Townhouses in Richmond, VA (RVA)Townhouses in Richmond, VA (RVA)

Tax Exempt Bond Program

RRHA finances development projects throughout Richmond to support affordable housing needs and economic development.

RRHA has the statutory power to issue bonds and to provide grants, loans, interest supplements, and other programs of financial assistance to finance development projects in the city of Richmond and the Commonwealth of Virginia.


How the Process Works

Developer identifies opportunity

Developer identifies project and determines eligibility of project to be financed through RRHA.

Developer makes appointment with RRHA staff to discuss receiving assistance for the project.

Developer submits application & pays application fee

Developers requesting financial assistance for a qualified residential development may apply by completing the application form.

A non-refundable application fee of $3,500 is required at the time the application is submitted.

Application fees are subject to revision at any time with the approval of the RRHA Board of Commissioners.

RRHA reviews application

RRHA staff and bond counsel reviews the application for completeness and compliance with applicable laws.

Additional information may be requested, or revisions requested or the application may be returned to the applicant for good reason during the review process.

RRHA conducts public hearing and approval process

A notice is published in the newspaper advising of public hearing on the project. Bond counsel prepares the notice and arranges for publication.

An “Inducement Resolution” prepared by bond counsel is presented to the RRHA Real Estate Committee and full RRHA Board of Commissioners indicating RRHA’s intent to assist the developer by issuing Bonds for the project upon the satisfaction of certain terms and conditions with a recommendation that City Council approve the issuance of the Bonds.

A knowledgeable representative of the Developer should appear at each meeting of the RRHA Real Estate Committee, the RRHA Board of Commissioners, City Council, and any assigned city government committee where the application is considered to respond to questions and/or present the project.

Developer acquires approval from City Council

Following RRHA Board approval a package is transmitted to City Council recommending Council approval of the issuance of the bonds. The applicant is responsible for making sure the item is approved by City Council.

The City Council resolution is introduced and referred to the appropriate City Council Sub-Committee for further review and a recommendation. City Council action on the paper is taken at a later date.

RRHA finalized documents and appropriate parties sign

Following City Council approval, RRHA and the Developer apply for an allocation of tax-exempt bond issuing authority from the Virginia Department of Housing and Community Development. The actual application for allocation is prepared by RRHA bond counsel.

Developer shores up financing, and the structure and details of bonds are negotiated and set. Draft bond documents are reviewed and finalized.

After bond documents are finalized, Developer asks the RRHA Board of Commissioners to adopt a final bond resolution.

(Bond closing) Bonds and related documents are signed by the appropriate parties.

Bonds are issued and sold

RRHA’s authority to issue bonds is found under Virginia Housing Authorities Law, Chapter 1, Title 36 of the Code of Virginia of 1950, as amended. Such bonds may be issued for any of RRHA’s corporate purposes. Bonds may be issued on a taxable or tax-exempt basis (Virginia Code, Section 2.1-326.2:1).


Bond Program FAQs

What is the tax-exempt bond program?

The tax-exempt multifamily housing bond program is a federal tax program administered in Virginia by the Department of Housing and Community Development (DHCD). It allows Virginia public housing authorities (like RRHA) to issue bonds to finance the development of affordable and low-income housing.

How does the tax-exempt bond program work?

An affordable housing developer may make a request for bond financing to RRHA. RRHA reviews the request and the project plans to determine if the project complies with state and federal law, and if the project will serve the RRHA’s mission and goals. If the RRHA as well as the City Council both approve of the request, then RRHA issues the bond.

What kind of housing projects can be funded?

In Virginia, multifamily housing bonds cannot be issued unless the borrower promises to develop housing that is affordable to renters at low incomes. To meet this requirement, the development must participate in another government-run housing program that includes “legally enforceable” rent affordability standards, such as the federal Low-Income Housing Tax Credit (“LIHTC”) program.

How are the bonds “tax-exempt?”

Normally, when a lender issues a loan with interest, payments the lender receives on the accrued interest are considered “income” for federal tax purposes. This means the lender must pay taxes on the income. On the other hand, lenders are not required to pay taxes on interest earned from tax-exempt bonds. This means that they can lend developers money at lower interest rates, which makes it less expensive to develop affordable housing.

Who pays for the bond?

RRHA issues bonds as a pass-through or “conduit” agency. This means that RRHA does not provide the bond funding, and is not required to repay the bond. A private lender (such as a bank) provides the bond funding as a loan, and the housing developer is responsible repaying the loan. RRHA’s role is limited to giving the loan this special “tax-exempt” status.

Why does RRHA issue bonds?

RRHA issues bonds for many reasons. Part of RRHA’s mission is to facilitate development of affordable housing across the City of Richmond. Issuing a bond gives RRHA the ability to influence development, such as by ensuring that the bond creates employment opportunities for public housing residents or minority businesses. RRHA also earns fees from bonds, which are capped at 2% of the total value of each bond RRHA issues. These fees provide vital funding for RRHA programs, such as its public housing revitalization activities. Individual RRHA staff members do not receive the bond fees, or any bonuses or other financial incentive to earn bond fees.