Page 18 - OPG Presentation - Shallowater

TaxCredits101:
How the Program Works
• The Internal Revenue Service (IRS) allocates FEDERAL tax credits, ($2.50 / person in each State), to the State Housing Agencies (Texas Dept. of Housing & Community Affairs - TDHCA).
• TDHCA allocates the tax credits to eligible affordable housing developers in each of the State’s 13 regions through a highly competitive application process. (See Map on next page)
• Shallowater is located in Region 1 and is designated “rural”
• Each region is allowed a minimum of (1) Urban and (1) Rural allocation
• Generally, a winning application includes a variety of very specific scoring items like the elementary school’s TEA score, proximity to another tax-credit development, amenities, and local contribution from the municipality.
• If successful, the developer then sells the tax credits to investors to obtain equity for their project.
• The developers use the equity generated from the sale of the tax credits to lower the debt burden on the development, making it easier to offer lower, more affordable rents.