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: - Location - is it near existing amenities and services - Affordability - is the land acquition costs within the acceptable PHFA budget Transportation - does the property management company offer shuttle services or is property near public transportation that easily connects to amenities - Cost - can the property sustain below market rent while maintaining property management sustainability for 40+ years - Land - is the property in a flood plain, is it near public sewer and public water

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. There are high standards set by PHFA that must be met when building a tax credit property. In addition, there are ongoing standards that must be maintained. Non-compliance can lead to removal of the property management company.

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: - Market study/housing need assessment/rent comparability study - Schematic plans/scope of work/zoning - Appraisals - Architect drawings/ energy rebate analysis - Community and economic impacts - Supportive services that will be provided - Experience of developer, property management company, architect, engineers, etc. - Phase 1 environmental review - Utility review - Financing/proforma After the application is submitted, the PHFA evaluation process takes approximately 6-9 months before awards are announced.

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. Numerous studies over time from around the country support the notion that affordable housing has no negative impact on surrounding property values - especially if the development integrates into the neighborhood. Replacing blight or vacant land will boost the residential real estate markets.

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. Affordable housing can help communities maintain a stable population by making it easier to retain people who already live and work there. Basic management practices such as onsite staff, careful screening, prudent security measures and regular upkeep are key to making a development an asset in the community.

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. Solving the affordable housing crisis in this country, means addressing the needs of the business community, working and middle class families and the broader population.