Over the last 15 plus years, CUB has developed a reputation and expertise in the financing of Low Income Housing Tax Credit (LIHTC) projects and other related Affordable Housing projects. We have financed over $240 million in loans and placed approximately 4,500 families into housing.

We currently provide construction bridge loans and in certain circumstances permanent loans.  The Affordable Housing Department provides financing for multifamily developments primarily in Kentucky and contiguous states.

A few of the developments we have financed recently include:

Parkside Apartments, Lexington, KY

St. Denis Senior Apartments, Louisville, KY

Hopewell Apartments, Paris, KY

Eminence Village Apartments, Eminence, KY

Beecher House Apartments, Somerset, KY

Most Blessed Sacrament, Louisville, KY




In order for CUB to best serve our customers’ needs in a timely and decisive manner we need the following information during the various stages of the application process.

At the letter of intent stage, the following should be submitted to CUB:

  • LIHTC Equity Assumptions
  • Sources and Uses
  • 15 year proforma
  • Market Study
  • Building costs and/or construction budget
  • Resume(s) of development team

Once the project receives approval of tax credits and are ready to proceed with a formal loan request, the following will be required:

  • Building plan or rendering
  • Site plan
  • Pictures of site
  • Borrowing entity structure
  • Copy of tax credit application and award letter
  • Equity commitment letter with pay in schedule
  • Two years financial statements and tax returns on all related entities
  • Two years personal financial statement and tax returns of guarantors
  • References of developer
  • Updated Sources/Uses and proforma
  • Appraisal

Once the project receives a loan approval from CUB’s loan committee, we will begin a commitment letter.  In order to release the commitment letter, the project’s financial structure must be finalized.  The commitment letter must be returned and signed by all applicable parties.

Once the commitment letter has been signed, a draft closing checklist will be provided to allow all parties to move toward a closing.

Asset Management

Asset management activities strive to maximize the value and return of Affordable Housing assets for all stakeholders. If CUB holds the permanent loan or is the tax credit investor, Asset Management will monitor the project during its initial fifteen year compliance period, life of the loan, or term of the investment. Once the project has been placed in service and stabilized, the project will be expected to maintain a minimum set of standards. They are as follows:

  • Project must remain in full compliance of IRC §42, local, state, and federal regulations.
  • Debt coverage ratio more than 1.10.
  • Occupancy rate better than break even.
  • Taxes and insurance must remain current.
  • Reporting requirements must be maintained according to loan and/or partnership covenants.
  • Project must pass regularly scheduled site visits with minimal deferred maintenance.
  • All commitments satisfied for replacement reserves or other restricted accounts.

Over the life of the project, capital improvements will need to be performed. If CUB is the managing agent for the replacement reserves, a minimum set of criteria will need to be observed in order to release funds. First, replacement reserve payments must stay current. The balance in the replacement reserve should not fall below six months of replacement reserve payments. In conjunction with the above principals, only certain capital improvements are allowed and the request must be submitted on the appropriate form with supporting documentation.  Please see the following links.

RR Guidelines(PDF)

RR Request Form(Excel File)



The Low Income Housing Tax Credit (LIHTC or Tax Credit) program was created by the Tax Reform Act of 1986 as an alternate method of funding housing for low and moderate income households and has been in operation since 1987.  Each state receives tax credits based on the state’s population.  These tax credits are then used to leverage private capital into new construction or acquisition and rehabilitation of affordable housing.

The tax credits are determined by the development costs and are used by the owner.  However, often, because of IRS regulations and program restrictions, the owner of the property will not be able to use all of the tax credits, therefore many LIHTC properties are owned by limited partnership groups that are put together by syndicators.  In this manner, a variety of companies and private investors participate within the LIHTC program, investing in housing development and receiving credit against their federal tax liability in return.

Most states determine the amount of tax credit an individual project receives based on it qualified basis.  First, total project cost is calculated.  Second, eligible basis is determined by subtracting non-depreciable costs, such as land, permanent financing costs, rent reserves and marketing costs, etc.  If the development is located in a HUD designated high cost area (HCA), the eligible basis receives a 130% HCA adjustment.  These areas include both Qualified Census Tracts (QCT) and Difficult Development Areas (DDA).  Finally, to determine the qualified basis, the eligible basis is multiplied by the applicable fraction, which is the smaller of (1) the percentage of low income units to total units or (2) the percentage of square footage of the low income units to the square footage of the total units, to arrive at the qualified basis.

The qualified basis is multiplied by the federal tax credit rate, published monthly by the IRS, to determine the maximum allowable tax credit allocation.  For projects that are new construction or rehabilitation, which are not financed with a federal subsidy, the rate is approximately 9%.  For projects involving a federal subsidy (including projects financed more than 50% with tax exempt bonds) the rate is approximately 4%.  The 9% and 4% rates are used to determine a project’s initial tax credit reservation.  A project’s final (placed in service) tax credit allocation is based on actual project sources and uses of funds, the financing shortfall and the actual applicable federal rate.  The rate applicable to a project is the rate published for the month each building is placed in service or in an earlier month elected by the sponsor.  The allocation cannot exceed the initial reservation amount and may be reduced if an analysis determines that the maximum allowable amount would generate excess equity proceeds to the project.


Tammy Thomas

First VP/Director of Affordable Housing

Direct Line:  502-647-7412

Fax:  502-647-7478

E-mail:  tht@cubbank.com

Clayton Aylmer

Asset Manager

Phone:  502-647-7449

Fax:  502-647-7478

E-mail:  cca@cubbank.com


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