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IRS Releases April LIHTC Rates
The IRS issued Revenue Ruling 2017-08, which provides various prescribed rates for federal income tax purposes, including applicable federal interest rates, adjusted applicable federal interest rates and adjusted long-term and tax-exempt rates for April 2017. To view the revenue ruling from the IRS, please click the Web Link provided below.
Tax Issues and Tax Reform
"How the Affordable Housing Tax Credit Improvement Act Would Affect QAPs"
"How Congress Could Offset the Effects on Affordable Housing Production of a Reduced Corporate Rate"
Congress
"Cantwell-Hatch Affordable Housing Credit Improvement Act Provides Pathway Forward"
HUD-Related Activity
"HUD Cuts, Tax Reform Might Put a Dent in Construction of New Affordable Housing"
State and Local Activities
"Nonprofits Join Up to Increase Affordable Housing Heft"
Management and Compliance
"Stop Paying to Light Up the Night and Right-Size Your Energy Spend"
Green Building
"Survival of the Retro-Fittest"
Association News
HUD Issues Revised FY 2017 Fair Market Rents
Congress Requests GAO Review of Lead-Paint Remediation Program
HUD Holding Benchmarking Webinars
Planning for Summer Meals Program
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Tax Issues and Tax Reform
How the Affordable Housing Tax Credit Improvement Act Would Affect QAPs
Novogradac (04/14/2017) Shelburne, Mark
The changes proposed in the Affordable Housing Credit Improvement Act of 2017 would have real-world implications for the affordable rental housing community, including state low-income housing tax credit (LIHTC) agencies, investors, developers, property managers and tenants. For example, three proposed changes to qualified allocation plans (QAPs) would affect the way state LIHTC agencies set up competition and distribute LIHTCs within a jurisdiction. The legislation considers what constitutes an adequate concerted community revitalization plan (CCRP). The bill recognizes that the QAP definition “shall take into account any factors the agency deems appropriate” and then says a CCRP must also be “geographically specific;” outline a “plan for implementation and goals for outcomes;” include a strategy for obtaining public and/or private investment in “non-housing” activities; and “demonstrate the need for community revitalization.” The legislation prohibits “support or opposition with respect to the project from local or elected officials” or “any local government contribution to the project" from being part of the QAP selection criteria. The concern is that incentives can impede fair housing objectives. A third QAP provision in the bill would require LIHTC agencies to consider “the affordable housing needs of individuals in the State who are members of Indian tribes.” The legislation would add an 11th criterion, and should help make their applications more competitive.
How Congress Could Offset the Effects on Affordable Housing Production of a Reduced Corporate Rate
Novogradac (04/17/2017) Wallace, Dirk; Novogradac, Michael; Lawrence, Peter
A reduced corporate tax rate and the House tax reform blueprint on low-income housing tax credit (LIHTC) equity pricing would have adverse effects on affordable housing production. Depending on how tax reform is written and if it were to be enacted, the amount of LIHTC equity raised annually could be reduced by as much as 17 percent or more, a loss of as much as $2.2 billion and 16,000 affordable homes per year or more. Congress could take two steps to make up for this loss of LIHTC equity and enable, at a minimum, the same level of affordable rental housing production. The first step is to increase the amount of allocable LIHTCs. This increase is generally revenue neutral over the 15-year compliance period if the tax savings for losses at higher rates are re-allocated as tax credits. The second step is to modernize the formula by which the annual LIHTC percentage is determined to ensure that all developments financially feasible today remain so. This proposal would ensure that, at a minimum, LIHTC investment and production is maintained under a lower corporate tax rate, ensure financial feasibility of LIHTC developments and create a formula that is more responsive to changing market interest rates and investor cost of capital.
Congress
Cantwell-Hatch Affordable Housing Credit Improvement Act Provides Pathway Forward
Novogradac Journal of Tax Credits (04/17) Vol. 08, No. 4 Novogradac, Michael
Thirteen senators on March 7 proposed S. 548, the Affordable Housing Credit Improvement Act. The office of Sen. Maria Cantwel (D-Wash.) estimates the legislation would create or preserve approximately 1.3 million affordable rental homes over a decade, an increase of 400,000 over current levels. A key provision in the bill is a 50 percent increase in the annual per-capita allocation and small state minimum for the federal low-income housing tax credit (LIHTC). That increase would be phased in over five years, with the per-capita allocation of $2.35 in 2017 gradually increasing to $3.53 in 2022. The small-state minimum, which is $2.71 million this year, would reach $4.065 million in 2022, a cost of $4.1 billion over a 10-year period, according to the Joint Committee on Taxation. The House version is not expected to include the 50 percent increase, but both versions call for implementing a minimum 4 percent rate for credits used to finance acquisitions or used in bond-financed developments. The proposal also extends the state discretion on the 30 percent basis boost, enabling the rent for higher-income households to offset the reduced rent charged for households that earn 30 percent or 40 percent of the average median income (AMI). The measure would also allow housing credit agencies to increase the eligible basis of properties by up to 50 percent where 20 percent of the apartments are designated for occupancy by households that are earning 30 percent of the AMI or lower if that is required for the development to be financially feasible.
HUD-Related Activity
HUD Cuts, Tax Reform Might Put a Dent in Construction of New Affordable Housing
National Real Estate Investor (03/23/17) Bell, Diana
Housing and Urban Development (HUD) budget cuts and possible tax reform could harm capital supply for affordable housing. Developers would also be forced to find new sources of financing. Meanwhile, states and local agencies would also have to bear some of the burden. A potential budget cut to HUD comes at an inopportune time. Experts say there is strong demand for affordable housing, and investment is needed to catch up to that demand. Currently, President Trump is requesting a $6.2 billion cut to HUD's budget in 2018. The Community Development Block Grant program, HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity are among the programs that would be eliminated under the budget reduction.
State and Local Activities
Nonprofits Join Up to Increase Affordable Housing Heft
Next City (03/29/17) Abello, Oscar Perry
Nonprofit community development corporations (CDCs) in New York City have been instrumental in stabilizing neighborhoods and preserving affordable housing by working with the city to take over foreclosed and neglected properties. Today, many of those same groups face competition in the costly New York City real estate market. A new nonprofit named JOE NYC is joining together several CDCs to get an edge. JOE is short for joint-ownership entity, and comprises a member-controlled organization. There are 10 current members and at least two more pending. The entity's overall goals include preserving members' existing portfolios of affordable housing, acquiring portfolios of affordable housing developed by others in the city, and pursuing new affordable housing projects. Working with the city and often using incentives like federal low-income housing tax credits (LIHTCs), community-based nonprofit developers have been behind more than 120,000 units of affordable housing in the city over the last 25 years, according to the Association for Neighborhood & Housing Development (ANHD), a citywide network of community development organizations. These units are at risk as the buildings reach the end of their tax-credit compliance periods. Starting in 2020, according to ANHD research, New York City will face a rising wave of buildings falling out of the LIHTC program. These developments, built with public benefits in mind, may get flipped into market-rate housing or into luxury condos, says Stephanie Sosa, ANHD senior policy associate. JOE NYC cannot save them all, but it can save some.
Management and Compliance
Stop Paying to Light Up the Night and Right-Size Your Energy Spend
Buildings (03/30/17) Penny, Janelle
With regards to commercial buildings, overlit exteriors, and lights that are left on after work hours could be driving up lighting-related energy consumption overnight and during periods of non-operation when little to no illumination is needed. Commercial landlords frequently do not notice that there is a problem, either because lights are left on when no one is around to notice or because they don't realize that some intentionally lighted spaces are overlit. Tenants, occupants, and building owners purposely leave lights on for three main reasons: safety, security, and to enhance focal points and branding. Too often, though, interior lights are left on inadvertently by occupants or cleaning staff. The challenge then becomes how to find waste. Property management staff can start by conducting their own investigation just by walking around and observing the property both during the day and after hours. Or, a professional can be hired to conduct a comprehensive lighting audit. Lumen Control Solutions President Danny Streit remarks, "Typically, someone comes on-site in the evening and looks at areas where energy could be saved either by turning lights off, reducing the light output or retrofitting to a more efficient source like LED. There are also metering devices you can install temporarily that measure usage patterns." Studies have shown that older buildings tend to waste interior lighting energy along any emergency egress paths, particularly in stairways and any other places that aren't used on a regular basis.
Green Building
Survival of the Retro-Fittest
Multi-Housing News (04/15/17) Bulman, Mallory
A growing list of financing options is making it easier to turn existing apartment communities into green ones. Fannie Mae upgraded its Green Rewards program this past fall, and Freddie Mac launched its own Green Advantage program to compete. There are also the Federal Housing Administration's PowerSaver Energy Rehab loan and Property Assessed Clean Energy (PACE) financing options for energy-saving apartment retrofits. Hilary Provinse, senior vice president of customer engagement at Fannie Mae, states, "We really do want to encourage borrowers to make these enhancements to their property . . . to make it more efficient, because it's better for us; it's better for the sustainability of the property; it's ultimately better for the tenants." The latest Urban Land Institute research estimates that whole-building energy retrofits can cost anywhere from $2 to $7 per square foot. The study also found it can take two to 15 years to achieve a full return on investment, depending on such factors as the property's age, design, and targeted savings.
But the savings can be significant, to say nothing of the improved property value and competitive standing against new apartment communities, which increasingly feature energy-saving appliances and systems. A U.S. Department of Energy study found that an estimated $16 billion in possible energy cost savings go unclaimed nationwide each year. But in a sample of more than a dozen apartment properties in Chicago with a median age of 95 years and an average of 30 rental units, the study found that -- post-retrofit -- buildings saw an average decrease of nearly $200 per square foot in natural gas expenditures and an average 2.95 percent increase in net operating income.
Association News
HUD Issues Revised FY 2017 Fair Market Rents
The Department of Housing and Urban Development (HUD) published a revised notice for FY 2017 Fair Market Rents: Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program in the March 30 Federal Register. This notice updates the fiscal year 2017 Fair Market Rents (FMRs) for the Portland, Maine, HUD Metro FMR Area (HMFA) and the Vallejo-Fairfield, Calif., Metropolitan Statistical Area (MSA), as requested by commenters. In addition, the notice includes HUD responses to the comments received regarding the FY 2017 FMRs. The effective date is May 1. To view the notice, click on the Web Link below.
Congress Requests GAO Review of Lead-Paint Remediation Program
U.S. Sens. Susan Collins (R-ME) and Jack Reed (D-RI) and Reps. Mario Diaz-Balart (R-FL) and David Price (D-NC) sent a letter asking the Government Accountability Office (GAO) to report on HUD’s lead hazard remediation efforts. The bipartisan leadership of the House and Senate subcommittees on Transportation, Housing and Urban Development raised concerns about the oversight needed to remediate lead-based paint hazards in HUD-assisted housing.
The letter asks the GAO to produce a report on the effectiveness of federal programs and protocols for identifying and addressing lead-based paint hazards, the partnerships between public housing agencies and public health agencies, and gaps in regulation compliance and enforcement. The letter also inquiries about HUD’s process for assessing lead-related risks during Housing Choice Voucher inspections, and the impact, if any, on landlord participation and housing availability. To read more about the request, click on the Web Link below.
HUD Holding Benchmarking Webinars
HUD will be holding a series of webinars through June 1 on Multifamily Utility Benchmarking. The six-part series features various topics related to the benchmarking requirements and toolkit; data collection and management; and funding opportunities. Registration for each webinar is required. For more information including a complete schedule, click on the Web Link. Recordings will be made available for those who are not able to attend.
Planning for Summer Meals Program
The U.S. Department of Agriculture released an unnumbered letter to promote the participation of Rural Housing Service (RHS)-financed housing properties and community facilities in the Summer Meals program, which provides no-cost healthy meals to low-income children during the summer. Meals to rural children at risk of going hungry are provided by local sponsoring organizations, while RHS provides sites where meals can be served. RHS encourages multifamily housing properties and community facilities to get involved and spread the word early, as state agencies and sponsoring organizations hold planning sessions months before the summer begins. For more information on Summer Meals, click here. To read the unnumbered letter, click on the provided Web Link.
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 Education Conference & Exposition
June 21-24, 2017
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NAA MAXIMIZE: Multifamily Asset Management Conference
October 2-4, 2017
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NAHMA Regulatory Issues (Fall) Meeting
October 22-24, 2017
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LeadingAge 2017 Annual Meeting & EXPO
October 29-November 1
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