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

OHIO

BY JERRY ASCIERTO

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

COLUMBUS—The Ohio Housing Finance Agency (OHFA) will continue to reshape its qualified allocation plan (QAP) in 2008. In 2007, the agency moved to a more subjective allocation process by basing its awards on the strength of a project’s market and the developer’s level of experience and development capacity.

The agency began conducting site and market evaluations in 2007 to identify projects in superior markets and with the best amenities. OHFA staffers now visit the sites of proposed developments as part of their evaluation.

2007’s QAP awarded points for project design and amenities, site and market evaluation, affordability of units, and support of local government officials. But the 2008 QAP eliminates the local government support category because it proved ineffective in encouraging more affordable housing. "The value placed on this category in past years allowed local councils to decline affordable housing without regard for need in the market," said Kevin Clark, OHFA’s housing credit allocation manager.

Additionally, starting in 2008, the site and market evaluation portion of the QAP will no longer use a point system. "Applications will be ranked in order of preference based on the selection criteria, rather than assigned a numerical score," said Clark.

Applicants must now submit a narrative describing how their project will meet each of the selection criteria, and can accompany OHFA staff on site visits. The selection criteria includes experience developing affordable housing; experience using government-funded programs; an organization’s capacity to finish construction of all current projects on time; an organization’s financial capacity; and an organization’s standing with all OHFA programs.

The permanent supportive-housing pool was increased for 2008 to $500,000 in recognition of a statewide need for such housing.

Preservation continues to be a focus: OHFA has allocated between $5 million and $7 million to preservation projects each year for the past five years, and expects to make the same amount available next year. Properties with existing projectbased rental assistance will receive first priority in the state’s preservation pool.

OHFA will have more than $22.5 million of federal low-income housing tax credit (LIHTC) authority in 2008, a $200,000 increase over 2007. The maximum LIHTC award will be $1 million. OHFA expects the median equity amount per tax credit dollar to be 90 cents in 2008.

2007 LIHTC review
In 2007, more than $22.5 million in LIHTCs were reserved for 39 projects. They constituted 2,206 units, of which 2,175 were tax credit eligible. Ninety percent of tax credit units targeted those earning up to 60 percent of the area median income (AMI), with the remaining 10 percent targeting those earning up to 40 percent of the AMI.

Demand outpaced supply by more than 2 to 1, as approximately $51 million in LIHTCs were requested in 2007. More than half of the applications received in 2007 were for seniors housing, and OHFA awarded about $11.8 million for the creation or rehabilitation of such units.

The median award in 2007 was $578,182, and the median project size was 57 units. The median equity amount per tax credit dollar was 91 cents.

Tax-exempt bonds
Ohio will have about $975.6 million in private-activity bond volume cap in 2008. About $120 million of that will be set aside for rental housing allocations.

Ohio’s volume cap has always been allocated through a lottery process by the Ohio Department of Development (ODOD), but that will change in 2008.

In the past, there were no threshold requirements or scoring minimums for developers to receive bond allocations. But in times of scarcity, when demand exceeded supply, certain criteria were used to rank projects in the application pool, including:
• Preservation of existing affordable housing;
• The per-unit cost of a rehabilitation;
• Affordability;
• Energy efficiency;
• Property physical evaluation by a federal, state, or local government agency;
• The time-sensitive nature of the request;
• Local government support; and
• Capital funding from the Ohio Department of Mental Retardation and Developmental Disabilities, or the Ohio Department of Mental Health.

The state is working on establishing merit-based criteria to prioritize projects in 2008. ODOD expects to mirror the criteria it previously used in times of scarcity.

Bond application deadlines for ODOD’s three separate rounds are Feb. 1, May 1, and July 1, 2008.

2007 bond review
As of mid-October, the state had allocated about $114.4 million to multifamily housing for 16 projects (totaling approximately 2,000 units), and ODOD expected another $60 million to be allocated before the end of the year.

Preservation deals took the lion’s share of bond allocations in 2007, the majority of which involved older assistedhousing properties, such as those financed under Sec. 235 or project-based Sec. 8.

"We anticipate this trend toward preservation to increase over the next several years," said Jason Fisher, a credit analyst at ODOD.

Bond applicants can also find additional state funding from OHFA, which offers a $250,000 grant per project.

2008 LIHTC PROGRAM: