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CDFA Tax Credits Finance Update - January 26, 2021

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Tax Credits Finance Update
January 26, 2021
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Tax Credits Finance Update


Do Housing Tax Credits Work as Well as They Could?
A recent study shows that California is actually providing more in subsidies to investors than we actually get back in project financing; adding as much as $26,000 to the cost of each LIHTC financed affordable unit. Further, real estate developers, contractors, bankers and investors capture 35% of every dollar in an LIHTC financed project, on average. By contrast, local government and permitting fees capture just 6% and construction labor just 14%.

Renovation Projects in Des Moines' Highland Park Neighborhood Could Receive $2.2M in Financial Aid
Proposed projects to redevelop two buildings in Des Moines' Highland Park neighborhood would receive more than $2.2M in financial aid from the city. City staff is recommending the project receive up to $1.67M in project-generated tax increment financing over 20 years as well as Federal Historic Tax Credits.

States Continue to use the LIHTC to Address the Needs of the Most Vulnerable Households
That the LIHTC has been used to address the needs of vulnerable populations – seniors, people with disabilities and extremely low-income (ELI) households (those with incomes at or below the federal poverty line, or 30% of the area median income, whichever is greater) – is not surprising. As more analysis becomes available, the extent to which the incentive is used and ways in which its use can be expanded is even more evident.  

New "Transformational Mixed-Use Development" State Tax Credits in Ohio
Taxpayers can now access a new, nonrefundable insurance premium tax credit for capital contributions to certain "transformational mixed use developments". A piece of legislation finished during the recent lame duck session and signed into law allows property owners or insurance companies to apply to the Ohio Tax Credit Authority for certification and preliminary approval of tax credits against taxes imposed on insurance companies.

Michigan Governor Signs Legislation Reinstating State Historic Tax Credit
Michigan Gov. Gretchen Whitmer signed legislation that reinstates the state historic tax credit (HTC) through the end of 2030. S.B. 54 grants a state HTC for 25% of qualified rehabilitation expenses, with an annual statewide cap of $5 million and a per-taxpayer cap of $2 million.

New Tax Extender Legislation Passed for Renewable Energy, Carbon Capture Projects
Of importance in the stimulus is a one-year extension to the production tax credit (PTC) for wind projects under Section 45 of the tax code; a two-year extension to the investment tax credit (ITC) for solar projects under Section 48; a new five-year ITC for off-shore wind projects (without any phase-out) under Section 48; and a two-year extension of the PTC for carbon capture projects under Section 45Q.

NYCHA Bangs Out Another Affordable Housing Deal With Private Developer
The New York City Housing Authority (NYCHA), New York City Department of Housing Preservation and Development (HPD) and the New York City Housing Development Corporation (HDC) announced the closing of Twin Parks Terrace, a 182-units affordable housing development in the Bronx on NYCHA-owned land. Financing for this $81M Low Income Housing Tax Credit (LIHTC) project includes bond financing from HDC.

Can 2020 Bond-Financed Projects Access the Fixed 4% Rate in the COVID-19 Legislation?
The COVID-19 legislation provides a 4% fixed low-income housing tax credit (LIHTC) rate for bond-financed affordable housing projects that meet certain requirements. The fixed-rate should plainly apply to bond-financed projects that rely on 2021 bonds and are entirely placed in service after 2020. For non-bond financed projects, the fixed 4% rate applies to acquisitions of used buildings provided the credits were allocated after 2020.

District of Columbia Housing and Finance Agency Finances New Affordable Development in Takoma
On December 22 DCHFA issued $21.5M in tax-exempt bond financing and underwrote $9.8M in four percent low income housing tax credits (LIHTC) for a new development at 218 Vine Street in Ward 4's Takoma neighborhood. This project will also include nine percent LIHTC.

Upcoming Events
Fundamentals of Economic Development Finance WebCourse

CDFA Federal Financing Webinar Series: Restoring Local Economies with Federal Partners
Tuesday, February 9, 2021 - 2:00 PM Eastern
The first installment of the 2021 CDFA Federal Financing Webinar Series will cover the various forms of financing programs available to state and local governments through Treasury, HUD, and EDA for restoring local economies.

Intro Bond Finance WebCourse
February 24-25, 2021 - Daily: 12:00 - 5:00 PM Eastern
The Intro Bond Finance WebCourse provides an in-depth look at governmental and qualified private activity bonds, with a focus on industrial development bonds (IDBs), 501(c)(3) non-profit bonds, exempt facility bonds, and other special bond programs...

More Headlines

Wendover Breaks Ground on $27.6M Affordable Seniors Housing Community in Orlando
REBUSINESS ONLINE | Jan. 25 | Housing Finance | Tax Credits | Low Income Housing Tax Credits (LIHTCs)

4% LIHTC Fix Helps Affordable Housing Industry
Frost Brown Todd | Jan. 21 | Housing Finance | Tax Credits | Low Income Housing Tax Credits (LIHTCs)

Fannie Mae Multifamily Has Completed $1.5B of LIHTC Investments
PR Newswire | Jan. 19 | Rural Development | Tax Credits

Property Tax Relief Remains Governor Ricketts' First Priority
Enterprise Pub | Jan. 19 | Rural Development | Tax Credits

Palm Beach Gardens, FL Plans to Offer Nearly $500K in Incentives to Lure Two Companies, Jobs to the City
The Palm Beach Post | Jan. 13 | Incentives | Tax Credits

New Jersey Governor Signs Economic Recovery Legislation
Insider NJ | Jan. 7 | Brownfield Financing | Disaster Recovery & Relief | Economic Development | Food Systems Finance | Incentives | Revolving Loan Funds (RLFs) | Tax Credits | COVID-19

$350M Secured for Bronx, NY Development With 542 Affordable Units
Multi-Housing News | Jan. 5 | Brownfield Financing | Tax Credits

New Industrial Building Planned for Former GM Spring and Bumper Plant
Hometown Life | Jan. 5 | Brownfield Financing | Tax Credits

The New Jersey Economic Recovery Act of 2020 Explained
JD Supra | Dec. 29 | Disaster Recovery & Relief | Food Systems Finance | Legislative | State Finance Program | Tax Credits | COVID-19

Five Strategies for Commercial Real Estate Under the Biden Administration
Forbes | Dec. 29 | Energy Finance | Resiliency | Tax Credits

New Stimulus Brings Another Extension for Renewable Energy Tax Credits
Fredrikson and Byron P.A. | Dec. 29 | Energy Finance | Tax Credits | Renewable Energy Investment Tax Credit (ITC) | Renewable Energy Investment Tax Credit (ITC)

Findlay Development Project that Includes More Apartments Gets $3.1M in Tax Credits
Local12 | Dec. 29 | Historic Preservation | Tax Credits | Federal Historic Rehab Tax Credits

The New Jersey Economic Recovery Act of 2020 Explained
JDSupra | Dec. 29 | Tax Credits | State Tax Credit Programs

Chicago-Area Developers Nab $82M in Financing for Historic Rehab in Aurora
Commercial Observer | Dec. 24 | Energy Finance | Healthcare | Historic Preservation | Housing Finance | Property Assessed Clean Energy (PACE) | Tax Credits

New Jersey to Pass $14B Plan Amid COVID-19 Crisis
Patch | Dec. 23 | Disaster Recovery & Relief | Economic Development | Food Systems Finance | Incentives | State Finance Program | Tax Credits | COVID-19

Congress Passes Major Climate Legislation in Year-End Omnibus
Scientific American | Dec. 22 | Energy Finance | Federal | Green Finance | Legislative | Resiliency | Tax Credits

New Additions to the Online Resource Database

MLK Gateway I: Opportunity Zone Investment Profile
Opportunity Zones | Tax Credits
This investment profile from the Economic Innovation Group showcases the MLK Gateway in Washington, DC. Located in the Anacostia neighborhood, MLK Gateway will bring new life to a historic Main Street corridor through a center of commerce, culture, and technology; foster community prosperity; and provide a vibrant mix of neighborhood-serving retail. Financing on the project includes OZ equity, NMTC equity, grants, credit enhancement, pre-development loans, and construction loans.

The Council of Development Finance Agencies (CDFA) is a national association dedicated to the advancement of development finance concerns and interests. CDFA is comprised of the nation's leading and most knowledgeable members of the development finance community representing public, private and non-profit entities alike. For more information, visit www.CDFA.net or email info@cdfa.net

Council of Development Finance Agencies
100 E. Broad Street, Suite 1200
Columbus, OH 43215
(614) 705-1300


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CDFA National Sponsors

  • Alliant Insurance Services, Inc.
  • BNY Mellon
  • Bricker Graydon LLP
  • Business Oregon
  • CohnReznick
  • Frost Brown Todd LLP
  • Grow America | Formerly NDC
  • Hawes Hill and Associates LLP
  • Hawkins Delafield & Wood LLP
  • Ice Miller LLP
  • KeyBanc Capital Markets
  • Kutak Rock LLP
  • McGuireWoods
  • MuniCap, Inc.
  • NW Financial Group, LLC
  • PGAV Planners, LLC
  • Raza Development Fund
  • SB Friedman Development Advisors
  • Stifel Nicolaus
  • The Bond Buyer
  • U.S. Bank
  • Wells Fargo Securities
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