Affordable housing tax credits

              Affordable Housing Tax Credits
OKLAHOMA HOUSING FINANCE AGENCY
OHFA’s Affordable Housing Tax
Credits
Congress created Affordable Housing Tax Credits
in 1986 to offset the high cost of rental housing
construction and rehabilitation, and to provide
affordable rent rates for low-income families.
Tax Credits provide a 10-year reduction in tax liability
for developers who construct or rehabilitate affordable
rental housing.
Tax Credits Facts
• Developers
sell Tax Credits
to Fortune 500
companies and
other investors. The
money obtained
from the sale is used
to lower fi nancing
costs. The end result
is lower rent for
families.
• Administered by
the Oklahoma Housing Finance Agency, the Affordable
Housing Tax Credit Program is one of the most
closely regulated provisions in the tax code. Tax credit
apartments or houses must be rented to persons
earning no more than 60 percent of the area median
income. Restricted rents are enforced for a minimum of
30 years.
• OHFA monitors tax
credit developments
regularly during the
30-year affordability
period for compliance
with stringent income,
rent and physical
condition requirements.
OHFA must report
noncompliance to
the Internal Revenue Service, who can recapture tax
credits from noncompliant owners. All developments
are monitored a minimum of once every three years by
OHFA’s compliance staff.
• The private sector discipline imposed on tax credits
developments – from
initial site selection
through years of
upkeep and compliance,
under threat of severe
tax penalty – is an
unprecedented departure
from all previous federal
housing programs. This
is a key element in the
success of the Affordable
Housing Tax Credit
Program.
Obtaining Tax Credits
To obtain Tax Credits in Oklahoma, a development must
achieve a higher score than competing developments
and must also meet state housing needs.
OHFA must limit allocations of tax credits to the
amount necessary to make each development fi nancially
feasible and viable as affordable housing for the required
long-term affordability period.
OHFA performs three separate rigorous fi nancial
evaluations which analyze sources and uses of funds,
other government
subsidies, reasonableness
of costs, and developer
and builder profi ts.
For-profi t developers,
non-profi t organizations,
public agencies, units of
local government and
tribal governments are
eligible to apply for Tax
Credits.
OHFA has issued more than $70 Million in
Tax Credits since 1987, resulting in more
than 20,360 apartments and single-family
homes. OHFA issues approximately $6.5
million in Tax Credits each year resulting in
nearly $110 million of construction activity
statewide.