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This Just In... OCC's Districts Report on Investment Opportunitites for Banks
John Farrell (617) 482-1643 Equity Opportunities Grow In DelawareThe Delaware Community Investment Corporation (DCIC) recently closed a $30 million equity fund under the organization's Affordable Housing Equity Program. DCIC finances and invests in housing and related activities designed to address the needs of low- to moderate-income people in Delaware. DCIC was established as a multibank community development corporation in 1994. One of DCIC's goals is to sponsor and administer an equity fund through which Delaware banks may invest equity in projects throughout the state that qualify for tax credits. With the addition of this new round of funding, the total equity made available by DCIC for affordable housing projects has grown to over $150 million. These funds have assisted in the production of 2,400 units of affordable housing. In December 2004, DCIC announced eleven investors committed $10 million to its New Market Tax Credit Fund (NMTC). DCIC was the first community development entity in Delaware to receive an allocation of tax credits under the NMTC program. It is now taking applications for qualifying projects that will involve the development or rehabilitation of real estate considered to be public investments. For further information, contact Doris Schnider, president of DCIC, at www.dcicnet.org or (302) 655-1420.Return to the top of the page.
Paul Ginger (312) 360-8876
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Karol Klim (678) 731-9723 x252
David Lewis (214) 720-7027
The Low Income Housing Tax Credit Program (LIHTC), created in 1986 and made permanent in 1993, is an indirect federal subsidy used to finance the new construction or rehabilitation of affordable rental housing under section 42 of the IRS code.
In 2001, the Georgia House of Representatives and Senate unanimously approved a state LIHTC program administered through the Department of Community Affairs. The credits provided by the program offer a dollar-for-dollar reduction in state income taxes and can satisfy bank CRA requirements in many instances.
Stateside Capital, LLC, headquartered in Atlanta is a for-profit organization formed to consolidate credits from various sources and offer them as investment opportunities to banks, corporations, and individuals. Minimum investments range from $100,000 in commingled funds to substantially higher amounts in private partnerships. The credits flow over a 10-12 year period and rates of return will vary with market conditions. The funds are comprised of properties throughout the state of Georgia that meet required tenant income guidelines. Because the state program mirrors its federal counterpart, the state investor receives the benefit of the due diligence performed by the large federal tax credit investors as well as the federal tax credit syndicators. For information or to contact Stateside about investment opportunities, e-mail rbeacham@statesidecapital.com, or call (404) 250-4190 or go to www.statesidecapital.com.
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Susan Howard (818) 240-5175
Dave Miller (720) 475-7670
In 1996, California Organized Investment Network (COIN) was incorporated to stimulate capital investing by California's insurance industry. By investing in economic development and affordable housing projects and programs, the state's low-and moderate-income (LMI) urban and rural communities would benefit. Originally established as a three-year pilot program, COIN has become a permanent operation with a staff of three, soliciting and analyzing investment opportunities throughout the state. Since 1997, over $1.3 billion has been invested in 635 COIN qualified community development investments. Investments are made on a direct or indirect basis (through intermediaries), and run the gamut of CRA and community development qualifying investments. The organization regularly identifies opportunities in its Investment Bulletins and reports on new investment opportunities . COIN also runs its own community development financial institutions (CDFI) program, certifying community development programs and projects around the state.
Two popular programs stand out among the opportunities identified by COIN. First are the deposits or equity investments in California's community development banks and credit unions. COIN recommends that the investments be made in federally insured financial institutions but does not make any recommendations relating to interest rates. Each institution negotiates with depositors on rates, varying from 0 percent to market rate. The second well-known opportunity is the COIN CDFI Premium Tax Credit Program. COIN has received an annual allocation of $10 million from the state budget. An insurer or other financial institution may make an investment (minimum $50,000) into a COIN-certified CDFI and receive a 20 percent tax credit based on an investment maturity of at least five years. Many of California's insurers and banks of all asset sizes have participated in both programs over the last seven years.
For more information on COIN, please visit its Web site at www.insurance.ca.gov/COIN. Delores McKinnon, the organization's director, may be reached at McKinnonD@insurance.ca.gov.
The Iowa Equity Fund, LLC (IEF), a limited liability company formed in 2001, promotes the development and sustainability of affordable housing through the use of the federal low-income housing tax credit (LIHTC) program. The formation of IEF resulted from cooperative efforts of many experienced Iowa affordable housing developers, and financial grants from the Iowa Finance Authority, as well as several banks. In addition to underwriting investments in the federal LIHTC program, IEF staff provides technical assistance to developers, owners, and management companies on the development and management of tax credit properties. IEF will syndicate and assist in all types and sizes of affordable housing properties with emphasis on rural, difficult to develop areas, and service intensive properties, such as rent-to-own and transitional housing. Every 12 to 18 months IEF sponsors an investment fund to invest or syndicate tax credit developments throughout Iowa. Traditionally, the investment funds seek Iowa-based corporate investors.
IEF is an affiliate of the Midwest Housing Equity Group, Inc. (MHEG), a 501(c)(3) nonprofit corporation. MHEG staff provides IEF with underwriting, management, and compliance expertise based on extensive experience with syndication of tax credit properties. MHEG also has over $110 million in current investments supporting more than 1,500 units of affordable housing in Nebraska, Iowa, and Kansas.
For additional information, please contact Iowa Equity Fund at (515) 280-6000 or visit its Web site at www.mheginc.com/IEF/iefwhat.htm.
