Real Estate Properties

Developments In Process

HOPE VI

Bond Financing

Bond Financing

The Charlotte Housing Authority (CHA) will provide bond financing for multifamily housing development through issuance of 501(c)(3) bonds and Private Activity Bonds. CHA's preference is that proposed deals for issuance have credit enhancement through a recognized lender/credit enhancement provider. CHA will consider issuing bonds for non-credit enhanced transaction, subject to underwriting and credit review.

501(c)(3) Bonds

The 501(c)(3) bond program was developed to provide financing for multifamily housing. By definition, the owner must be a government entity or have nonprofit status meaning the organizations must meet the requirements of Section 501(c)(3) of the Internal Revenue Code. These bonds require no allocation of private activity bond volume cap or other resources and there are no limitations on the amount of the bond proceeds which can be used for the acquisition of land and existing facilities. Bond interest rates with this program are equal to or better than to other tax exempt bond rates, but in markets where income levels are lower, additional subsidies may be needed to ensure that the project is economically feasible. Unlike private activity tax-exempt bonds, low income housing tax credits are not compatible with 501(c)(3) bond financing.

Private Activity Bond
(also known as Tax Exempt Bonds)

Private Activity Bonds are bonds issued by or on behalf of the state or local governmental entities for the benefit of a private company. The purpose is to provide special financing benefits for qualified projects. These bonds are used to attract private investment for projects that have some public benefit. Interest on the bonds is generally exempt from federal income taxes for investors, which typically result in lower long term interest rates to the borrower.

Within the housing arena, tax exempt bonds can be combined with 4% federal low income housing tax credits. The North Carolina Housing Finance Agency reviews tax exempt bond/4% credit deals for allocation annually. See their website (www.nchfa.com) for details on application timing and requirements.

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