Metro West Housing Solutions is behind some of the biggest affordable-housing growth efforts in Lakewood, with successes like Lamar Station Crossing completed and CityScape at Belmar under development.
The organization and others like it are …
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The organization and others like it are sounding the alarm that the work they are doing will become significantly more difficult without the Low Income Housing Tax Credit (LIHTC), which is currently being debated in Congress.
“The LIHTC is the main source of funding for all of our developments,” said Brendalee Connors, chief asset management officer with MWHS. “This funding provides between 50 and 70 percent of the money to build and/or rehab properties.”
The current LIHTC rates expired at the end of 2013. Legislation to enact permanent minimum 9 and 4 percent credit rates has received bipartisan support in both the House and the Senate, but its fate is still uncertain.
According to information provided by Connors, the federal program is allocated by states — in the case of Colorado, the Colorado Housing and Finance Authority (CHFA). Each state receives an amount of credit based on the population of the state and developers apply to CHFA for the credits and are ranked compared to all of the other applicants in each round.
The top choices are then allocated credits, up to $1.25 million per year for 10 years.
The developer then finds a partner willing to invest in the deal and the partner pays equity in order to receive the benefits of the real estate (the tax credits, tax deductions for losses, and ultimate purchase price of the property at the end of the partnership).
The developer uses these funds along with other sources (bank loan, grants, owner loans) to build the property. Once the property is finished it must then follow the LIHTC rules (primarily income and rent restrictions, and condition of the property) for a minimum of 30 years.
The National Association of Housing and Redevelopment Officials (NAHRO) is one of the organizations leading the charge to get the tax credits at least extended, if not made permanent. If the LIHTC were eliminated, MWHS would not be able to develop any new projects and even if the credits are just reduced, it will make developing less affordable housing much more expensive. MWHS currently provides housing for nearly 5,000 families and individuals with a waiting list of 3,000.
“There is a desperate need in this country for safe, decent and affordable housing,” said John Bohm, congressional relations, public affairs, and field operations director with NAHRO. “It’s very important that we maintain the use of this very effect tool in our tool box.”
According to Connors, if the credits aren’t extended MWHS existing developments would not be affected but it would end any future developments because while there are some very small HUD programs available, their restrictions and threat of being cut make them difficult to use for family housing.
NAHRO, MWHS and many, many other groups have signed a letter to congress emphasizing the importance of the LIHTC. These groups are also inviting legislators to visit their properties, meet the residents, and understand exactly what the tax credit provides.
“We’re reaching out to tell the stories of how these credits benefit so many,” Bohm said. “We’re hopeful that congress will find common ground and at least extended these credits, if they won’t make them permanent.”
For more information, visit www.rentalhousingaction.org.
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