CLASS would like to welcome guest blogger James Vanar, a Senior Director with Love Funding to weigh in on the effects that LIHTC properties will have on the Multifamily market in 2013. Thanks for stopping by James.
“You’ve heard of the “fiscal cliff,” but what about the “LIHTC ledge”? Over the next eight years, more than 1 million apartment projects backed by low-income housing tax credits could leave the affordable housing stock. That’s according to the worst-case scenario laid out in a new study commissioned by the Department of Housing and Urban Development (HUD). Here’s the gist: A wave of LIHTC properties established between 1995 and 2009 are reaching the end of their restriction periods, giving their owners the opportunity to convert those properties back into market-rate units if they wish.
Committed to fulfilling its mission of supporting the nation’s affordable rental housing stock, HUD has gone to great lengths nationwide to implement significant application processing improvements. These changes are enhancing an already very attractive financing option for multifamily properties. The agency’s latest move is worth calling out in particular, especially for those who have been attracted to HUD’s non-recourse loan programs but frustrated in the past by its lengthy underwriting and processing timeframes.
Last year, HUD unveiled a new pilot program to test an accelerated approval process for the purchase or refinance of affordable multifamily rental properties. The program has been such a success that HUD recently expanded it nationwide, and some applicants are receiving HUD commitments in less than 45 days. These shortened time periods have been a boom for LIHTC project acquisitions as they pave the way for sellers to accept reasonable financing contingencies.
The LIHTC program is perfect for any owner or developer looking to refinance or acquire properties of three key types: affordable housing projects with 90% or more of the units covered by Section 8, older properties that had LIHTCs that are now re-syndicating with new LIHTCs, or newly constructed properties that have LIHTCs and are stabilized. If you’re unsure whether your project applies, feel free to contact James at (949) 215-1682 or firstname.lastname@example.org.”