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Congress Approves FY 2018 Funding


The omnibus legislation approved March 23 by Congress raised both the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) affordable housing program funding levels for Fiscal Year 2018 and enacted provisions to improve the Low-Income Housing Tax Credit (LIHTC) program. The approved bill included two key provisions from the Affordable Housing Credit Improvement Act: a 12.5 percent increase in housing credit allocation for four years, which can be extended beyond the fourth year, and the permanent authorization of income averaging that allows the 60 percent Area Median Income ceiling to apply to the average of all units in a project rather than each individual housing credit apartment. The learn more, click on the Web Link provided below.
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Industry Trends


"The Appeal of Affordable Housing to For-Profit Investors"
"Cautious Optimism for Nation's Top Developers"

Tax Issues and Tax Reform


"The LIHTC Continues to Serve Those Most in Need of Affordable Housing"
"IRS Announces New LIHTC Volume Amounts"

Congress


"Omnibus Measure Includes First LIHTC Expansion in a Decade"

State and Local Activities


"Homeless in Seattle Celebrate $3 Billion Affordable Housing Victory"
"Moving Section 8 Families to Wealthier Neighborhoods May Mean Higher Rents for Those Left Behind"

Association News


Register for Emerging Trends in Tax Credit Webinar
IRS Releases LIHTC Rates for April
HUD Issues FY 2018 Income Limits
HUD Provides Annual Factors for CY 2018 Admin Fees for PHAs
Initiative to Combat Sexual Harassment in Housing
NAHMA Releases 2017 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events

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Industry Trends


The Appeal of Affordable Housing to For-Profit Investors
National Real Estate Investor (03/27/18) Anderson, Bendix

Investors are buying apartment properties with relatively low rents, including those created through government-subsidized affordable housing programs. Although some investors plan to raise rents, many do not because affordable housing properties tend to produce reliable income. Affordable housing properties in many markets are fully-occupied and safer investments than conventional, class-A apartment buildings. Lower-rent properties are attractive in part because of heavy demand for these apartments, as some households that could previously afford the middle-market have been priced out of those communities, experts say. Development costs are too high for builders to start new apartments with low rents without help from the government's affordable housing programs, and those programs have limits on how much new housing they can afford to build. Affordable housing advocates often worry that private investors may raise rents once they buy these buildings. Many properties built with federal Low-Income Housing Tax Credits (LIHTC) are now approaching the end of their original 30-year agreement to maintain low rents. In many smaller markets, tenants will not pay significantly higher prices on renovated older apartments, which reduces the temptation to remove properties from affordable housing programs, renovate them, and raise rents. However, primary markets, where rents are higher, face a greater risk of losing affordable housing.
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Cautious Optimism for Nation's Top Developers
Affordable Housing Finance (04/09/18) Kimura, Donna

Affordable housing developers are more optimistic this year but still anticipate challenges, amid concerns about Low-Income Housing Tax Credit (LIHTC) prices, rising interest rates, and increasing development costs. More than 48 percent of recently surveyed developers believe housing finance conditions will deteriorate by the end of the year, while 31 percent say conditions will improve, and 20 percent expect no significant change. This marks an improvement over last year, when 70 percent of respondents predicted finance conditions would worsen. In 2017, developers were worried about tax reform, and though the housing credit and private-activity bond programs survived, lawmakers adopted a lower corporate tax rate and made other changes that could drastically cut affordable housing production. In 2017, 83 percent of the surveyed developers cited tax reform as the most significant issue, with no other issue coming close. Together, the AHF 50 Developers started construction on 231 developments with 22,540 affordable homes in 2017. They also completed 214 communities with 20,592 affordable units, in a decrease from the 266 developments and more than 25,000 units started by the 53 companies in the previous year's group. This year the AHF 50 Developers predict they will start 307 developments with more than 34,000 affordable units, despite concerns about funding availability and rising development costs.
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Tax Issues and Tax Reform


The LIHTC Continues to Serve Those Most in Need of Affordable Housing
Notes from Novogradac (03/26/2018) Lawrence, Peter

A report released March 20 by the U.S. Department of Housing and Urban Development (HUD) concluded that the Low-Income Housing Tax Credit (LIHTC) continues to serve the nation's most vulnerable households. The study, “Understanding Whom the LIHTC Program Serves: Data on Tenants in LIHTC Units as of December 31, 2015,” found that the reported 2015 vacancy rate was approximately 4 percent, confirming consistently low vacancy rates, strong property performance, and high demand for LIHTC housing. Extremely low-income tenants (ELI), or those making 30 percent or less of the area median income (AMI), continued to account for a large share of the tenants served. The percentage of tenants earning between 30 percent and 40 percent of AMI remained unchanged in 2015 at 18.2 percent. The other categories, tenants earning from 40 percent of AMI and up, all increased in 2015. The number of white LIHTC tenants decreased from 22.9 percent in 2013 to 21.2 percent in 2015. The number of African American tenants also decreased in 2015, while Hispanic tenants of any race increased 2.1 percentage points to 11.4 percent in 2015. The percentage of Asian tenants increased 0.5 percentage points in 2015 to 2.5 percent. The 2015 and 2014 percentage of households providing disability information were unchanged, but represented an increase over 2013 when the percentage was 78.0 percent. Tenant data reported by HUD indicates the LIHTC continues to serve those most in need of assistance, namely ELI households and people with disabilities.
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IRS Announces New LIHTC Volume Amounts
Affordable Housing Finance (04/13/18) Kimura, Donna

The Internal Revenue Service has announced an increase in the new Low-Income Housing Tax Credit (LIHTC) volume cap, approved under the Consolidated Appropriations Act. The new cap is the greater of $2.70 multiplied by a state's population or $3,105,000, up from $2.40 multiplied by a state's population or the small-state minimum of $2,765,000. The LIHTC volume cap will grow 12.5 percent over the next four years under the spending bill.
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Congress


Omnibus Measure Includes First LIHTC Expansion in a Decade
Politico Pro (03/26/18) Faler, Brian

The recent omnibus spending bill signed into law includes the first expansion of a tax subsidy for low-income housing in a decade. By one estimate, it will increase the number of affordable housing units by 30,000 in 10 years. "It's definitely a big deal," said Michael Novogradac, managing partner at the San Francisco-based accounting firm Novogradac & Co. The provisions were added following pressure from Democrats who argued that Republicans' recent rewrite of the tax code, with its cut in the corporate rate, had lowered the value of the Low-Income Housing Tax Credits. The legislation boosts the number of credits available and also relaxes income restrictions on who may live in affordable-housing developments. Novogradac, which had estimated the tax rewrite would slash the number of affordable homes by more than 200,000, anticipates the new provisions will add back about 30,000 units. "That's 30,000 families that will have affordable housing that wouldn't otherwise have it," said Novogradac. The provisions will cost $2.8 billion over the next decade, predicts the official Joint Committee on Taxation. Republicans permitted the provisions in exchange for Democrats agreeing to language designed to clean up the so-called "grain glitch" in the new tax law that could let some farmers avoid paying taxes.
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State and Local Activities


Homeless in Seattle Celebrate $3 Billion Affordable Housing Victory
Reuters (03/29/18) Scruggs, Gregory

On March 27, U.S. Sen. Maria Cantwell (D-Wash) visited Patrick Place, a four-story, 68-apartment building, to celebrate a boost for federal Low-Income Housing Tax Credits (LIHTCs). Congress approved a spending bill that will give the LIHTC program an additional $3 billion of federal funds over the next four years. Cantwell launched a campaign to increase the tax credit two years ago at Patrick Place, which features a computer lab, on-site mental health and addiction counselors, and a rooftop patio. "We’re here today to celebrate the fact that campaign has been answered with the first investment in 10 years in affordable housing," she said. Introduced in 1986, LIHTCs provide housing for more than 13 million people in the United States and is responsible for 90 percent of all affordable rentals, says Cantwell. There is currently a shortage of 7.4 million affordable homes for renters on or near the poverty line, according to the National Low Income Housing Coalition. Homelessness rose last year for the first time since 2010 because of a lack of affordable housing, said the U.S. Department of Housing and Urban Development. The expanded LIHTC program is projected to produce 29,000 additional affordable homes nationally over the next four years, estimates Dan Watson, deputy chief of the regional housing authority. Dennis Bateman, a formerly homeless Seattle resident, has been sober for almost two years and holds a steady job. The 64-year old was offered an apartment at Patrick Place after a year living in a homeless shelter.
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Moving Section 8 Families to Wealthier Neighborhoods May Mean Higher Rents for Those Left Behind
Tampa Bay Times (04/14/18) O'Donnell, Christopher

A federal rule called Small Area Fair Market Rent (SAFMR) that took effect this month will allow some families on housing vouchers to move to wealthier neighborhoods, but thousands of low-income families who stay put might face higher rents. In 24 metropolitan areas, housing subsidies will be raised in some neighborhoods so families can move out of high-poverty neighborhoods. This will mean lower housing subsidies in poorer neighborhoods that traditionally provide the majority of Section 8 housing. Local housing authorities say this leaves them with the quandary of making low-income families pay the shortfall or passing it on to landlords and risk losing them from the voucher program. Some affordable housing advocates commend the policy, which they say will help desegregate metropolitan areas and end the clustering of subsidized housing. Under the old payment rule, vouchers were capped at a percentage of the average rent for an entire county or region, but now housing agencies must establish different subsidy levels based on ZIP code. The SAFMR rule has already been tested in some metropolitan areas with mixed results. Five metropolitan areas that implemented the rule saw a decrease in the number of homes available to voucher holders in low-rent neighborhoods, a HUD study found. But the study also shows more voucher holders moved to higher-rent communities.
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Association News


Register for Emerging Trends in Tax Credit Webinar

Join the experts on May 23 beginning at 2 p.m. Eastern to learn how impressing your investor and monitoring agents will impact the future of your housing credit property.
The webinar will provide 1.5 hours of instruction, followed by a 30-minute question-and-answer session. It is presented by Heather Staggs, CPO, FHC, SHCM, president of S.T.A.R. Momentum Compliance Consulting Inc.; and Deborah Gershen, NAHP-e, FHC, SHCM, vice president of Moderate Income Management Company Inc.
It is free to current SHCM certified professionals and $109 for non-SHCM professionals. Be sure that you renewed your SHCM credential in 2017 in order to participate in this webinar free of charge.
For questions about your renewal, contact Natasha Patterson, ACA, from NAHMA, at npatterson@nahma.org or 703-683-8630, ext. 117. For registration issues, contact Amy Allen, from NAA, at AAllen@naahq.org or by phone 703-797-0608.
To register for this course, click the Web Link below.
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IRS Releases LIHTC Rates for April

The Internal Revenue Service (IRS) issued Revenue Ruling 2018-09, 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 2018.
Table 4 in this ruling contains LIHTC Appropriate Percentages Under Section 42(b)(1) for April 2018:
  • Appropriate percentage for the 70 percent present value Low-Income Housing Credit: 7.66 percent
  • Appropriate percentage for the 30 percent present value Low-Income Housing Credit: 3.28 percent
To view the revenue ruling from the IRS, click on the Web Link provided below.
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HUD Issues FY 2018 Income Limits

The Department of Housing and Urban Development (HUD) issued Fiscal Year (FY) 2018 Income Limits for the Public Housing and Section 8 programs. The national median income for FY 2018 is $71,000, an increase of 5.7 percent compared with FY 2017. HUD will continue to cap increases at 11.5 percent, which is twice the national median income.
For more information, click on the Web Link below.
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HUD Provides Annual Factors for CY 2018 Admin Fees for PHAs

HUD announced the monthly per unit fee rates for use in determining the ongoing administrative fees for housing agencies administering the Housing Choice Voucher (HCV), Five-Year Mainstream, and Moderate Rehabilitation programs during Calendar Year (CY) 2018.
For CY 2018, administrative fees will be earned based on vouchers leased as of the first day of each month. Two fee rates are provided for each PHA: the first rate applies to the first 7,200 voucher unit months leased in CY 2018; the second rate applies to all remaining voucher unit months leased in the calendar year.
For more information and to view the fee tables, click on the Web Link.
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Initiative to Combat Sexual Harassment in Housing

HUD and the Department of Justice (DOJ) announced the nationwide rollout of an initiative aimed at increasing awareness and reporting of sexual harassment in housing. The announcement comes on the 50th anniversary of the Fair Housing Act and includes an interagency task force, a public awareness campaign and outreach materials.
The joint nationwide initiative builds on the DOJ’s announcement from October 2017 of pilot initiatives in Washington, D.C., and the Western District of Virginia, which generated an upswing in housing harassment reporting to the department. During the pilots, the DOJ developed and tested ways to better connect with victims of sexual harassment in housing and with those organizations that victims may turn to for assistance.
More information is available by clicking on the Web Link below.
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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.
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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.
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June 13-16, 2018
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October 21-23, 2018
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October 28-31, 2018
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April 2018