W HERE ’ S O UR M ONEY ? 9% Tax Credits In Snohomish County

Who’s Receiving Tax Credits?

Tax Credit Basics Affordable Rents Tax Credits 99.9% Ownership Equity Federal Allocation State Housing Finance Commission Developer LIHTC Project Investor

Two Types Of Tax Credits 4% vs 9% - 30% subsidy vs 70% subsidy Depreciable costs only, affordable units only New construction or substantial rehab Affordability requirements Competitive vs. Noncompetitive 9% Credits4% Credits Total project costs$21,000,000 Less Ineligible costs($1,000,000) Eligible Basis$20,000,000 Applicable Fraction100% Applicable Percentage9.00%3.22% Annual Credit$1,800,000$644,000 Total 10 Year Credit$18,000,000$6,420,000

Challenges in 9% Projects COMPLEXITY Competition – need to go far above and beyond the minimum to score competitively TONS of categories that are given weight in scoring Challenges in working with mixed income and mixed use projects Commission determines the minimum funding required for financial feasibility Coordinating funding sources – no one wants to go first SOURCESPer UnitPercentage Tax-Exempt Bonds$6,000,000$68,18244% 4% Tax Credit Equity$4,134,727$46,98630% Snohomish County AHTF$772,500$8,7786% State Housing Trust Fund$2,000,000$22,72715% Deferred Fees$800,233$9,0946% TOTAL$13,707,460$155,767100% USES Acquisition$8,900,000$101,13665% Rehab$2,425,000$27,55718% Soft Costs$2,382,460$27,07317% TOTAL$13,707,460$155,767100% Source: HASCO (Olympic and Sound View Final Sources & Uses)

Why is Snohomish County Behind? Not a lack of skilled housing providers! Timely opportunity – high emphasis on serving homeless population High priority in scoring on local funding Project costs expected to be much lower than in King County – not necessarily valid Separate points for federal and state funding sources, but less emphasis No points possible for TOD or areas of high opportunity in the Metro pool