City of Austin Affordable Housing Forum Housing Tax Credits by tlc69476


									                                 City of Austin
                 Affordable Housing Forum: Housing Tax Credits
                             Agenda/Meeting Notes
                                  Wednesday, March 26, 2008
                                     9:00 a.m. - 10:30 a.m.
               Street-Jones Building, 1000 E. 11th St., 4th Floor Conference Room

48 attendees

9:00 a.m.      Welcome and Introductions
               City Council Member Jennifer Kim and Chief of Staff Kristen Vassallo

9:10 a.m.      Panel Discussion: Housing Tax Credit Program
               o Terry Campbell, Principal, Campbell-Hogue & Associates
               o Mike Clark, Principal, Alpha Barnes Real Estate Services
               o Robbye Meyer, Multi-Family Finance Director, Texas Department of Housing
                  and Community Affairs
               o Margaret Shaw, Acting Director, Neighborhood Housing and Community
                  Development, City of Austin (Moderator)

               Resource Panelists:
               o Edwina Carrington, Principal, Reznick Group
               o Nicole Flores, Senior Vice President, PNC MultiFamily Capital
               o Kelly Hunt, Austin Housing Finance Corporation
               o Rob Latsha, Administrator, Private Activity Bond Allocation Program, Texas
                  Bond Review Board

General discussion of housing tax credits from the developer, property manager, TDHCA, and
syndicator perspectives. Consensus: 2007/2008 is a difficult year for housing tax credits
everywhere. Tax credits have decreased from a nearly 1:1 ratio to as low as $.77 on the dollar.
Fannie Mae, Freddie Mac and other large financial institutions have quit purchasing tax credits
due to Alternative Minimum Tax liability. This is how the economic downturn has affected the
market for affordable housing.

A “perfect storm” for an affordable housing crisis?
       1. national mortgage crisis
       2. shortage of affordable units in Austin
       3. increasing utility costs

9:40 a.m.      Discussion

   •   How do we save deals that might fall through because of the lack of tax credit financing?
       “Soft money” from other funding sources can help. In Texas there are generally only two
       sources of funding for affordable housing projects. In other states it is common to have
       10-12 sources on one project. Sources like Austin’s general obligation housing bonds are
       being examined across Texas.
   •   Has TDHCA recently examined the housing tax credit criteria for Texas Region 7?
       (includes Austin)
       The formulas are examined each year based on Census data and other factors, but there
       have been no major changes in the Region 7 criteria in recent years. A case could be
       made that there are factors in Region 7 not currently being evaluated.

   •   Does the City’s zoning process prohibit tax credit deals?
       The Affordable Housing Incentives Task Force recommended tools to deal with zoning.
       S.M.A.R.T. housing also provides an ombuds service to assist developers in City’s
       zoning/permitting process.

   •   How does the bond market fit in?
       The Bond Review Board has not reviewed any multi-family deals yet this year. The flip-
       side of current market conditions is that there is currently plenty of bond funding
       available. Currently $25 million available in Region 7 and the statutory cap goes away on
       August 15. They have seen some for-profits moving away from housing tax credits to
       bond funding instead.

   •   How do syndicators encourage new tax credit investors? (telecommunications, energy)
       It’s an ongoing process, and now is not the best time for new investors not familiar with
       tax credits to get into the game. But in general syndicators are trying to diversify
       investors, although financial institutions will always make up a large portion.
       Fannie/Freddie has contributed 40-50% of all tax credits over the last decade.

   •   Can housing tax credits be applied to single-family rehabilitation projects?
       Yes, in some cases. There are scattered-site opportunities. Must be at least 16 units to

10:20 a.m.      Summary and Wrap-Up

Action Items:

   1) TDHCA review of Region 7 tax credit criteria (City of Austin; property managers,
      affordable housing stakeholders)

   2) Lobby to Pass Alternative Minimum Tax Bill—there is a bill being considered in
      Congress that would eliminate or revise the Alternative Minimum Tax so the large tax
      credit purchasers would come back into the market (associations/municipalities)

   3) Non-Profits: examine opportunities for purchasing general partnership interests in
      properties that will be ending 15-year affordability periods in the next few years (non-
      profit housing developers)

   4) Local Equity Funds: explore options for creating more local gap financing vehicles for
      affordable housing. Research how other states/regions develop local sources of “soft”
      money (City of Austin; financial institutions; housing stakeholders)

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