Kathryn Peters
executive director, Kentucky Housing Corp.
What’s the biggest
change you’ve made to the 2015 qualified allocation plan (QAP), and why?
The biggest changes KHC has made in the 2015 QAP is addressing fair housing concerns by restricting the creation of new affordable housing units in Qualified Census Tracts (QCTs). KHC now requires developments that propose the creation of new units in QCTs to undergo a thorough review and justification process prior to an application for funding being accepted. KHC incorporates local input by giving weight and guidance to the local Analysis of Impediments to Fair Housing. Additionally, KHC has dedicated the majority of the 9% LIHTC resources to the preservation of affordable multifamily housing. In 2014, the Corporation made the preservation of existing affordable housing an overarching corporate strategy and developed the 2015 QAP to support increased preservation efforts.
What trends are you seeing in your 9% and/or 4% credit low-income housing tax credit (LIHTC) programs?
KHC continues to see high demand for 9% housing credits, and investor pricing has increased to the high-80 cents range to mid-90 cents range. Additionally, the Corporation has seen an increase in the utilization of 4% housing credits with tax-exempt bonds. KHC has made concentrated efforts over the years to promote the utilization of tax-exempt bonds with 4% housing credits. In efforts to expand KHC’s multifamily production beyond the 9% housing credit program, in 2014, KHC began offering GAP funding for tax-exempt bond projects, which has resulted in an additional 2,176 units being assisted as compared with last year.
What strategies are you implementing to preserve existing affordable housing?
In October 2014, KHC hosted a Preservation Summit with over 130 housing industry stakeholders to find new approaches to sustain the preservation of more than 49,000 rent-restricted apartment units that could be lost over the next five years in Kentucky.
Many concerns in addressing the preservation of affordable housing stock were identified. Property owners foresee problems with their maturing portfolios at a time when federal housing program funding is being reduced.
KHC is encouraging industry partners to use tax-exempt bonds with 4% housing credits and is working with other affordable housing providers to coordinate funding rounds and incentivize the leveraging of funds.
What is your agency doing to address cost containment?
KHC established cost-containment limits based on the Department of Housing and Urban Development 221(d)(3) per unit limitations. In prior years, adherence to KHC’s cost-containment limits was incentivized in the application scoring process. In 2015, cost containment was made a threshold item to be eligible for consideration. If a project proves to exceed the applicable cost containment limit at final cost certification, the gap is the responsibility of the owner.
What advice do you have for developers applying for LIHTCs and/or other financing in your state? What’s a common mistake developers make when applying for funding?
Applying for 9% housing credits is very competitive, and there is little room for error in an application. Applicants should seek and obtain technical assistance from a KHC Multifamily Programs representative prior to submitting their application to ensure all submission requirements are met. The most common mistake that occurs is when applicants do not fully read the documentation standards for application submission and provide only a portion of a requirement.
