Alabama finalizes QAP, eyes Katrina recovery

MONTGOMERY, ALA. Alabama,one of the states struck by Hurricane Katrina, will have about $8.4 million in annual federal low-income housing tax credit (LIHTC) authority to distribute to housing developers in 2006.

Tax credits are expected to be one of the key financing tools used in the disaster recovery.

The $8.4 million is the regular LIHTC authority. Alabama and other Gulf States are expected to receive additional federal housing credits for hurricane recovery. (See article, page 18.)

The Alabama Housing Finance Authority (AHFA) recently finalized its qualified allocation plan (QAP) for the distribution of its 2006 credits, noting the monumental housing shortage created throughout the region by the hurricane. Some 23 counties in the state have been declared eligible for federal disaster assistance. AHFA said it expects to take advantage of all waivers and programs made available by the Internal Revenue Service, Department of Housing and Urban Development and other agencies.

The LIHTC application deadline is Feb. 27 through March 3. Reservations would then be made around June.

In early January, AHFA was anticipating all applicants to participate in the funding round, but the QAP notes that the agency may distribute credits without the use of the application cycle or scoring system to projects eligible for special action related to the hurricane.

In the past, the agency has deducted points for projects in counties that have been funded in the past three years. This was to help distribute credits across the state. AHFA, however, will waive the point deductions in the disaster areas, according to Barbara Wallace, housing credit/HOME coordinator.

Another new move in the 2006 QAP is the creation of an “energy conservation and healthy living environment” category. A maximum of 12 points is available. Several of the elements in this category have existed before, but they have now been assembled in one area of the allocation plan. For more information, visit www.ahfa.com.

One of the latest LIHTC properties to open in Alabama is Amesbury Apartments, a 56-unit development that is providing affordable housing for low- and moderate-income individuals who are 55 years or older in Pell City.

Rents at the development range from $280 for a one-bedroom unit to $350 for a two-bedroom, two-bath apartment. Three units are for physically disabled residents.

Developed by William Dinsmore, president of Alabama-based Housing Investors, Inc., the brick complex features 12 buildings and is close to health facilities, stores, churches and banks.

The project was financed with $1.7 million in HOME funds, according to AHFA. As a result, 40% of the units are reserved for residents earning no more than 50% of the area median income (AMI) and 60% of the apartments are reserved for tenants earning no more than 60% of the AMI.

To stretch the HOME funds, AHFA combined it with $376,956 in LIHTCs, reported the agency. Compass Bank of Decatur provided $259,450, and the Federal Home Loan Bank of Atlanta’s Community Investment Program provided $50,000.

Dinsmore is also a member of Housing Developers, LLC, which recently developed the Windscape Apartments, an 84-unit affordable development in Athens, Ala. This 15-building project features a one- and two-story townhouse design and was financed with approximately $649,900 in 9% LIHTCs. Amenities at the development include a swimming pool, extended playground and exercise facility.

 

Stephen Auger worked his way up to the position of executive director of the Florida Housing Finance Corp. after five years at the agency, most recently serving as deputy development officer of multifamily programs.

He took over the top post in August 2005 after former executive director Orlando Cabrera left to become assistant secretary at the Department of Housing and Urban Development.

Auger shares with Affordable Housing Finance how his state will help provide the funds and land needed for affordable housing. Florida Housing will allocate about $33 million in low-income housing tax credits this year.

Q What are some challenges you are facing with financing affordable housing? How are you dealing with them?

A In the last couple of years, we’ve dealt with land, construction and insurance costs. We’re being challenged to think about growth-management issues.

A lot of counties and urban areas are built out. There’s a big growth-management initiative … that will be implemented now. It creates a lot of funding for growth management, requiring local governments to be thoughtful about zoning and density, to think about roads, schools and affordable housing needs.

Q How is hurricane recovery changing your priorities?

A One of the silver linings of the storm is that it raised affordable housing issues for a lot of communities. A lot of local elected officials became aware of its importance, which translated to a lot of support and extra funding for affordable housing last year. We got an extra $350 million.

[Gov. Jeb Bush was proposing at press time to increase funding for Florida Housing’s affordable housing programs by 26% to $243 million next fiscal year, which starts Oct. 1.]

Q What trends are you seeing in affordable housing in your state?

A There’s certainly concern about costs rising and incomes not keeping pace. Gaps in financing structures are getting wider, requiring more subsidy per unit. For us, that means fewer units.

The good news is that will force us to be more creative. We will look at recommendations for more comprehensive preservation strategies [such as creating community land trusts with HOME dollars].

For the 2006 tax credit cycle, we raised the request limit for 9% tax credits by about 5% [to $2.5 million per project]. Most areas damaged by Hurricane Wilma will get a 30% boost to their eligibility basis.

Q Some developers say that it’s been more difficult to finance with tax-exempt bonds. Do you agree?

AIt’s true we currently have a lot of unused bond authority. It goes with the increase in costs and no increase in incomes. It’s harder to support debt.

In the last couple of years, we have paired state dollars from the State Apartment Incentive Loan (SAIL) as gap financing. We’re looking to make SAIL loans more flexible with rates and loan-to-value ratios to make those second mortgages more useful in using 4% tax credits.

High construction cost areas may still not be feasible to use tax-exempt bonds. With these changes, [at least] many other areas will be feasible to do bond deals.

[The] legislature is proposing a Rental Recovery Loan Program again this year. Funded from state housing trust fund dollars, it’s designed to work with bonds [especially in hurricane-affected areas]. Last year, the program got $42 million. The governor will recommend $176 million in the next legislative session for counties affected in 2004 and 2005.