Agenda - Planning Commission - 09/04/2014

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Last revised July 24, 2014 affordable properties. Administered at the federal level by the IRS, rather than the more typical housing partner HUD, the tax credit program financed over 1.2 million units by 2010, distributed through more than 17,000 properties nationwide. The LIHTC Program is formula -based, and sets a cap on the amount of credits a designated state agency or other "housing credit agency" (often referred to as suballocators) can award to projects annually through required "Qualified Allocation Plans," or QAPs. In Minnesota, the Minnesota Housing Finance Agency is the lead allocation entity, though in the seven county metro there are four suballocators—Minneapolis, Saint Paul, and Dakota and Washington counties. While tax credit financing is complex, the concepts underlying it are relatively simple. Owners or developers of affordable projects need upfront capital to get their projects underway and built. This money can be contributed by the owner, developer, or by private investors. In exchange for the front- end infusion of capital, the owner or investors (most typically investors, who often purchase credits through tax credit "syndicators") can claim a dollar for dollar tax credit against their tax liabilities each year for 10 consecutive years. In this way, the program uses market and investment oriented principles to incent affordable development. Housing tax credits come in two primary forms —limited resource "9% credits" that are competitively awarded and count against the state tax credit volume cap, and "4% credits," a less scarce resource that generally do not count against the cap. Tax credit transactions are also often aided through the issuance by Minnesota Housing or other "Entitlement Issuers" of tax exempt bonds (subject to a state bond volume cap) that contribute to the project's "eligible basis" and help determine the amount of tax credits awarded to a given project. Manufactured Housing & Manufactured Housing Parks A housing unit constructed primarily off -site prior to being moved to a piece of property where it is set. The cost of construction per square foot is usually considerably less for manufactured housing than for traditional on -site homes (stick -built homes). This type of housing also includes "modular homes" - homes divided into multiple sections that are constructed off -site, then assembled like building blocks at the property. Financing a manufactured home can be different than financing a stick -built home. If the manufactured home is purchased separately from the land on which it will sit, a personal property loan is the most common type of financing. Personal property loans carry a higher interest rate than traditional mortgages. If the manufactured home and the land are purchased together, a traditional mortgage might be available. The Federal Housing Administration and Department of Veterans Affairs have manufactured -housing loan programs. Market Demand The total number of households in a defined market area that would potentially move into any new or renovated housing units. Market demand is not project specific and refers to the universe of tenure appropriate households, independent of income. The components of market demand are similar to those used in determining project -specific demand. Market Rate Rent The rent that an apartment, without rent or income restrictions or rent subsidies, would command in the primary market area considering its location, features and amenities. Market rent should be adjusted for concessions and owner paid utilities included in the rent. Market Study A comprehensive study of a specific proposal including a review of the housing market in a defined market area. Project specific market studies are often used by developers, syndicators, and government entities to determine the appropriateness of a proposed development, whereas market 2040 HOUSING POLICY PLAN I METROPOLITAN COUNCIL DRAFT RELEASED FOR PUBLIC COMMENT Appendices I Page 90