Low Income Housing Tax Credit (LIHTC) Gap Finance

Concessionary Debt LIHTC Gap Finance 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. 

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

This is intended only to highlight certain program requirements. Loans are subject to other requirements, including the CHFA Credit Policy and applicable operating and replacement reserve requirements. Please note that the programs are subject to change.

Concessionary Debt Process and Timeline

The application period for Concessionary Debt LIHTC Gap Finance is currently closed.

During the fiscal year 2023-2024 Concessionary Debt application period, CHFA received 38 applications representing more than $113M in funding requests (PDF). Each application was evaluated against the criteria established in their respective program guidelines and from the directives in the Governor’s Executive Order from August 21, 2023. Priority criteria included the number of units (high density), environmental sustainability, geographic diversity, readiness to proceed, and economic diversity in the mix of unit income restrictions.

Based on these criteria and the limited amount of available funds, seven of the 38 applicants, representing $14.5M in funding requests, were selected to move forward (PDF) to full underwriting.

Please sign up for the Proposition 123 Affordable Housing Financing Fund eNews for future announcements regarding opportunities to apply for Concessionary Debt LIHTC Gap Finance.