March 11, 2016

Developing Affordable Housingthe financing process

Affordable Housingthen...

Image courtesy of AIA.comPruitt-Igoe (St. Louis, MO)

Affordable Housing...and now

Affordable Housingthen...So what is a Tax Credit?

Tax reform Act of 1986 (§42) 9% versus 4% $2.30 x population Eligible Basis Role of State Agencies

Typical Financing StructureCompetitive 9% LIHTC

80.0%

10.0%

8.0%

2.0%

9% LIHTC Equity

Permanent Mortgage

Soft Financing

Deferred Fee

Affordable Housingthen...9% Tax Credit Process

Federal Tax Credit

Allocation Pool

State Allocating Agency

Competitive application

Developer

99.99% Investor

Tax Credits + Losses

$$$

Project Sponsor$$$

Construction + management+

compliance

Compli

ance

Affordable Housingthen...

How Competitive is “Competitive?”

New Jersey Housing Mortgage Finance Agency (2015) Ranking15 Municipal 5 30-yr PILOT 3 5% Municipal Contribution5 Redevelopment Area2 Housing Authority Waiting List12 Location6 Brownfield + transit + schools + jobs6 Positive Land Uses11 Developer3 Experience3 Commitment of Funds5 MBE/WBE Subcontractors

18 Design6 Unit Amenities6 Community Amenities6 LEED / Energy Star / NGBS

44 Affordability/Program20 Extended Compliance21 25% of units are 3BR8 10% of units < 30% AMI6 Social Service Provision5 5 units or 5% Homeless

Affordable Housingthen...

How Competitive is “Competitive?”

6 Positive Land Uses

New Jersey Housing Mortgage Finance Agency (2015) Ranking

Affordable Housingthen...Positive Land Uses Example

Current development: Raritan, NJ

Affordable Housingthen...Benefits to the Municipality

Significantly less cost to the

municipality than if self-developed

Helps satisfy COAH

obligation

Redevelops underutilize

d real estate

Adds to municipal tax base

Diversifies Housing

Stock