Shifting Policies: Maryland, Pennsylvania Report Changes to LIHTC Programs

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Pennsylvania has made and Maryland is proposing major changes to their federal low-income housing tax credit programs this year, officials told a Washington, D.C. conference held by the National Council of Housing Market Analysts and National Housing & Rehabilitation Association.

David Evans of the Pennsylvania Housing Finance Agency (PHFA) and Pat Sylvester of the Maryland Department of Housing & Community Development (DHCD) talked about their agencies’ LIHTC program, along with other state agencies, on a panel held April 2.

Pennsylvania Program

Evans reported that PHFA has departed from tradition in its 2013 LIHTC program by holding two application rounds rather than one and changing the categories of competition. The first round, with an application deadline of November 2, 2012, was limited to applications for proposed projects in urban areas from throughout the state. The second, with applications due February 13, 2013, was limited to applications for suburban and rural projects. An equal amount of credits – about $16.1 million – was reserved for each round.

In the past, Evans explained, applications for projects within the same geographic region of the state – six in all – competed against one another. For example, he said, a rural project in a county south of Pittsburgh would compete – with great difficulty – against a high-impact project in the city of Pittsburgh.

“Now all urban deals across the state are competing against one another, and the same with the suburban/ rural deals,” he said. “We’ve found it to be much more competitive, and also much more of an apples-to-apples comparison in both market and in the type of things we expect to see in that development. It’s worked out quite well.”

PHFA announced Urban Cycle awards to 17 projects in mid-March, and received applications for 78 projects requesting $75.1 million in credits in the Suburban/Rural Cycle in February.

“We saw a massive increase [in applications], especially in our Suburban/Rural round,” said Evans.

He said another change is the decision to make credit awards, from among the highest-ranking applications, to three general occupancy projects, two projects for seniors 62 years or older with services, and three preservation deals.

Maryland Program

Sylvester said DHCD is making a “major revision” to Maryland’s qualified allocation plan and multifamily rental financing program guide for this year’s LIHTC program. The agency anticipates a fall application round to take applications for 2014 housing credits.

The agency issued initial drafts of both documents, received comments that it is now reviewing, and will be issuing revised drafts.

Sylvester said one significant proposed change is to only accept applications for “what we call priority projects.” She said these could be projects that have a significant impact on a community, are located in a qualified census tract with a community revitalization plan, are transportation-oriented in nature, or are in one of Maryland’s “BRAC” counties where there has been consolidation of military bases.

“We’re also prioritizing preservation and housing that will serve special needs populations or persons with disabilities – what we call permanent supportive housing – in which no more than 25% of the units serve that population,” Sylvester said.

She said DHCD will no longer use scoring criteria to evaluate market studies for proposed projects but continue to apply threshold criteria.

Sylvester also reported that DHCD is doing brisk volume in its tax-exempt multifamily housing bond program, largely because of hefty state appropriations for its Rental Housing Works program, which provides gap financing for bond projects. The agency received $17.5 million of these subsidy dollars last year and Sylvester was confident that the agency will get another $25 million for the fiscal year that begins July 1.

“We have close to 22 [multifamily bond] deals in the pipeline, and are issuing bonds monthly,” said Sylvester. “It’s a huge driver of new business for the Department, and we’re trying to redirect a lot of folks to using that product.”

She indicated that DHCD is issuing short-term tax-exempt bonds at the same time a HUD-insured loan is originated, and the bonds are redeemed after the project is placed in service.