Transcription of Affordable Housing Finance and LIHTC 101 Powerpoint.ppt
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Affordable Housing Finance and LIHTC 101 Powerpoint.ppt
BASIC AFFORDABLEBASIC Affordable Housing Finance AND LOW- income Housing TAX CREDITSS eptember 2012 With gratitude to Kathleen FostergPublic Housing Finance TodayTodayConventional Public Housing Finance :g Capital and operating fund based on formula Operating Fund is break-even, at-best Capital Fund supplementsCapital Fund supplements No NOI No ability to convert NOI into up-front debt Developments owned directly by PHA=syndication not possibleDevelopments owned directly by PHA syndication not possible Even with mixed- Finance technique, no ability of PH units to support debt2 Why RAD?Why RAD?RAD: Takes public Housing units out of the operating and capital funding paradigm Converts both layers of subsidy into a single subsidyyygy Ownership through single-purpose entities allows for TC syndication possible Positive NOI attainable, thus, project has ability to support debt PHA, as sponsor, can compete for other sources of funding, such as HOME, FHLB PHA has potential to earn developer fees and property tfmanagement fees PHA can continue to control ownership of project3 Overview Private Finance
The Tax Credit ProgramThe Tax Credit Program A housing subsidy program for low-income rental housing C t d ithi S ti 42 f th I t l R C dCreated within Section 42 of the Internal Revenue Code A fedeede a co e ta c ed t t at s a ocated by eacral income tax credit that is allocated by each state’s housing finance agency
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