Austin Affordable Housing Project Hits Speed


Bump with New Tax Law by Taylor Goldenstein, Austin American Statesman


Travis County staffers warned Tues- day that the federal tax overhaul could


stymie efforts to fund a proposed af- fordable housing project in Austin that largely depended on low-income housing tax credits.


Tax credits are the U.S. government’s primary tool to encourage the devel- opment of affordable housing. The government grants the credits to de- velopers, who then sell the credits to banks and other investors, who in turn


use those credits to lower their own tax bills.


However, a key change in the recently approved federal tax bill — the corporate tax rate reduction from 35 percent to 21 percent — could put a dent in the developer’s returns from the program, Karen Thigpen, county corporations project and program manager, told the Commissioners Court at its Tuesday meeting. The lower the tax obligation, after all, the less the credits are worth to investors, she said. “We do not yet have a precise measure on these declines — both in dollars or in demand,” Thigpen said. “It’s too early to quantify how large of an impact this will have ... but we are hearing that it may be as much as 10 cents on the dollar per tax credit, which is a significant decline.”


In the case of Travis County’s project, developer DMA Development Company has winnowed down its funding shortfall to $1.5 million for Travis Flats, an affordable housing project in a mixed-use development on county-owned land, Thigpen said. The lessened value of the credits and other uncertainty surrounding the law’s effects could delay the project by up to four months, she said.


The $30 million proposed complex at 5325 Airport Blvd. would be built next to existing offices for the county clerk and oth- er departments and would include more offices as well as 146 apartments, with 122 designated for low-income residents.


The Travis County Housing Finance Corporation, which the commissioners oversee, will be seeking out two types of low- income housing tax credits, a larger and smaller credit, after commissioners unanimously gave the green light Tuesday. Commissioners also approved the issuance of up to $17 million in multifamily housing revenue bonds, which will be used in conjunction with the smaller credit, in case the larger credit is not received.


This is the second time the project has faced major funding challenges. Last year, the county lost out on the same low- income housing tax credit to nonprofit Foundation Communities’ project in the Mueller development. Only one of the projects could receive the credits in the same year, per state law, as the projects are within two miles of each other. Thig- pen said the county is not aware of other applicants within two miles seeking the credit at this time.


President Donald Trump and other Republicans have touted the corporate tax rate reduction as a way of stimulating eco- nomic growth and keeping and bringing businesses to the U.S.


An analysis by Novogradac & Co., a San Francisco-based accounting firm that specializes in real estate and affordable hous- ing issues, estimated that the credit’s equity pricing could lose roughly 14 percent in value due to the corporate rate drop.


Page 12 TALHFA Winter 2018 / 2019


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