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Disaster Recovery Update
In February, the Department of Housing and Urban Development allocated $7.89 billion in Community Development Block disaster recovery (CDBG-DR) funds appropriated by Congress through a supplemental spending bill in 2017. The purpose of the CDBG-RD funds is to assist in the long-term recovery from 2017 disasters. To read the notice, click on the Web Link below. Additionally, the IRS issued a Notice 2018-17 to expand relief from certain Low-Income Housing Tax Credit and tax-exempt bond requirements to Puerto Rico, including temporary housing relief, compliance monitoring relief and carryover allocation relief.
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Industry Trends
"Turning Older Buildings Into Great Places to Live"
"How Public-Private Partnerships May Provide the Solution to the Affordable Housing Crisis"
"Fannie Mae Announces $100 Million LIHTC Fund"
Tax Issues and Tax Reform
"Tax Overhaul Is a Blow to Affordable Housing Efforts"
"LIHTC Market Faces 'Mild Turbulence' Ahead"
"Observational Study Corroborates Lower LIHTC Unit Production Due to Lower Corporate Tax Rate"
Congress
"Fannie, Freddie Draft Reform Bill Addresses Affordable Housing"
State and Local Activities
"Connecticut Developers, Funders Say Tax Reform Likely Won't Pull Rug Out from Housing Credits"
Association News
Save the Date: Online SHCM Course
Claim Your SHCM Digital Badge
'REWIND' NAA Educational Sessions
Preorder Recorded Sessions from NAA's June Conference
Own Multifamily Housing: The Essential Industry Text
NAHMA Releases 2017 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Industry Trends
Turning Older Buildings Into Great Places to Live
Apartment Finance Today (01/30/18) Bailey, Laura
A new report commissioned by Capital One and written by the MIT Center for Real Estate examined the benefits of adaptive reuse. The authors cited the lower environmental costs of retrofitting existing buildings over building new ones and their proximity to city centers. Baltimore's Columbus School, for instance, struggled to find a new role after it closed in the early 1970s. In 2012, The Woda Group, one of the nation's largest developers of affordable housing, began planning to convert the building to affordable housing. The $13 million Columbus School Apartments, completed in 2014, added 50 units to the local housing stock. Units are reserved for residents earning less than 30 percent, 40 percent, and 50 percent of the area median income. In addition to the developer, the team included architects CBH Associates and the nonprofit Center for Urban Families. To support the effort, Capital One purchased $12.3 million in low-income housing tax credits (LIHTCs) and historical tax credits via Hudson Housing Capital. Capital One's Community Finance team has already begun working on another affordable development in Baltimore, the adaptive reuse of an abandoned 1920s police station. Similarly, for Building 9 in Seattle, Capital One worked with Mercy Housing Northwest and provided a $13.4 million construction loan, a $1 million Washington Community Reinvestment Association permanent loan, and approximately $16 million in LIHTC equity purchased through Enterprise Community Investment.
How Public-Private Partnerships May Provide the Solution to the Affordable Housing Crisis
National Real Estate Investor (02/05/18) Khidekel, Inna
In the years since the global financial crisis, a large portion of the U.S. workforce has been priced out of affordable housing. Since 2009, the U.S. has particularly focused on the housing needs of two subsets of the population: those earning more than 100 percent of Area Median Income (AMI) who can afford new class-A luxury rentals, and those earning below 60 percent of AMI who are supported by government-subsidized programs such as low-income housing tax credits and Section 8 housing. Only about 24 percent of extremely low-income renters are able to secure subsidized housing. By leveraging its operating scale, an experienced multifamily owner-operator can address both the housing and livelihood needs of households earning below 80 percent of AMI. Green initiatives also promote a responsible and positive environmental footprint, while improving efficiency, sustainability, and costs. Companies that deliver quality programming with full-time staff in specially built on-site social and community centers, such as Project Access and NeighborWorks, can expand the impact quality housing can have on the workforce. This is especially true if these programs are held to high accountability standards with specific benchmarking and goals. Meanwhile, government agencies, including Freddie Mac and Fannie Mae, have recently partnered with select private sector real estate owner-operators to implement innovative and flexible affordable housing financing solutions at scale. This facilitates making substantial renovations while preserving affordability and investor returns.
Fannie Mae Announces $100 Million LIHTC Fund
Affordable Housing Finance (02/05/18) Kimura, Donna
Fannie Mae announced its $100 million low-income housing tax credit (LIHTC) fund, saying the fund will focus on supporting affordable multifamily housing. The fund will be known as the Raymond James Affordable Housing Fund 11, and will be managed for Fannie Mae by its partner in the fund, Raymond James Tax Credit Funds. The Raymond James Affordable Housing Fund 11 will focus on Hurricane Harvey impacted areas, rural markets, and Native American housing. It will back multifamily projects in these underserved areas by funding for rehabilitation and construction. The fund will also support resiliency features in properties which are located in markets subject to flood and storm activity, and is expected to make its first investment during the first quarter of 2018. Approximately a dozen projects may be included in the fund.
Tax Issues and Tax Reform
Tax Overhaul Is a Blow to Affordable Housing Efforts
New York Times (01/19/18) Dougherty, Conor
The Republican tax plan approved in December lowers the tax rate for corporations, which will likely impact affordable housing construction. The value of credits that corporations get in return for their investments is also lower. Novogradac & Company estimates that the new tax law will reduce the growth of subsidized affordable housing by 235,000 units over the next decade. Developers and city agencies are now searching for new financing and scaling back longer-term plans. Nationwide, roughly 1 million renters are being added annually since 2010—about twice as many as the previous rental peak in the 1970s and 1980s, according to a 2017 report by Harvard’s Joint Center for Housing Studies. Households making more than $100,000 a year accounted for a third of the growth in renters over the past decade. There are some indications that the rush of building is helping increase affordability, but low-income housing remains undersupplied. Roughly half of renters pay more than 30 percent of their income on housing, and a quarter pay more than half.
LIHTC Market Faces 'Mild Turbulence' Ahead
National Real Estate Investor (01/31/18) Mattson-Teig, Beth
Investors and developers are expecting more uncertainty ahead for the low-income housing tax credit (LIHTC) market after a dramatic drop in pricing over the past year. The main concern is that demand for tax credits could diminish once institutional investors calculate the full impact from the Tax Cuts and Jobs Act. However, investors have not yet hit the pause button -- they still have ample capital available and a desire to buy tax credits. The market has reset again in late 2017 and early 2018 following the passing of the tax reform bill, although the recent adjustment is more modest, says Todd Crow, executive vice president and manager of tax credit capital for PNC Real Estate, a commercial real estate financing solutions provider. Tax credits that were selling for $1.02 to $1.05 in the fall of 2016 now range between 87 and 92 cents. The pricing shift has resulted in compromises from stakeholders to make up for the shortage in equity coming from the tax credits. The lower corporate tax rate effectively cuts the tax bill of institutional investors such as banks and life insurance companies by one-third, which could create a situation where investors do not have as much need for the LIHTCs. The industry is also keeping a close eye on other legislative initiatives that could potentially impact the LIHTC program, such as a Treasury Department review of the Community Reinvestment Act and bills in the House and Senate that aim to amend the original 1986 code and make some beneficial changes, such as allowing the program to be increased by about 50 percent.
Observational Study Corroborates Lower LIHTC Unit Production Due to Lower Corporate Tax Rate
Notes from Novogradac (01/24/2018) Novogradac, Michael
Novogradac is conducting an observational study to analyze average credit allocations, affordable housing unit production, and total project costs for calendar years 2015 and 2017. The year 2016 was excluded because it was a tax credit equity pricing transition year. In 2017, a widely adopted underwriting assumption was a 25 percent corporate tax rate, which reduces the value of the LIHTC by about 11 percent. Preliminary results indicate that the aggregate loss of unit production due to the decline in the anticipated corporate tax rate for the states sampled is approximately 2,000 units, or from about 19,000 units down to about 17,000, a loss of about 10.5 percent. More specifically, tax credit allocations, per unit of affordable housing in the study sample between 2015 and 2017, increased about 16 percent to 17 percent. The increase in tax credits was attributable to higher costs in the range of 4 percent to 5 percent. The increase in credits attributed to the decline in tax credit equity pricing is estimated at about 12 percent. This increase in allocation of tax credits per unit due to a decline in the value of the tax credit translates into a loss of about 11 percent of the number of affordable housing units produced or renovated and preserved. Novogradac & Company expects that the enacted 21 percent corporate tax rate will lead to a further decline of about 3 percent in affordable rental home production and preservation. The aggregate decline of housing production and preservation per dollar of tax credits attributable to the decline in the corporate tax rate is anticipated to be about 14 percent.
Congress
Fannie, Freddie Draft Reform Bill Addresses Affordable Housing
Politico Pro (01/31/18) Woellert, Lorraine; Warmbrodt, Zachary
Draft legislation to reform Fannie Mae and Freddie Mac includes provisions to expand affordable homeownership and rental housing. The draft bill from Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) would require the Federal Housing Finance Agency to develop a plan to govern the payments from an affordable housing fund that would identify and resolve mortgage-access impediments faced by underserved borrowers. The measure would set up a government guarantee that would be available for certain mortgage-backed securities. It would also establish the chartering of private “guarantors” that would securitize guaranteed mortgage bonds. Private capital would be in a “first loss position” on the mortgage-backed securities to cover losses arising out of a severe recession accompanied by stress in residential real estate.
State and Local Activities
Connecticut Developers, Funders Say Tax Reform Likely Won't Pull Rug Out from Housing Credits
HartfordBusiness.com (02/12/18) Seay, Gregory
Connecticut housing developers and funding agencies say the impact of the recent federal tax overhaul legislation will not be severe because businesses still want to leverage housing tax credits to cut their IRS and state-income tax bills. Also, the federal tax reform did not alter the accessibility or value of housing tax credits issued by Connecticut to spur development of affordable rental and owner-occupied dwellings. "Businesses will continue to take advantage of any tax-savings opportunities they have,' says Cal Vinal, president and CEO of Hartford's Capital for Change, formerly Connecticut Housing Investment Fund Inc. Vinal notes that some businesses, reviewing the implications of tax reform, may be learning for the first time about the tax benefits of housing tax credits and, thus, inclined to use them. The Connecticut Housing Finance Authority (CHFA) annually awards its allotment of some $8 million in low-income housing tax credits (LIHTCs), that when fully leveraged by developers, generate approximately $80 million in project funding, according to Executive Director Karl Kilduff. CHFA's next LIHTC awards are set for late March. Since 2011, Connecticut has invested more than $1 billion to build, renovate or preserve some 23,000 living units. By the end of 2017, more than 12,000 units had been built, with 11,300 more units under construction or in various phases of development, state officials say.
Association News
Save the Date: Online SHCM Course
Take advantage of this convenient, affordable way to prepare to earn the Specialist in Housing Credit Management (SHCM) certification in four online sessions, or brush up on your housing credit compliance knowledge. Each webinar will last for approximately two hours, followed by a question-and-answer period for attendees. The webinars take place on consecutive Wednesdays in April with each beginning at 12 p.m. Eastern time.
The course schedule is as follows:
- April 4: Chapter 1, Program Regulations presented by Anita Moseman
- April 11, Chapter 2, Unit Eligibility presented by Gwen Volk
- April 18, Chapter 3, Applicant Eligibility & Certification presented by Dodi Gershen
- April 25, Chapter 4, Monitoring & Compliance presented by Heather Staggs
The cost for the course, including the SHCM exam and SHCM application fee, is $549 for National Apartment Association Education Institute (NAAEI) and National Affordable Housing Management Association (NAHMA) members and $599 for nonmembers. Individual webinars can be purchased for $109 each. To register, click the Web Link provided below. If you need assistance with the registration process, please contact: Amy Allen, at AAllen@naahq.org.
Claim Your SHCM Digital Badge
The NAAEI is offering digital badges for SHCM credential holders. The badges can be shared through social media, email, websites and your digital resume. Digital badges feature encoded metadata: the badge’s issuing organization, its expiration date, and the knowledge and skills it confirms. They also provide employers with immediate verification, all in one click. For more information on the digital badge program, click on the Web Link provide below, and watch for an email from ProExam Vault.
'REWIND' NAA Educational Sessions
Order 50-plus education sessions that were presented at the 2017 Education Conference & Exposition in Atlanta for $199. You may earn up to six continuing education credits toward your NAAEI credential renewal.
This year’s audio recordings include the following sessions:
- Opening Doors: The Key to Understanding Permanent Supportive Housing presented by Michael D. Clark, HCCP, principal and owner, Alpha-Barnes Real Estate Services LLC; Tom Gallagher, principal, E&G Group; Jacquie Hoffman, MDiv, president NPH board of directors 2017, regional vice president of property operations, Mercy Housing; and Lori Trainer, CAM, CAPS, vice president, Southern Affordable Services Inc.
- Dealings with HUD: Successfully Navigating Muddy Waters presented by Greg Brown, senior vice president of government affairs, NAA; John McDermott PLLC, general counsel, NAA; Jeanne McGlynn Delgado, vice president, government affairs, American Seniors Housing Association; and Lori Trainer, CAM, CAPS, vice president, Southern Affordable Services Inc.
- Affordable Housing: Key Federal Legislative-Regulatory Issues to Keep You Up at Night presented by Kris Cook, CAE, executive director, NAHMA; and Larry Keys, director of government affairs, NAHMA.
Click on the Web Link for more information.
Preorder Recorded Sessions from NAA's June Conference
Preorder the 70-plus education sessions that will be presented at the 2018 June NAA Apartmentalize conference in San Diego for $99 by clicking on the Web Link below. For more on the conference, visit https://www.naahq.org/apartmentalize.
Own Multifamily Housing: The Essential Industry Text
Multifamily Housing: The Essential Industry Text has been developed as a definitive reference and interactive guide aimed at expanding the knowledge of multifamily professionals and as a complement to “on-the-job” experience for investors, developers, owners, managers, consultants and suppliers. As college students consider the apartment industry as a viable career option or choose to earn degrees in property management or real estate, this text offers a single source with best practices, uniform guidelines and standardized operational procedures, complete with a comprehensive glossary and industry terminology. Click on the Web Link below to purchase a copy.
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
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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