Housing Bonds Overview
The Washington State Housing Finance Commission issues both
tax-exempt and taxable bonds to provide below market-rate financing
to nonprofit developers and to for-profit developers who set aside a certain
percentage of their units for low income individuals and/or
families. Tax-exempt Bonds
Tax-exempt bonds, also known as private activity bonds, are bonds where the interest
earned by the bondholder(s) is exempt from
federal taxation. Because the interest is tax-exempt, the debt has lower interest rates than traditional
financing. The interest rate depends on the
characteristics of the project and the rating of the bonds. The
Commission issues two types of bonds: Multifamily Bonds and
501(c)(3) Bonds. Tax-exempt Multifamily
Bonds
Multifamily bonds are subject to
annual volume limits (“Bond Cap”) based on the state’s population. In
2006, the Commission allocated nearly $203 million in Bond Cap to
multifamily housing projects across the state. Projects financed with
Multifamily Bonds must have 5 units or more, be complete with kitchens
and bathrooms, and have some units set aside as low-income units.
More...
Low Income Housing Tax Credits
combined with Tax-Exempt Multifamily Bonds
If
more than 50% of a project is financed with tax-exempt Multifamily
Bonds, the project may access the 4% Low Income Housing Tax Credit
without competing for an allocation of LIHTCs. This program allows
developers to combine low interest rates on long term debt with a
substantial equity contribution from an allocation of LIHTCs. Nonprofit
developers can take advantage of the benefits of LIHTCs by forming a
partnership with a for-profit tax credit investor.
More...
Tax-exempt 501(c)(3)
Bonds
Nonprofit 501(c)(3) bonds can be
used to finance housing projects wholly owned by a 501(c)(3)
organization, as long as the project fits within the charitable purpose
of the organization. In 2006, the Commission issued nearly $257 million
in nonprofit housing bonds. These bonds are not subject to annual Bond
Cap limitations and cannot be combined with the LIHTCs. However, nonprofit
501(c)(3) bonds are less restrictive regarding the types of units
allowed – individual units are not required to have complete kitchens or
bathrooms, and there are generally no income restrictions placed upon
the project.
More...
Programs
This page was
modified on 05/04/2007.
|
