Prestwick Development Company Affordable Housing Typically 60% of - - PowerPoint PPT Presentation

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prestwick development company affordable housing
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Prestwick Development Company Affordable Housing Typically 60% of - - PowerPoint PPT Presentation

Sep 29, 2023 50 likes •220 views

Prestwick Development Company Affordable Housing Typically 60% of AMI or Less The Low Income Housing Tax Credit is a dollar-for-dollar tax credit in the United States for affordable housing investments. It was created under the Tax Reform Act

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Prestwick Development Company

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Affordable Housing – Typically 60% of AMI or Less

The Low Income Housing Tax Credit is a dollar-for-dollar tax credit in the United States for affordable housing investments. It was created under the Tax Reform Act of 1986 (TRA86) that gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. Housing Bonds are a financing tool used by state Housing Finance Agencies to finance low interest mortgages for low income renters by providing investment opportunities that the interest earned is tax exempt and the proceeds are used to make low interest loans. HOPE VI & Choice Neighborhoods utilized by the United States Department of Housing and Urban Development to revitalize struggling neighborhoods with distressed public or HUD- assisted housing. Section 8 & Project Based Rental Assistance/HomeFlex are utilized by Public Housing Authorities to subsidize rents for families with the greatest needs.

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Housing – Delivery Hurdles

Cost to develop basic, 950 SF, surface parked rental unit: 2008: $93K Monthly rent required to finance unit: $875/month 2016: $135K Monthly rent required to finance unit: $1,189/month 2018: $142K Monthly rent required to finance unit: $1,259/month

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Housing – Delivery Hurdles

Reasons for Cost Increases:

  • Construction Increases
  • $65-$70/RSF in 2008
  • 95-$100/RSF in 2016
  • $110/RSF in 2018
  • Land Costs
  • Controllable Operational Costs
  • Tax Assessments
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Solution – LIHTC

What is a Low Income Housing Tax Credit (LIHTC):

  • Tax Credits Awarded to Qualifying Developments
  • Tax Credits Sold to Corporations and Banks
  • Proceeds Used to Development Housing

Benefits of the Low Income Housing Tax Credit (LIHTC) Programs:

  • Pays for Significant Portion of Development Costs
  • Resulting Monthly Rent - $600+ instead of $1,200+/-
  • Income Restricted at 60% of the Metropolitan Area Median Income
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60% Area Median Income (2016) – LIHTC

Income 1 Person 2 Person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person 60% 28,680 32,760 36,840 40,920 44,220 47,520 50,760 54,060 Max Rents* 1 BR 2 BR 3 BR 60% $768 $921 $1064

*Deduct Utility Allowance for Actual Rent

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Financing – 9% Tax Credits

Total Cost- 15.3M Tax Credit Equity - 13.0M Debt - 2.3M Gap Financing - 94 units

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Financing Tax Exempt Bonds

Total Cost - 23.8M Tax Credit Equity - 14.0M Debt - 7.3M Gap Financing - 2.0M (HOPE VI, HOME, CDBG, AHP…) DDF - .5M 162 Units

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Financing Tool Box – Mixed Finance

LIHTC Tax Exempt Bonds Payment in lieu of taxes Foundation Grants Federal Grants Neighborhood Stabilization (NSP) Georgia Power Rebates TIFF and TADs CDBG HOME Sell Lease back Convention Debt and Equity Affordable Housing Program (FHLB) Green Funds

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https://www.youtube.com/watch?v=7CTGZNbDl6w

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Gateway Capitol View

AFFORDABLE HOUSING CASE STUDY

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Gateway Capitol View (4% Senior)

TDC – 23.8M Equity - 14.0M Debt - 7.3M Gap Financing - 2.0M (HOME, CDBG, AHP…) DDF - .5M Rental Assistance from the Atlanta Housing Authority Assumptions: Credit Pricing - .49 and .95 162 Units

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Where Do We Go From Here?

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Questions