A “Stimulating” Summer

Well, despite the weakened condition of the tax credit investor market, things are the opposite of slow in Ohio’s Low Income Housing Tax
Credit (LIHTC) industry. Though actual dollars have not yet begun
to flow to projects, everybody is working on different aspects of the resources provided to Ohio under the America Recovery and Reinvestment Act (ARRA), also known as the federal stimulus bill.

The two primary programs under ARRA affecting the LIHTC world
are the:

In addition to these resources, there are millions of dollars in the Home Weatherization Assistance Program (HWAP), Neighborhood Stabilization Program (both I and II), energy retrofit, public housing modernization and other funding coming to a neighborhood near you.

We are very fortunate in Ohio. The Ohio Housing Finance Agency (OHFA) is definitely ahead of their housing finance agency colleagues: OHFA was the first agency to submit for TCAP and TCE. And OHFA has issued guidelines and procedures for managing ARRA resources for struggling 2007 and 2008 projects, and also for recently announced 2009 tax credit awards. OHFA has also issued an RFP for an entity to serve as an asset manager on behalf of the agency for projects without an investor, because OHFA will in fact be taking the place of an investor.

OHFA’s task now is to get these dollars out the door. This is made more difficult given restrictive federal requirements and timelines. With OHFA implementing new programs and policies, with adjusted underwriting standards, legal documents and closing processes, and developers faced with new submission requirements and tight time frames for turnaround of forms and due diligence materials, it will indeed be a stimulating summer. Hopefully everybody’s “shovel-ready” projects will be turning dirt by September.

As always, OCCH staff stands ready to assist our development partners in getting their deals approved, closed and under construction.

Unfortunately, while ARRA provided a huge amount of public capital to get stalled deals going, it did nothing to stimulate private sector investment in the LIHTC program. Several proposals, including the extension of time investors can “carryback” credits and losses to earlier profitable years’ tax returns, were dropped before the bill passed. The long term viability of the LIHTC program as a vehicle to produce affordable rental housing rests not in the provision of short-term gap financing to projects, but in the leverage of private capital. Similar proposals are now being circulated and need a legislative vehicle to advance.

Without attracting greater amounts of private capital in the near future, Congress will have to extend the Tax Credit Exchange Program because there will not be enough investor dollars for the 60% of 2009 credits that can’t be exchanged, let alone 2010 credits.

Hal Keller