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Affordable Housing Finance magazine - February 2004DCA broadens QAP rules, set-asides by Eric Wong Atlanta - The Georgia Department of Community Affairs (DCA) is implementing many changes to its qualified allocation plan (QAP), which could give an advantage to applications that include HOME funding or that that have experienced project sponsors. Changes proposed include reducing the competitive edge for family projects from five to two points; increasing the maximum points available for project-based rental assistance; and revising the maximum ownership interest rules. In the past, "an application proposing ownership interest by a participant having proposed ownership interests in three other projects that score higher were deemed ineligible for funding." That three-project limitation was removed, said Fenice Taylor, tax credit program manager. Other modifications are an increase in the debt-service coverage ratio in the first year of operation from 1.10x to between 1.15x and 1.35x and trending vacancy and collection loss at 7% rather than 10%. HOME funds are also now considered government financial assistance, which is a 15-point scoring criteria in the QAP. The tax credit program here has a 30% rural set-aside and a 10% nonprofit set-aside. The maximum award is $750,000 per year. Tax credit applications are due May 4, with reservations to be announced in September. In 2003, 33 developments received $15.4 million in tax credit reservations. Nearly $29 million in requests from 60 applications were submitted. The Paces Foundation, a community housing development organization, had all three of its low-income housing tax credit applications awarded tax credit reservations in the 2003 round. The three developments, Mineral Springs Apartments, Montgomery Landing Apartments and TimberChase Apartments, are beginning construction this year. Montgomery Landing is a $11.9 million infill project in Savannah that will include 144 new units. The design includes a community building with a fitness center. The partner in this project is Parallel Housing, a nonprofit based in Athens. The development received a $750,000 tax credit reservation. Mineral Springs is a $5 million, 67-unit development in Blue Ridge. Through a $500,000 Affordable Housing Program (AHP) grant from the Federal Home Loan Bank of Atlanta, Paces will be acquiring 35 existing units that were built in 2002. The $200,000 tax credit reservation will be used to build an additional 32 units of affordable housing and a community building. Regions Bank was the AHP sponsor. TimberChase, also known as Grier Senior Manor, is a new $5.3 million, 64-unit seniors housing project in McDonough. It will have a gazebo and an exercise center. The partners on this project are two nonprofits, Rice Family Farms Consortium and LowCom Development. TimberChase received a $310,000 tax credit reservation, a $280,000 AHP grant and $2 million in HOME funding. These three projects will increase Paces' portfolio to 925 units in 10 developments here and in Texas. DCA also has a state housing tax credit that matches the federal credit on a dollar-for-dollar basis. However, developers are saying that since last year, corporate buyers for the state tax credit have dried up significantly. Where federal credits have been priced between 78 cents and 82 cents, the state credits have been priced in the mid-20s, they say. "More developers are deferring their development fees up to 50%", said Paces President Mark du Mas. It's still possible to get funding, he added, but it's harder because the investor appetite for these credits changes from month to month. Some investors are asking the DCA and state legislature to model the state tax credit after North Carolina's, du Mas said (for more information on the North Carolina state tax credit, see Affordable Housing Finance, November 2003, page 2). One developer said he has avoided a problem with the state tax credit by having a reliable investor. Rick Haymond, a development specialist for Regency Development Associates, Inc. (RDA), said his firm is wholly owned by SunTrust Bank, which invests in both state and federal tax credits. "SunTrust is a major regional buyer and successfully packages the state credits for smaller banks with state tax liabilities with which it has a strong correspondence, " Haymond said. RDA recently won a $418,137 tax credit reservation for the 60-unit Jack Allen Apartments in Fitzgerald. SunTrust was the equity investor and construction and permanent lender. The one- to three-bedroom units are set aside for families earning between 30% and 60% of area median income, although six of the units are market-rate. Tax-exempt bonds The state private-activity tax-exempt bond cap in 2004 is $694.8 million for all programs, an increase from $642 million last year. About $295.3 million is allocated to affordable housing. "Right now, we are seeing more 4% tax credit deals than 9%," said Taylor. The Georgia Housing and Finance Authority (GHFA), Urban Residential Finance Authority and local issuers share in the housing pool. GHFA issues only single-family housing bonds. One change this year is that the DCA will commission market studies for all its tax-exempt bond projects. In 2003, about 30 multifamily projects had received funding as of mid-October, said Bobby Stevens, DCA bond allocation manager. Applications are accepted all year. This year also introduces a new source of funding: a state historic preservation tax credit program that allocates up to $5,000 over 10 years for each qualified project. These credits will be administered by the historic preservation division of the state Department of Natural Resources and the state Department of Revenue.
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