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

IOWA

BY JERRY ASCIERTO

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

DES MOINES—The Iowa Finance Authority (IFA) has upped the maximum award total to $700,000 from $600,000 in its 2008 qualified allocation plan (QAP).

IFA has also established a new category, “underserved areas,” to its list of setasides for 2008. The set-aside pledges 10 percent, or approximately $581,500 of the state’s low-income housing tax credit (LIHTC) authority to developments in counties that aren’t located in a metropolitan statistical area and haven’t received LIHTCs in the last five years.

Additionally, the state made a change to its preservation set-aside, excluding any non-subsidized units from qualification and renaming it the "affordable preservation set-aside." Although about 25 percent of IFA’s annual tax credit authority goes toward preservation of older projects, the affordable preservation set-aside ensures a minimum level of such development each year, and contains 10 percent of the state’s overall LIHTC authority.

The QAP process will also become more user-friendly in 2008. IFA established a new grace period for developers to correct any deficiencies on their applications. Beginning in January, developers will be given 14 calendar days to respond to a deficiency letter.

IFA anticipates seeing fewer developments in qualified census tracts request LIHTCs in 2008, and more demand from developers pursuing homeownership and mixed-income housing developments, according to Dave Vaske, IFA’s LIHTC manager.

In 2007, IFA awarded $5.8 million in 9 percent tax credits, though more than twice that amount, about $13.1 million, was requested. In all, 14 projects representing 620 tax credit units received LIHTCs in 2007.

Acquisition-rehabilitation deals won the overwhelming majority of the credits, about 81 percent. A little more than a quarter of all credits went toward units for the physically or mentally disabled.

The median tax credit award was $500,000, and the median project size was 45 units.

Iowa expects to have a statewide taxexempt private-activity volume bond cap of $260 million in 2008, and plans to set aside between $20 million and $30 million for rental housing in 2008.

In 2007, Iowa allocated $52 million in bond financing to multifamily projects for five developments representing 1,025 units. The state’s total 2007 volume cap was about $256.2 million.

2008 LIHTC PROGRAM: