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

UTAH

BY DANA ENFINGER

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

SALT LAKE CITY—The most interesting trend to emerge in Utah’s lowincome housing tax credit (LIHTC) program is the increase in rehabilitation projects, said W. Robin Kemker, Utah Housing Corp.’s (UHC) senior tax credit analyst.

Preservation is becoming more critical all across the nation, and LIHTCs are being used as a preservation tool in Utah.

Roughly half of Utah’s annual tax credit authority goes toward the preservation of older projects, said Kemker. "We consistently see U.S. Department of Agriculture’s Rural Development (RD) and Department of Housing and Urban Development (HUD) projects coming in for preservation each round."

Developers attempting new construction in Utah face two big challenges, said Kemker: construction costs and NIMBYism.

All applications received for 2008 have indicated they are going for Energy Star certification, said Kemker. The certification is mandatory for new construction, and UHC awards points for rehabilitation projects incorporating Energy Star enhancements. State energy credits and LIHTCs are available for developments using solar voltaic energy, said Kemker.

No major changes were made for 2008’s qualified allocation plan (QAP), other than a change in threshold requirements. The period for which projects are now required to maintain affordability is 99 years. Previously, projects were awarded a range of points depending on how long they remained affordable. UHC didn’t require projects to stay affordable for a certain number of years in its 2007 QAP.

Developers requested $7.9 million in LIHTCs in 2007, and about $6.1 million was reserved. Twenty developments, consisting of 522 tax credit units, received 2007 reservations. The median project size was 44 units, while the median tax credit award was $317,600.

The set-aside for nonprofits was the most oversubscribed in 2007 because these developments are preserving RD and HUD projects that typically compete very well in UHC’s scoring system.

The tax-exempt private-activity bond volume cap is estimated to be $256.2 million. About $30.8 million will be set aside for rental housing allocations. In 2007, one multifamily project consisting of 81 units received bond financing.

2008 LIHTC PROGRAM: