CHICAGO—The Illinois Housing Development Authority (IHDA) has made some significant changes to its 2008-2009 qualified allocation plan (QAP), revamping its setaside categories and offering incentives for lower-income targeting and green building techniques.
IHDA will have $22 million in lowincome housing tax credit (LIHTC) authority in 2008, but that’s not the only source of funds available to affordable housing developers working in the state.
Illinois has its own tax credit program, the Illinois Affordable Housing Tax Credit, which is expected to total $17.4 million in 2008. The state also features an affordable housing trust fund, which awarded $62.4 million in 2007, and should have a similar amount to dole out in 2008.
The maximum LIHTC award for 2008 will be $1.5 million.
Next year, IHDA is proposing to give more resources to supportive housing for the homeless and disabled, by making supportive housing its own category in the 2008-2009 QAP.
In the past, supportive housing was included in the special-needs category, and supportive-housing developments had to compete with supportive-living facilities for the elderly. But the proposed 2008-2009 QAP includes a "supportive housing population," set aside, defined as developments where at least 50 percent of the units are affordable to and occupied by populations in need of supportive housing, and where at least one service provider is specified.
The elderly set-aside is now the "independent elderly and supportiveliving facilities" set-aside, and the special needs set-aside is now known as "supportive housing populations."
Additionally, IHDA has re-ordered the set-asides. In the past, small public housing authorities had to compete with the largest authorities for tax credits. But the new set-aside categories offer a distinction between large public housing authorities ($3 million) and small public housing authorities ($2 million).
The other set-aside categories are:
• Independent elderly and supportive- living facilities ($3.5 million);
• Nonprofit ($3.3 million);
• Small project ($1.5 million);
• Preservation ($2 million); and
• Supportive-housing populations ($2 million).
Income targeting and accessibility
The state’s 2008-2009 QAP will feature increased incentives for developers to target the lowest income tenants, or those below 30 percent of the area median income (AMI), as well as supportivehousing populations.
Developments that have 10 percent or more of their units occupied by those earning up to 30 percent of the AMI can win two additional points in the "lowest income tenants" category; and can receive three more points for serving extremely low income supportive-housing populations.
The new QAP also features incentives for projects that increase accessibility for those with mobility impairments. Two points will be awarded to projects that exceed the minimum accessibility requirements of federal law. Projects not subject to federal accessibility standards will receive two points if at least 5 percent of their total units are designed for people with mobility disabilities.
Green building initiatives
The 2008 QAP also has increased incentives for including energy efficiency and green initiatives in building design. For the first time, IHDA has created a Green Initiatives guidebook that outlines categories for earning "green points," which lead to earning tax credit points on the QAP.
There are four main categories in the guidebook, two of which relate to multifamily development. Multifamily new construction projects can earn up to 707 possible green points, and rehabilitation projects can earn up to 691 green points. To earn one tax credit point, a project must earn 150 green points; to earn two tax credit points, a project must earn 200 green points; and to earn the maximum three tax credit points, a project must earn 250 green points.
Some of the criteria found in the guidebook include reusing storm water on the site; using Energy Star-labeled materials and fixtures; installing a geothermal heating system; and using recycled building materials.
Income targeting points
The main point categories will remain the same in the 2008-2009 QAP, as will threshold requirements. The points awarded for income targeting have changed. In the past, projects with 5 percent to 10 percent of their units serving those earning up to 30 percent of the AMI scored only two points. Now, projects will receive five points if 10 percent of their units serve those earning up to 30 percent of the AMI.
The new point structure also awards four points if 10 percent of units target those earning up to 40 percent of the AMI, and developers can also score four points if 10 percent of their units target those earning up to 50 percent of the AMI.
In the past, developers had to double those percentages (to 20 percent of a project’s units) to win five points in each category.
Operating expenses increased
The only change in underwriting standards in the 2008-2009 QAP is an increase in allowable operating expenses to $3,000 to $5,000 in non-metro areas, and $4,000 to $6,000 in metro areas. In the past, operating expenses had to be within a range of $2,700 and $4,500.
2007 recap In 2007, more than $21.5 million in 9 percent tax credits were reserved, as demand outpaced supply by about 3 to 1. In all, 31 projects received LIHTC reservations, totaling 2,052 tax credit units out of 2,464 total units funded.
New construction won the bulk of credits at $18.5 million, and seniors housing took a third of all credits, at more than $7 million.
Multifamily housing in rural areas also took a large share, accounting for $6.6 million of 2007 reservations. Housing for the physically and mentally disabled, as well as for those with AIDS, was awarded more than $4.6 million in 2007.
The median award was almost $693,925, and the median project size was 79 units. The most oversubscribed set-asides were those for nonprofits and small projects, and the most undersubscribed were for public housing authorities.
As of press time, IHDA was unsure how much private-activity tax-exempt bond cap it would have in 2008. The agency encourages developers to apply for tax-exempt bond financing, particularly for preservation projects, because the bond financing allocation process is non-competitive and 4 percent tax credits work well in preservations deals, IHDA said.
2008 LIHTC PROGRAM:
- 2008 LIHTC authority (est.): $22 million
- Application deadlines: April 7, 2008
- Web: www.ihda.org