|Many communities have successfully used 4 percent Low-Income Housing Tax Credits to create or preserve affordable rental homes. |
To navigate through the examples of developments and programs that benefit from 4 percent tax credits click on the links in the box to the right. Or just scroll and read below.
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Los Angeles, CA
New York, NY
At 51st and King Street in Chicago, a 96-unit affordable housing complex subsidized partially by Section 8
funds was in danger of losing its affordable status due to rising home prices in the area. The National Housing Trust and the Chicago Community Development Corporation partnered in 2002 to acquire and preserve the property. They developed a complex financing plan that included 4 percent LIHTCs, a loan from the Illinois Housing Development Authority, and increased Section 8 funding. With private activity bonds
in the amount of $4.25 million the complex was able to access $2.5 million in equity through the 4 percent LIHTC -- a significant contribution to the total acquisition and renovation cost of $8.8 million.
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Los Angeles, California
Legacy Partners is in the process of erecting a 375-unit, mixed-income
development in Hollywood which is expected to cost more than $260 million. The development will use an "80-20" structure in which 20 percent of units are affordable to households earning less than 50 percent of area median income
and the remaining 80 percent rent at market rates. The Los Angeles Community Redevelopment Agency issued tax-exempt bonds to finance a low-interest mortgage. The tax-exempt bonds allow the development to leverage additional equity, the value of which is not currently known, through the 4 percent LIHTC. This development will also use cross-subsidies in order to make it financially possible to offer below-market
rents on 20 percent of its units.
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New York, New York
In July 2003 the New York City Housing Development Corporation (HDC) introduced its Low-Income Affordable Marketplace Program (LAMP), which provides financing for the creation of apartments affordable to residents earning less than 60 percent of area median income. Through this program, HDC issues tax-exempt bonds and couples the permanent mortgage made through the bond proceeds with a one-percent second mortgage loan made directly through its corporate reserves
. The tax-exempt bond financing qualifies the project for as-of-right 4 percent LIHTC, which is an essential component of the project's financing. As of 2007, under the LAMP program, HDC has financed the new construction of more than 10,000 low-income affordable housing units, 894 of which have been reserved for formerly homeless tenants. HDC has committed to financing more than 25,000 units.
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In 2004, the $45.8 million Columbia Knoll development was built on the former site of the historic Shriner's Hospital for Children. Because the site was listed in the National Register of Historic Places, the pre-development process took longer than usual. The preservation project lasted for three-and-a-half years. Many building components of the Shriner's Hospital, including doors, windows, and cabinets, were preserved and incorporated into the new development.
Columbia Knoll includes a 208-unit building for seniors and 118 units for families spread across eight buildings. Apartments are restricted to families earning 30 to 60 percent of area median income. Units are required to remain affordable for a minimum of 60 years. The construction was funded by a $3 million loan from the Portland Development Commission, 4 percent LIHTCs, state energy grants, and a number of other sources. Bond financing was responsible for 53 percent of the development's funding, while 4 percent LIHTCs contributed 23 percent.
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In 1991, residents of Meridian Manor successfully sued the building's owner over housing code violations. When the owner was unable to pay the judgment, the residents assumed ownership of the building and formed a cooperative. Soon after, the city condemned the structure, but the cooperative lacked the resources to make the necessary renovations. The very low incomes of cooperative members prevented self-financing, while a shortage of subsidies and the competitiveness of the 9 percent LIHTC allocation process limited the options available for financing using public funds.
The District of Columbia Housing Finance Agency helped the residents finance the renovations by issuing tax-exempt bonds so that Meridian Manor could qualify for the 4 percent LIHTC, which provided $1.15 million in equity. The D.C. Housing Authority also provided Section 8 funds to bring the rental income up to a level that would support repayment of the bonds. In order to qualify for these financing sources, Meridian Manor became a "rental-cooperative" -- a combination of cooperative and rental housing. After 15 years, members of the cooperative would accumulate the financial resources necessary to own the property outright. Gap financing was provided by the DC Department of Housing and Community Development and the sale of historic tax credits.
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to continue reading about how states and localities are using the 4 percent Low-Income Housing Tax Credit Creative Capital: Financing the Preservation of Affordable Housing. [PDF] March/April 2007. By Scott Kline. Multifamily Trends. Washington, DC: Urban Land Institute, pp.51-2.
 Mixed-Income Goes Hollywood. April 2007. By Bendix Anderson. Affordable Housing Finance.
 Low-Income Affordable Marketplace Program - LAMP (Tax-Exempt Bonds). [PDF] 2007. Program Term Sheet. Prepared by the Development Group, New York City Housing Development Corporation.
 Portland's Columbia Knoll Housing Project Rises from Historic Roots. July 23, 2004. By Jessica Swanson. Daily Journal of Commerce (Portland OR).
 Creative Capital: Financing the Preservation of Affordable Housing. [PDF] March/April 2007. By Scott Kline. Multifamily Trends. Washington, DC: Urban Land Institute, pp.51-2.