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HUD Releases MFIs for 2017


HUD has released the estimated median family incomes (MFIs) and income limits for fiscal year 2017. MFIs are used as the basis for income limits in several HUD programs, including the public housing, Section 8 Housing Choice Voucher, Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities programs. To view the FY 2017 income limits and MFIs, click the Web Link below.
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Industry Trends


"Assessing a Cloudy LIHTC Market"
"Senior LIHTC Developments Have Higher NOI, But Gap Decreasing"
"Fannie and Freddie Double Down on Financing Workforce Housing"

Tax Issues and Tax Reform


"Trump Corporate Tax Shakeup Puts Housing Developers in Tailspin"

HUD-Related Activity


"HUD 2017 Income Limits Notice Indicates Robust Income Growth"

State and Local Activities


"What Cities Have the Biggest Shortage of LIHTC Apartments?"
"Affordable Housing Developers 'Fighting Like Crazy' to Pencil Out Projects Following Drop in Tax Credit Value"

Green Building


"The Rewards of Green Financing"

Association News


Register for NAA’s June Conference
‘REWIND’ NAA Educational Sessions
Own Multifamily Housing: The Essential Industry Text
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events


Industry Trends


Assessing a Cloudy LIHTC Market
Affordable Housing Finance (05/05/17) Kimura, Donna

Over the past several months, the low-income housing tax credit (LIHTC) industry has seen deals go through a number of changes involving upward adjusters, downward adjusters, and different tax rates, said Jeff Weiss, president of LIHTC syndicator Alden Capital Partners. Trying to predict what will happen six months into the future while structuring deals now is challenging, said Jennifer Seamons, senior vice president with KeyBank's Community Development Lending & Investment team, speaking at the AHF Live: Housing Developers Forum in New Orleans. For banks, there is a need to balance having an appetite for tax credits and meeting regulatory obligations, according to Seamons. Banks comprise a significant portion of the LIHTC investor base. Many of them look to the housing credit as a way to meet their Community Reinvestment Act obligations. Meanwhile, President Donald Trump has called for slashing the business tax rate from 35 percent to 15 percent while members of Congress will likely consider a rate in the 20 percent to 25 percent range. At least in the short-term, there may be a shift toward proprietary or single-investor funds, said Weiss. This is because the negotiations and execution may be more straightforward than in a multi-investor fund with more participants. Hana Eskra, Florida market president for developer Gorman & Co., had deals that were priced just prior to the market upheaval. Eskra said she is working with investors to analyze LIHTC pricing at different tax rates.
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Senior LIHTC Developments Have Higher NOI, But Gap Decreasing
Novogradac (04/26/2017) Kincer, H. Blair

The Novogradac 2017 Multifamily Rental Housing Operating Expense Report examined expenses for 1,400 properties that include more than 170,000 individual apartments. The study found a significant difference in the operating expenses for low-income housing tax credit (LIHTC) properties that serve seniors (people 55 and older) and those that serve families. For instance, senior LIHTC properties had higher income and lower expenses per unit in each of the six years (2010 through 2015) analyzed. As a percentage, the typical senior LIHTC apartment was 4.7 percent less expensive to operate than a typical family apartment in 2015. While the presence of children at family LIHTC properties likely leads to more damage and wear, many LIHTC property managers say senior properties require additional interaction with tenants, which may increase administration expenses, the report reveals. Other differences between family and senior properties were in the categories of operating expenses, repairs and maintenance, and real estate tax expense, the latter likely due to a geographical bias in the properties studied and PILOT agreements reducing property taxes for many senior properties. The areas in which senior properties were more expensive included management expenses, payroll, and administration expenses. Meanwhile, the net operating income (NOI) – the difference between expenses and income–for family properties increased by 2.1 percent from 2010 through 2015, while that for senior properties decreased by 7.7 percent. Senior properties had a 23 percent better NOI than family properties in 2010, but that gap declined to 11 percent in 2015.
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Fannie and Freddie Double Down on Financing Workforce Housing
National Real Estate Investor (05/09/17) Anderson, Bendix

Fannie Mae and Freddie Mac are creating various loan programs for the development and maintenance of inexpensive apartments. Fannie Mae offers low interest rates on loans for new apartment properties that participate in local "inclusionary zoning," under which state and cities governments allow developers to build more new luxury apartments if they agree to include some affordable units. The interest rates that Fannie Mae offers to these "inclusionary" apartment properties are somewhere between its regular, competitive interest rates and the 13-to-39-basis-point discount the agency offers to federal low-income housing tax credit (LIHTC) properties. Freddie Mac has created two rehab products, each specifically designed to help owners maintain and fix up aging, inexpensive apartments. These loans offer low interest rates to owners who commit to complete modest renovations that can cost as little as $5,000 per unit. Freddie Mac also offers lower interest rates on loans for apartments properties if the owners commit to making those properties at least 15 percent more energy efficient. "It works out to much lower utility costs for the tenants," says David Leopold, vice president for Freddie Mac Multifamily. Freddie Mac will also pay for a "green assessment" to identify what would be the most effective renovations. The Federal Housing Finance Agency has limited the volume of loans Fannie Mae and Freddie Mac can make on apartment buildings to $36.5 billion each. Loans do not count towards that cap if they finance apartments priced to be affordable to households earning 60 percent of the area median income in most areas.
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Tax Issues and Tax Reform


Trump Corporate Tax Shakeup Puts Housing Developers in Tailspin
Bloomberg (04/26/17) Varghese, Romy

The price of low-income housing tax credits (LIHTCs) has declined by as much as 15 percent since the election of Donald Trump as president, eliminating hundreds of millions in potential funding. In California, which has 21 of the 30 most expensive rental markets, state officials expect construction of affordable apartments to drop by 25 percent this year. LIHTC investors pumped $16 billion into affordable housing last year, according to CohnReznick LLP. Developers are now asking local governments to make up the shortfall and seeking other sources of funds. While some projects already underway when the Trump effect hit have been able to bridge their gaps, housing officials say they are concerned that taxpayer dollars will not be able to make up for any permanent downturn in the market. "That was really in a blink of eye almost a billion dollars that disappeared from the resources to build affordable housing in the country," says Bart Mitchell, president and chief executive officer of Community Builders, a large nonprofit developer of mixed-income housing. "There won’t be enough resources to fill every gap and have as many housing units as before."
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HUD-Related Activity


HUD 2017 Income Limits Notice Indicates Robust Income Growth
Novogradac Journal of Tax Credits (05/17) Stagg, Thomas

Overall, 2017 was a very robust year for income limits. More than 80 percent of areas (88 percent of the population) saw an increase in the 50 percent very low-income (VLI) limit used for Section 8 rental assistance and multifamily tax subsidy projects (MTSP) when compared to the 2016 VLI income limits. For many existing low-income housing tax credit (LIHTC) properties, income limits will not increase once the hold harmless rule is factored in. Once the hold harmless and Housing and Economic Recovery Act (HERA) Special policies have been accounted for, almost half of the areas will not have an increase in their maximum income limit due to being held harmless at a higher income limit from prior years. The national median income increased by 3.5 percent, so the cap on increases in LIHTC rent and income limits will be 7 percent. Also, since HERA Special does not have a cap on increases, there will be some areas that increase by more than 7 percent due to the HERA Special calculation. According to HUD, 209 areas (11 percent of all areas) were capped at a 7 percent increase. Eighty-nine areas had their decreases floored at 5 percent (3.4 percent of all areas).
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State and Local Activities


What Cities Have the Biggest Shortage of LIHTC Apartments?
Apartment Finance Today (05/15/17) Kimura, Donna

A new report from MPF Research indicates that Phoenix has the largest disparity between low-income households and low-income housing tax credit (LIHTC) units. The city has just 6.08 housing credit units per 100 low-income households, ranking it the lowest out of the top 50 apartment markets studied by the firm. However, several notable LIHTC developments, including Cedar Crossing by Native American Connections, have recently opened in the city. Phoenix is followed by Pittsburgh (6.13) and Syracuse, N.Y. (6.27). Looking at the other end, LIHTC apartments were the most prevalent in Richmond, Va., where there are 22 housing credit units for every 100 low-income households, according to researchers. Kansas City was next with 21.68 units followed by Virginia Beach/Norfolk, Va., with 21.05 units. However, in every single metropolitan area, designated affordable housing units fell significantly short of the needed volume, according to MPF Research. Although LIHTC apartments can serve households earning up to 60 percent of the area median income (AMI), they often target individuals and families earning less. The new study focuses on the neediest households, those earning no more than 30 percent of the AMI. "Looking at the lists, no clear trends emerge that indicate why designated affordable housing is more scarce in some areas than in others," says the report. Greg Willett, chief economist at MPF's parent company RealPage, points out that the difference between the markets at the top and bottom of the list is more than three times greater.
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Affordable Housing Developers 'Fighting Like Crazy' to Pencil Out Projects Following Drop in Tax Credit Value
Denver Post (05/08/17) Rusch, Emilie

Affordable housing developers in Colorado are facing a sudden decrease in the value of federal low-income housing tax credits (LIHTCs) in the wake of the November election. The amount investors are willing to pay for the credits has declined by about 15 cents to 25 cents on the dollar because of the possibility of corporate tax cuts under the Trump administration. "With a drop of 5 to 10 cents in a transaction, that can create a $1 million gap. It’s that gap that has to be filled," says Cris A. White, CEO of the Colorado Housing and Finance Authority (CHFA). In September, 13 projects received allocations of the highly competitive LIHTCs from CHFA, a funding round that was expected to be worth more than $130 million over 10 years. "Just as an example, if you have $1 million in annual tax credits and you get $1 a year for 10 years and you sell it for $1.10, which was one of the quotes we had gotten, then that's $11 million," explains Bob Munroe, a partner with Solvera Affordable Housing Advisors. "Now, the market is 95 cents. Now it's only $9.5 million. Suddenly we have a $1.5 million gap that's totally been created by forces outside of our control." CHFA is considering a supplemental allocation of tax credits to help get some struggling projects over the finish line, says White. The Denver Office of Economic Development also expects to see more projects come to the city for financial support, according to housing program manager Doug Selbee. This year marks the first year of the city’s new 10-year $150 million affordable housing plan.
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Green Building


The Rewards of Green Financing
Multi-Housing News (04/19/17) Hayward, Jeffery

Committing capital to environmentally-friendly measures can provide a significant return on investment, writes Jeffery Hayward, Executive Vice President & Head of Multifamily at Fannie Mae. "Fannie Mae's green financing business supports loans for properties that will reduce their annual energy or water consumption by 20 percent or more by upgrading to energy- or water-efficient equipment," Hayward says. "The financing also is available for multifamily homes with a green building certification such as LEED, ENERGY STAR, or National Green Building Standard." Hayward cites Fannie Mae's recognition by the U.S. Environmental Protection Agency as a 2017 ENERGY STAR Partner of the Year for the third consecutive year as one indicator "that we are accomplishing what we set out to do. We are continuing to lead and innovate in the green financing space." Hayward says certain developers are reaping profits in the green retrofit of multifamily properties, with Moody's Analytics noting green building features increasingly are important for maintaining property valuations. In addition, multifamily commercial property loans resold into commercial mortgage-backed securities will be better assets when the underlying property is green. Hayward also points to U.S. Green Building Council projections that 3.9 million green construction jobs we be created between 2015 and 2018 as evidence of the wider economic impact of green property construction and retrofitting.
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Association News


Register for NAA’s June Conference

It's time to “Apartmentalize,” which means taking your career, your company and the experience your residents receive to the next level. Achieve greater success in all three areas by joining the National Apartment Association (NAA) in Atlanta to attend the apartment industry's premiere event—the 2017 NAA Education Conference & Exposition, June 21-24. Learn from world-class speakers and industry experts, network with nearly 10,000 of your peers, and get access to innovative products and services from more than 450 top suppliers. For more information click on the Web Link provided.
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‘REWIND’ NAA Educational Sessions

Preorder 50-plus education sessions that will be 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 will 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, National Apartment Association; John McDermott PLLC, general counsel, National Apartment Association; 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, National Affordable Housing Management Association (NAHMA); and Larry Keys, director of government affairs, NAHMA.
Click on the Web Link for more information.
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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.
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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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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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May 2017