Unless you’re a banker whose institution invests in low-income housing tax credits or a developer who uses them to finance projects, it’s unlikely you’ve heard of Midwest Housing Equity Group Inc.

However, the Omaha-based nonprofit corporation and its Des Moines-based subsidiary, the Iowa Equity Fund, have a lot to do with financing successful affordable housing projects throughout Iowa.

The Iowa Equity Fund will raise approximately $26 million this year from institutions that include Fannie Mae, Wells Fargo Bank and Bank of the West and insurance companies such as Principal Financial Group Inc., as well as smaller Iowa-based banks.

As a syndicator, Midwest Housing Equity Group packages portfolios of tax credit properties for periodic investments by these institutions, which benefit from MHEG’s expertise in evaluating these investments and managing them on a long-term basis. It uses the funds to purchase low-income housing tax credits from developers and nonprofit organizations that have been awarded the credits by the Iowa Finance Authority.Syndicating its tax credits allowed Anawim Housing, a Des Moines nonprofit housing agency, to finance its largest housing project to date, a $7 million deal to purchase and renovate 66 housing units in Des Moines.

“This is the first time we have syndicated, said Sister Stella Neill, Anawim’s executive director. “Most other times we have done small enough projects that people have purchased the tax credits directly,” she said. The organization sold nearly $3.3 million in tax credits to MHEG.

The Pioneer Woods project, located at Southeast 17th Street and Kirkwood Avenue, involved the purchase of 33 duplexes from the city of Des Moines. The first six refurbished units will be leased June 1, with the remainder expected to be occupied by the end of the year.

“Putting the financing together was probably the most difficult piece,” Neill said. “With the various financing mechanisms, including Midwest Housing, we are able to have these units rented to people at 40 and 50 percent of the median household income. That’s ultimately the goal, to create affordable housing.”

In its 14-year history, MHEG’s four companies in Nebraska, Kansas, Iowa and Oklahoma have raised more than $330 million and invested in more than 150 developments. Those developments created more than 3,300 affordable housing units for people earning less than 60 percent of the area median income. Including its current projects, the Iowa Equity Fund has invested in 23 projects in the state since its inception, creating more than 800 housing units.

Midwest Housing’s president, Jim Rieker, founded the nonprofit in 1993 as Equity Fund of Nebraska Inc.

“The governor, Ben Nelson (now a U.S. senator representing Nebraska), came to us and said, ‘We need to find a way to get tax credit property into more than just Lincoln and Omaha, into rural areas and special-needs areas,'” Rieker said. “So we created the company with a lofty goal of raising $5 million a year and doing about 100 units.”

The organization expanded into Kansas in 2000 and began operating in Iowa in 2001 in response to a plea by then-Gov. Tom Vilsack to broaden the tax credit program’s reach to the state’s rural communities. The organization changed its name in 2001 to Midwest Housing Equity Group, and two years ago expanded into Oklahoma.

“This year we’re raising $131 million and are going to do about 700 to 800 units in our four-state area,” Rieker said. “So our lofty goals have gotten quite lofty. We blew that $5 million goal out of the water in the second year, and never looked back.”

MHEG competes with several national tax credit syndicators that operate regional offices in the Midwest, among them National Equity Fund Inc. and Enterprise Community Partners Inc. However, MHEG is not just doing deals that the big boys don’t want, Rieker said.

“When we first started, that might have been the case,” he said. “But now, it’s a matter of who can provide the best prices, who can pay the most for the credits. One thing we focus on as a company is, what else can we provide other than just good pricing? We are known for great support that we provide both in the development phase and on an ongoing basis. I think people look to us as a true partner in putting a deal together.”

For every tax credit purchase deal it negotiates in Iowa, “there are probably at least five other syndicators chasing it,” said Dan Garrett, MHEG’s executive vice president and head of the Iowa Equity Fund.

Midwest Housing works with a wide variety of investors, primarily banks and insurance companies as well as accredited investors organized as C-corporations.

“Banks get a couple of benefits,” Rieker said. “They get a nice return on their investment, and they get Community Reinvestment Act credits. The way we are structured, any bank in Iowa can get CRA credit for any project done in Iowa.”

MHEG covers about 65 percent of each housing project’s total cost in the form of equity, which enables the owners to keep the rents at an affordable level. In part, it relies on “soft loans” through programs such as the federal HOME loan program or the Federal Home Loan Bank’s Affordable Housing program to fully fund a project. However, federal budget cuts have resulted in cuts to those programs and gaps in funding, Rieker said.

Additionally, “investors are demanding higher yields as interest rates creep up, and that’s impacting all of us,” he said. “As yields go up, pricing (offered on tax credits) has to come down, and that creates gaps in funding. Iowa was really the first state to see an impact from that.”

Developers tend to get nervous when the yields are going down while construction costs continue to rise, Garrett said.

“The past 10 years has been a great market for the development world. In the past six to eight months we’ve started going the other direction, and we’re feeling the impact,” he said. “Recently, I think things have leveled off a little bit, but nobody has a crystal ball.”