In early February, 2009, Congress passed an economic stimulus package, "The American Recovery and Reinvestment Tax Act of 2009" includes several provisions modifying and expanding the scope of the energy efficiency and renewable energy incentives. Now, just over a year later, Denver Gardens, an affordable housing complex in Denver, is one of the first projects in Colorado and among the first in the country to receive financing through the Tax Credit Assistance Program (TCAP). The project was awarded $1.7 million in TCAP funds by the Colorado Housing and Finance Authority (CHFA) which helped close the gap it was facing due to the recent decline in tax credit market values. With this award, Denver Gardens was able to close the $14 million purchase and renovation transaction that will provide more than 100 low-income seniors with a place to call home.
The renovation plan for Denver Gardens, totaling $3 million, includes nearly $1 million of sustainable features to lower the project’s energy costs and improve livability for its residents. Green features include the installation of photovoltaic panels and energy-efficient appliances, windows and lighting.
The bond that helped fund the project was issued by Fannie Mae and purchased by the CRA Qualified Investment Fund, a market-rate, community development bond fund. Bank of Oklahoma, an affiliate of Colorado State Bank and Trust, helped provide funding for Denver Gardens through its investment in the CRA Qualified Investment Fund.
"The recent economic decline has significantly impacted the ability of Low Income Housing Tax Credits (LIHTC) to fund critical affordable housing projects nationwide," said Barbara VanScoy, Senior Portfolio Manager of the CRA Qualified Investment Fund. "The TCAP has been vital in spurring the completion of high quality, affordable housing projects for low income people that otherwise would not have been finished." The failure of LIHTC to fund affordable housing projects began in early 2008. This spurred the United States Congress to create the TCAP as part of the American Recovery and Reinvestment Act. The program was funded with $2.25 billion nationwide and enabled LIHTC allocating agencies, such as CHFA, to use the funds to provide grants or loans to affordable housing developments like Denver Gardens.
"Denver Gardens is a great example of how innovative tools help satisfy our commitment to our communities," said Greg Symons, CEO of Colorado State Bank and Trust. "We believe in giving back and the CRA Qualified Investment Fund's purchase of this bond on behalf of Colorado State Bank and Trust helps provide quality, affordable and sustainable housing for low income families when it is needed most." A few notable changes for energy efficiency and renewable energy incentives:
- Energy efficiency incentives for upgrades to existing homes have been extended, and are now available for 2009 and 2010.
- The financial cap for these incentives, which cover home envelope improvements as well as heating, cooling and water heating equipment, was increased to $1,500 (from $500). The cap applies to one's combined credit for 2009 and 2010 (e.g. if one claims $1000 in 2009, up to $500 may be claimed in 2010).
- Lower caps, such as the $200 cap on new windows, have been abolished. The existing home incentives are now calculated at 30% of the cost of the installation, up to the $1,500 cap. The legislation is unclear on whether this includes both equipment and labor, however previous IRS rulings suggest that labor is NOT included.
- Standards for equipment eligibility have changed – see the individual topic pages under the Consumer tab for details (coming soon).
- On-site renewables (solar photovoltaic and hot water systems, small wind systems, and geothermal heat pumps) are now eligible for a tax incentive worth 30% of the total cost, without a cap.
[Note: Community Capital Management and the CRA Qualified Investment Fund Community Capital Management is a Fort Lauderdale-based SEC-registered investment advisor, , Colorado State Bank and Trust is a subsidiary of BOK Financial Corporation, which is a regional financial services company that provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network, www.bokf.com.]