(Photo: A home on the Red Cliff Indian Reservation that will be rehabilitated with the Red Cliff Rehab I LIHTC project.)
The Red Cliff Chippewa Housing Authority (RCCHA) of Bayfield, Wis., recently achieved two important milestones for its Low Income Housing Tax Credit (LIHTC) project, Red Cliff Rehab I: it closed the project with an equity investor, RBC Capital Markets, which will provide about 72 percent of the project’s $7.3 million cost, and it was awarded $320,000 in Affordable Housing Program (AHP) grant funds from the Federal Home Loan Bank of Chicago.
“Our community is smiling,” said Marvin Defoe, LIHTC project manager for RCCHA. “We are very pleased with this opportunity in making this rehabilitation project a reality. It will give our housing community a safe, healthy, and updated place to raise a family.”
The homes are a mix of single-family and duplex units that were originally constructed between 1967 and 1984. After rehab, each unit will have at least a one-car garage and a patio; the inside of each unit will also include an oven, refrigerator, dishwasher, microwave, clothes washer and dryer, and hard surface vinyl flooring. As part of the renovations, all units will receive new insulation, new efficient heating and air conditioning systems, new and upgraded plumbing and electrical systems, new driveways, new windows and roofs and completely new kitchens. The project will also build three new community playgrounds.
Wisconsin Housing and Economic Development Authority’s (WHEDA) award of $639,704 in LIHTCs in April 2013 made this project possible. The additional $320,000 grant through the Affordable Housing Program will reduce the tribal contribution for the project. The tax credit investor, RBC Capital Markets, will provide about $5.2 million over the course of the project, which is already under construction and is expected to be complete by next spring.
“RBC Capital Markets is proud to be a part of this transaction and looks forward to the 15-year partnership with the Red Cliff Chippewa Housing Authority,” said Stephen Lee, RBC investment analyst. “The closing of Red Cliff Rehab I, marks our eighth investment in Indian Country and fits within our overall goal of becoming the most sought-after syndicator partner in the tribal LIHTC space. We certainly look forward to seeing the finished product and for the opportunity to work with RCCHA on future housing projects.”
Travois, a mission-driven consulting firm that is focused exclusively on promoting housing and economic development for American Indian, Alaska Native and Native Hawaiian communities and is based in Kansas City, Mo., worked with the housing authority to submit the successful LIHTC and AHP grant applications, guided the project through closing, will be monitoring construction to ensure compliance with building codes and construction documents and will help the housing authority rent the units to qualified families once construction is complete.
“We are thrilled that the Red Cliff Chippewa Housing Authority is combining investor equity from the LIHTC program and AHP grant funds to rehabilitated much-needed housing,” said Bryan Schuler, Travois vice president for housing development. “These are critical tools that are helping to ease the devastating housing shortage and improve substandard living conditions in Indian Country.”
About the Low Income Housing Tax Credit program
The Low Income Housing Tax Credit program was developed by Congress is 1986, and its regulations are provided for in Section 42 of the Internal Revenue Code. It was created to encourage private investment in the construction or rehabilitation of housing for low-income families. The IRS makes tax credits available to each state, and the states are responsible for developing Qualified Allocation Plans (QAPs) and determining which projects receive awards. Investors are interested in buying tax credits to reduce the amount of taxes they owe the federal government. Tax credits offset taxes on a dollar-for-dollar basis for a 10-year period. Tribes can raise the equity they need for building projects through the LIHTC program, which lowers the amount a tribe will need to contribute to the project. It does not need to repay this equity but must follow all regulations for the 15-year compliance period.
About the Affordable Housing Program
The Affordable Housing Program is a competitive program that provides grants and subsidized loans to support affordable rental housing and homeownership opportunities. Member banks partner with developers or community organizations to finance the purchase, construction or rehabilitation of low-income or moderate-income housing. AHP funds can be used in combination with other programs and funding sources, including the LIHTC program and the Native American Assistance and Self-Determination Act (NAHASDA). For more information about AHP, visit the Federal Home Loan Bank of Chicago. View a summary of awards from the Federal Home Loan Bank of Chicago here.
About Travois
Founded in 1995, Travois is a mission-driven consulting firm focused exclusively on promoting housing and economic development for American Indian, Alaska Native and Native Hawaiian communities. Travois has brought more than $500 million in private investor capital to nearly 170 housing projects through the Low Income Housing Tax Credit program and more than $65 million in investor equity to 20 economic development projects through the New Markets Tax Credit program. These investor funds have helped build or rehabilitate 4,300 homes and have helped finance critical economic development projects, including infrastructure, health care, community centers, education facilities and other businesses. The Travois family of companies also offers architectural design and construction monitoring services, environmental assessments, consulting on green energy improvements, asset management services and comprehensive training to clients in 20 states, from Hawaii and Alaska to Maine. For more information, please visit www.travois.com or find us on Facebook, Twitter, LinkedIn, YouTube, Pinterest and Instagram.