Billions of dollars in federal grants and tax incentives flowed to the Gulf Coast following Hurricanes Katrina, Rita, and Wilma, including more than $325 million in Gulf Opportunity (GO) Zone low-income housing tax credits (LIHTCs).
The good news is that 246 affordable housing developments with nearly 20,000 units have been placed in service in Alabama, Louisiana, Mississippi, Florida, and Texas as of July.
The bad news is that about 77 developments with another 6,000 housing units have not been completed and are in jeopardy of losing their credits as the program's placed-in-service deadline nears.
Sen. Mary Landrieu (D-La.) is pushing to extend the Jan. 1, 2011, deadline two years to give the remaining properties a shot at being completed. The extension is included in the American Jobs and Closing Tax Loopholes Act of 2010, better known as the tax extenders bill. The bill, which the Senate failed to pass by three votes in June, would also extend the Sec. 1602 LIHTC exchange program for a year as well as make the GO Zone credits eligible for the exchange program.
GO Zone credits have been critical in financing affordable housing development and rebuilding. With the most damage, Louisiana and Mississippi received the largest shares of authority, $170 million and $106 million, respectively.
The Louisiana Housing Finance Agency reserved its credits to 162 developments with more than 13,000 affordable units. In mid-July, 114 projects with more than 8,500 units had been placed in service, according to Brenda Evans, program administrator.
That leaves a large number of projects that haven't been completed, including some that have yet to close on their financing or commence construction.
The Mississippi Home Corp. (MHC) reserved its credits to 99 developments with 9,267 units. Only two projects have returned credits.
Overall, 75 GO Zone credit projects with 7,459 units had been placed in service, reported Dianne Bolen, MHC executive director, in June. Another four projects with 472 units were under construction.
However, 18 projects with 1,062 units had yet to start construction. Many of the proposed developments got caught in the recent economic downturn, and the developers saw their LIHTC commitments and investor interest disappear, says Bolen.
MHC made several moves to get the credits out and working.
“We decided to have multiple cycles over a short period of time,” says Bolen. “We were targeting whatever the needs were.”
They also had to do outreach in the coastal region, which had little LIHTC activity in the past. Housing in the area has traditionally been family-owned, single- family rental cottages. To educate the public about tax credit properties, MHC created a brochure explaining the type of apartments that were going to be built.
In another move, MHC worked with Gov. Haley Barbour in 2007 to create the Tax Credit Assistance Fund, which used Community Development Block Grant funds to provide additional financing.
The Alabama Housing Finance Authority reserved about $43 million in GO Zone credits to 65 developments with 4,178 units. Fifty developments with 3,293 units have been completed.
Florida and Texas each received $3.5 million in GO Zone credit authority.
The Texas Department of Housing and Community Affairs allocated its funds to seven properties with nearly 400 units. However, two projects with a combined 76 units returned credits. The remaining five deals have been completed.
Florida, which was hit by eight hurricanes during the 2004-2005 season, awarded GO Zone credits to two developments with a total of 226 affordable apartments. Both have been placed in service, reported Florida Housing.