Empowering Affordable Housing Success through Nonprofit Partnerships. In the world of affordable housing, teaming up with nonprofit developers can be a transformative strategy. The benefits are significant and can reshape your project's outcomes.

At the core, these partnerships boost your competitiveness for low-income housing tax credits (LIHTC). Many states reward points for nonprofit involvement, which escalates as their ownership interest and participation level increase. These points can tip the scale in a competitive LIHTC environment. Having a nonprofit expert in resident services on your ownership team further elevates your chances. Some agencies even acknowledge partnerships with Year 15 right of first refusal (ROFR) for nonprofits, making a significant impact in the race for LIHTC awards.

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There is more to gain, Nonprofits play a pivotal role in securing state and local gap subsidy funding, pivotal for financial feasibility and access to 4% credits via tax-exempt bond financing. In Washington, D.C., a 100% tax exemption is granted to LIHTC-regulated properties controlled by nonprofits. This exemption reduces financial gaps by leveraging more first mortgage debt. Similarly, Maryland offers tax benefits for nonprofit-affiliated affordable housing projects. Many city and state programs, including CDBG, HOME, and housing trust funds, prioritize nonprofit-involved projects. Beyond finances, nonprofit partnerships offer expertise in construction administration, resident services, and community relationships.

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Nonprofit organizations enjoy income tax exemptions, rendering the tax-related benefits of tax credits inconsequential to them. Nonetheless, engaging in a tax credit project offers nonprofits several advantages, including:

• Project Development Opportunity: Tax credits attract diverse stakeholders to the development process, fostering collaboration that might not occur otherwise. This support proves invaluable for nonprofit entities lacking the resources, expertise, or initial capital required for standalone project development.

• Enhanced Financing Leverage: Tax credits can serve as powerful leverage in securing financing for projects.

• Overhead Coverage: Upon successful development and syndication, the nonprofit general partner becomes eligible for several fees, covering essential overhead expenses. These may include a developer's fee, property management fee (if managing the property), partnership management fee, and incentive management fee.

• Path to Ownership: Nonprofit developers often acquire an option to purchase the project after the 15-year tax credit compliance period. This arrangement contributes to the creation of enduringly affordable housing.

• Publicity for Fundraising: Participation in tax credit projects provides exposure, aiding nonprofits in raising essential funds for their endeavors.

• Property Management Opportunity: Involvement in tax credit projects can open doors for nonprofit organizations to engage in property management, extending their impact beyond development.

 

In essence, tax credit projects present nonprofits with a range of strategic benefits, enabling them to advance their mission while contributing to the creation of affordable housing and fostering community development.

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At Housing For communities, we are dedicated to more than just providing housing solutions. We believe in empowering communities and individuals through building capacity and offering comprehensive technical assistance.

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Together, building capacity and providing technical assistance form the backbone of our approach. We believe that sustainable development is not only about structures but also about empowering individuals and organizations to thrive and drive positive change.

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