Subcommittee hears overview of low-income housing tax credits; two Buncombe-area projects noted

The Buncombe County Affordable Housing Subcommittee heard a primer on the federal Low Income Housing Tax Credit program and an update on two local projects during its meeting.

Matt Card, presenter, told the panel that “the Low Income Housing Tax Credit is a federal program. It's a tool to incentivize affordable housing” and that the credit was created in 1986. He said the program is codified in Section 42 of the Internal Revenue Code and that tax credits are allocated to each state on a per-capita basis. Card explained that North Carolina's program is administered by the North Carolina Housing Finance Agency, which issues a Qualified Allocation Plan that sets priorities and application rules.

Card described the two primary federal credit types: 9% credits, which he said are competitive and typically reserved for new construction and deliver the highest subsidy (he characterized it as roughly 70 percent subsidy), and 4% credits, which are noncompetitive and typically produce a lower subsidy (he said up to about 30 percent). He also explained that tax credit equity is sold to investors over a 10-year period and that the equity pricing used in pro formas changes with the market.

On local projects, Card said recent North Carolina Housing Finance Agency awards included Pillows at Swannanoa, a 9% award that received the program's stated maximum award of $1,300,000, and Rocky River Apartments in the Woodfin area, a 4% project that the subcommittee reviewed during a prior housing strategy process.

The presenter noted compliance and use restrictions: a typical project has a 15-year compliance period followed by a 15-year extended use period (he said states may extend the period), tenant income limits tied to area median income, and program monitoring. Card described one qualification route as having at least 40 percent of units both rent-restricted and occupied by households earning 60 percent of AMI or less.

Subcommittee members asked about developer entry costs, application complexity under the Qualified Allocation Plan and the role of local capital stacking. Card said applications require many elements of a capital stack and that projects often rely on additional local or private funding sources for 4% projects to be feasible. He offered to return with more detail on developer requirements and capital-stack examples.

The presentation provided a technical overview of how tax-credit equity reduces financing costs and helps projects offer lower rents, and noted local award outcomes that county staff will monitor as the recovery and housing work proceeds.