THE ENVIRONMENTAL PROTECTION AND GROWTH MANAGEMENT DEPARTMENT AND THE HOUSING FINANCE AND COMMUNITY REDEVELOPMENT DIVISION RECOMMEND APPROVAL OF THE ABOVE MOTION.
This item supports the Board’s vision of offering sustainable, compatible, innovative housing options for all income-levels, including integrated supportive housing and rapid-rehousing: Goal 1: Facilitate a regional approach to growth and redevelopment through coordination and collaboration at the federal, state, county, and local levels; Goal 2: Strengthen stakeholder partnerships to increase the availability of affordable housing of all types (e.g. rental, purchase, supportive, etc.), county wide, in every community; and Goal 3: Develop, through effective community collaboration, neighborhoods and communities incorporating intermodal connectivity, while integrating energy efficiency, community resilience, and other livability standards and initiatives.
The 1986 Tax Reform Act allows the Housing Finance Authority of Broward County (the “HFA”) to exchange the Single Family Mortgage Revenue Bond (“SFMRB”) allocation for Mortgage Credit Certificates (“MCC”) to provide housing purchase assistance through federal income tax credits. The MCC is a federal income tax credit that is used in conjunction with first mortgage loans from a lender, excluding loans funded via mortgage revenue bonds or qualified veteran’s mortgage bond loans. With a MCC, the borrower is eligible to receive a tax credit (a dollar-for-dollar federal income tax reduction) for a portion of the annual interest paid on the mortgage, not to exceed $2,000, during each year that the borrower occupies the home as their principal residence. As an example, a 30-year mortgage loan in the amount of $150,000 originated on January 1, with an interest rate of 4.5% will accrue approximately $6,700 of mortgage interest in the first year. Presuming a 30% MCC rate, the MCC will allow the borrower a federal income tax credit of $2,000 if the MCC rate exceeds 20%). If a borrower’s annual federal income tax liability is $2,000 or more (after all credits and deductions have been subtracted), the borrower receives the total benefit of the MCC. The balance of the interest paid equaling approximately $4,700, still qualifies as an deduction for borrowers who itemize deductions within their tax return. The benefit from the MCC tax credit equates to of a reduction in the first-year interest cost from 4.5% to approximately 3.20%.
The Public Notice of the HFA to establish a MCC Program which was published in the Sun-Sentinel, on June 29, 2018 pursuant to Section 25 (e) (5) of the Code and Treasury Regulation 1-25T(j)(4).
At the June 20, 2018, board meeting, the HFA approved Resolution No. 2018-016 (Exhibit 2) authorizing the exchange not to exceed $140,000,000 of single family bond allocation to issue its Mortgage Credit Certificates, Series 2018 with a maximum MCC authority of $35,000,000. The Resolution was approved as to form by the Office of the County Attorney.
Adoption of this Resolution allows the HFA to exchange up to $140,000,000 of single family bond allocation to issue its 2018 Mortgage Credit Certificates, with maximum MCC authority of $35,000,000; authorizes the execution and delivery of the Program Administration Guidelines; authorize the execution and delivery of the Participation Agreements between the HFA and various lending institutions to participate in the MCC Program; and authorizes expenditures not to exceed $35,000.
Since May 2017, the HFA has provided MCC assistance to 93 first time affordable home buyers. |