SUBJECT/RECOMMENDATION:
Title
Provide direction regarding the City's participation in projects applying to the 2014 Cycle of the State of Florida's Low Income Housing Tax Credit program. (WSO)
Body
SUMMARY:
The Low Income Housing Tax Credit Program (LIHTC) is governed by the U.S. Department of Treasury under Section 252 of the Tax Reform Act of 1986 and Section 42 of the Internal Revenue Code, as amended. The program was established to provide for-profit and non-profit organizations with a dollar-for-dollar reduction in federal tax liability in exchange for the acquisition and substantial rehabilitation, substantial rehabilitation, or new construction of low and very low-income rental housing units. Each year, the IRS allocates housing tax credits to designated state agencies, typically state housing finance agencies, which in turn award the credits to developers of qualified projects through a competitive application process. The program is monitored by the IRS and rents are set by HUD. Residents of these units are limited to 60% and below of the area median income with 10% of residents required to be at 33% of area median income and below.
In the State of Florida, the Florida Housing Finance Corporation administers the LIHTC program and is in the process of developing the rules for the 2014 Universal Application cycle. They have released a tentative schedule that applications will be released in mid-November 2014 and due in late January 2015. From the initial rules, projects in Clearwater have a strong chance of scoring competitively. For this reason, developers have inquired whether the City will be participating in the 2014 cycle. Similar to last year, cities will need to provide a $75,000 commitment to each project they are supporting in order for the proposed project to receive maximum points.
Given the reductions in the city's housing funds from the state and federal governments (SHIP and HOME programs); the Housing Division may not have funding available to commit to LIHTC projects for Fiscal Year 14-15. However, there is still an identified need for both affordable senior housing and multi-family rental housing. LIHTC projects provide a benefit to the community because they provide the financing vehicle to construct these projects, leveraging dollars and bringing in new investment.
In 2011 and 2013, City Council directed staff to release a Notice of Funding Availability (NOFA) and committed General Fund dollars to support projects applying to the LIHTC program. If the Council provides this direction for the city to participate in the 2014 cycle, staff recommends following the same public process as last year to allocate General Funds, or other city funding, for LIHTC projects.
The suggested timeline would be to release the NOFA in October 2014, advertising in the newspapers, website, etc. for interested developers to submit an application for their proposed projects. Applications would be due in November 2014. Staff would rank the applications according to city goals and objectives identified in the Consolidated Plan and the LIHTC program. The City Council would make the final selection, including the number of projects to support and the total amount of commitment in December 2014. This process ensures consistency and equitableness and allows the City to continue to support affordable housing.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
N/A