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Building Affordable Housing The Olympia Gardens Experience

The ability of an HBCU to accomplish community economic development goals hinges upon access to capital markets The Low-income Housing Tax Credit (LIHTC) Program provides access to private investment capital for affordable rental housing.

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Building Affordable Housing The Olympia Gardens Experience

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  1. The ability of an HBCU to accomplish community economic development goals hinges upon access to capital markets The Low-income Housing Tax Credit (LIHTC) Program provides access to private investment capital for affordable rental housing Building Affordable Housing The Olympia Gardens Experience Alabama A&M University (AAMU) Community Development Corporation (CDC)

  2. Building Affordable Housing The Olympia Gardens Experience • This program provides a federal tax credit to investors in affordable housing.  The credit can be used each year for 10 years and is allocated to non-profit developers, who may sell it to raise equity to construct or acquire and rehabilitate affordable rental housing.  Alabama A&M University (AAMU) Community Development Corporation (CDC)

  3. The LIHTC or Tax Credit) program was created by the Tax Reform Act of 1986 as an alternate method of funding housing for low- and moderate-income households, and has been in operation since 1987. Building Affordable Housing The Olympia Gardens Experience Alabama A&M University (AAMU) Community Development Corporation (CDC)

  4. Building Affordable Housing The Olympia Gardens Experience • LIHTC are a source of “debt free” capital and must be used for new construction, rehabilitation, or acquisition and rehabilitation. • Projects must also meet the following requirements: • Rental Projects • Projects that serve low-income individuals or families at 60% or below the area median income Alabama A&M University (AAMU) Community Development Corporation (CDC)

  5. Building Affordable Housing The Olympia Gardens Experience • The LIHTC program reduces the tax bracket for high income investors through syndication • Syndication is simply the selling of profits and losses (cash and tax losses) through a limited partnership Alabama A&M University (AAMU) Community Development Corporation (CDC)

  6. Building Affordable Housing The Olympia Gardens Experience • A limited partnership allows an investment company to pass both profit and losses to its shareholders (investors) in portion to their ownership interest in the partnership • Olympia Gardens is a limited partnership between the AAMU CDC and Olympia Construction (a for-profit developer) and AmSouth Bank (corporate investor) Alabama A&M University (AAMU) Community Development Corporation (CDC)

  7. Building Affordable Housing The Olympia Gardens Experience • Project Description • 48 garden style apartments • 8 one bedrooms • 28 two bedrooms • 12 three bedrooms Amenities • Clubhouse with laundry and meeting rooms • Community pool and playground • Attractive landscaping and sprinkler system Alabama A&M University (AAMU) Community Development Corporation (CDC)

  8. Building Affordable Housing The Olympia Gardens Experience • Project Description • 29 units rent at or below 60% of AMI • 19 units rent at or below 50% AMI • 8 units reserved for the mentally handicapped Alabama A&M University (AAMU) Community Development Corporation (CDC)

  9. Building Affordable Housing The Olympia Gardens Experience • Benefits of LIHTC Project to HBCU & CDC • Addressed need for quality affordable housing • CDC gained experience as a housing developer • Enhanced sustainability of CDC • Improved visibility of CDC to community • Provided positive Public Relations for the HBCU Alabama A&M University (AAMU) Community Development Corporation (CDC)

  10. Building Affordable Housing The Olympia Gardens Experience • Challenges - Technical Training • Understanding the LIHTC Application Process • FHLBA, BB&T, Others • Training Board Members about the Program • Obtaining professional and technical advice • FHLBA • University Attorney • Securing Reputable Private Partners Alabama A&M University (AAMU) Community Development Corporation (CDC)

  11. Challenges – Assembling a TA Team • No one believe you can achieve goal • Everybody wants to be paid • pro bono legal advisor • University accountant • Tax credit attorney • FHLBA Development Doctor Program Alabama A&M University (AAMU) Community Development Corporation (CDC)

  12. Building Affordable Housing The Olympia Gardens Experience • Challenges – Dealing with NIMBY issues • Finding a suitable site • Soliciting local government involvement • City government • Housing Authority Alabama A&M University (AAMU) Community Development Corporation (CDC)

  13. Building Affordable Housing The Olympia Gardens Experience • Challenges – • Negotiating a Development Agreement • Private partners • Selling the Tax Credits • Syndicating the Project • Negotiating with Syndicators Alabama A&M University (AAMU) Community Development Corporation (CDC)

  14. Building Affordable Housing The Olympia Gardens Experience • Project Pitfalls after obtaining Credits • University and CDC Relationship • Board Members not attending Training • Private partners not living up to commitments • Unexpected delays in completing contracts • Gov’t Approvals – take time Alabama A&M University (AAMU) Community Development Corporation (CDC)

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