MFA Announces More Than $6 Million in Tax Credit Funding for Rental Housing Projects
The Board of Directors for the New Mexico Mortgage Finance Authority (MFA) recently approved more than $6 million in funding through the competitive Low-Income Housing Tax Credit (LIHTC) program for six affordable housing developments that are set to create 284 units of affordable housing across the state.
“Given the growing need for affordable housing, it’s exciting to help support these transformational projects,” said MFA Executive Director and CEO Isidoro Hernandez. “These projects will not only provide homes for almost 300 families, but also help set the foundation for thriving families and healthy economic growth in each of these communities.”
This year’s funding awards support diverse communities across the state, with tax credits funding new construction and rehabilitation of existing developments in Albuquerque, Las Cruces, the Pueblo of Laguna and Rio Rancho. In addition, construction of these developments helps bolster economic activity in these communities through construction activity.
“This [LIHTC] program is a great way for developers to obtain equity for their projects by selling the tax credits to investors,” said MFA Chief Housing Officer Donna Maestas-DeVries. “The investors receive a reduction in their federal income taxes over a ten-year period and New Mexico gains more affordable housing. It is a win-win situation all around.”
MFA, which administers the LIHTC program, receives an annual allocation of tax credits that is awarded to housing developers through a highly competitive process. In the 20-year history of the program, MFA has awarded over $137 million in tax credits, resulting in over $1.25 billion in funding for affordable housing projects that created or rehabilitated 18,599 units of affordable housing.
Created by the Tax Reform Act of 1986, the federal LIHTC program gives LIHTC-allocating agencies, such as MFA, the annual budget authority to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households.
The LIHTC program works by offering tax credits which reduce the tax liability to individuals or corporations that invest funds in rental housing developments with units set aside for low-income households. To use this tax incentive, developers typically form limited partnerships with investors who contribute equity capital in exchange for tax savings. Once an allocation is made and construction is completed, tax credits can be claimed annually for a 10-year period.
Earlier this year, several projects that previously received tax credit funding through MFA either broke ground or hosted their grand opening. These projects included: PAH! Hiland Plaza which broke ground in May and is set to create 92 new affordable housing units with a preference for individuals with hearing or vision differences, Hope Village, a 43-unit development which opened in late March and supports some of Albuquerque’s most vulnerable residents who are experiencing or are at risk of homelessness, and Luminaria Senior Community, a 92-units development for low-income seniors which also opened in late March.
Additionally, the developments boost local economies in New Mexico by providing local revenue, tax income and jobs. The projected revenue statewide from this tax credit round across all three stages of the development process is more than $40.7 million. The developments are projected to support approximately 580 jobs across the state, according to economic impact estimates based on figures from the National Association of Home Builders, The Economic Impact of Home Building in a Typical Local Area (Multifamily Construction), 2015.
There is currently a statewide shortage of 32,000 units for renters making less than 30 percent of area median income, according to a study commissioned by the MFA-led Housing New Mexico Advisory Committee. In addition, 218,471 New Mexico households were identified as “cost burdened” – spending more than 30 percent of their income on housing costs. This included 100,858 households identified as “severely cost-burdened” – spending more than 50 percent of their income on housing.
The projects receiving funding this year include:
- Laguna #3—New construction of a 20-unit community with a community center designed for multigenerational families in the Pueblo of Laguna. The development is within the K’awaika Center Master Plan. The developer is LHDME. The total tax credit award in $936,397.
Calle Quarta—New construction of a 61-unit apartment community in Albuquerque. The development is mixed use with storefront retail and community amenities including a social services office, computer lab, demonstration kitchen and fitness room. The developer is YES Housing, Inc. The total tax credit award is $1.07 million.
120 La Plata--Rehabilitation of a 32-unit development in Albuquerque. The renovation will address accessibility issues, repair parking lots, add a new landscape irrigation system and add a new community building. The renovation will also add new evaporative coolers, water heaters and furnaces as well as repair and upgrade the interiors and exteriors of the existing units. The developer is the Albuquerque Housing Authority. The total tax credit award is $796,000.
The Three Sisters—New construction of a 70-unit apartment community is Las Cruces. The community features a community building, garden areas, playgrounds and walking paths. Vapor barriers will add additional protection against previously remediated PCE (tetrachloroethylene, a byproduct of dry-cleaning facilities). The developer is Chelsea Investment Corporation. The total tax credit award is $1.3 million.
Felician Villas—New construction of a 66-unit senior living apartment community in Rio Rancho that features community spaces and close access to Meadowlark Senior Center. The development also features 16 vouchers for rental assistance. The developer is Chelsea Investment Corporation. The total tax credit award is $1.2 million.
9000 Veranda--Rehabilitation of a 35-unit community in Albuquerque. The renovation will address accessibility issues, add a new community building, repair cooling and heating appliances and upgrade both interior and exterior features in the units. The developer is the Albuquerque Housing Authority. The total tax credit award is $843,000.