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<br /> <br />1730 MADISON ROAD • CINCINNATI, OH 45206 • 513 861 5400 • FAX 513 861 3480 MANAGEMENTPARTNERS.COM <br /> 2107 NORTH FIRST STREET, SUITE 470 • SAN JOSE, CALIFORNIA 95131 • 408 437 5400 • FAX 408 453 6191 <br /> 3152 RED HILL AVENUE, SUITE 210 • COSTA MESA, CALIFORNIA 92626 • 949 222 1082 • FAX 408 453 6191 <br /> <br />SUMMARY OF AFFORDABLE HOUSING DEVELOPMENT <br />PUBLIC FINANCING PROGRAMS <br />4-6-16 <br /> <br /> <br />MULTI – FAMILY BONDS <br /> <br />State and local governmental agencies and joint powers authorities can issue tax-exempt <br />housing revenue bonds. These bonds assist developers of multifamily rental housing units to <br />acquire land and construct new units or purchase and rehabilitate existing units. The tax- <br />exempt bonds lower the interest rate paid by the developers. The developers in turn produce <br />market rate and affordable rental housing for low and very low-income households by reducing <br />rental rates to these individuals and families. Projects that receive an award of bond authority <br />have the right to apply for non-competitive 4% tax credits. <br />Bond authority for Rental Projects is awarded through a competitive process to three sub-pools: <br />the General Pool (Projects having more than 50% of total units designated as Restricted Rental <br />Units); the Mixed Income Pool (Projects having 50% or fewer of total units designated as <br />Restricted Rental Units); and the Rural Project Pool (Projects located in a rural area). There is a <br />state limit on the amount of bonds that can be sold annually. <br /> <br />TAX CREDITS <br /> <br />Congress created the federal Low Income Housing Tax Credit Program in 1986. It replaced <br />traditional housing tax incentives, such as accelerated depreciation, with a tax credit that <br />enables low-income housing sponsors and developers to raise project equity through the sale of <br />tax benefits to investors. Two types of federal tax credits are available and are generally referred <br />to as nine percent (9%) and four percent (4%) credits. These terms refer to the approximate <br />percentage of a project’s “qualified basis” a taxpayer may deduct from their annual federal tax <br />liability in each of ten years. <br />For 2015, each state has an annual housing credit ceiling of $2.30 per capita for 9% Low Income <br />Housing Tax Credits. Nine percent credits are allocated on a competitive basis so that those <br />meeting the highest housing priorities and public policy objectives, as determined by the <br />Committee, have first access to credits. <br />Developments financed with the proceeds of tax-exempt bonds may also receive federal tax <br />8.A - Page 4