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MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
MHHousingandTaxCredits.ppt
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MHHousingandTaxCredits.ppt

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  • WE CONTINUE WITH THE DATA COLLECTION PER THE LIST HERE HOWEVER, LATER WE WILL HAVE A DEMONSTRATION OF PIXUS WHICH WILL SHOW YOU HOW WE’VE TAKEN THE DATA COLLECTION AND EVALUATION INTO THE 21 ST CENTURY OF TECHNOLOGY…WILL KNOCK YOUR SOCKS OFF
  • Next Year plan to implement the advance compliance training.
  • Transcript

    • 1. Using ODMH and MR/DD Capital Funds with Low Income Housing Tax Credits April 24, 2007 HOUSING OHIO COHHIO’s Annual Statewide Conference
    • 2. Who we are… Ohio Capital Corporation for Housing <ul><li>OCCH was created in 1989 by the Ohio Housing Finance Agency and is an independent nonprofit corporation with its own Board of Directors </li></ul><ul><li>OCCH’s mission is: “to cause the construction, rehabilitation, and preservation of affordable housing throughout Ohio” </li></ul><ul><li>Raised over $1,000,000,000 in tax credit equity and completed over 16,000 units in over 300 Projects </li></ul><ul><li>Establish equity funds of corporations doing business in Ohio </li></ul><ul><li>Provide technical assistance to nonprofit and for-profit developers in structuring and financing affordable housing tax credit transactions as well as property/asset management training </li></ul><ul><li>Manage assets of the equity funds for the 15-year life of the partnerships </li></ul>
    • 3. Who we are… Community Housing Network <ul><li>Franklin County ADAMH contract housing provider </li></ul><ul><li>Own over 600 units of ODMH Housing </li></ul><ul><li>Develop, own, and manage 5 tax credit projects </li></ul>
    • 4. Recent Legislative Change <ul><li>ORC Chapter 154 was amended to permit ODMH and MRDD capital funds to be issued under a section of the Constitution that allows the funds to be used by a for-profit tax credit company. </li></ul><ul><li>The amendment is retroactive so that projects already developed with ODMH or MRDD funds can benefit from tax credits. </li></ul>
    • 5. HOUSING OHIO COHHIO’s Annual Statewide Conference Overview of the Tax Credit Program
    • 6. LIHTC Program <ul><li>Federal housing programs have traditionally taken the form of direct cash subsidies (e.g., HUD capital advance to project developer) </li></ul><ul><li>Tax Credits are indirect cash subsidies that attracts private investors who invest equity in low-income housing projects in exchange for tax credits that reduce their income tax obligation </li></ul><ul><li>Because only for-profit entities pay federal income taxes, only for-profit owners can take advantage of tax credit program. </li></ul>
    • 7. LIHTC Projects <ul><li>Tax Credit Company : </li></ul><ul><ul><li>Nonprofit and for profit owners partner with for-profit investors. </li></ul></ul><ul><ul><li>Companies form a for-profit tax credit company to own the property being developed or rehabilitated. </li></ul></ul>
    • 8. LIHTC Projects <ul><li>For-Profit Investors’ Role : </li></ul><ul><ul><li>For-profit investors contribute cash (equity) to the project in exchange for receiving the tax credits. </li></ul></ul><ul><ul><li>For-profit investors are silent partners with limited power to provide day-to-day project management. </li></ul></ul>
    • 9. LIHTC Projects <ul><li>Nonprofit Company’s Role : </li></ul><ul><ul><li>Nonprofit company uses equity and other gap financing to develop low-income housing. </li></ul></ul><ul><ul><li>Nonprofit company has sole management power and is required to operate the project for low-income individuals with disabilities for at least 30 years. </li></ul></ul>
    • 10. Hypothetical Tax Credit Deal
    • 11. How LIHTC Credits Flow… State Housing Finance Agency Tax Credits $ $ $ $ $ $ $ $ $ $ $ $ $ Tax Credit Authority Tax Credit Allocation Cash Equity Investment US Treasury (IRS) Investors Rehabilitated MH Project LP
    • 12. 4% Tax Credit/Bond Deals <ul><li>Finance Project by Using: </li></ul><ul><ul><li>Tax Credits: Amount of Tax Credits: depends on value of project, but generally will cover 30% of project costs. </li></ul></ul><ul><ul><li>Tax Exempt Bonds </li></ul></ul><ul><ul><li>Available Grants (Rehab Projects: assumption of existing ODMH/MR/DD debt by project). </li></ul></ul>
    • 13. Conventional vs. Tax Credit Deal
    • 14. Sample Development and Proforma Budget
    • 15. Sample Multi-Project Pool
    • 16. HOUSING OHIO COHHIO’s Annual Statewide Conference Overview of Bond Financed Projects
    • 17. What is the 50% Test? Must Finance “At least 50% Of Projects Aggregate Basis + Land” With Bonds Or …roughly ½ of total project costs.
    • 18. How Bonds Can Be Used Three Ways Bonds Can Be Used: Construction Financing Permanent Financing Both Construction &amp; Permanent
    • 19. What Commitments Come With Bonds &amp; 4% Credits Deed Restriction: 20/50 or 40/60 Set Aside Pretty Much The Same As LIHTC, One Caveat, Must Extend To Bond Term If Longer
    • 20. Credit Enhancement Two Types: FHA Insurance: Letter of Credit Un-Enhanced Bonds:
    • 21. Bond Rating Rated By One of Two Main Agencies: Standard &amp; Poors OR Moodys OR Unrated: Bought By Direct Investor
    • 22. Costs Of Bonds A Lot… Participant List: Issuer, Bond Counsel, Underwriter, Underwriter’s Counsel, Owner, Owner’s Counsel, Lender, Lender Counsel, Credit Enhancer or Letter of Credit Bank, Rating Agency, Trustee, Tax Credit Syndicator, Syndicator’s Counsel Figure 7% Of The Bond Amount With Permanent Financing, Less For Construction Only
    • 23. Bond Pools Several Small Projects Can Be Pooled Into One Bond Issuance Can Be In Multiple Locations, Cities, Counties, Etc…
    • 24. Expected Timeline Forever…. Expect A Year To 18 Months
    • 25. Issues With Tax Exempt Bond Deal 1. Deals Are Very Complicated 2. Many Players Involved 3. Financing Can Be Very Expensive Get A Good &amp; Knowledgeable Development Team!
    • 26. HOUSING OHIO COHHIO’s Annual Statewide Conference Sources of Gap Financing
    • 27. HOUSING OHIO COHHIO’s Annual Statewide Conference Other Considerations to Financing
    • 28. Tax Credits Compliance Overview <ul><li>HIGHLIGHTS OF THE PROGRAM </li></ul><ul><ul><li>Income Restrictions </li></ul></ul><ul><ul><li>Rent Restrictions </li></ul></ul><ul><ul><li>Occupancy Restrictions </li></ul></ul><ul><ul><li>Lease Requirements </li></ul></ul><ul><ul><li>Recertification Requirements </li></ul></ul><ul><ul><li>Special Rules </li></ul></ul><ul><ul><ul><li>Unit Transfer Rules </li></ul></ul></ul><ul><ul><ul><li>Next Available Unit </li></ul></ul></ul><ul><ul><ul><li>Vacant Unit Rules </li></ul></ul></ul><ul><ul><ul><li>Record Retention Requirements </li></ul></ul></ul>
    • 29. Income Restrictions <ul><li>Minimum Requirements: </li></ul><ul><li>At least 40% of the property must be set aside for families earning below 60% of Area Median Income, or </li></ul><ul><li>At least 20% of the property must be set-aside for families earning below 50% of the Area Median Income </li></ul><ul><li>Cuyahoga County: Family of Four </li></ul><ul><li>50% AMI=$30,700 60% AMI = $36,840 </li></ul><ul><li>Cuyahoga County: One Person Household </li></ul><ul><li>50% AMI=$21,500 60% AMI = $25,800 </li></ul>
    • 30. Rent Restrictions <ul><li>Rents are restricted by income group, bedroom size, and Area Median Income </li></ul><ul><li>Cuyahoga County </li></ul><ul><li>1 Br 2 Br 3Br </li></ul><ul><li>50% Area Median Income $575 $691 $798 </li></ul><ul><li>60% Area Median Income $690 $829 $957 </li></ul><ul><li>Rents include tenant portion of rent, plus utility costs and all other costs that are required by owner </li></ul>
    • 31. <ul><li>Property must remain as a low income property for at least 15 years and most properties will have an additional 15 year extended use period </li></ul><ul><li>Students - households consisting entirely of full-time students are not eligible for tax credit units </li></ul>Occupancy Restrictions
    • 32. Lease Agreement <ul><li>Program does not permit transient occupancy </li></ul><ul><li>Initial Lease Term must be at least 6 months </li></ul><ul><ul><li>Unless property is an SRO or transitional housing for the homeless </li></ul></ul>
    • 33. Recertifications <ul><li>Must be completed within 12 months from Lease start date </li></ul><ul><li>May sign Tenant Income Certification up to 60 days before effective date </li></ul>
    • 34. Rehab of Existing Properties <ul><li>Relocation </li></ul><ul><ul><li>HUD Handbook 1378.0 </li></ul></ul><ul><ul><li>www.hudclips.org </li></ul></ul><ul><ul><li>www.fhwa.dot.gov </li></ul></ul><ul><ul><li>www.communitychange.org/issues/housing/ </li></ul></ul>
    • 35. Asset Management Overview <ul><li>Role of Asset Management </li></ul><ul><li>Watchlist Criteria </li></ul><ul><li>Monitoring and Reporting </li></ul><ul><ul><li>Monthly, Quarterly and Annual Requirements </li></ul></ul>
    • 36. Key Players in Tax Credit Program <ul><ul><li>IRS </li></ul></ul><ul><ul><ul><li>Responsible for allocating tax credits to the states &amp; enforcing rules &amp; regulations </li></ul></ul></ul><ul><ul><li>State Allocation Agency </li></ul></ul><ul><ul><ul><li>Responsible for awarding credits that have been allocated by IRS and monitoring &amp; reporting non-compliance </li></ul></ul></ul><ul><ul><li>Property Owner (GP) </li></ul></ul><ul><ul><ul><li>Often hires a property manager to operate property, who is responsible for compliance . </li></ul></ul></ul><ul><ul><li>Equity Investors (LP) </li></ul></ul><ul><ul><ul><li>Responsible for financial &amp; regulatory compliance oversight </li></ul></ul></ul><ul><ul><li>Management Agent </li></ul></ul><ul><ul><ul><li>Responsible for setting up systems &amp; procedures to ensure on-site staff are equipped to comply with the program requirements. </li></ul></ul></ul><ul><ul><li>On-Site Management Staff </li></ul></ul><ul><ul><ul><li>Responsible for renting to qualified households, and for ensuring that the leasing, documentation &amp; other management aspects are in compliance with the requirements of the program </li></ul></ul></ul>
    • 37. <ul><li>Assists sponsors and managers in maintaining the quality of housing for residents and preserving the value of Fund investments </li></ul><ul><ul><ul><li>Monitors to assure that our performance standards and expectations are being met regarding: </li></ul></ul></ul><ul><ul><ul><ul><ul><li>financial condition; </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>physical condition; </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>regulatory and statutory compliance; and </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Reporting </li></ul></ul></ul></ul></ul>Asset Management
    • 38. Watchlist Criteria - Financial
    • 39. Watchlist Criteria - Physical
    • 40. Reporting Reports more than 30-days late Watchlist Criteria Compliance &amp; Other CRITERIA DEFINITION INFORMATION SOURCE Compliance Issues  Any qualified unit out of compliance for more than 60 days  Non-compliance with 10% or more of qualified units (rent levels, tenant income , certification)  No receipt of Annual Owner’s Certification  IRS Form 8823 issued  Notice of IRS claim or audit  Quarterly Status Report  Annual Owner’s Certification  Annual Site Visit  Monthly &amp; Quarterly Report Transfers of Ownership/Reorganization of Project Sponsor Any change Annual Owner’s Certification Strength of Sponsor/Management Company  Decline in sponsor’s financial condition  Deterioration of its asset management capability  Annual Site Visit Default under Partnership agreement, mortgage or loan agreement Litigation Any litigation Quarterly report
    • 41. <ul><li>Data Collection </li></ul><ul><li>Construction Reports </li></ul><ul><li>Weekly Leasing Reports </li></ul><ul><li>Monthly Reports </li></ul><ul><li>Quarterly Reports </li></ul><ul><li>Compliance Reports </li></ul><ul><li>Property Inspections </li></ul><ul><li>Annual Audit </li></ul><ul><li>Evaluation </li></ul><ul><li>AHIC Criteria </li></ul><ul><li>Risk Rating </li></ul>OCCH Project Reporting
    • 42. Training Opportunities <ul><li>Basic Compliance &amp; Intermediate Compliance </li></ul><ul><ul><li>www.homebuyerohio.com/compliance_tc/training.htm </li></ul></ul><ul><li>MAHMA State Meeting </li></ul><ul><ul><li>www.mahma.com/mahma_training.htm </li></ul></ul><ul><li>TheoPro Compliance &amp; Consulting </li></ul><ul><ul><li>www.icomply42.com </li></ul></ul><ul><li>Elizabeth Moreland Consulting, Inc. </li></ul><ul><ul><li>www.housingcreditcollege.com </li></ul></ul><ul><li>Annual Ohio Housing Conference </li></ul>
    • 43. Websites <ul><li>OHFA: www.homebuyerohio.com </li></ul><ul><li>OCCH: www.occh.org </li></ul>
    • 44. HOUSING OHIO COHHIO’s Annual Statewide Conference Technical Assistance
    • 45. NAMI Ohio 747 East Broad Street Columbus, Ohio 43205 Phone 614-224-2700 Fax 624-224-5400 Tollfree 800-686-2646 [email_address] NAMI Ohio
    • 46. Housing Assistance Websites COHHIO (Coalition Homeless+Housing) www.cohhio.org Corporation for Supportive Housing www.csh.org Dataplace www.dataplace.org / NAMI Ohio www.namiohio.org Ohio Capital Corp for Housing www.occh.org Ohio Department of Development www.odod.state.oh.us Ohio Department of Mental Health www.mh.state.oh.us / Ohio Housing Finance Agency www.ohiohome.org SAMSHA www.mentalhealth.samhsa.gov Substance Abuse and Mental Health Services Administration Technical Assistance Collaborative http:// tacinc.org / HUD www.hud.gov
    • 47. www.namiohio.org/assets/images/housingtoolkit.pdf
    • 48. Ohio Capital Finance Corporation
    • 49. Purpose and Background <ul><li>Purpose </li></ul><ul><li>To establish a flexible source of funds that can be utilized by development partners of Ohio Capital Corporation for Housing for use as predevelopment funding, acquisition financing, bridge financing and homeownership development. </li></ul><ul><li>Background </li></ul><ul><li>From 2000-2004 OCCH lent out over $3.6M in predevelopment loans </li></ul><ul><li>Loans limited to $50,000 </li></ul><ul><li>Used for Short Term and Predevelopment Costs </li></ul><ul><li>In 2002 the Ohio Capital Finance Corporation received CDFI Fund Certification </li></ul><ul><li>In 2004 the Ohio Affordable Housing Loan Fund was created - $10,000,000 </li></ul><ul><li>In 2006 over $10,000,000 in loans have closed and the Fund has begun to revolve </li></ul><ul><li>The Loan Fund has experienced no write-offs or loans at risk </li></ul><ul><li>Continued demand for existing loan products </li></ul><ul><li>Borrowers appreciate new source of capital that understands the tax credit marketplace </li></ul>
    • 50. Products, Rate and Term <ul><li>Tax Credit Products </li></ul><ul><li>Predevelopment Loan – Maximum $150,000 </li></ul><ul><li>Acquisition Loan - Maximum $1,000,000 </li></ul><ul><li>Year 15 Bridge Loan - Maximum $1,000,000 </li></ul><ul><li>Non Tax Credit Products </li></ul><ul><li>Predevelopment Loan – Maximum $100,000 </li></ul><ul><li>Acquisition Loan - Maximum $1,000,000 </li></ul><ul><li>Homeownership Loan - Maximum $500,000 </li></ul><ul><li>Interest Rate </li></ul><ul><li>Prime minus ½ (8.25% - ½ % = 7.75%) </li></ul><ul><li>Interest accrues for life of loan </li></ul><ul><li>Variable rate </li></ul><ul><li>Term </li></ul><ul><li>Up to 18-24 Months </li></ul><ul><li>Principal &amp; Interest repaid at construction loan closing </li></ul>
    • 51. Lending Guidelines <ul><li>All Tax Credit Predevelopment and Acquisition Loan projects must have a valid reservation of tax credits </li></ul><ul><li>80% of units must be affordable to 60% of AMI </li></ul><ul><li>All projects will entail either multifamily or single family properties </li></ul><ul><li>The minimum loan amount is $10,000 </li></ul><ul><li>Borrowers may be nonprofit, public housing authority or for-profit entities </li></ul><ul><li>The maximum lending limit per loan is $1,000,000 </li></ul><ul><li>The maximum lending limit per borrower is $3,000,000 </li></ul><ul><li>There are no prepayment penalties with any loan </li></ul><ul><li>Developer Fees and Operating Costs are not eligible for funding </li></ul>
    • 52. Predevelopment Loan (tax credit) <ul><li>Maximum Loan Amount: $150,000 </li></ul><ul><li>Uses: architectural drawings, zoning, permitting, legal fees, phase I environmental report, engineering, real estate taxes, soils report, carryover costs, etc. </li></ul><ul><li>Collateral: full recourse guarantee and/or first mortgage if available </li></ul>
    • 53. Acquisition Loan (tax credit) <ul><li>Maximum Acquisition Loan - $1,000,000 </li></ul><ul><li>Uses: To assist in acquiring land and/or buildings </li></ul><ul><li>Limited to 100% loan to value (as is) </li></ul><ul><li>Collateral: full recourse guarantee and first mortgage </li></ul>
    • 54. How to Apply <ul><li>For an Application and Closing Checklist Contact: </li></ul><ul><ul><li>Jon Welty </li></ul></ul><ul><ul><li>An OCCH Development Officer </li></ul></ul><ul><ul><li>www.occh.org/predevelopment lending </li></ul></ul><ul><li>Return completed signed Application along with documents from the Closing Checklist to begin the application process. </li></ul>
    • 55. Frequently Asked Questions <ul><li>Can I borrow the loan fees? Yes </li></ul><ul><li>Can I borrow funds twice, once for predevelopment and once for acquisition? –Yes </li></ul><ul><li>Who is the borrower? – The tax credit partnership for tax credit loans or developer for non tax credit loan </li></ul><ul><li>Does the Partnership (borrower) have to be formed? - Yes </li></ul><ul><li>Can funds be wired to the General Partner or Developer’s bank account? – No, the funds need to be transferred to the borrower’s checking account </li></ul><ul><li>Can you accept a mortgage instead of a guarantee? – No </li></ul><ul><li>Can I payoff the loan in installments? – No </li></ul><ul><li>Will you accept a check or do you prefer a wire? – A wire is preferred </li></ul><ul><li>Can the loan be extended? – Yes, please provide notice to the fund for an extension – there are no extension fees </li></ul>
    • 56. Additional Information <ul><li>Community Housing Network </li></ul><ul><ul><li>Susan Weaver – 614.251.1700 x106 </li></ul></ul><ul><ul><li>Samantha Shuler – 614.251.1700 x114 </li></ul></ul><ul><li>Ohio Capital Corporation for Housing - 614.224.8446 </li></ul><ul><ul><li>Doug Klingensmith </li></ul></ul><ul><ul><li>Melanie Shapiro </li></ul></ul><ul><ul><li>Jon Welty </li></ul></ul><ul><li>Ohio Housing Finance Agency </li></ul><ul><ul><li>Kevin Clark – 614.752.4550 </li></ul></ul><ul><li>Federal Home Loan Bank </li></ul><ul><ul><li>Mary Hernandez – 513.852.7604 </li></ul></ul><ul><li>NAMI Ohio </li></ul><ul><ul><li>Ron Rett – 614.224.2700 </li></ul></ul>
    • 57. HOUSING OHIO COHHIO’s Annual Statewide Conference Discussion Questions???

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