Leverage for Low-income Housing Tax Credits Program

Allocation: $100,000,000

This program provides Community Development Block Grant – Mitigation (CDBG-MIT) funds to qualifying entities that propose projects that incorporate at least one of the mitigation strategies described in the CDBG-MIT Action Plan and prioritize projects in areas with the lowest proportion of rental housing units outside the highest-risk areas.

CDBG-MIT LEVERAGE FOR LOW-INCOME HOUSING TAX CREDITS PROGRAM

A significant portion of the rental population needs housing options capable of mitigating the risks that affect Puerto Rico to the greatest extent possible. The Puerto Rico Department of Housing (PRDOH) realizes that the challenges Puerto Rico faces to recover from disastrous events are countless opportunities to institute true mitigation measures to address the pressing risk mitigation needs of renters who are disproportionately likely to reside in high-risk areas for flooding and/or landslides.

These risks can be mitigated through strategic site selection, as the severity of risk is based heavily on the geographic characteristics of a given area, unlike other risks associated with exceptional natural events. Any assisted housing development, however, must still incorporate building standards and methods that mitigate other risks that threaten structures in Puerto Rico, as identified in the Action Plan.

The LIHTC-MIT Program will address the need for safe, quality, resilient, and affordable rental housing in Puerto Rico. Consequently, the Program will help expedite the construction and availability of affordable housing units on the Island. The CDBG-MIT funds will provide up to eighty percent (80%) of the Developer’s funding for constructing these housing units. The Developer can secure the remaining funds from a construction and/or permanent loan from a private lender or private source, and equity in exchange for tax credits.

GUIDELINES

FileAction
Program Guidelines (V1.0)--Updated 11/18/2024Download

    Projects funded through the LIHTC-MIT Program will mitigate risk for rental housing by one of the following:

    • Rehabilitation of existing structures to incorporate modern building codes and methods, such as elevations to make the residential structures more resilient against the impacts of natural disasters. This effort may also entail acquiring properties for rehabilitation purposes.
    • New construction of resilient rental housing options utilizing strategic site selection outside areas where the geography presents localized risks. This initiative may also include the acquisition of properties for new construction.

    The LIHTC-MIT Program will additionally encourage the conversion of non-residential (commercial, industrial, etc.) vacant structures located outside of high-risk areas into affordable rental housing.

    Foto de apartamentos
    Leverage for Low-income Housing Tax Credits Program

    THERE ARE TWO TYPES OF TAX CREDITS FOR THE ACQUISITION, REHABILITATION, OR CONSTRUCTION OF RENTAL HOUSING FOR LOW-INCOME HOUSEHOLDS

    9%

    Available for the construction or renovations that are not financed with tax-exempt bonds.

    4%

    Available for existing homes, construction, or renovations financed with tax-exempt bonds.

    SUMMARY OF THE ELIGIBILITY AND APPLICATION PROCESS

    Under the Puerto Rico Housing Finance Authority (PRHFA) Qualified Allocation Plan (QAP) and the subsequent Notice of Funding Availability (NOFA) that incorporates LIHTC-MIT criteria, PRHFA may provide an allocation of LIHTC, either through the competitive selection criteria for 9% LIHTC, or the allocation of 4% LIHTC to projects financed with tax-exempt obligations subject to the annual private activity bond (PAB) volume cap limitations under Section 146 of the Internal Revenue Code.

    Contingent on available CDBG-MIT funding, PRHFA will plan subsequent funding rounds and continue to address the increased need for affordable rental housing stock. CDBG-MIT funds, in conjunction with LIHTCs and other financing, will be leveraged to maximize funding sources and create projects that accomplish multiple goals.

    Applicants are encouraged to review the information in the QAP, CDBG-MIT Action Plan, and Program Guidelines before applying during the NOFA funding round.

    Prior to being awarded CDBG-MIT funding, the following must be completed and submitted for each eligible project:

    • PRHFA LIHTC Program Threshold Review;
    • PRHFA LIHTC Program Ranking Evaluation under the applicable QAP;
    • PRHFA LIHTC Program Technical Feasibility Study and Cost Evaluation;
    • Initial PRHFA LIHTC Program Underwriting Analysis and Subsidy Layering Review; and
    • PRDOH Environmental Review Process.

    ASSISTANCE

    The maximum award amount will depend on the type of project proposed by the Applicant. Applicants for projects that will convert abandoned non-residential buildings (commercial, industrial, etc.) into affordable housing can receive up to eighty percent (80%) funding of the project’s cost. Applicants rehabilitating existing residential structures or constructing new residential structures for affordable rental housing can receive up to sixty percent (60%) funding of the project’s cost.