During the joint work session of the Salida City Council and the Planning Commission held on Monday January 6, a presentation was given by Vice President of Development for Commonwealth Development Corporation Daryn Murphy, explaining how Low Income Housing Tax Credits (LIHTC) could work for a potential affordable housing development in Salida.
Murphy shared the operations of the program and their portfolio of projects with the Salida Council and Planning Commission. Commonwealth Development Corporation is a fully vertically-integrated development firm which works in Colorado with a program administered by the Colorado Housing Finance Administration (CHFA). The program allows for trades of income tax credits for housing at affordable rates, generally at 60 percent of the *Area Median Income (AMI) and below.
How the credits work
Federal tax credits are allocated to state housing finance agencies by a formula based on population. Then each state agency establishes its affordable housing priorities and developers compete for an award of tax credits based on how well their projects satisfy the state’s housing needs.
Developers receiving an award use the tax credits to raise equity capital from investors in their developments. The tax credits are claimed over a 10-year period but the property must be maintained as affordable housing for a minimum of 40 years in Colorado. Because tax credits can be revoked for any noncompliance, investors maintain close supervision over the properties to ensure their long-term viability and compliance with IRS and state allocating agency requirements.
According to the presentation given by Murphy, The Housing Credit program has spurred the development of approximately three million quality homes for working families, seniors, disabled veterans, and people at risk of homelessness. Each year, Low Income Housing Tax Credits produce over 100,000 units throughout the country.
Commonwealth Development Corporation, which is headquartered in Wisconsin, has worked on projects in Colorado communities including Evans, Greeley, and multiple structures in Colorado Springs. According to Murphy’s presentation, Chaffee County’s average medium income for a family of four is $67,600. Based on this figure, AMI* at 60 percent for a one-person household is $28,620, for a two-person household $32,700, for a three-person household $36,780, and for a four-person household $40,860.
Commonwealth Development Corporation has begun the process of applying for LIHTC by submitting a Letter of Intent to CHFA for potential site opportunities in Salida.
*Note: AMI stands for Area Median Income. It is a statistic used by the U.S. Department of Housing and Urban Development (HUD) for purposes of determining the eligibility of applicants for housing programs.