Press Contact Only:
Margaret Matrone, NCHFA, 919-877-5606
North Carolina will gain $173 million of affordable rental housing as the result of funding awarded to 49 apartment developments today (August 30) by the Tax Reform Allocation Committee and North Carolina Housing Finance Agency. The developments will provide 2,059 apartments, 477 of which will be built in counties affected by Hurricane Floyd. Approximately half the units are designated for elderly persons and half for working families.
The developments will receive $11.5 million of federal Housing Credits, as approved by the Committee, which consists of Secretary of Commerce James Fain, State Treasurer Richard Moore, and State Budget Officer David McCoy. Twenty-three developments will also get low-interest loans from the state’s Housing Trust Fund and federal HOME Program. Those loans were approved Thursday morning by the N.C. Housing Finance Agency’s board of directors. Most of the developments will also use state income tax credits, as approved by the General Assembly in 1999.
The 49 developments were selected from an original field of 166 proposals, of which 112 completed the two-stage application process. The N. C. Housing Finance Agency evaluates the properties on behalf of the committee, beginning with independent site and market studies of each property, site visits by agency staff, and invitations for comments by local governments. Each property is also rated for rent affordability, financial structure, capability of the development team, special targeting by location or population, and architectural design.
The federal Housing Credit Program finances virtually all of the affordable rental developments now being built nationwide. Housing Credits were an important source of flood rebuilding last year, when the N.C. Housing Finance Agency held an early funding cycle in flood counties for year 2000 credits to finance 473 new apartments, almost all of which are now in service. Since 1987, more than 32,200 privately-owned apartments have been built statewide using Housing Credits.
Owners of Housing Credit properties agree to keep rents affordable for tenants earning 60 percent of the local median income, usually for 30 years. Properties receiving loans must be affordable at 50 percent of median. For a family of four, 50 percent of median income ranges from $20,750 in non-metropolitan counties to $33,050 in the Triangle.
To make the properties economically viable at these rent levels the owners are allowed to take a credit on their federal income tax of 9 percent of the eligible costs, for a period of 10 years. Properties that receive federal credits are also eligible for a credit against state income tax of 25 percent or 75 percent of the federal credit amount. The larger state credit applies to developments in economically distressed or flood-impacted counties. Usually, the tax credits are sold--syndicated—before the property is built, and the proceeds are used to reduce the amount of debt that is needed.
Congress authorized states to issue Housing Credits at a rate of $1.50 per capita in 2001; and the rate increases to $1.75 per capita in 2002. Congress increased the amount in 1999 to compensate for inflation since the program began in 1987.
The N.C. Housing Finance Agency is a self-supporting public agency created by the General Assembly in 1973. The Agency receives no state tax funds for its operating expenses. It has financed more than 120,000 affordable homes and apartments.