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Senator Wants to Expand LIHTC
U.S. Sen. Maria Cantwell (D-WA) is requesting, through “A Call to Invest in Our Neighborhoods (ACTION) Campaign,” personal stories from people who have struggled to afford housing and/or have experienced homelessness. Cantwell is a strong advocate for the Low-Income Housing Tax Credit and in late April indicated her intention to release legislation to expand the credit. Her office is looking for a large volume of stories from across the country to help demonstrate the widespread and urgent need to invest more federal resources in affordable housing. Submit your story using the Web Link below.
Asset Management
"Freddie Mac Adds Multifamily Credit Risk Transfer Capability"
Tax Issues and Tax Reform
"Making a Dent in Affordable Needs"
State and Local Activities
"Colorado Legislature Passes State LIHTC Extension"
"Report: California Renters Bear Increasing Burden of Housing Costs vs. Income"
Green Building
"Better Financing Options Make Green Multifamily Development Affordable"
Industry Trends
"Study: Adding Low-Income Housing to Poor Neighborhoods Lowers Crime and Boosts Property Values"
"Country Faces Overwhelming Need for Affordable Seniors Housing Options"
"Report: Efficiency Could Provide Big Benefits to Low-Income Renters"
Association News
See You in San Francisco
Preorder Copies of NAA Educational Sessions
Webinar Wednesdays Continue
Leadership Training with NAAEI and Dale Carnegie
Own Multifamily Housing: The Essential Industry Text
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Asset Management
Freddie Mac Adds Multifamily Credit Risk Transfer Capability
Apartment Finance Today (05/16) Kimura, Donna
Freddie Mac hopes to sell a portion of the credit risk on certain multifamily mortgage loans to more private investors. The loans back targeted affordable rental housing tax-exempt bonds guaranteed by the company. Freddie Mac has settled its first offering of its Multifamily Structured Credit Risk (SCR) Debt Notes, which are unsecured and unguaranteed corporate bonds that build on the company's multifamily securities offerings and single-family Structured Agency Credit Risk debt notes. The SCR notes reduce taxpayers' exposure to mortgage default risk, and the first-loss credit risk of a specified pool of mortgages is transferred to private capital markets credit investors. Freddie Mac retains the senior loss credit risk. "By bringing in more private capital into the space, we are increasing the liquidity level. By increasing liquidity, that should over time bring the cost of capital down," says Victor Pa, vice president of multifamily investments for Freddie Mac. The program's underlying collateral comes from Freddie Mac's bond credit enhancement business. The first transaction, the $52 million SCR Notes Series 2016-MDN1, Class B, is linked to the credit and principal payment risk of a reference pool of multifamily mortgage loans backing state and local housing finance agency tax-exempt bonds, for which Freddie Mac provides credit enhancement.
Tax Issues and Tax Reform
Making a Dent in Affordable Needs
Multi-Housing News (05/02/16) Thangavelu, Poonkulali
Joseph Hagan is president & CEO of Chicago-based National Equity Fund, a syndicator that has raised more than $12 billion in equity for Low Income Housing Tax Credit (LIHTC) projects. He says the current LIHTC market has ample capital, and has more investors than there are deals. He estimates that the average price per credit nationwide is probably $1.01, but in some cases can reach as high as $1.25. Hagan adds that demand for LIHTCs is typically higher on the coasts, in particular in places like New York City or San Francisco due to the significant amount of deposit base of CRA (Community Reinvestment Act) investors. Due to recent changes under the Tax Act, the 9 percent credit is now flat, meaning it will always be 9 percent and it will not fluctuate based upon interest rates, he notes, so a deal that costs $1 million will result in $90,000 of credits to sell in the marketplace. Meanwhile, the 4 percent credit had a higher cost to it, and in the midst of all the negotiations for extenders that came before Congress for that major tax bill, lawmakers just did not want to deal with it, Hagan asserts. The hope is that lawmakers will re-examine the flat 4 percent credit the next time they do a tax bill, he says. Hagan believes the biggest threat to the market is that Congress is considering reducing the corporate tax rate to about 16 percent. Every time the corporate tax rate comes down, the LIHTC will not be as appealing to investors, he says.
State and Local Activities
Colorado Legislature Passes State LIHTC Extension
Affordable Housing Finance (05/10/16)
A bill that extends the Colorado state low-income housing tax credit (LIHTC) program through 2019 has passed both the House and Senate. The legislation now heads to the desk of Colorado Gov. John Hickenlooper. HB 1465 extends the state LIHTC program and authorizes the Colorado Housing and Finance Authority (CHFA) to allocate $5 million in state LIHTCs annually in 2017, 2018, and 2019. Without passage of HB 1465, the state LIHTC program would have been terminated at the end of this calendar year. Colorado's state LIHTC program was recently renewed in 2014. Housing leaders say that in just a single year, the credit was successfully used to directly support the development of 1,902 new affordable rental housing units; leverage $185 million in private-sector investment into Colorado; help CHFA support 282 permanent supportive homeless housing units, the most in any single year of the organization’s history; and enable CHFA to double the number of affordable rental housing units supported last year using either state and/or federal LIHTCs.
Report: California Renters Bear Increasing Burden of Housing Costs vs. Income
California Economic Summit (05/12/16) Ono, Nadine
Reports released by the California Housing Partnership Corporation (CHPC) suggest that rising rental rates and declining state and federal funding are deepening California's affordable housing crisis. The reports analyzed the housing needs of nine counties: Alameda, Fresno, Los Angeles, Orange, Sacramento, San Diego, San Joaquin, San Mateo, and Ventura. Among the key findings was that rental rates keep rising, while incomes overall are falling. More than 1 million of the lowest income households have no access to affordable homes and almost 1 million extremely-low income and very low income households pay more than 50 percent of their income to rent. CHPC recommended that at least $1 billion from the state's General Fund surplus be used to establish state programs prioritizing the lowest-income households. It also recommended expanding California's Low Income Housing Tax Credit (LIHTC) and improving the value of the LIHTC by up to 40 percent at no cost to the state. State voters also should be given the opportunity to approve a new housing bond and authorize local governments to use tax increment financing for locally approved affordable housing benefit districts and to issue bonds, according to the CHPC. It also called for allowing Community Revitalization and Investment Authorities to use property tax increment available to Enhanced Infrastructure Financing Districts. CHPC President & CEO Matt Schwartz said implementing the recommendations would make a dent in the number of units needed, but California would still see a shortfall.
Green Building
Better Financing Options Make Green Multifamily Development Affordable
Environmental Protection (05/03/16) Plett, Katie
Consumer desire and demand for sustainable living has begun to increase rents in eco-centric buildings, and there are now more options for financing green projects, making it easier for builders and owners to reduce costs, interest, and fees and add long-term value to their properties. Over the past 15 years, green financing options and green building certifications have increased to cater to these needs, but their availability is not yet common knowledge. The global green-building market reached $260 billion in 2013, with a 12.81 percent increase in 2014. With local and national jurisdictions widely accepting challenges such as the "2030 Challenge," and broader international recognition of global climate change, the industry is expected to continue this trend through 2020 and beyond, with consistent increases in usage and demand. Two leading voluntary certification programs, LEED and Energy Star, have set performance expectations on a national and global level. In the U.S., there are 1.5-billion square feet of LEED-certified space and 2.5-billion square feet of Energy Star-certified commercial space. Green financing provides long-term savings on operating expenses and increased revenue, as well as additional incentives through lower interest rates and sometimes higher loan proceeds. In 2015, Fannie Mae launched Green Building Certification and Green Rewards, two programs that encourage efficient and eco-friendly building and incentivize owners of older buildings to make green improvements.
Industry Trends
Study: Adding Low-Income Housing to Poor Neighborhoods Lowers Crime and Boosts Property Values
Vox (05/02/2016) Yglesias, Matthew
A study by Rebecca Diamond and Timothy McQuade of Stanford Business School suggests that building low-income housing in poor neighborhoods helps to reduce crime rates and raise property values. The study specifically examines housing built using the Low Income Housing Tax Credit (LIHTC) based on transaction and demographic data from 129 counties. Neighborhoods with a median income below $26,000 saw a 6.5 percent increase in property values within 0.1 miles of the LIHTC development site. However, in mostly white neighborhoods with incomes above $54,000, house price declines of approximately 2.5 percent took place within 0.1 miles of the LIHTC development site. In low-income neighborhoods, the introduction of affordable housing decreased crime and segregation as well. In high-income neighborhoods, the introduction of affordable housing did not lead to an increase in crime. The study suggests that adding new low-income housing in certain neighborhoods can be a win-win policy that not only helps families get a place to live but also improves the circumstances of nearby troubled neighborhoods. The authors suggest that a reduction in crime rates likely helps to raise property values.
Country Faces Overwhelming Need for Affordable Seniors Housing Options
National Real Estate Investor (04/18/16) Carr, Robert
A study by rental advocacy group Make Room reveals that the percentage of seniors who need affordable housing is rising faster than the increase in the elderly U.S. population. Between 2005 and 2014, the population of seniors aged 65 and older increased by 25 percent nationwide, from 22.5 million to 28.1 million, while the number of seniors paying more than half of their household income, before taxes, toward rent and utilities increased by 34 percent, from 1.4 million to 1.8 million. Daryl Carter, chairman and CEO of real estate investment firm Avanath Capital Management, asserts, "We should be able to triple the $6.5 billion that we currently spend on the tax credit program. There's just simply not enough assistance to address the affordable needs we have in this country." Ron Mehl, a seniors housing developer with Minneapolis-based Dominium, says with tax credits, unit costs can be kept at $900 per month, compared to the market rate of about $3,000 per month. Another challenge has been the rising cost of construction materials and labor, especially in high demand markets, Mehl notes. Jessica Katz, assistant commissioner at New York City's Department of Housing Preservation & Development, says the city has unveiled a local tax credit program that mimics the federal government's low income housing tax credit. New York City has also adopted a Zoning for Quality and Affordability program that supports the creation of less expensive seniors housing while waiving a parking requirement. Katz says the city is already ahead of its 10-year plan, and nearly 3,000 new affordable units for seniors have been created.
Report: Efficiency Could Provide Big Benefits to Low-Income Renters
Midwest Energy News (04/25/16) Lydersen, Kari
Low-income households would benefit significantly from efficiency upgrades, according to a new report from the American Council for an Energy Efficient Economy and the coalition Energy Efficiency for All. The report examined data from 48 U.S. cities and found low-income households spend up to three times as much of their income on energy costs as higher-income households. On average, low-income households spend 7.2 percent of their income on energy while higher-income households spend only 2.3 percent. They often pay more for energy because they are more likely to live in inefficient buildings, often where they do not have control over heating and cooling or the power to make efficiency upgrades. Most low-income renters live in multifamily buildings. Increased efficiency measures have the potential to close this energy burden gap by about one-third, according to the study. However, state and local efficiency programs tend to be focused on single-family, owner-occupied homes, notes the report. The authors urge greater investments in efficiency and particular attention to efficiency in low-income communities.
Association News
See You in San Francisco
Register now for the NAA Education Conference & Exposition, June 15-18, in San Francisco. Additionally, the NAHMA Public Policy Issues summer forum is held in conjunction with the NAA Conference, June 15, and requires a separate registration. To register or for more information about the NAA conference click the link below.
Preorder Copies of NAA Educational Sessions
Preorder REWIND: NAA Conference & Exposition Session Recordings by clicking the Web Link below. More than 50 education sessions that will be presented at the 2016 NAA Education Conference & Exposition in San Francisco. You may earn up to six continuing education credits toward your NAAEI credential renewal.
Order today for only $99. Pricing goes up to $199 on June 7 and to $299 on June 19.
NAHMA audio recordings will include the following sessions:
- NAHMA Presents: A Year After SCOTUS—Latest Trends in Disparate Impact. Presented by Harry J. Kelly, Nixon Peabody LLP; and Michael W. Skojec, Ballard Spahr LLP
- NAHMA Presents: Affordable Workforce Housing—Identifying the Need and Potential Solutions. Presented by Cynthia Parker, BRIDGE Housing; Angela Boyd, Enterprise Community Partners; and Elizabeth (Libby) Seifel, Seifel Consulting Inc.
- NAHMA Presents: Key Federal Legislative and Regulatory Issues Impacting Affordable Multifamily Housing. Presented by Kris Cook, NAHMA; Greg Brown, NAA; Tom Azumbrado, San Francisco Multifamily Hub, HUD; and Alexa Jeffress, San Francisco Multifamily Hub, HUD
- NAHMA Presents: Affordable Housing Preservation Options—Save It, Sell It, Buy It. Presented by Kasey Burke, Meta Housing Corporation; and Daniela Greville, McCormack Baron Salazar Inc.
Webinar Wednesdays Continue
Join NAAEI, Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series in the industry to provide SHCM designates with access to industry thought leaders to discuss innovative ideas, best practices and emerging industry trends. These webinars will give participants the tools they need to become industry superstars in their own right. To review upcoming webinars, click the Web Link below.
- May 25: Terri Norvell, Leadership Essentials: My Team Knows What to Do. They Just Aren't Doing It
- June 8: Lisa Trosien, Follow Up or Fail: It's up to You!
- June 22: Donald Davidoff, Overcoming the 13 Most Common Objections at Renewal Time
- July 6: Rommel Anacan, Pitch Perfect Selling! How to Hit All of the Right Notes When Selling to Different Types of Customers
- July 20: Toni Blake, The Passion Workshop
- Aug. 3: Kate Good, Get More Leases This Week! Quick Ideas for Immediate Impact
- Aug. 17: Doug Chasick, It's a Zoo Out There! New Rules About Assist Animals
- Aug. 24,: Don Sanders, Employees First, Customers Second—A Winning Management Philosophy
- Sep. 21: Kristi Fickert, Outreach and Partnership Marketing in the Digital Era: Ideas, Tips & Tricks to Help You Better Maximize Your Outreach Marketing Efforts
Leadership Training with NAAEI and Dale Carnegie
Responding to the need for leadership training within the apartment industry, 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. The next two-day program takes place Sept. 21-22 in Austin, Texas. For more information, click the Web Link below.
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.
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 Public Policies Forum
June 15, 2016
More
NAA Education Conference & Exposition
June 15-18, 2016
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NAHMA Regulatory Issues Meeting
October 23-25, 2016
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LeadingAge Annual Meeting & EXPO
October 30-November 2, 2016
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