Tax Exempt Bond Financing

Tax exempt bonds are issued by the Urban Residential Finance Authority (the Housing Finance group of Invest Atlanta) to assist with the accomplishment of growth in multifamily housing.  URFA is empowered to issue tax exempt bonds to make below market interest rate mortgage loans to developers for rental housing provided Internal Revenue Service section 142 requirements are met to ensure that a percentage of the rental units benefit low and moderate-income renters.

Each year URFA receives a tax-exempt bond allocation from GA Department of Community Affairs.  URFA serves as a conduit bond issuer.  Bonds are issued on a first-come, first-served basis based on availability of allocation.  There is no maximum amount of bonds that can be allocated to a single development.   Eligible projects must be located within the city of Atlanta.

Any tax-exempt bond funds allocated pursuant to this program must be used to provide permanent financing for the development.  The allocation is not intended for short-term financing, or “bridge” financing, or any refinancing, which is not the permanent financing for the development; however, it can be used for construction financing and be taken out by another source under certain conditions.

Eligible Developments:

  • New Construction or Acquisition and Rehabilitation. Minimum of 75 units and $5MM in Total Development Costs.
  • Conversion of an existing property not being used for housing
  • 40% of units must be set aside to persons at 60% AMI or 20% of units set aside at 50% AMI. See http://www.huduser.org/portal/datasets/il.html for AMI limits.
  • A minimum of 15% of units must be set aside for market rate tenants with no income restrictions
  • Be located within the City Limits of Atlanta

Use of Funds:

  • Bond Financing must be at least 50% of capital stack
  • Cost of Issuance financed by Tax Exempt Bonds cannot exceed 2% of bond amount
  • Affordability period is the greater of 15 years or as long as bonds are outstanding
  • Tax-Exempt bonds can be coupled with 4% LIHTC’s & must be enhanced by letter of credit or by a financial guarantee unless the bonds are sold via private placement or the bonds are rated and the project has a HUD HAP contract of at least 15-years
  • Bond Financing can be used for up to 100% of total development costs provided debt supports a minimum 1.20x DSCR.
  • For Acquisition and Rehabilitation, rehabilitation costs must equal at least 10% of the total project cost

Developer Guidelines:

  • Developer must have experience commensurate with scope and size of the project
  • Developer must have a successful track record of property management and marketing
  • All workforce units must be comparable in size and quality to market rate units within the same development. Affordability must be disbursed across unit types and floors.
  • Developer must have financial capacity
  • Development must meet sustainability requirements

Neighborhood Compatibility

  • URFA encourages developers to plan/develop projects that are located in the following areas:
    • Economic Development Priority Areas
    • Qualified Census Tracts
    • Difficult to Develop Zones
    • Within 1/4 mile of MARTA Mass Transit, Atlanta Streetcar, or Atlanta Beltline
    • Within a Tax Allocation Districts (TAD)
  • Development must complement and enhance the existing character of the neighborhood
  • NPU Letter