WASHINGTON – The U.S. House of Representatives has voted a sizable boost in funds for the Low Income Housing Tax Credit, rapidly becoming a key vehicle for bringing private money into American Indian housing.
Under provisions of the bill, the program will see its allocation increase by 40 percent over five years, from $1.25 per person per state to $1.75. Therefore, a tribe-heavy state like California, with 30 million people, can expect to see its tax credit funding jump from $37.5 million a year to $52.5 million, if the Senate also passes HR 4923.
The National American Indian Housing Council here noted that a “New Markets” provision in the bill that calls for a series of “American Private Investment Corporations” to aid low-income communities specifically requires one of these entities must be for Native Americans.
The tax credit program was adopted by the U.S. government in 1986 but not used in Indian country until the last couple of years.
Investors fund housing construction by buying – at discount – tax credits which they can use to offset corporate tax liabilities. The cash they pay for the credits is used to fund the houses, usually in tandem with other financing sources.
David W. Bland, principal in Travois, an affordable housing and community development firm based in St. Paul, Minn., which has tapped the tax credit market, says his firm has plans to help more than 30 tribes find $39 million of investor equity to finance $62 million in housing.
Travois has worked with the Raymond James Tax Credit Funds Inc., of St. Petersburg, Fla., which has a fund to invest exclusively in American Indian tax credit projects and other sources.
Completed Travois projects include the Felsman Addition on the Flathead Reservation in Montana, home of the Salish and Kootenai tribes, Yankton Sioux Homes I on the Yankton Sioux Reservation in South Dakota, Eagle Nest Homes I on the Pine Ridge Reservation in South Dakota, Red Lake Homes I in Red Lake, Minn., Elk View Homes I on the Cheyenne River Reservation in South Dakota, and White Mountain Apache Homes I on the Fort Apache Reservation in Arizona.
Taken together 654 units have been planned through Travois, with 13 completed projects, 13 under construction, and the rest pending, Bland said.
Raymond James said its $25 million Indian Country Tax Credit Fund, working with Travois, will have invested in 319 homes with 11 different tribes in seven states by the end of 2001.
Investors have included Wells Fargo Bank, U.S. Bank and Key Community Development, it said.
Raymond James recently documented one of the first Indian families to benefit from its fund when Cathy Waukau and her four boys moved into a three-bedroom home on the Menominee Reservation in Keshena, Wis.
Ms. Waukau is paying just $230 a month for the house, which has a lease-to-own provision to enable homeownership after 15 years. Tax credits helped finance 19 single-family homes on the Menominee Reservation, the firm said.
Altogether a million units of low-income housing have been financed around the country by the low-income tax credit. Generally, the programs are administered by the state Housing Finance Authorities.
Typically, tax credit money does not completely fund a project, but it may finance half or more. In the case of the Felsman Addition, dedicated last spring, money also came from the Affordable Housing Program of the Federal Home Loan Bank of Seattle.
In that case, the investor was the Enterprise Social Investment Corp., a unit of the non-profit Enterprise Foundation of Maryland. ESIC and Fannie Mae, the mortgage secondary market agency, recently put up $1 million for the first tax credit deal to get underway in New Mexico.
