It takes a village to develop or rehab an affordable rental property. The Low-Income Housing Tax Credit (LIHTC) Program was created in 1986 to encourage investment of private capital in the development of affordable rental properties. To date, fifteen states have adopted their own State LIHTC program alongside the Federal Program. This has created a substantial benefit to developers in those states. The reliance on hefty prices from tax credit equity has recently changed due to tax reform that was enacted in December of 2017. Developers are currently assuming lower pricing due to this change, which means that developers will have to find alternative sources of capital to fill the gap created by this reduction in tax credit equity. Historically, tax credit financing has played a major role in successful affordable housing project funding, but that’s only half of the story. It takes many other subsidies from state and local municipalities to make the numbers work. For example, on one of Clocktower’s recent projects, 98 Essex Street in Haverhill, MA, the redevelopment of an historic Shoe and Leather Association Building into sixty-two apartments for low -and moderate-income households, the developer is using a myriad of financing to achieve its end goal. Financing included $19.5 million in state and federal LIHTC equity, with Massachusetts Housing Investment Corp. syndicating the federal tax credits while Clocktower Tax Credits, LLC brokered the state tax credits. The Massachusetts Housing Finance Agency provided a $1 million permanent loan and $600,000 from the agency’s Workforce Housing Initiative. The Massachusetts Department of Housing and Community Development contributed an additional $2.5 million in direct affordable housing subsidy. The Affordable Housing Trust Fund contributed $1 million, while the City of Haverhill and the North Shore Home Consortium contributed an additional $365,365. Eastern Bank is providing $16.3 million in construction loan financing. When completed, there will be fifteen one-bedroom, forty-one two-bedroom, and six three-bedroom apartments available for residents between 30 percent and 80 percent of area median income (AMI). It truly took a village to make this project happen.
For more information, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.