Low Income Housing Tax Credit (LIHTC) Gap Finance

The Concessionary Debt LIHTC Gap Finance program provides subordinate debt financing to eligible for-profit and nonprofit entities, local governments including housing authorities, and tribal governments for the creation of affordable multifamily rental housing developed with Federal Low Income Housing Tax Credits. 

Please note: Shovel-ready projects that result in the construction of new units will be prioritized during the first year of program funding.

09-28-2023

Program Benefits	• Subordinate gap financing    • Below-market interest rates   • Flexible repayment terms
Eligible Borrowers	• For-profits   • Nonprofits   • Governmental entities, including housing authorities  • Tribal governments
Eligible Projects	Developments that have received an award of Low Income Housing Tax Credits and/or Colorado state Affordable Housing Tax Credits but have not yet converted to permanent financing
Program Allocation	15% to 35% of Affordable Housing Financing Fund (AHFF) allocation
Area Median Incomes (AMIs) Served	• 60% average AMI for all restricted units   • Up to 25% of the development’s units may be unrestricted but are excluded from eligible project financing
Program Limits	Maximum gap loan size is limited to 1.05 debt service coverage when considering all must-pay debt, 90% of value or total development cost in combination with all must-pay debt, or $6,000,000, whichever is less. Loans may be limited to lower dollar amounts during the first year of program funding.
Minimum Debt Financing	$400,000
Interest Rates and Fees	• 2.5% fixed rate    • 1% origination fee  • Standard loan closing costs
Loan Repayment	Amortizing and non-amortizing loan structures available based on underwriting
Collateral	Loans will be collateralized by the project assets.
Affordability Restrictions	A Regulatory Agreement requiring affordability for the greater of the loan term or 20 years will be required.
Priorities	• High-density housing  • Mixed-income housing  • Environmental sustainability

Concessionary Debt Process and Timeline

Starting September 18th, applications will be accepted for the Concessionary Debt Multifamily Finance, LIHTC Gap Finance, and LIHTC Predevelopment Finance programs established by Proposition 123. CHFA received 38 applications representing more than $113M in funding requests (PDF). Following the application period, selections will be announced in January 2024.

The application window has closed for the LIHTC Gap Finance program.

Application Timeline:

September 18, 2023	CHFA will begin accepting applications.
October 9, 2023	Application submission period will end at 11:59pm MT.
January 2024	CHFA will announce projects selected to receive Concessionary Debt funds.