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

KENTUCKY

BY DANA ENFINGER

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

FRANKPORT—Projects centered on preservation of existing housing stock and green construction methods will be the focus of the Kentucky Housing Corp.’s (KHC) 2008 qualified allocation plan.

"We are awarding increased points for [green] housing," said Thomas Wolfe, tax credit allocation manager. "We are going to emphasize preservation projects, especially in Rural Development projects."

Also, a focus will remain on specialneeds housing, as it did in 2007, he said.

In 2008, KHC plans to reserve $8.2 million in low-income housing tax credits (LIHTCs).

The maximum LIHTC award in Kentucky for 2008 is $800,000. The application deadline is Jan. 7, 2008, for the first round, and the round one reservation date is June 13.

In 2007, developers requested more than $12.2 million in 9 percent LIHTCs, and nearly $8.4 million was reserved. Twenty-five projects received allocations in 2007, representing 1,025 tax credits units out of a total of 1,029 units. The median tax credit award was $250,000, and the median project size was 40 units. New construction projects made up 80 percent of the developments receiving allocations. The remaining allocations went to acquisition-rehabilitation projects. Most of the 2007 allocations—63 percent—went to developments in Kentucky’s rural areas. Joint ventures and for-profits dominated the competition for allocations in 2007. Nonprofits only received 5 percent of allocations, and public housing authorities received 1 percent.

The increased cost of construction in general, coupled with the increased cost of units for people with special needs, are the biggest challenges facing affordable housing developers, said Wolfe.

The estimated tax-exempt privateactivity bond volume cap will not be known until February 2008, according to Walter Claire, senior director of financial management for KHC. In 2007, $223 million in bonds was issued. Almost $46 million was used to finance six multifamily projects with a total of 959 units.

2008 LIHTC PROGRAM: