TAX CREDITS & TAX-EXEMPT BONDS: STATE-BY-STATE PREVIEW

ALASKA

BY DONNA KIMURA

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

ANCHORAGE—More stringent market study standards are required for low-income housing tax credit (LIHTC) projects in Alaska in 2008.

Developments receiving funds through the LIHTC program must have a market study completed by a third party that has been contracted directly by the Alaska Housing Finance Corp. (AHFC). A capital needs assessment must be prepared for all acquisition and acquisition-rehabilitation projects. In the past, developers contracted for the market studies on their own.

In Alaska, the major point categories include serving the lowest-income tenants, extended project use, community revitalization, development and operation supporting data, leveraging, project characteristics, and project location.

Overall, no major changes were made in the qualified allocation plan (QAP) for 2008, according to AHFC officials.

In addition to the required 10 percent set-aside for nonprofit organizations, Alaska has two other set-asides, 20 percent for the U.S. Department of Agriculture Sec. 515 and Sec. 538 program projects and for Department of Housing and Urban Development Sec. 8 project-based rental assistance projects that have contracts expiring.

Reservations are scheduled to be made Feb. 15, 2008. Applications were due Nov. 16, 2007.

Like several other states, Alaska anticipates growing interest in acquisition-rehabilitation deals in the future.

Looking back at 2007, AHFC said it reserved about $1.9 million in tax credits to four developments that will provide 133 LIHTC apartments and 160 units overall. All are new construction deals. The median award size was about $400,000, and the median project size was 25 units.

Sixty-five percent of the reservations went to nonprofit sponsors, and the rest went to public housing authorities.

When it comes to private-activity taxexempt bonds, AHFC officials reported that the debt-service coverage ratio will be 1.4x instead of 1.3x. Bond-financed projects that use 4 percent LIHTCs must meet the QAP thresholds.