The Arkansas Development Finance Authority (ADFA) recently awarded more than $75 million in federal Low-Income Housing Tax Credits (LIHTC) that will generate approximately $64 million in equity.
The LIHTC were awarded based on a competitive application process to six different developers and will be used to build nine affordable multi-family developments consisting of 499 units for Arkansas families, seniors, and people with disabilities. The total construction cost of the nine developments is about $89 million and will create hundreds of jobs.
The LIHTC program is an important resource for creating affordable housing in Arkansas. The LIHTC program is the state’s primary means of drawing private capital towards the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households.
Developers awarded LIHTC sell the credits to investors at a discounted rate and use proceeds as partial financing for their development. The investors claim the tax credits over a 10-year period to offset their federal income tax liability. The LIHTC are designed to cover approximately 70% of each development’s eligible development costs.
In exchange for the credits, developers must limit occupancy to households earning less than 60% of the area median income and keep rents at the affordability level set by the United States Department of Housing and Urban Development. This affordability must be kept for 30 years.
“Developing high-quality and affordable housing is vital for the success of our state,” said Secretary of Commerce Hugh McDonald. “The Low-Income Housing Tax Credits program encourages capital investment and will support the construction of multi-family developments, creating hundreds of new housing units as well as new jobs for Arkansans.”
In addition to LIHTC, ADFA loaned approximately $16 million in federal HOME Investment Partnerships Program (HOME) funds to developers awarded LIHTC.
“ADFA is working to ensure Arkansans have access to safe, affordable places to call home, so they can build better lives for themselves and their families,” said ADFA President Mark Conine. “The LIHTC program is a great example of how public and private dollars can come together to serve Arkansans and benefit the overall economic health of our state. These quality multi-family units will provide excellent homes for working families and seniors to combat the growing shortage of affordable rental housing in Arkansas.”