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November 2010

October 2010

McKonly & Asbury Holds Fall Affordable Housing Seminar

Blog main pic McKonly & Asbury hosted an informative affordable housing seminar on Monday, October 18, 2010 at the Giant Community Room in Camp Hill.

Brian Shull, Senior Development Officer at the Pennsylvania Housing Finance Agency (PHFA), talked about PHFA’s Preservation Through Smart Rehab Program. Brian talked about the program goal, target projects, eligibility to participate in the program, and the process to participate. This program is designed to provide financing for the installation of energy efficiency measures that materially reduce energy demand and utility costs of projects. To access an application for this program, click here

Angela Tracy, Customer Programs Director, of PPL Electric Utilities, spoke about energy efficiency, as well as the Winter Relief Assistance Program (WRAP). WRAP is a no charge weatherization program for PPL customers who use a certain amount of electricity and meet certain income guidelines. Energy educators show residents ways to reduce utility bills. Energy-saving measures such as insulation, appliance replacement, and air-sealing may be provided at no cost to the renter.

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McKonly & Asbury to Present “Tax Credits 101” at Homes Within Reach Seminar

Blog main pic McKonly & Asbury is pleased to offer “Tax Credits 101” as a Professional Institute  at the Housing Alliance of Pennsylvania’s 2010 Homes Within Reach conference. The Professional Institutes are new this year at the Homes Within Reach conference and are designed to go deeper into specific topics than the workshops allow time for. Join us on Monday, November 8, 2010, from 12:30p.m. – 5:30 p.m. at the Homes Within Reach conference at the Harrisburg Hilton for concentrated instruction on the various phases of developing a Low-Income Housing Tax Credit project. We will be joined by experts in their respective fields of the LIHTC industry for an in-depth look at all aspects of a tax credit development.  Topics and speakers to include:

Tax Credit Basics
In this session, you will learn about the low-income housing tax credit industry, how tax credits work, and what is involved in developing a tax credit project. Elizabeth Brooks of McKonly & Asbury’s Affordable Housing Segment, will present an overview of what you need to know to develop a LIHTC project and will include a comprehensive example “by the numbers” of a tax credit project.

Financing Your Project and Attracting an Investor
This session will explore how to finance a tax credit project.  Join Peter Kaplan of PNC Multifamily Capital as he discusses how investors and syndicators evaluate developments. You will also be given tips on what to look for in an investor’s commitment letter. We will examine sources of funds available to fill funding gaps and have David Doray from PHFA, Vicki Lori from DCED, and John Bendel from the Federal Home Loan Bank on hand to explain their funding sources and how to apply.

Site Selection and Designing the Building(s)
What are the steps to identifying a good site for your development? What happens after a site is identified? Does PHFA have to approve the site? Do I need an appraisal? Do I need an environmental audit? What are the steps to getting a land development plan? Tim Henkel of Pennrose Properties, LLC will discuss what makes a good site and what needs to happen after a site has been selected. There are several threshold criteria and many points to be awarded based on the design of your building(s). Nancy Bastian of Cecil Baker Partners will discuss threshold and points driven development amenities, unit amenities, visitability, digital accessibility, and energy conservation. We will also be discussing pitfalls to avoid when selecting your site and designing your building.

The Tax Credit Application
Elizabeth Brooks of McKonly & Asbury, will discuss what is needed for a feasible application. We will discuss the timeframe for putting an application together, what third parties need to be involved, and what information needs to be gathered by the developer. We will also walk through a development budget.

Interpreting Your Market Study
What is a capture ratio? Is the number good? How great is the need in the market you are planning to locate your development? Get these questions answered and learn more as Mark Shonberg of Barone, Murtha, Shonberg, and White will walk you through how to read and make sense of a market study.

Registration is through the Housing Alliance of Pennsylvania. For registration information, click here.


The 10% Test – It’s All or Nothing

Calculator The 10% Test deadline for projects that received 2009 low-income housing tax credits in Pennsylvania is quickly approaching. These projects have until November 2, 2010 to incur 10% of their reasonably expected basis; and until November 11, 2010, to submit the required information to the Pennsylvania Housing Finance Agency. This is an important test because failure to satisfy it can cause a project to lose its tax credits.

Generally, a project must be placed in service in the year that the low-income housing tax credits are awarded by the state housing finance agency (in Pennsylvania, this is PHFA). A carryover allocation can extend the placed in service date to the end of the second calendar year after the year that a carryover allocation is made.  In order to obtain the extended time for placing a project in service, the project must receive a valid carryover allocation agreement and satisfy the 10% Test timely. 

In order to meet the 10% Test for 2009 credits, a project must incur 10% of the reasonably expected basis by November 2, 2010. Reasonably expected basis is the estimated land and all depreciable property (not just basis eligible property) expected to be part of the project. Projects should already be planning how they are going to meet the test. One issue to keep in mind is that including a portion of the developer’s fees will require certain documentation. Another issue is that purchasing and storing materials prior to the commencement of construction will require advanced planning and appropriate documentation.

McKonly & Asbury is a leader in accounting for affordable housing projects in Pennsylvania. IRS and PHFA regulations require specialized knowledge when preparing a 10% Test. This test is critical in the tax credit process and it is important to work with someone who has the experience and expertise to ensure that your Test is accurate and your credits are not lost. The M&A Team has the audit and tax expertise and experience needed to complete an accurate 10% Test. For more information, please contact Elizabeth Brooks at ebrooks@macpas.com.

The information presented in this post is intended solely for informational purposes and should not be construed as accounting advice from McKonly & Asbury, LLP.