MDHA has begun utilizing $11 million in nine percent Low-Income Housing Tax Credits (LIHTC) from the Tennessee Housing Development Agency (THDA) for Levy Place in East Nashville. MDHA has not sold Levy Place.
As required by the LIHTC program, MDHA has entered into a limited partnership arranged by City Real Estate Advisors (CREA), in which MDHA remains the controlling partner in the new Levy Place L.P.
Through CREA, Fifth Third Bank is buying the tax credits, resulting in $11 million in equity for Levy Place. That amount, along with loans from Pinnacle Bank, will provide $9 million in long-term renovation work at the East Nashville development. The deal also allows MDHA to receive $2.5 million for recapitalizing other affordable housing.
This allocation of tax credits came from THDA’s set aside for Rental Assistance Demonstration projects. Under the Rental Assistance Demonstration program, MDHA will convert all 20 of its public housing properties to Project-Based Rental Assistance (PBRA) by the end of 2017, with Levy Place as the first to make the transition.
The Rental Assistance Demonstration program removes the U.S. Department of Housing and Urban Development’s (HUD) declaration of trust on the property and gives MDHA the authority to mortgage and make much-needed capital repairs or redevelop existing developments, like Cayce Place.
The Rental Assistance Demonstration program also ensures the long-term affordability of the developments and requires a one-for-one replacement of all units. It is a key preservation strategy by HUD to recapitalize public housing.