Affordable Housing Anyone?

Question

https://www.bizjournals.com/co...

Steve Morris · Answer

You missed the money shot - To get the 9% credits, each state has a quota and the market is ferociously competitive.

You put together a proposal/request, you'd better have a real compelling story - And saying I want to make a profit isn't your best plot line.

In addition, there are some for-profit operators, but affordable stuff (due to compliance and tenant issues) is just more expensive to operate.

Steve Morris · Answer

What are your thoughts about the 4% non-competitive tax credit? I understand they are coupled with bond financing, but still see these deals increasing. The Developer Fees paid to non-profit co-developers and for-profit developers can be hefty.

I know Oregon so diff states H/As may be different.  There is no limit on the 4% TC that can be issued by the state (the 9% are limited by $ per capita) once they approve your projects.

I guess they're OK, but basically for rehab and not acquistion.  While the 9% sell at close to par, I think you're looking at <$0.40 for the 4%.

However, you're right, that's the big reason the non- and for-profits like new const, up to 15% developer fee.

I will say though, that is probably one of the better mechanisms to get more LIH.

BJ Everson · Answer

@Steven J. Umaña agreed. They can get re-syndicated for another 15yr stream of LIHTC (10 yr credits, 15 yr compliance)

BJ Everson · Answer

@Steven J. Umaña I work for an insurance company where I AM a portfolio of LIHTC assets. Really good industry of RE and has a good social drive (affordable housing) and strong supply needs. We invest in both the 9 & 4%.

Steven J. Umaña · Answer

@BJ Everson great to meet fellow Columbus folks in the industry! I really can't see a slowdown in the supply needs, especially with COVID-19 and the long-term economic uncertainty that it has caused. A lot of affordable housing developments currently in operation in both rural and urban areas will need recapitalized and substantially rehabilitated in the coming years as well.

Steven J. Umaña · Answer

Thanks for the input @Steve Morris - What are your thoughts about the 4% non-competitive tax credit? I understand they are coupled with bond financing, but still see these deals increasing. The Developer Fees paid to non-profit co-developers and for-profit developers can be hefty.

Affordable Housing Anyone?

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