Affordable
Housing Finance magazine - February 2004
DCA 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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