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

FLORIDA

BY LIZ ENOCHS

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

TALLAHASSEE—Florida officials are looking to boost their emphasis on green building, preserve more aging affordable housing developments, and aid projects using the Department of Housing and Urban Development’s HOPE VI program next year.

The state’s 2008 draft qualified allocation plan (QAP) for low-income housing tax credits (LIHTCs) keeps the main point categories the same, but makes some other significant changes. The QAP sets out goals for certain types of housing the state is looking to fund in order to maintain a diversified rental portfolio. For 2008, the Florida Housing Finance Corp. (Florida Housing) said it’s aiming to allocate LIHTCs to at least one HOPE VI development in addition to a minimum of one seniors development, two projects serving farmworkers or commercial fishing workers, and two urban infill developments. The HOPE VI targeting is new for 2008.

The QAP would also increase the state’s set-aside for projects that preserve affordable housing to $5 million from $4 million. That would give preservation projects roughly 14 percent of the state’s total projected $36.2 million in 2008 LIHTC authority. Florida’s projected LIHTC authority for the new year was reduced because officials forward-allocated $7.36 million in 2008 credits this year.

Although in some states, LIHTCs are becoming more of a preservation tool than an incentive for new housing production, Florida Housing is "working hard to maintain an even balance between preservation of existing developments and new construction developments," said the agency.

For 2008, Florida officials are also proposing the elimination of a $3 million set-aside for applicants that qualify for the Front Porch Florida Communities designation. The designation, which is part of a state program aimed at rebuilding distressed communities, signals that the community in question has met certain criteria, including developing anaction plan for improvement.

Florida Housing also added a green building section to its draft LIHTC application for 2008, offering developers five points if they elect to use at least 10 out of a list of 15 design options or features. Two requirements—those for documentation on the status of the development’s site plan, and for verification that it complies with zoning and land use regulations— will revert back to threshold requirements next year, according to Florida Housing.

The main point categories outlined in the draft LIHTC application are: optional features and amenities, which can earn a development up to 30 points; green features, which can add five points; resident programs, which can score up to 14 points; and local government financial contributions, which can garner five points. Florida Housing will also award up to 3.75 tie-breaker points to projects depending on their proximity to community amenities such as grocery stores, bus stops, or public schools. The maximum score an applicant can earn is 66.

Florida Housing expects its QAP to become final in January or February. Developers must submit applications by March 26, 2008, and reservations will be made on Sept. 26. The agency expects the median price paid per tax credit dollar for projects in the state to be 93 cents.

In 2007, the state reserved $38.1 million in 9 percent LIHTCs, about 20 percent of the total amount requested, which exceeded $182.3 million. The reservations will fund 17 projects with 1,449 units, of which 1,428 will be tax credit units. In 2006, the state reserved $56.7 million in both 4 percent and 9 percent LIHTCs, funding 7,026 tax credit apartments.

The overall number of tax credit units being built in the state is shrinking because of rising taxes and land costs, which mean more subsidy is required for projects that do get completed, according to Florida Housing.

The number of units to be funded with 2007 LIHTC reservations is less than a tenth of 14,695 units that received tax credit reservations just three years earlier, in 2004. That’s partly because of rising costs and partly because affordable housing production got a boost between 2004 and 2006 from almost $25 million in returned credits. The LIHTCs were returned by developers who couldn’t complete their projects as costs rose in the wake of several hurricanes that slammed the state, according to LIHTC program manager Jennifer Chester.

Although Florida does not have a state housing tax credit, it does have a housing trust fund, which is expected to make $124 million available to housing developments in 2008.

Tax-exempt bonds
Florida will have an estimated $1.54 billion in private-activity bond volume cap in 2008, and $360 million will be set aside for rental housing. Officials anticipate that they will see smaller developments next year, as well as more acquisition- rehabilitation and preservation projects. Rehab projects can earn additional points in the competition for taxexempt bonds, and can win higher perunit housing credits and higher developer fees.

Applications are due March 20, 2008, and will be taken on a first-come, first-served basis after that.

As of October, Florida Housing had awarded $162.9 million in tax-exempt bonds to 16 projects representing 2,103 units. At that time, 10 projects had received reservations of $5.5 million in 4 percent tax credits.

2008 LIHTC PROGRAM: