Tax Credits were introduced by Congress in 1986 under the Reagan administration with the goals of:
To entice private investors to invest in housing by offering a reduced tax liability
To mimic market rate housing (look and feel)
To break down stereotype of affordable housing
To ensure longevity of program, 40 year commitment
Tax Credits have some similarities to HUD programs but are different!
Some examples of HUD programs are PRAC, Section 8, 811 and 202.
Property management and ongoing operations of a tax credit property require:
Annual reporting to PHFA and investor(s)
Maintain detailed waitlist of potential future residents and update as needed
Monitor ratio of AMI units as defined in application - adjust accordingly when needed
Physical apartment and building inspections by PHFA or PHFA consultant
Annual audit of finances by PHFA or PHFA consultant
Annual audit of tenant files and recertification of assets and income
PENALTIES for non-compliance
Frequently asked questions
What are some of the land criteria that PHFA looks for when awarding tax credits?
There are many factors that PHFA looks at when determining what property/devleoper should be allocated the tax credit award. When looking at the land, PHFA considers:
How can I visually tell if a building is a tax credit property?
You can not tell. When the program was put in place, the goal was to ensure that tax credit buildings do not look differently from a market rate property.
How competitive is the Tax Credit process?
The annual process is extremely competitive with only 36-45% of the applicants receiving the tax credit award. The developer provides the following information in the PHFA application:
How will Tax Credit housing affect property values?
Tax Credit properties pay property taxes. One of the objectives of the Tax Credit program is to build affordable housing that does not look like low income housing. The developer/property management company signs various agreements with PHFA outlining the high standards of upkeep and property management. There are penalties for non-compliance.
Will affordable housing increase crime in the community?
There is no evidence that affordable housing brings crime to a neighborhood! The National Crime Prevention Council calls for more affordable housing to reduce crime because neighborhood cohesion and ecomonic stability are enhanced when affordable housing is provided.
How is affordable housing fair when only the poor benefit?
People living in Tax Credit buildings must have some income/assets to qualify. The targeted population is working class people that make between $8-$18.00 an hour.