August 17, 2010
North Carolina Housing Finance Agency
North Carolina will gain $229 million in affordable rental apartments as the result of federal tax credits approved this week by the Tax Reform Allocation Committee and loans from the North Carolina Housing Finance Agency.
The new awards will produce 1,912 privately owned, privately-managed affordable apartments in 25 counties, bringing the total number of Housing Credit apartments built in the state since 1987 to 54,000 units. Nearly 69 percent of the recently approved apartments (1,315 units) will be designated for families, and 597 units will house elderly residents.
“The development of these properties will provide excellent affordable housing for North Carolinians, and will keep hundreds of construction workers on the job during a difficult economic time,” said N.C. Housing Finance Agency Chairman Sam Ewell.
The new developments will include 192apartments for persons with disabilities. Rent assistance will make these apartments affordable to persons living on Supplemental Security Income (SSI) of approximately $660 a month, under an initiative financed by the General Assembly and offered through a cooperative arrangement between the Housing Finance Agency, the N.C. Department of Health and Human Services, local service organizations, and the apartment owners and managers.
In addition to the federal tax credits, 19 of the apartment developments will receive loans totaling $14.8 million approved by the N.C. Housing Finance Agency’s board of directors, and all will receive state tax credits as authorized by the General Assembly. The loans and state tax credits make it possible to produce apartments in rural counties where incomes are low, and help to reduce the rents in urban counties.
All of the apartments will be affordable to North Carolinians whose incomes are at 60 percent or less of the median. This ranges from $46,620 for a family of four in Raleigh to $30,240 in lower income areas such as Vance or Wilkes counties. The state tax credits make some of the apartments affordable to households with incomes at 30 to 50 percent or less of the median. This ranges from $23,310 for a family of four in Raleigh down to $15,480 in Vance or Wilkes counties.
The N.C. Housing Finance Agency evaluates the tax credit applications on behalf of the Tax Reform Allocation Committee, which consists of Secretary of Commerce J. Keith Crisco, State Treasurer Janet Cowell and State Budget Officer Charles Perusse.
To recommend the 31 properties, the N.C. Housing Finance Agency evaluated 123 applications for federal tax credits. The evaluation includes independent market studies of each property and site visits by agency staff. Each property is rated for architectural design, rent affordability, financial stability, capability of the development team, and criteria to ensure statewide distribution.
To make the properties economically viable at below-market rent levels, the owners are allowed to take a credit on their federal income tax of 9 percent of the eligible costs, for a period of 10 years. Properties that receive federal credits are also eligible for a one-time state tax credit of 10, 20 or 30 percent of the eligible development cost, depending on the county where the housing will be built. The largest state credit percentage applies to developments in counties with the lowest median incomes.