L. I. H. T. C.

Low Income Housing (Tax Credits)

  • Government incentive to Private Developers to Build Low-Income Housing

  • You Can Sell Your Tax Credits for About 80-Cents on the Dollar

Tax Credit (Funding)

  • 09 % Tax Credit = Up To 70 % of Construction Costs

  • 04 % Tax Credit = Up To 40 % of Construction Costs

09 % Tax Credit (Pros/Cons)

  1. Up To 70 % of Construction Costs

  2. POINTS FOR PROXIMITY TO PUBLIC-TRANSIT

  3. Lower Debit Service Payments (b/c Smaller Loans)

  4. Less Risk

  5. Clear, Simple Financing

  6. About [03] Funding Sources, Total

  7. Popular Program

  8. Many Applicants

  9. Might Need to Apply, Multiple Times

  10. Credits Per Unit: ($100,000 to $150,000)

  11. Usually Works for 100-Units or [LESS]

  12. Strict Guidelines

  13. STATE: Qualified Allocation Plan (QAP)

  14. POINTS FOR Demographic Served

  15. (01) Elderly, (02) Homeless, (03) Disabled, (04) Veterans, (05) Families, (06) Migrants

  16. usually DEFERRED Developer Fee -OR- "City Gap Funding"

  17. Great for "Your First Deal". [Simple]

  18. Great if you have LESS-Than 100-Units

  19. Great if you CAN Be Flexible!

  20. Great if you CAN Apply MULTIPLE-TIMES!

Tax Exempt BONDS

  1. Low-Interest Loans

  2. offered by STATE, COUNTY, CITY Governments

  3. provide Funding at a Lower-Cost to Public Infrastructure Projects (like Low-Income Housing)

  4. NO Federal Taxes on the Interest-Income

  5. PENNSYLVANIA: Largest (Top-09) Volume of Tax-Exempt Bonds issued in Nation

  6. Developers Compete for these Tax-Exempt Bonds

  7. STATES Control-Access to Tax-Exempt Bonds

  8. QUANTITY of Tax-Exempt Bonds, based upon STATE POPULATION

04 % Tax Credit (Pros/Cons)

  1. Must Use Tax-Exempt BONDS for 25 % of the Project Cost

  2. Usually a Lower Interest-Rate

  3. More-Complicated Process & Higher-Cost

  4. Increased Capital-Stack Stakeholders: [ Tax Credits, Tax-Exempt Bonds, CDBG Loans, City-Govt Grants, Charitable Donations from Local Corporations, Construction Loan from Bank ]

  5. No Scoring, No Wait-List

  6. Usually Works for 100-Units or [MORE]

  7. LESS REQUIREMENTS FOR Demographic Served

  8. Often include a RETAIL ELEMENT

  9. ELIGIBLE BASIS: Acquisition Cost & Construction Cost [Tax Credits for these Costs]

  10. usually DEFERRED Developer Fee -OR- "City Gap Funding", -AND/OR- "Tax Abatements"

  11. Great if you have Strong Relationships with City Council & Government

  12. Great if you have MORE-Than 100-Units

  13. Great if you Want More-Freedom in the Development Offering

  14. Great if you Can Coordinate MULTIPLE FUNDING SOURCES

  15. Great if you Understand BOND FINANCING