. “It’s a chance to ensure it’s alive and well for the next 50-plus years,” said Shiosaki.From 1933 to 1991, the Seattle Art Museum (SAM) called this location home. Then SAM moved to downtown Seattle and its Asian art collection stayed in Volunteer Park to form the Seattle Asian Art Museum, under SAM’s management. The Art Deco building is undergoing major renovations to replace the 1930s heating system, add cooling and humidity controls to protect the museum’s art collection, install seismic upgrades, improve the loading dock, add a new freight elevator and improve ADA accessibility. [scald=172351:embedded_image_100 {"link":"https://www.novoco.com/atom/172351","linkTarget":"_blank"}]Image: Courtesy of LMN ArchitectsThe Seattle Asian Art Museum is receiving

Richard Gerwitz

Friday, November 1, 2013

During the past two years, low-income housing tax credit (LIHTC) developers have been increasing their use of a new financing structure that marries a taxable conventional loan with equity from 4 percent LIHTCs. Although at least 50 percent of a 4 percent LIHTC development’s aggregate basis needs to be financed with tax-exempt private activity bonds for the developer to secure the LIHTCs, compelling taxable mortgage rates have made taxable conventional loan financing an attractive alternative to traditional tax-exempt bond financing. This financing structure meets the 50 percent test by issuing short-term cash-backed tax-exempt bonds, initially secured by the cash proceeds of the bonds themselves. Conventional loan proceeds replace these funds as the tax-exempt bond funds are advanced to the property. Once the development is placed in service, the short-term bonds are redeemed and the development is left with the conventional permanent loan.

Forrest D. Milder

Friday, November 1, 2013

Investment tax credits (ITCs) and production tax credits (PTCs) both become available when the facility to which they are attributed is placed in service. For many years, a placed-in-service rule also applied to whether the project was eligible for tax credits at all. In general, solar and fuel cell projects had to be placed in service by Dec. 31, 2016, to qualify for the 30 percent ITC, wind projects had to be placed in service by Dec. 31, 2012 in order to qualify for the PTC or the ITC, and most other projects, including biomass, solid waste, landfill gas, most geothermal and most water-related technologies, including hydropower and hydrokinetic had to be placed in service by Dec. 31, 2013.


News Briefs

Friday, November 1, 2013

On Sept. 26, the U.S. Department of Housing and Urban Development (HUD) released mortgage insurance premiums (MIPs) for the Federal Housing Administration (FHA) Multifamily, Healthcare Facilities and Hospital mortgage insurance programs. The fiscal year (FY) 2014 MIPs are the same as in FY 2013...

Friday, November 1, 2013

On Sept. 16, the U.S. Department of Housing and Urban Development (HUD) released a notice in the Federal Register regarding certain operating cost adjustment factors (OCAFs) for 2014. The notice establishes OCAFs for Section 8 Housing Assistance Payment (HAP) contract renewals...

Friday, November 1, 2013

On Sept. 19, a joint letter signed by more than 1,200 businesses, investors, nonprofit organizations and community leaders was sent to Congress advocating for an increase in credit authority and for a permanent extension for the new markets tax credit (NMTC)...

Friday, November 1, 2013

On Sept. 17, the Wisconsin Housing and Economic Development Authority (WHEDA) announced the creation of a housing locator website. The free website will provide up-to-date information about rental housing across the state. Visitors can search by rental needs, including affordability, location and distance to medical facilities, public transit and schools...

Friday, November 1, 2013

On Sept. 25, First NBC Bank Holding Company announced that the First NBC Community Development Fund LLC, the bank’s community development entity (CDE), was awarded $19.6 million in NMTCs from the state of Louisiana. First NBC will use the award in the rebuilding of New Orleans...

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