AFFORDABLE HOUSING FINANCE -BOULDER, CO-

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1 AFFORDABLE HOUSING FINANCE -BOULDER, CO-

2 TAX CREDITS 101 An introduction to the Low-Income Housing Tax Credit (LIHTC) Program

3 The LIHTC program was created in 1986 to replace direct subsidies from the Federal Government for affordable housing

4 LIHTCs incentivize private investment in affordable housing by offering a dollar for dollar tax credit against investor s federal tax liability

The Federal Government allocates low-income

population Housing developers must then apply

credits This capital means less $$ to borrow,

then enter a partnership with investors,

5 The Federal Government allocates low-income housing tax credits to States based on population Housing developers must then apply to State Housing Finance Authorities for tax credits This capital means less $$ to borrow, and thus lower rents are possible Developers then enter a partnership with investors, allocating tax credits to raise capital for affordable housing

To qualify for tax credits Tax credit deals must have aggressive market studies Tax credits are received over time based on performance Housing must meet a high

6 To qualify for tax credits Tax credit deals must have aggressive market studies Tax credits are received over time based on performance Housing must meet a high standard for occupancy and be rented to low income households for investors to receive their credits This encourages high-quality management and property upkeep

7 2017 9% Low-Income Housing Tax Credits $30,000,000 applied for $12,800,000 awarded

8 29% - Average % of AMI for LIHTC residents in CO $32,580 Annual income for a 4-person household at 29% AMI in Boulder County. In Colorado 26% of LIHTC developments serve seniors 7% of LIHTC developments serve homeless populations 72% of LIHTC developments serve families 86% of LIHTC developments are located in urban areas 14% of LIHTC developments are located in rural communities

9 HOUSING DEVELOPMENT PROCESS How affordable housing gets built. From acquisition to completion.

10 SIX MAJOR STEPS TO REAL ESTATE DEVELOPMENT SITE FEASIBILITY+ACQUISITION ASSEMBLE TEAM+ENGAGE STAKEHOLDERS CONCEPT+ENTITLEMENTS DUE DILIGENCE +FINANCIAL CLOSING CONSTRUCTION PROJECT COMPLETION+TRANSITION

11 TIMELINE YR 1 YR 5 SITE FEASIBILITY ENGAGE STAKEHOLDERS ACQUISITION DESIGN FINANCIAL CLOSING COMPLETION ASSEMBLE TEAM DUE DILIGENCE ENTITLEMENTS CONSTRUCTION TRANSITION

12 COFFMAN STREET CASE STUDY

13 Entitlement Risk Affordable housing developer typically pays all costs associated with predevelopment. Time is money impacts of long entitlement process Loss of tax credits Interest rate risk Construction pricing increase Design cost increase

14 How can local governments support housing? Item Typical process Longmont process Benefit Planning/building permit review Height/Density bonus months Expedited review (target to cut review time in half) Planning Commission/City Council approval. Staff approval for specific zone districts. Fee waivers City Council approval Defined in land development code. Less risk, more competitive funding applications. Less risk, more certainty when putting deal together. Certainty when building proforma, local match already met. Reduce risk: streamline review process, empower planning staff, codify zoning incentives. Increase certainty: Define fee waivers, remove unnecessary approvals, as much byright as possible.

15 Guiding Principles Need Portfolio Balance Equity Sources Neighborhood Mix

16 Who We Serve

17 Unit Count & Resident Income 60% AMI, 350 Units Breakdown of BHP s restricted units by AMI 50% AMI, 288 Units 30% AMI, 216 Units BHP s Affordable Units 40% AMI, 95 Units 45% AMI, 17 Units <=30% AMI 30-40% AMI 40-50% AMI 50-60% AMI [CATEG ORY >80% NAME] AMI BHP s Current HH AMI levels

18 60% AMI Project 50-Unit Project SOURCES Debt 4% and State LIHTC City of Boulder Outside Grants USES Land Hard Costs Soft Costs $ 5,500,000 $ 8,500,000 $ 4,100,000 $ 1,000,000 $19,100,000 $ 5,000,000 $10,000,000 $ 4,100,000 $19,100,000 $82,000/unit $382,000/unit

19 30% AMI Project SOURCES Debt 4% and State LIHTC City of Boulder Outside Grants $ 0 $ 8,500,000 $ 4,100,000 $ 1,000,000 $13,600,000 $82,000/unit $382,000/unit 50-Unit Project USES Land Hard Costs Soft Costs $ 5,000,000 $10,000,000 $ 4,100,000 $19,100,000 GAP: $5,500,000

20 30% AMI Project Plugging the Gap 50-Unit Project SOURCES Debt 4% and State LIHTC City of Boulder Outside Grants USES Land Hard Costs Soft Costs $ 0 $ 8,500,000 $ 9,600,000* $ 1,000,000 $19,100,000 $ 5,000,000 $10,000,000 $ 4,100,000 $19,100,000 $192,000/unit $382,000/unit *typical annual City funding available: $6-$7 million

21 30% AMI Project 9% Project SOURCES Debt 9% LIHTC City of Boulder Outside Grants $ 0 $12,100,000 $ 6,000,000 $ 1,000,000 $19,100,000 $120,000/unit $382,000/unit 50-Unit Project USES Land Hard Costs Soft Costs $ 5,000,000 $10,000,000 $ 4,100,000 $19,100,000

Density Matters - Scaling Up 50 UNIT PROJECT 60 UNIT PROJECT SOURCES AMOUNT SOURCES AMOUNT Bonds $5,500,000 Bonds $7,200,000 9% LIHTC $11,000,000 9% LIHTC $12,400,000 City of Boulder $1,900,000 City

22 Density Matters - Scaling Up 50 UNIT PROJECT 60 UNIT PROJECT SOURCES AMOUNT SOURCES AMOUNT Bonds $5,500,000 Bonds $7,200,000 9% LIHTC $11,000,000 9% LIHTC $12,400,000 City of Boulder $1,900,000 City of Boulder $1,700,000 Outside Grants $700,000 Outside Grants $700,000 TOTAL $19,100,000 TOTAL $22,000,000 USES AMOUNT USES AMOUNT Land $5,000,000 Land $5,000,000 Hard Costs $10,000,000 Hard Costs $12,400,000 Developer Fee $1,200,000 Developer Fee $1,300,000 Soft Costs $2,900,000 Soft Costs $3,300,000 TOTAL $19,100,000 TOTAL $22,000, more units!

23 PROJECT TRANSACTION SUMMARIES

24 Palo Park New Construction 4% LIHTC State Tax Credit 35 units 10 units - 60% AMI 12 units 50% AMI 8 units 40 % AMI 5 units 30% AMI

25 Palo Park Transaction Summary

26 Tantra Lake 2017 Acquisition City Partnership 185 Units Mixed Income 75 units- 60% AMI 110 units--market

27 Tantra Lake Transaction Summary

28 AFFORDABLE HOUSING FINANCE -BOULDER, CO-

DISABILITY HOUSING NETWORK LOW INCOME HOUSING TAX CREDIT DEVELOPMENT

DISABILITY HOUSING NETWORK LOW INCOME HOUSING TAX CREDIT DEVELOPMENT OCTOBER 24, 2012 OHIO CAPITAL CORPORATION FOR HOUSING OCCH s mission is: to cause the construction, rehabilitation, and preservation