Low-Income Housing Tax Credits News Briefs – November 2021 – Novogradac

LIHTC Industry

The U.S. Department of the Treasury posted official guidance on how it will reallocate funds under the first Emergency Rental Assistance program. Treasury’s guidance addresses the $25 billion initially allocated to states, the District of Columbia, U.S. territories, tribal governments, tribally designated housing entities, the Department of Hawaiian Homelands and units of local government. Treasury was required to identify excess funds for reallocation from amounts grantees did “not obligate” from their initial allocation as of Sept. 30.

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Novogradac convened a working group to examine the effects of a surprise announcement by the U.S. Census Bureau of a year 2020 data collection issue. In July, the U.S. Census Bureau announced that it will not publish one-year American Community Survey (ACS) data for 2020. The 2020 ACS data, if available, would have been used to calculate 2023 median incomes, which in turn would have been used to determine 2023 income and rent limits for low-income housing tax credit- (LIHTC) and tax-exempt bond- (TEB-) financed residential rental properties. The Novogradac working group is analyzing the effects of this announcement on LIHTC- and TEB-financed properties.

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HUD published in the Sept. 9 Federal Register a notice designating 2022 difficult development areas (DDAs) and qualified census tracts (QCTs) for purposes of the low-income housing tax credit (LIHTC). The statutorily mandated notice designates DDAs for all 50 states, the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands and the U.S. Virgin Islands. The notice also designates QCTs based on new income and poverty data released in the American Community Survey. LIHTC properties built in a DDA or QCT are qualified to increase their eligible basis by up to 30%. The 2022 QCTs and DDAs are effective for LIHTC allocations after Dec. 31, 2021, or for buildings placed in service after Dec. 31, 2021, if the properties are financed by tax-exempt bonds.

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The U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund updated its guidance and information in September for the fiscal year 2021 Capital Magnet Fund application round on its website. More than $380 million in grants is available to CDFIs in this funding round. The last day to submit the application and requirements is Nov. 9.

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The U.S. House of Representatives Financial Services Committee voted Sept. 14 to approve legislation that drives $322 billion to housing and community development resources. The committee’s budget amendment includes $80 billion to build, preserve or retrofit more than 3 million affordable housing units, with $37 billion for the National Housing Trust Fund, $35 billion for the HOME program and $10 billion for the Capital Magnet Fund. The bill includes $90 billion in rental assistance to low-income renters, including $75 billion for hundreds of thousands of Housing Choice Vouchers, with $25 billion of those funds aimed at helping those who have experienced or are at risk of experiencing homelessness. Eighty billion dollars is aimed at addressing public housing capital backlog. The legislation provides $8.5 billion for Community Development Block Grant funding, including targeted funding for colonias and manufactured housing communities. The bill includes $10 billion in first-time, first-generation homebuyer down payment assistance. The bill provides $2 billion for the Indian Housing Block Grant Program and $9.64 billion for a housing investment fund.

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Rep. Maxine Waters, D-California, introduced legislation Sept. 7 to alter the Emergency Rental Assistance (ERA) program. H.R. 5196, Expediting Assistance to Renters and Landlords Act of 2021, aims to expedite the processing of applications so ERA grantees can hasten the delivery of assistance. Changes include expanding eligibility criteria to cover hardships that happened during the pandemic; codifying that tenants are allowed to identify themselves as eligible; and extended the time period during which a household may receive either ERA1 or ERA2 assistance.

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The Affordable Housing Tax Credit Coalition named developer Woda Cooper Companies Inc.’s The Livingston in Columbus, Ohio, as the recipient of the Affordable Housing Tax Credit Coalition’s Charles L. Edson Tax Credit Excellence Awards in the Senior Citizens category. The awards celebrate developments and organizations that have used LIHTCs in meaningful ways. The Livingston was a joint venture between Woda Cooper, Gertrude Wood Community Foundation and LifeCare Alliance, combining new construction with restored architectural components from an art deco theater built in 1940. Developments in nine states received Edson Awards.

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The U.S. Census Bureau released Sept. 14 its 2021 Current Population Survey Annual Social and Economic Supplement report. The report indicated that, between 2019 and 2020, real median household income decreased 2.9% to $67,521 and the total number of people with earnings decreased by about 3 million. The number of those who worked full time, year-round decreased by approximately 13.7 million. The real median earnings of all workers decreased 1.2%, while the real median earnings of those who worked full time, year-round increased 6.9% between 2019 and 2020. The poverty rate increased for the first time after five consecutive annual declines, reaching 11.4% in 2020, up almost a full percentage point from 10.5% in 2019. In 2020, there were 37.2 million people in poverty, approximately 3.3 million more than in 2019.

LIHTC State

District of Columbia budget legislation that includes a tax exemption for low-income housing tax credit (LIHTC) properties owned or controlled by nonprofit organizations is now law. B24-285 also includes provisions to exempt LIHTC housing from property tax and payment in lieu of tax if is developed on property that has been awarded a grant or loan from the Housing Production Trust Fund or other District government low-income housing financing assistance programs to provide affordable housing to householders earning no more than 80% of the adjusted median income. The legislation makes slight changes to the requirements for a property owner to transfer, sell or assign a District of Columbia LIHTC to another taxpayer.

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The Wisconsin Housing and Economic Development Authority (WHEDA) announced Sept. 28 it awarded federal 9% housing tax awards for its 2021 Innovation Housing Tax Credit program. Two developments, one in Madison and one in Grafton, each received $8 million each in tax credits. A 32-home development in Grafton, Woodside Prairie, developed by Impact Seven, is a new supportive housing development geared toward helping autistic adults. The Salvation Army developed The Shield in Madison, which caters to residents with special needs, including 11 homes for individuals who have experienced homelessness and 22 apartments for survivors of domestic violence and others with special needs. WHEDA’s award is expected to generate a total of $14 million in equity for the two projects.

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California Gov. Gavin Newsom signed legislation that expands the state’s LIHTC to additional buildings “at risk of conversion” and allows LIHTC allocations for adaptive reuse. AB 447 expands the types of programs that qualify as governmental assistance under the definition of properties “at risk of conversion.” The legislation also changes the definition of “at risk of conversion” for rent-restricted properties to include only properties where 50% of units are restricted to initial occupancy by lower-income households. AB 447 also expands the definition of adaptive reuse to include hotels and motels converted to residential use within five years of the date of application for the credit.

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The Arizona Department of Housing published a notice of funding availability (NOFA) for 2021-2022 state housing fund that includes additional funding and expanded eligibility for properties that received 9% LIHTC reservations in 2020 and have experienced cost overruns. The NOFA also expands eligibility to 9% LIHTC applicants in rural areas. Applicants will be eligible for up to $2 million in gap financing with a total of $24.5 million available through the state housing trust fund, national housing trust fund and HOME Investment Partnerships program. Applications can still be accepted from properties that submitted the 2021 9% application but are now seeking financing by 4% LIHTCs.

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The Missouri State Tax Commission affirmed the decision of a hearing officer from an Oct. 29, 2019, dispute concerning the charitable purposes exemption from property tax for low-income housing for the elderly and disabled. The commission’s finding said administrative agencies such as the Missouri State Tax Commission have no authority to declare a statute invalid or to interpret a statute in a way that is contrary to the plain terms of the statute, and that the language of the two statutory provisions were consistent. The taxpayer’s exemption, which allowed them to declare the property for charitable purposes, was allowed to stand.

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The Iowa Finance Housing Authority awarded more than $132 million in federal housing tax credits in September. The public housing authority anticipates 18 rental housing developments in Boone, Cedar Rapids, Clinton, Council Bluffs, DeWitt, Grinnell, Johnston, Marion, Marshalltown, Shenandoah and West Des Moines will create nearly 700 homes for Iowans. Six developments received $8.4 million each, which was the most allocated in this round.

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The Alabama Housing Finance Authority in September announced the selection of 19 multifamily housing developments to receive 2021 HOME Investment Partnerships Program funds and/or LIHTCs. Twelve are new constructions, seven are acquisitions and rehabilitations, totaling more than 1,000 homes. The announcement also included The Villas at York in Birmingham, Alabama, which will receive $1.3 million in National Housing Trust Funds.

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The Florida Department of Revenue announced that, effective July 1, 2021, a 100% exemption from ad valorem taxation is provided to owners of multifamily properties that provide affordable housing that meet certain criteria. The development must contain more than 70 homes and be subject to an agreement with the Florida Housing Finance Corporation. Such properties are considered used for a charitable purpose and exempt from ad valorem taxation.

LIHTC Dealmaker

The Richman Group Affordable Housing Corporation announced Sept. 22 that it closed financing of $850 million of affordable housing tax credit properties during the summer. The funds are expected to provide more than $400 million in tax credit equity for the acquisition, rehabilitation and/or new construction of more 50 properties located throughout the nation. Richman’s efforts will add more than 4,000 homes to its portfolio.

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WNC closed in September on a trio of funds that raised $255 million in institutional low-income housing tax credit (LIHTC) equity to build or rehabilitate more than 2,300 affordable homes. Forty-four million dollars from one fund targets Arkansas exclusively; the remaining homes are in Alaska, California, Georgia, Maine, North Carolina, North Dakota, New Hampshire, Oregon, South Carolina, Tennessee, Texas and Washington. The properties include multifamily and senior housing in urban, suburban and rural areas.

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The Paradise Community Village affordable housing complex in Paradise, California, rebuilt after the 2018 Camp Fire, reopened in late September. The property provides 36 homes. Community Housing Improvement Program’s reconstruction was financed with LIHTCs.

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Pacific Western Bank invested $30 million in a transit-oriented, multifamily development in Philadelphia. Method Company and Cimbra Partners are developing the site, which will provide 135,000 square feet for the multifamily building as well as 10,450 square feet of ground-level retail. The property is located in Philadelphia’s East Falls neighborhood near the Schuylkill River and the Southeastern Pennsylvania Transportation Authority.

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The Family Resource Center in Columbus, Nebraska, renovated a property into 34 affordable senior homes for those 55 and older. The homes are on floors above the senior center. Mesner Development partnered with the Columbus Community Foundation to develop the property. The endeavor included a $3.2 million LIHTC allocation as well as $1.5 million in Housing Trust Fund financing. The property previously hosted a hospital as well as several nonprofits.

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Merchants Capital announced Sept. 15 it secured more than $26 million in financing to acquire the 240-home Island Terrace, an affordable housing development in Chicago. After acquisition, the borrower, Preservation of Affordable Housing Inc., plans to syndicate the property using 4% and 9% LIHTCs. Upon syndication, the property will be divided into two condominiums, with 178 homes housed in the 4% LIHTC property and 62 in the 9% LITHC property. Ninety-nine homes will be for those earning between 60% and 80% of the AMI with 44 more covered under Section 8. Renovations are expected to begin in mid-2022.

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A historic hotel and retirement facility in Belleville, Missouri, is now a senior affordable complex known as Lofts of the Square. The former Hotel Belleville and Meredith Memorial Home, shuttered in 2010, was a $14.2 million development built using historic tax credits (HTCs) as well as LIHTCs. The homes received $5.2 million in state and federal HTCs along with $9.3 million in LIHTCs. PNC Bank provided a combined $12.5 million in equity.

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The O’Connor Way Senior Housing development opened in August in Boston. The $20.8 million, 46-home development was built with $8.2 million in federal LIHTC funding from Boston Capital. The land, previously owned by the Boston Housing Authority, has been vacant for more than a half-century. The homes are for those 62 and older who earn between 30% and 60% of the area median income (AMI). Caritas Communities Inc. and the South Boston Neighborhood Development Corporation partnered to develop the property.

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KeyBank in September provided $28.1 million of fixed-rate Fannie Mae financing for two affordable housing communities in Clayton County, Georgia. Developed in a partnership between Zimmerman Properties and TriStar LLC, the homes are for those earning 50%, 60% and 70% of the AMI. In addition to LIHTCs, the property will be developed with $41 million in tax-exempt bonds. Villas at Mt. Zion will offer 96 homes for those 55 and older; Flats at Mt. Zion will provide 210 multifamily homes.

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East Boston Community Development Corporation and Trinity Financial broke ground Sept. 7 on the third phase of Overlook Terrace at Orient Heights in Boston. The third phase will deliver 123 homes, bringing the development’s total to 331. The third phase is being developed with equity from 4% LIHTCs; Phase 1 also used 4% LIHTCs. The development has been in progress since 2008, with construction on the first phase completed in 2018.

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Woda Cooper broke ground Sept. 9 on Ruth Park, an affordable housing property in Traverse City, Michigan. The $14.3 million development received $12 million in federal LIHTCs. The 58 homes are for seniors earning between 30% and 80% of the AMI.

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Woda Cooper celebrated Sept. 10 the grand opening of Seven45 Stocking, a 50-home property in Grand Rapids, Michigan. The $11 million development is for those earning between 30% and 80% of the AMI. Seven45 Stocking received a $9.2 million allocation of federal 9% LIHTCs in October 2017, with CREA LLC investing in the tax credits.

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Pennrose and the Redevelopment Authority of the City of York held a grand opening Sept. 15 for State Street Crossing, a 4.21-acre redevelopment in York, Pennsylvania. The property features 56 homes across seven buildings in a mixture of affordable apartments and townhouses. Built with 9% LIHTCs, the site previously hosted a Danskin clothing factory.

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MassHousing closed Sept. 16 on $23.5 million in financing for the expansion of the Golda Meir House in Newton, Massachusetts. Nonprofit organization 2Life Communities is expanding the existing site, adding 68 rental homes for seniors. Financing includes $17 million in state and federal LIHTCs from the Massachusetts Department of Housing and Community Development. MassHousing provided $8.1 million tax-exempt construction and permanent loan as well as $15.4 million in tax credit equity bridge financing. Wells Fargo is investing in the tax credits. Completion of construction is anticipation in spring 2023.

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KeyBank Community Development Lending and Investment provided $16.3 million for development of Homeward Central Harlem, a lesbian, gay, bisexual, transgender and queer-focused property. The development will serve those between ages 18 and 25 who have experienced homelessness. The property is receiving $14.3 million in LIHTC equity along with a $12.8 million construction loan and a $3.5 permanent loan through Freddie Mac to Type A Projects and Azimuth Development Group. Homeward NYC will become the beneficiary owner and provide long-term services to residents.

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A 75-unit senior property in Bay Shore, New York, serving those in the lesbian, gay, bisexual, transgender and queer community was completed Sept. 18. The $30 million Bayshore Senior Residence provides supportive services for its LGBTQ+ residents. Developers received $19 million in state and federal LIHTC equity. Tenants will earn 30% to 80% of the AMI.

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McCormack Baron Salazar (MBS) started construction in September on a 174-home mixed-income property with LIHTC units in Fort Worth, Texas. Cowan Place Senior Living is the first of six planned phases of new residential housing planned as part of Fort Worth’s Stop Six Choice Neighborhood Transformation Plan, a redevelopment initiative powered by a $35 million grant award to Fort Worth in April 2020 by the U.S. Department of Housing and Urban Development. Cowan Place, with 117 homes built using LIHTCs, is expected to open in 2023.

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MBS and the Housing Authority of the city of Pittsburgh closed financing in September on Phase 3 of Cornerstone Village. This $19.6 million phase, built with 9% LIHTCs, adds 42 mixed-income apartments. The development will achieve Enterprise Green Communities certification.

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Cinnaire closed in September a nearly $176 million LIHTC fund, the nonprofit financial partner’s largest multi-investor equity fund in five years. The fund will aim to build or preserve 1,648 homes in five states. The fund is the firm’s second-largest multi-investor fund since the firm was founded in 1993, with nine investors.

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A groundbreaking took place Sept. 16 for the Kokua Senior Living complex in Honolulu. Coastal Rim Properties and Highridge Costa are developing the 224-home, 20-story, $88 million affordable housing tower for seniors. The homes, which are being developed with LIHTCs, will be available to those 55 and older earning 30% to 60% of the AMI.

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The Housing Authority of the City of Brownsville, Texas, began in September the conversion of a hotel into affordable housing. The property received $11.8 million in state LIHTCs. Previously the site of the El Jardin Hotel, the development is slated to become a mixed-use property with homes as well as office and retail space. Construction is expected to begin in 2022 with a late 2023 opening.

LIHTC People

Wisconsin Gov. Tony Evers appointed Wisconsin Housing and Economic Development Authority board member Ranell G. Washington as the new board chair when Ivan Gamboa stepped down Oct. 1. Washington, president of business banking and community development with Town Bank in Milwaukee, brings experience as a credit analyst and business banker. Washington also is a partnership development adviser for American Family Insurance.

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Cinnaire appointed Sherita Smith in September as vice president of community development in Detroit. Smith will lead the firm’s targeted investment strategy in the Motor City, bolstering partnerships with local firms to advance Cinnaire’s initiatives. Previously, Smith served as executive director at Grandmont Rosedale Development Corporation, a nonprofit dedicated to serving the Grandmont Rosedale communities in northwest Detroit.

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The Washington State Housing Finance Commission named Wubet Biratu to head its asset management and compliance division. Biratu previously served as property manager at Portland’s Home Forward public housing authority, overseeing its affordable housing portfolio of 12 communities. Biratu will oversee more than 1,100 properties statewide in her new role.

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The National Council of State Housing Agencies elected Sept. 26 its board of directors for 2022. Scott Spivey, board chair and member of the Mississippi Home Corporation, and Margaret Salazar, vice chair and member of Oregon Housing and Community Services, were reelected. New Mexico Mortgage Finance Authority’s Izzy Hernandez and North Carolina Housing Finance Agency’s Scott Farmer were newly elected directors. Joaquín Altoro with the Wisconsin Housing and Economic Development Authority was newly elected to the office of secretary/treasurer.

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Merchants Capital added Sept. 22 Laurie DiBona as vice president of acquisitions in Boston and Lisa Zebro as vice president and deputy chief equity underwriter in New York. DiBona, who previously worked at Boston Capital and R4 Capital, will work with affordable housing developers throughout the nation to negotiate and structure lower-tier partnership agreements. Zebro, previously a manager in Ernst & Young’s tax credit equity division, will underwrite lower-tier and upper-tier investments in tax credit equity funds sponsored by Merchants.

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The Colorado Housing and Finance Authority announced Sept. 21 it named Rayla Maurin as its private activity bond (PAB) manager. Maurin, who will work to develop the Centennial State’s PAB strategy and deployment, brings more than a decade of experience to the post. Previously, Maurin worked in finance and affordable housing with Raymond James Tax Credit Funds, Citibank and real-estate developer LHP Capital.

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Sara Arnold was appointed vice president of asset management Sept. 29 for Irvine, California-based, real estate firm WNC. Arnold will help manage WNC’s portfolio. Arnold joins WNC from Wentwood Capital Advisors, where she spent more than a decade overseeing approximately 70 low-income housing tax credit properties as vice president of asset management. Before that, Arnold worked as for C.L. McDade & Company as a commercial real estate appraiser.

LIHTC Bond

St. Bernard’s Park Apartments, a 160-unit affordable senior housing property in Rochester, New York, finished rehabilitation in October. The cost was $27 million and included bonds as well as $5.8 million in federal 4% low-income housing tax credit (LIHTC) equity. It also received state and federal historic tax credits (HTCs) that generated $6 million in equity. The homes are for those 55 and older earning up to 60% of the area median income (AMI). The property was built as a seminary in 1891, but became affordable homes in the 1990s.

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New York Gov. Kathy Hochul announced Sept. 14 the opening of Vincent’s Village, a $42 million affordable/supportive housing property in Nanuet, New York. Funding for the property includes $7.5 million in bonds and $14.7 million in LIHTC equity. The development hosts 93 affordable homes for those 55 and older to households earning up to 60% of the AMI.

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New York Gov. Kathy Hochul announced Sept. 23 the completion of the Dayspring Campus, a supportive housing complex in Yonkers, New York. The 63-home affordable housing property with 37 apartments for families who have experienced homelessness and/or families with special needs includes $7.1 million in funding via bonds as well as $15.2 million in federal LIHTC equity. The development renovates a former church in the Nodine Hill neighborhood.

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Work started in September on a $96 million affordable housing property in Ithaca, New York. The 12-story development will feature 181 affordable apartments, including 40 homes for people in need of supportive services. Funding includes $11 million in bonds and $26.3 in federal 4% LIHTC equity. Rents are structured for those earning up to 80% or less of the AMI. The site also will include a 55,000-square-foot conference center.

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Developers Pat Biernacki and Victor Atkins announced in October a $63 million plan to renovate Granada Homes in San Antonio, Texas. The now-249-home senior property is getting full remodel. Financing includes bonds, 4% LIHTCs and state and federal HTCs. The upgrades will boost the number of homes to 265 from 249 as well as make improvements to the HVAC systems, windows, floors and restoration of common areas to replicate their 1920s origins.

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Construction began in earnest in October on a $31.5 million, 79-home complex in Fort Collins, Colorado. Funding includes bonds as well as state and federal 4% LIHTCs. The homes being developed by the Downtown Development Authority and Housing Catalyst are for those earning between 30% and 80% of the AMI. The site previously hosted a YMCA and an Elks Lodge.