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NAHMA Supports Retaining LIHTC Program in Current Form
The National Affordable Housing Management Association (NAHMA) submitted comments to the Community Development and Infrastructure Working Group of the Senate Finance Committee in April strongly urging the Low-Income Housing Tax Credit (LIHTC) program remain in its current form as part of any comprehensive tax reform bill. Additionally, NAHMA advocates the removal of any barriers in the LIHTC program for full-time adult students seeking to increase their economic opportunities through education. The association recommends the working group and ultimately, the Senate Finance Committee, pursue legislation that would make permanent the minimum 9 percent LIHTC rate for new buildings that are not federally subsidized at the 70 percent present value, as well as establish a permanent minimum 4 percent credit rate for existing buildings that are not federally subsidized. Finally, NAHMA requests the group pursue legislation that would make the LIHTC more cohesive with other federal programs to further leverage its success.
Tax Issues and Tax Reform
"Industry Continues to Hope for Permanent LIHTC Rate"
Congress
"House Subcommittee Considers Public-Private Affordable Housing Strategies"
State and Local Activities
"Georgia Launches RAD Multi-Site Bond Program"
"Division Releases Report on Nevada Multi-Family Housing"
"Key Tool for Low-Income Housing Needs New York Lawmakers' Support"
Green Building
"Building Material of the Future—Wood?"
Management and Compliance
"Property Management—The Budgeting Game"
Industry Trends
"LIHTC Exit Strategies: Foreclosure"
"Developers and Cites Are Navigating the Affordable Housing Sea in a Leaky Boat"
Association News
SHCM Blend Learning Course Returns
Register Online for NAHMA’s Summer Forum
Get Involved with NAHMA’s Grassroots Advocacy
NAAEI Leadership Experience: Powered by Dale Carnegie
Tax Issues and Tax Reform
Industry Continues to Hope for Permanent LIHTC Rate
Affordable Housing Finance (04/01/15) Kimura, Donna
Sens. Maria Cantwell (D-Wash.) and Pat Roberts (R-Kan.) plan to introduce low-income housing tax credit (LIHTC) legislation in the chamber, according to David Gasson, vice president at Boston Capital and executive director of the Housing Advisory Group. Speaking recently during the CohnReznick annual spring Affordable Housing Conference in San Francisco, Gasson said the LIHTC bill would need to find a "tax vehicle" to attach to in order to pass. The best chance could come this spring when Congress addresses the Highway Trust Fund. Conversations have already begun on whether other tax provisions can be part of the debate. "We're always trying to find a tax vehicle to include the permanent 9 percent and 4 percent fix," said Gasson. At the end of February, Reps. Pat Tiberi (R-Ohio) and Richard Neal (D-Mass) introduced legislation to permanently establish fixed 9 percent (for new rental construction property) and 4 percent (for existing property) rates in the House. H.R. 1142 would apply to buildings placed in service after Dec. 31, 2014.
Congress
House Subcommittee Considers Public-Private Affordable Housing Strategies
National Mortgage Professional Magazine (04/16/15) Hall, Phil
The U.S. House Financial Services Committee’s Subcommittee on Housing and Insurance recently held a hearing focusing on how the private sector can contribute to the alleviation of the affordable housing shortage in areas where the government cannot. WC Smith's Brad Fennell urged a philosophical change in the federal government's approach. “Affordable housing policy shouldn’t just focus on the number of units built, but should look at the question of ‘how do we uplift the poor by integrating them into more income-diverse, stable communities?’” he argued. Fennell cited the floating tax credit rate as an obstacle for all projects involving Low Income Housing Tax Credits (LIHTC). “This rate is published monthly by the IRS, often changes from month to month, and determines the amount of cash equity from our investor,” he said. “We can elect to set the rate when we close our financing, or let it float and then fix it when we place the building in service. One consequence of the recent low-interest rate market is that this rate has been drifting down to historic lows [both the 70 percent present-value credit and the 30 percent present value credit], starving newer projects of equity financing. Since the development timeline to close financing can run from several months to over a year, the project’s equity amount is often not known until the month of closing, which makes it difficult to plan a project's construction scope and amenities.” Fennell suggested establishing the LIHTC rates at constant rates of 4 and 9 percent instead of having them float monthly, which “would allow the private sector to have more predictability in financing, and will certainly make more projects workable.”
State and Local Activities
Georgia Launches RAD Multi-Site Bond Program
Affordable Housing Finance (04/20/15) Kimura, Donna
Small public housing authorities (PHAs) in Georgia can turn to a new state program for help in financing federal Rental Assistance Demonstration (RAD) deals. The RAD Multi-Site Bond Program will match housing authorities with an experienced developer partner in order to implement a 4 percent low-income housing tax credit (LIHTC) and private-activity bond transaction. Although 4 percent LIHTCs and bonds are generally more available than the competitive 9 percent LIHTCs, 4 percent LIHTC transactions need to be sizable to warrant the transaction costs of issuing a bond. The program would be beneficial to PHAs that have a small portfolio of properties or do not have experience completing complicated bond transactions on their own. "The beauty or hope of this program would be that we would result in cost efficiencies and time efficiencies and make deals that otherwise couldn't work financially work if you can bring in the 4 percent equity," says Shelly Patton, principal at Tapestry Development Group in Decatur, Ga., who has been involved in the effort. About 15 companies have responded to the DCA's inquiry into interested developers. The program could potentially serve as a model nationally, adds Patton.
Division Releases Report on Nevada Multi-Family Housing
Reno Gazette-Journal (03/30/15) Garcia, Jessica
The Nevada Housing Division has published its annual report on affordable multi-family housing, "Taking Stock: Nevada's 2014 Affordable Apartment Survey." The report was issued after carrying out a survey of the division's Low Income Housing Tax Credit (LIHTC) properties during the fourth quarter of 2014. Nevada’s LIHTC properties comprise 23,740 units statewide. The LIHTC program is administered by the Division, and allocates the state's share of federal housing tax credits each year to developers for specific affordable apartment communities for seniors and families. The 2014 annual survey found decreased vacancy trends that underscore the need for more affordable housing. The overall vacancy rate for LIHTC properties decreased by two points from 7 percent in the fourth quarter of 2013 to 5 percent in the fourth quarter of 2014. The survey also revealed high demand for one-bedroom units in mining workforce centers; need is great for affordable senior housing throughout the state; 9 percent of LIHTC properties advertise specifically to veterans; waiting lists existed at over 60 percent of LIHTC communities; LIHTC properties reported a reduced level of rent skipping at 13 per year, per 100 units in 2014 as compared to 15 per year, per 100 units in 2013.
Key Tool for Low-Income Housing Needs New York Lawmakers' Support
City Limits Weekly (03/24/15) Kende, Judi
New York State lawmakers need to make affordable housing a top priority. One way to tackle this problem is to increase funding for the New York State Low-Income Housing Tax Credit Program (SLIHC). SLIHC is a state tax credit that leverages public dollars with private investment to encourage the building or rehabilitation of affordable homes. This tool is critical because it finances housing for a broader range of incomes than other affordable housing subsidies. SLIHC reaches many working class families who are unable to afford market rate rent, including those with incomes up to 90 percent of Area Median Income (AMI), or $75,500 per year for a family of four. The higher rents from these families can help offset lower rents for those at greater risk of homelessness, making SLIHC one of the few public resources that can reach extremely low-income families earning 30 percent of AMI, or $25,000 for a family of four. This tax credit is also an important tool for housing seniors, especially those who rely solely on Social Security. The existing SLIHC is underfunded--current funding is at $8 million per year, while the demand is fourfold higher. New York state needs to increase funding by an additional $150 million over the next five years to meet this demand.
Green Building
Building Material of the Future—Wood?
Green Building Elements (03/05/15) Killough, Dawn
Minnesota's Timber, Technology, and Transit (T3) seven-story office building will be the U.S.'s tallest wood-framed building. At 210,000 square feet, the building is built on a foundation of concrete and steel, but the floor plates and elevator core are made of engineered lumber panels. Three kinds of panels are used in the building's construction: Cross Laminated Timber made of laminated layers of milled lumber set at 90-degree angles, Laminated Strand Lumber made of thin wood chips, and Laminated Veneer Lumber made of thin layers of laminated wood. The wood is sustainably grown and harvested and the building is expected to have a carbon footprint estimated at 75 percent less than a concrete and steel building of similar size. The biggest obstacle to building tall buildings with wood is navigating the current codes, but it is hoped the T3 project will help forge new ground in this area. U.S. Agriculture Secretary Tom Vilsack recently instituted new training programs encouraging designers and builders to consider advanced wood building materials, and the Made in Rural America initiative includes a $2 million award for a project that demonstrates the viability of sustainable wood products in high-rise construction.
Management and Compliance
Property Management—The Budgeting Game
Commercial Property Executive (04/10/15) Marsh, Amanda
More and more commercial property owners are scrutinizing their budgets amid a shifting priority toward making the kinds of investments that keep properties competitive. Carr Properties' Richard Greninger observes owners are now "inclined to reinvest in their buildings to make them more competitive and marketable" as a result of what he terms "densification." For their part, office tenants are weighing strategies that lower outlays for space while boosting spending on technology and staff. Greninger says they are usually motivated by a need to grow head count by 7 percent to 10 percent and reduce the company footprint by 25 percent. “It’s a big, short-term cash-flow hit,” he notes. “We need to embrace repositioning buildings, understand their needs, and be proactive in order to minimize rent roll loss."
Avison Young principal Michael Vullis says the top three tenant retention priorities should be technology, sustainability, and creation of open-space plans. He reports the open-space trend has broadened out into common areas, and owners' attention to those areas has increased in proportion. Vullis also stresses the need to prioritize investment in building-wide access to Wi-Fi. Meanwhile, Greninger says building owners' sustainability efforts have to demonstrate their value of energy efficiency and push for a sustainable culture to tenants. Retail budgets are mostly flat, with one exception being an overall concerted effort to catch up on deferred maintenance items such as upgrading HVAC units and tending to roofs in need of patching. Vullis concludes by observing that it is falling on more property managers to act as the owner's "eyes and ears and making the property the best it can be."
Industry Trends
LIHTC Exit Strategies: Foreclosure
Lexology (04/07/15) Bossi, Mark V.
Foreclosure is the ultimate solution for lenders facing a distressed and over-leveraged low-income housing tax credit (LIHTC) project. A foreclosure usually terminates the LIHTC Land Use Restriction Agreement (LURA) containing the rent and occupancy limits on the property, subject to the new owner’s compliance with a “decontrol period.” The absence of a LURA in effect for the property means any remaining tax credits will be prohibited, so a lender must decide whether to retain or reinstate the LURA, thereby maintaining the right to claim any remaining tax credits, or to terminate the agreement and permit the property to be converted to a market-rate property. Lenders will typically foreclose away the LURA and then agree to encumber the property with a new LURA if it wishes to maintain it as a LIHTC property. The lender’s chief focus in assessing a foreclosure option should be on how much it expects to get for the property upon its ultimate disposition. Estimating the anticipated net realizable value of a property begins with obtaining a valuation of the project by a qualified appraiser, and a lender should not necessarily think it will be able to realize the full appraised value at or following foreclosure. Instead, the lender should carefully weigh the pertinent market of potential buyers, how it intends to reach them, and how they will value the property and any remaining tax credits. Asking whether the valuation report signals the property is more valuable as an LIHTC property or as a market-rate property, and how much of its value is attributable to its bricks and mortar versus its remaining tax credits if the former case proves true, is a good starting point. The lender' best option if the report finds the property more valuable as a market-rate property may be allowing the LIHTC LURA to expire upon foreclosure.
Developers and Cites Are Navigating the Affordable Housing Sea in a Leaky Boat
Next City (03/27/15) Stephens, Alexis
Affordable housing developments often take advantage of federal low-income housing tax credits, but more cities are considering inclusionary zoning and other tools to navigate spiking markets. Nonprofit developers look to the Texas Department of Housing for tax credits to finance 70 percent of development costs, but a vocal opponent of tax credit projects on Austin's City Council argues market-affordable housing could be built without subsidies. However, subsidies are necessary in cities where the cost of housing is much less than it is in markets like New York City and San Francisco, according to a recent article from Ithaca.com. Smaller markets face lower local incomes, rampant NIMBYism and high land costs in appealing areas. The article recommends the city explore an inclusionary zoning policy, following the example of New York City. Still, a report from NYU's Furman Center on Mayor Bill de Blasio's affordable housing plan says there is not enough demand for market-rate housing to "cross-subsidize" affordable housing. Inclusionary zoning would need to be combined with an additional city subsidy.
Association News
SHCM Blend Learning Course Returns
The SHCM Blended Learning course will be held each week in May. The course is broken into four webinar sessions with each lasting approximately two hours including a question-and-answer period for attendees. The schedule is as follows:
- Thursday, May 7, 1-3 p.m. EST
Chapter 1: Program Regulations presented by Anita Moseman - Thursday, May 14, 1-3 p.m. EST
Chapter 2: Unit Eligibility presented by Gwen Volk - Tuesday, May 19, 1-3 p.m. EST
Chapter 3: Applicant Eligibility & Certification presented by Gwen Volk - Thursday, May 28, 1-3 p.m. EST
Chapter 4: Monitoring & Compliance presented by Heather Staggs The cost for the course, including the SHCM exam and application fee, is $599; National Apartment Association Education Institute (NAAEI) designates will receive a $50 discount for the entire course. Individual webinars can be purchased at $99 each. The deadline to register for the course is May 5, click on the Web Link below to register online.
Material for the webinars is based on National Affordable Housing Management Association (NAHMA)’s newly revised “Practical Guide to Housing Credit Management” workbook. Participants will receive course materials in a PDF format prior to the first webinar sessions. All students will need to take the SHCM exam by Thursday, June 18. Contact your local AHMA for assistance when scheduling your exam. For more information about the SHCM program, visit
http://www.nahma.org/education/specialist-in-housing-credit-management
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Register Online for NAHMA’s Summer Forum
Preregistering online for the National Affordable Housing Management Association (NAHMA)’s Public Policy Issues summer forum in Las Vegas is the best way to guarantee your space for the NAHMA educational sessions and a lunch ticket.
The summer forum takes place Wednesday, June 24, at the Mandalay Bay Resort & Casino with evening activities at the Palms Casino Resort. It is held in conjunction with the National Apartment Association (NAA) annual Education Conference & Exposition, June 25-27. Registration for the NAHMA and NAA events is separate.
To register for the NAHMA forum Wednesday, June 24, visit the Meetings page at www.nahma.org and click the blue NAHMA Meeting – Register Online button. Descriptions and speakers for the NAHMA sessions can be found on the preliminary NAHMA June 2015 agenda posted on the Meetings page at www.nahma.org.
To register for the NAA conference, June 25-27, visit http://educonf.naahq.org/attend/register/ and use promo code NAHMA15 for the NAHMA member discount?$200 off the NAA full conference fee, based on cost at the time of registration. Full conference registration?good for NAA-sponsored events only?includes access to the National Apartment Association’s educational sessions, networking events and expo floor. NAA registration rates increase after June 13.
Get Involved with NAHMA’s Grassroots Advocacy
As a national organization, the National Affordable Housing Management Association (NAHMA) can advocate on behalf of the industry as a whole, but cannot provide the personal accounts that illustrate the real-life impacts a Congress member’s vote can have back home.
That is where our members come in. Advocating for the industry needs to be done on a year-round basis, not just at federal budget time when the message can be drowned out by all the special-interest groups lobbying for their share of the pot.
NAHMA encourages members to visit the Grassroots Advocacy section on its website, www.nahma.org. The Advocacy Toolkit page provides easy-to-use tools for participating in grassroots advocacy including frequently asked questions, best practice, tips for congressional visits, and talking points and, in partnership with Congressional Management Foundation, short how-to videos ranging from building relationships to strategies for influencing undecided lawmakers.
Grassroots advocacy does not have to take place on Capitol Hill. You can attend a town hall meeting in the lawmaker’s district, follow the congressional member on social media or better yet, invite the representative to your property to see for himself how important it is to fully support affordable housing programs.
Take advantage of the advocacy tools NAHMA provides and lend your voice to the cause of advocating for multifamily affordable housing. Click the Web Link below for more information.
NAAEI Leadership Experience: Powered by Dale Carnegie
Responding to the need for leadership training within the apartment industry, National Apartment Association Education Institute (NAAEI) has partnered with Dale Carnegie Training to deliver a world-class leadership-training program.
This program targets regional employees and corporate department heads, helping them make the transition from being a great manager to an effective leader. Courses will be held May 13-14 in Austin, Texas, and Oct. 14-15 in Denver, Colo. For more information about this two-day program, click on the Web Link below.
Abstract News © Copyright 2015 INFORMATION, INC.
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