3.3.9.5 Multifamily Housing

TYPES OF FACILITIES FINANCED – The construction and the acquisition and rehabilitation of residential rental properties (multifamily housing) may be financed with tax exempt “exempt facility” bonds if, among other things, 20% of the units may be rented only to tenants with family income of 50% or less of area median income or 40% of the units may be rented to only tenants with family income of 60% or less of area median income. The acquisition, construction and/or rehabilitation of multifamily housing projects by 501(c)(3) organizations may be financed with qualified 501(c)(3) bonds.

ISSUERS – Multifamily housing conduit financing issuers include cities, counties, housing authorities, JPAs, and the California Housing Finance Agency.

SPECIAL CONSIDERATIONS – Apart from certain financings for projects in high cost, urban areas, multifamily housing bonds are generally issued to finance projects that receive low income housing tax credits, with the effect that all units are rented to tenants with family income of 60% or less of area median income. Most multifamily housing bonds are privately placed, and transactions are often structured without a trustee and/or as “draw down bonds”—obligations for which principal is advanced by the lender/bondholder as funds are needed. In some cases, the party extending credit is characterized as a lender to the public agency rather than as a purchaser of its bonds.