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Task Force Recommends Practices in Housing Credit Administration
In January, the National Council of State Housing Agencies (NCSHA) released a report by its Task Force on Recommended Practices in Housing Credit Administration. The final report strengthens the number of existing recommended practices and includes 13 new practices in state program administration. NCSHA expects state Housing Credit allocating agencies to begin incorporating the recommended practices into their Housing Credit administration in 2018. To read the report, click on the Web Link provided.
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Industry Trends
"Multifamily Development Trends Shaping 2018"
Tax Issues and Tax Reform
"Impact of Final Tax Reform Legislation on the Historic Tax Credit, New Markets Tax Credit, and Low-Income Housing Tax Credit"
"Community Development Tax Credits: Damaged, but not Devastated"
State and Local Activities
"San Jose Angles to Help Fund Affordable Senior Housing Project"
"Grand Rapids Tackling Affordable Housing Strategies"
Green Building
"Large New York City Buildings Will Now Post Energy Efficiency Grades"
Development and Construction
"Saving Lives"
Association News
Register for NAHMA’s March Meeting
Changes Coming to PBCA Program?
Save the Date: Foundation Scholarship Applications Open
Plan to Enter the NAHMA Vanguard Awards
NAHMA Releases 2017 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Industry Trends
Multifamily Development Trends Shaping 2018
Multi-Housing News (12/13/17) Doyle, Dan
One apartment development trend that will likely shape 2018 is municipality-driven incentives. More than ever, it has become important for developers to form partnerships with local municipalities in active markets in order to better comprehend and meet the needs of the city and its residents. "In 2018," Dan Doyle writes, "we'll see more municipalities putting programs in place to assist with affordable housing development, with some creating mandates that require a certain amount of affordable housing." Another trend that will impact the new year's apartment sector is community engagement. Whenever the focus turns to markets outside a company's headquarters location, developers should actively engage city officials and industry experts via strategic programs that align with mutual goals. Increased segmentation will be important as well, and the key to a successful lease-up is to differentiate your apartment community to appeal to the demands of the local market's specific resident base. Adaptive reuse is a fourth trend expected to grow in importance in 2018. Many of today's renters want to live in downtown districts, but many are being priced out. With construction costs high, apartment developers must look to solutions such as adaptive reuse of existing buildings to help solve some of the cost issues in urban cores. In such markets, retrofitting an existing building may be more attractive, as the structure costs are already in place.
Tax Issues and Tax Reform
Impact of Final Tax Reform Legislation on the Historic Tax Credit, New Markets Tax Credit, and Low-Income Housing Tax Credit
National Law Review (01/15/18) Roher, Jed A.
The tax reform bill signed into law on Dec. 22 includes a Base Erosion and Anti-Abuse Tax (BEAT) under which corporations may claim none of their historic tax credits (HTCs) and new markets tax credits (NMTCs), and only 80 percent of their low-income housing tax credits (LIHTCs) and Production Tax Credits (PTCs). This reduces the value of those credits to those corporations and presumably reduces the amount investors will be willing to contribute to projects in exchange for them. Beginning in 2026, LIHTCs and PTCs will be treated like HTCs and NMTCs, and corporations would not be able to use any portion of these credits against their BEAT liability. Similarly, the change to the HTC – which is also generally shifted from developers of historic projects to investors in them – from a credit claimed all at once to a credit claimed over five years would likely reduce the value of that credit to investors and/or impact the timing of investors’ cash infusions into the underlying projects. Furthermore, reducing the top corporate tax rate from 35 percent to 21 percent will reduce the value of depreciation deductions that are sometimes allocated to investors in low-income or historic projects. This will reduce the tax benefits available to investors in those projects and likely further reduce the amount that investors are willing to deploy into those projects in exchange for those tax benefits.
Community Development Tax Credits: Damaged, but not Devastated
Novogradac & Company LLP (01/02/2018) Novogradac, Michael
The effect of tax reform on community development tax credits is now under review following the recent tax overhaul. Although community development advocates are applauding the survival of the low-income housing tax credit (LIHTC), private activity bonds (PABs), new markets tax credit (NMTC), they are also concerned about the damage done to these tools. Among other notable parts of the new law, the headline provision was a reduction in the top corporate tax rate from 35 percent to 21 percent and a move to a territorial international tax system, which comes with a new tax dubbed BEAT that could result in corporations permanently losing up to 100 percent of the benefit of their LIHTCs, PTCs, and NMTCs. Going forward, tax credit advocates have several major tasks: assess and adjust to the changes brought by the tax cuts and reforms; help legislators write clean up legislation containing technical corrections; and work to improve and expand the tax credits in the wake of 2017. Meanwhile, the Affordable Housing Credit Improvement Act and the New Markets Tax Credit Improvement Act are still before Congress, and will become a focus again in 2018. Proponents of affordable housing and community development should also continue to remind lawmakers of the good done by their industries, not just in achieving their fundamental purposes but in creating economic benefit to communities as well. Although the tax reform fight of 2017 is over, the war to increase and improve these tools continues.
State and Local Activities
San Jose Angles to Help Fund Affordable Senior Housing Project
San Jose Mercury News (01/11/18) Baum, Julia
The San Jose City Council made some last-minute maneuvers at the end of 2017 to ensure that money allocated to build housing for senior citizens will be available when the time comes, despite recent changes to the tax code. In June 2017, city officials approved a $9 million loan to help finance a $42 million affordable senior housing complex. Tenants of the proposed 63-unit apartment complex would include homeless and low-income residents age 62 and older. Nonprofit Abode Services will provide case management services to one-third of the tenants in units reserved for the homeless. In addition, Santa Clara County will provide in-home supportive care to another third of the tenants, who will be required to pay no more than 30 percent of their monthly income. The ground level of the complex will include dental or medical offices, which will generate sales tax revenue for the city. While affordable housing advocates are worried the new tax law signed by President Trump will thwart plans to build thousands of affordable housing units in California, the low-income housing tax credits and the tax-exempt private activity bonds, both of which are important to the construction of such homes, were held over in the new law. However, the new tax system could cut federal funding for subsidized housing throughout California by 20 percent, resulting in a low of 4,000 potential units and about $500 million in projects, according to the California Housing Partnership. The partnership and other similar organizations helped to subsidize about 20,000 homes and apartments in the state in 2017. Still, about 1.5 million additional subsidized housing units are needed to meet statewide demand.
Grand Rapids Tackling Affordable Housing Strategies
MLive.com (01/09/18) Biolchini, Amy
The city commission of Grand Rapids, Mich., has proposed a handful of strategies aimed at addressing affordable housing issues. The goal of the strategies is to outline ways the city can team up with nonprofits and private developers to provide affordable housing, explained First Ward Commissioner Jon O'Connor. One strategy under consideration would create a change in PILOT fees for housing developers to pay for the Affordable Housing Fund. The payment in lieu of taxes program applies to housing projects that are financed with federal or state housing aid; that serve low-income families, older adults, or the disabled; and that are owned by a qualifying nonprofit or association. Instead of paying property taxes, the property owner pays a service charge on their mortgage to the city. The city is proposing to give property owners the option of continuing to pay the standard four percent service charge, or to pay a one percent service charge to the city and a two percent service charge into the city's newly established affordable housing fund. Projects that qualify to pay the fee instead of paying traditional property taxes tend to have better financial projections, which makes them more appealing to the state's low-income housing tax credit program for selection. The state program is the largest source of new affordable housing units in Grand Rapids, O'Connor said. A second strategy proposes an adjustment in zoning incentives to guide new construction, while another proposes to create an equitable development policy that developers could choose to follow.
Green Building
Large New York City Buildings Will Now Post Energy Efficiency Grades
Architects Newspaper (12/29/17) Lubell, Sam
Similar to how restaurants post letter grades in their windows, large buildings in New York City may soon have to disclose their energy efficiency ratings. The City Council is considering a measure to require residential and commercial buildings larger than 50,000 square feet to post a federal energy efficiency rating and a simplified A-D letter grade in their lobbies starting in 2020. The requirement would eventually be extended to buildings that are larger than 25,000 square feet. "We think that a market-driven approach here will help encourage more efficient buildings," says Council member Dan Garodnick. "We think it will foster a higher level of engagement." The legislation is part of a package of quality-of-life measures, including one that seeks to limit the duration of after-hours construction. "Nearly 70 percent of greenhouse gas pollution in New York City comes from buildings," said Rory Christian, director of the New York Clean Energy Environmental Defense Fund, in a prepared statement. "Requiring large buildings to post their energy efficiency grades is a natural next step in the evolution of the city’s energy policies."
Development and Construction
Saving Lives
Apartment Finance Today (01/16/18) Kimura, Donna
Affordable residences are part of the Women's Addiction Recovery Manor (WARM) campus in Henderson, Ky. Wabuck Development Co. built the development in addition to four other projects under Recovery Kentucky, a state program launched in 2005 to help people recover from opioid or other addictions. Dale Sights, a local bank president, serves as WARM's president and CEO. Sights worked closely with the Wabuck team to develop the project, which features 64 permanent housing units that were built in two phases. Sec. 8 project–based vouchers generally support the housing costs, in addition to low-income housing tax credits (LIHTCs), Community Development Block Grants, and funding from the Department of Corrections. On the recent $8.6 million, 46-unit Genesis Recovery Kentucky Center project near Ashland, LIHTC syndicator Ohio Capital Corporation for Housing provided approximately $6.5 million in LIHTC equity. In addition to awarding the housing credits, Kentucky Housing Corp. provided a $500,000 HOME Investment Partnerships Program loan. The Federal Home Loan Bank of Cincinnati provided a $1 million grant. Similarly, the Ohio Housing Finance Agency (OHFA) has made a change to its LIHTC program for 2018–2019 that aims to help developments working with those recovering from opioid and other drug disorders. A new subpool for developments serving people recovering from substance abuse was created as part of OHFA's overall engagement process for establishing its qualified allocation plan (QAP). "We identified five priorities, and essentially every component of the QAP relates back to one of those overarching concepts," says Carlie J. Boos, OHFA program and policy manager.
Association News
Register for NAHMA’s March Meeting
Online registration for the 2018 National Affordable Housing Management Association (NAHMA) annual winter meeting is now open. Register today and save $50. The three-day event features educational panels, networking opportunities, Industry Awards and the Communities of Quality Awards luncheon. The event concludes with prearranged Capitol Hill meetings with congressional representatives and their staff. For more information, click on the Web Link provide below.
Changes Coming to PBCA Program?
Based on the Department of Housing and Urban Development (HUD)’s draft December Requests for Proposal (RFPs), NAHMA believes that HUD intends to significantly alter the Performance-Based Contract Administrators (PBCAs) program to establish a national and regional oversight approach called Housing Assistance Payments (HAP) Contract National Support Services or HAPNSS, and Housing Assistance Payments (HAP) Contract Regional Support Services or HAPRSS. Click on the Web Link to read the Dec. 22 RFPs.
Save the Date: Foundation Scholarship Applications Open
At the beginning of February, the NAHMA Educational Foundation will release the 2018 scholarship application to interested student residents. The application will be available by visiting https://nahma.communityforce.com or by going to the NAHMA website at www.nahma.org and clicking on the Educational Foundation link. Please make your residents aware when the 2018 scholarship application is available and encourage them to apply. The deadline for completed applications is 10 p.m. Eastern on Friday, May 25. For more information about the scholarship program, click the Web Link provided below.
Plan to Enter the NAHMA Vanguard Awards
NAHMA will release the 2018 Affordable Housing Vanguard Awards application later this month. The Vanguard Award recognizes new, quality multifamily affordable housing development. The award pays tribute to developers of high-quality affordable housing; demonstrates that exceptional new affordable housing is available across the country; demonstrates the creativity and innovation that must be present to create exceptional properties given the financing and other challenges to development; highlights results of private-public partnerships required to develop today’s affordable housing; and shares ideas for unique design and financing mechanisms with industry practitioners to further stimulate creative development in the affordable multifamily industry. Click on the Web Link below for more information about the awards program.
NAHMA Releases 2017 Affordable 100 List
The National Affordable Housing Management Association (NAHMA) announces its 2017 Affordable 100—a list of the 100 largest affordable multifamily property management companies ranked by affordable unit counts—is available on its website, click Web Link below, as well as in the June issues of NAHMA News, Affordable Housing Finance magazine and Units magazine. The NAHMA website version expands the list to the top 120 largest multifamily property management companies. In addition, the online version presents two specialty lists: the 25 largest housing credit (LIHTC) property management companies and the 25 largest Rural Development program property management companies.
Become a Specialist in Housing Credit Management® (SHCM®) Company!
The three national associations sponsoring the Specialist in Housing Credit Management® (SHCM®) certification program invite your company to become a Specialist in Housing Credit Management® Company, a corporate designation created specifically to honor management companies that successfully maintain a significant portion of their properties and staff to the high standards of the SHCM certification program.
The SHCM program, developed especially for management companies involved with properties developed and operated under the Low-Income Tax Credit (LIHTC) program, is sponsored by the National Affordable Housing Management Association (NAHMA), the National Apartment Association Education Institute (NAAEI), and LeadingAge.
Earning the SHCM Company designation publicly demonstrates that a company is among the finest managers of LIHTC housing in the industry.
For more details on how to become a SHCM Company, click on the Web Link below.
Upcoming Events
NAA Campus Connex
February 13-14, 2018
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NAHMA Winter Meeting
March 4-6, 2018
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NAA Advocate
March 13-16, 2018
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LeadingAge 2018 PEAK Leadership Summit
March 18-21, 2018
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NAA Apartmentalize
June 13-16, 2018
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NAHMA Fall Meeting
October 21-23, 2018
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LeadingAge Annual Meeting and Expo
October 28-31, 2018
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