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The Housing Credit Program is a tax incentive program
designed to increase the supply of quality affordable rental housing.
These federal income tax credits offset the building acquisition,
new construction, or substantial rehabilitation costs for rental
housing developments. Since 1987, the Ohio Housing Finance Agency
has used the Housing Credit Program to facilitate the development
of over 72,000 affordable rental housing units in Ohio.
The Internal Revenue Service (IRS) regulations for
the Housing Credit Program can be found under Section 42 of the
Internal Revenue Code (IRC). It is the responsibility of the applicant
to be knowledgeable of Section 42 of the IRC, regulations and administrative
documents (rulings, notices, and procedures), and all relevant materials
published by the IRS. OHFA strongly encourages all applicants to
seek experienced legal and accounting advice in order to comply
with all program requirements.
The housing credit was created by Congress in 1986 replacing earlier
federal tax incentives for the development of affordable rental
housing.
Housing credits are used to offset an individual
or corporation's federal income tax liability. The amount of housing
credit received can be subtracted on a dollar-for-dollar basis from
the federal income tax liability.
The housing credit is received each year for 10 years
– the period the taxpayer claims the housing credit on his/her
federal income tax return. The owner must maintain income and rent
restrictions continuously for 15 years – this is the compliance
period. Additionally, the owner must enter into an extended use
period of an additional 15 years by filing a Restrictive Covenant
on the project with the County Recorder.
The taxpayer may claim the housing credit beginning
either with the taxable year in which the building is placed in
service, or in the following year at the owner's election (or OHFA's
determination, if necessary). The allocated housing credit amount
taken by the taxpayer is based on the portion of the building occupied
by low-income residents at the end of the first year of the housing
credit period.
The housing credit can be used to offset the cost of acquiring,
substantially rehabilitating, and/or constructing residential rental
housing to be occupied by low-income individuals and families. These
units must be available to the general public and have initial leases
of six months or longer.
Costs to develop the low-income units become the building's
eligible basis. The housing credit can be allocated to common areas
as long as these facilities are provided to all residents without
additional fees or charges. It is important to note that units created
solely for occupancy by the manager, maintenance personnel, and/or
security guard are considered common space.
The following types of projects are eligible for housing
credits:
- Acquisition/Substantial Rehabilitation
- Substantial Rehabilitation Only
- New Construction
Certain project costs are not subject to inclusion into eligible
basis upon which the housing credits are derived. These include:
commercial building costs; land; permanent financing fees; reserves;
off-site improvements; syndication expenses (including legal, accounting,
and bridge loan interest); any expense that cannot be depreciated
with the building; OHFA application, reservation, and compliance
fees; and in-kind contributions to a project. This list is not inclusive
of all costs that may be ineligible for housing credits. Refer to
Section 42 of the IRC for more information.
The housing credit is not available for any of the
following facilities: hospitals; nursing homes; sanitariums; lifecare
facilities; retirement homes (if providing significant services
other than housing are mandatory for residents); employer housing;
mobile homes; and student housing. Factory-made housing that is
permanently fixed to real property may qualify for the housing credit.
Congregate care facilities may be eligible if the "additional supportive
services" are provided to the resident as a voluntary option and
the resident is not charged mandatory fees for those services. Refer
to Section 42 of the IRC for more information.
All applications for 2008 housing credits at each stage of the allocation process must be submitted to the Ohio Housing Finance Agency, Office of Planning,
Preservation and Development, 57 East Main Street, Columbus, Ohio
43215. Applications must be received no later than 5:00 p.m. by
the dates listed in the program calendar. Applicants must use the 2008 Affordable Housing
Funding Application (AHFA).
The 2008 Affordable Housing Funding Application, the
Qualified Allocation Plan (QAP), and all necessary forms and additional
supportive documents will be posted to OHFA's web site as they become available. The Qualified Allocation Plan provides
information on the 2008 program including minimum project requirements,
competitive criteria and underwriting criteria. Data tables are
also included with the QAP to provide applicants with the necessary
localized data regarding such information as median family income,
qualified census tracts and rent limits by county. Information regarding
the location of all past projects (both in process and completed)
must be included in the required market studies. That report, List
of Housing Credit Allocated Projects, is also available for downloading.
Applicants should review all program information and application
for a thorough understanding of Ohio's program.
Following is a calendar of deadlines and other important dates as
they apply to the housing credit application process (subject to
change).
| November 2007 |
5 |
2008 Housing Program Training |
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8 |
Applications for Experience and Capacity Review Submitted |
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15 |
2008 Housing Program Training |
| December 2007 |
13 |
Experience and Capacity Determinations Issued |
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20 |
2008 AHFA Ready for Distribution |
| February 2008 |
14 |
Applications for Site and Market Evaluation Submitted |
| May |
1 |
Results of Site and Market Evaluation Issued |
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22 |
Deadline for Full Applications |
| July |
3 |
Final Results for All Allocation Pools Released |
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7 |
Reservation Agreements Issued |
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22 |
Next Steps Meeting for Successful Applicants |
| August |
4 |
Deadline for Reservation Agreements and Phase I Environmental Site Assessments |
| November |
20 |
Carryover Submission Deadline |
| December |
31 |
Carryover Allocation Agreements Issued |
This
summary is an excerpt from the 2008 Qualified Allocation Plan. The
complete Plan and application are available for downloading. If
you need further information, contact the Office of Planning, Preservation
and Development at (614) 466-0400.
The
Qualified Allocation Plan (QAP), described under Section 42(m) of
the IRC, contains OHFA's procedures and policies for the distribution
of the state's allocation of housing credits. The QAP may be subject
to change pending developments in federal and state legislative
requirements and/or OHFA policy.
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