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

GEORGIA

BY LIZ ENOCHS

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

ATLANTA—Georgia expects to see projects that preserve existing affordable housing properties take up a larger share of its low-income housing tax credit (LIHTC) authority over the next couple of years, as the number of properties aging out of their LIHTC restrictions rises.

“We are just beginning to see preservation as a substantial part of our allocation,” said Fenice Taylor, manager of affordable housing development for the Georgia Department of Community Affairs, which manages the state’s LIHTC program.

About $4.5 million, or almost 27 percent of the 9 percent LIHTCs state officials reserved, went toward the preservation of older projects in 2007. That’s up from about 15 percent the previous year, according to data reported by state officials in 2006.

Georgia’s draft 2008 qualified allocation plan (QAP) contains no major changes from the previous year’s QAP, Taylor said. The major point categories are project location, income and special needs targeting, development strategies, financial assistance and leveraging of resources, preservation of affordable housing, and architectural enhancements. The last category for the first time introduces points for energy efficiency and indoor air quality (14 points), and certification through the Leadership in Energy and Environmental Design standard (4 points). The maximum possible score is 192 points.

In 2007, developers requested $28 million in LIHTCs from the state, and Georgia reserved $17 million to 47 projects representing 1,999 tax credit units and 2,487 units in total.

About $11.2 million went to family projects, $6.3 million to seniors projects, $7.3 million to rural projects, and almost $676,000 to developments serving the homeless.

Rural projects were in the highest demand. "Approximately half of the population of the state lives in rural Georgia,"said Taylor. "There is little funding available in these areas as effective as LIHTCs, and therefore the LIHTC funding is highly sought after in rural Georgia for housing development."

Georgia also has a state tax credit, which is expected to equal its federal LIHTC authority in 2008, at $18 million. That's also the amount Georgia reserved in state tax credits in 2007.

The state did not use its entire LIHTC authority for 2007, reserving $17 million out of the $24.3 million it projected it would have. That was "due to a lack of HOME funds to meet the funding constraints of the developments," said Taylor.

The median tax credit reservation in 2007 was $538,000 and the median project size was 73 units. The average reservation per unit was about $8,500 for 2007, an increase of more than a third from the $6,300 average in 2004.

"Higher development costs and the availability of affordable multifamily zoned land that is economically feasible to build on is decreasing the number of LIHTC units constructed each year in many areas," said Taylor.

Tax-exempt bonds
Georgia expects to have $796 million in tax-exempt volume cap for private- activity bonds in 2008. About 40 percent of that, or $338 million, will be set aside for all types of eligible housing projects.

In 2007, the state allocated $109 million in tax-exempt bonds to five multifamily projects; the number of units for these projects was unavailable. Three of the projects received reservations of 4 percent tax credits totaling $2.7 million. State officials expect to see fewer multifamily applications and more small-issue industrial development and solid waste disposal bonds in 2008.

2008 LIHTC PROGRAM: