The Oregon Affordable Housing Tax Credit (OAHTC) is a state tax credit available to qualified Oregon lenders who reduce finance costs on permanent loans made to developers of affordable housing projects. For most projects, the savings realized from the reduction in finance charges must be passed through to low-income tenants or members of Limited Equity Homeownership Cooperatives in the form of reduced rents or housing payments. This Pass-Through requirement is a function of the reduction in finance charge and is only available to affordable housing projects with OAHTC-attached perm loans that are not pass-through exempt. In practice, lenders who agree to reduce interest rates on perm loans by up to 4% are eligible to claim an annual credit to make up for the lost income for the term of the OAHTC.
Pass-through requirement. Affordable housing developers benefiting from the interest rate reduction on OAHTC-attached loans must pass through the savings realized from the lower finance payments to tenants in the form of reduced rent. The pass-through can be spread out uniformly over every eligible unit or targeted at a smaller number of eligible units to achieve deeper affordability. OHCS will require annual verification that the full required pass-through amount is used to reduce rents.
Pass-through exempt project types. These project types are preservation of federal rent assistance contracts from HUD or USDA RD, manufactured dwelling parks, projects with project-based rent assistance from federal, state, or local sources, and affordable rental housing projects within OHCS's portfolio that are characterized by financial or physical distress that threatens the project's ongoing viability. With these project types, the savings accrued from the interest rate reduction become equity in the project and an inducement to preserve the PBRA, the affordable housing, and the MDP.
OAHTC for affordable rental housing projects is available through the ORCA process.
OAHTC is generally paired with other OHCS resources. OAHTC can be used as a standalone resource for refinancing expiring OAHTC-attached perm loans or for acquisition of housing for conversion to affordable.
Applicants interested in applying for OAHTC for homeownership projects will need to use Homeownership Division's
NOFA process.
Monitoring and compliance requirements. Lenders holding OAHTC-attached loans must submit an annual OAHTC report along with a 5% charge of the tax credits used. The requirements for the annual report are listed in OAR 813-110-0030(2).
Borrowers with OAHTC-attached loans must report annually to Portfolio Administration and Compliance. Borrowers should be aware that the cost of the 5% charge remitted to OHCS by lenders is generally passed on to the borrower and they should plan accordingly.