ATLANTA—Low-income housing tax credits (LIHTCs) may soon be the latest tool used in revitalizing communities hard hit by foreclosures in Georgia.

In a new move, the Department of Community Affairs (DCA) is allowing developers to seek LIHTCs to rehabilitate vacant single-family homes into affordable rental units. This would be a change from the past when restrictions have largely prevented this type of development.

The move comes as Georgia had the fourth-highest foreclosure rate in the nation last year, with 2.71 percent of housing units (1 in 37) with at least one foreclosure filing in 2011, according to RealtyTrac, an online marketplace for foreclosed properties. Only Nevada, Arizona, and California had higher rates.

“It's had a devastating impact around the state,” says Joe Collums, policy analyst in the Office of Affordable Housing at DCA. “We wanted to consider how tax credits could play a constructive role in helping communities address this crisis.”

In its 2012 qualified allocation plan (QAP), DCA has loosened some of its restrictions for certain scattered-site developments that target communities most impacted by the foreclosure crisis.

To receive consideration, applicants must propose rehabbing single-family homes in a neighborhood that meets the federal Neighborhood Stabilization Program definitions or be in a neighborhood where at least 30 percent of the single-family housing stock is vacant, says Collums.

Developers must rehabilitate at least 20 single-family homes where no more than half of the homes are contiguous.

They must also provide evidence that the targeted neighborhood is part of a larger community revitalization plan, along with evidence of local government financial support and/or financial support from private institutions or foundations.

Applicants need to have a plan for acquiring site control for 100 percent of the proposed sites by the date of application. However, they would only need half of the sites under site control where the remaining 50 percent is under the control of a local land bank.

DCA is also calling on applicants to prepare a rehabilitation plan that includes general work scope, type and condition of property to be targeted, and identification of project-specific issues, for example if it is in a historic neighborhood. Developers must also have a tenant ownership or property disposition plan.

The QAP does not set aside a specific amount of LIHTCs for the rehabilitation of vacant homes, but it does allow DCA to make a reservation of credits or release restrictions on scattered-site development, says Collums.

Pre-applications are due March 15, and complete applications are due June 14. Another change is an increase in the amount set aside for preservation deals. DCA is committing 25 percent of its 9 percent LIHTC authority to preservation projects. That's nearly $6 million of the state's approximately $21 million in annual credits.