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What the SCOTUS Ruling on the 'Texas Case' Means for the LIHTC Program


While various civil rights and disabilities access statutes are important in affordable housing, only the Fair Housing Act was at issue in the Texas case. And, while under current law, the Low-Income Housing Tax Credit (LIHTC) is not considered federal funding for purposes of these statutes, most forms of financial assistance, including those from the U.S. Department of Housing and Urban Development (HUD) are covered. Read the first of a two-part Novogradac Journal of Tax Credits series that discusses the distinctions between law and policy related to the Texas case and the Americans with Disabilities Act. For more information, click on the Web Link below.
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Market and Program Trends


"LIHTC Market Continues to Roll"
"New Fund Pairs Housing and Services Coordination"

Tax Issues and Tax Reform


"Exiting From a Low Income Housing Tax Credit Project in Year 15: What Should Be Considered?"

State and Local Activities


"California Awards Cap-and-Trade Funds"
"Low-Income Housing Efforts Get Boost, But Demand Remains High"

HUD-Related Activity


"HUD at the Crossroads"
"HUD Watchdog Issues Report"

Management and Compliance


"Expert Stresses Focus on Efficiency in Building"

Association News


Don’t Miss LeadingAge’s Annual Meeting
Report Recommends Joint IRS-HUD Oversight of LIHTC Program
Industry Groups Oppose Joint IRS-HUD Oversight Recommendation
Learning on the Go with Webinar Wednesdays
Purchase a One-Of-A-Kind Gift
NAHMA Releases 2015 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events


Market and Program Trends


LIHTC Market Continues to Roll
Affordable Housing Finance (08/18/15) Kimura, Donna

Low-income housing tax credit (LIHTC) prices could potentially reach an overall average of $1, according to a mid-year survey of 17 syndicators. The survey found they paid an average of 97 cents per dollar of credit in the second quarter, up from 94 cents at the end of 2014. "The competition for 9 percent deals, regardless of their location, has been fierce," observes Tony Bertoldi at City Real Estate Advisors. Syndicators are even reporting deals in secondary and tertiary markets commanding pricing at or near $1. The rise in prices has meant a drop in investor yields, which averaged 5.6 percent in the second quarter, according to the survey, down from 6.5 percent about six months ago. Looking ahead, 57 percent of the surveyed syndicators say they expect prices to hold steady in the second half while 43 percent predict prices to still go up due to continued strong competition for deals. The surveyed firms report closing nearly $3.7 billion in LIHTC capital and acquiring 407 projects in the first six months of 2015, while several syndicators have multi-investment funds closing in the second half. Ryan Sfreddo at Red Stone Equity Partners says in places where there was already limited room for price increases, such as the CRA markets of New York, Boston, Florida, and California, there has been some accelerated term erosion at the deal level.
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New Fund Pairs Housing and Services Coordination
Apartment Finance Today (09/15) Kimura, Donna

A new pay-for-performance pilot called Strong Families Fund is funding its first affordable housing project: Deborah Strong Housing in Ypsilanti, Mich. The new fund is expected to finance the construction or renovation of 600 to 700 affordable housing units over the next three years as well as support on-site access to high-quality coordination of social services during the next decade. The Kresge Foundation, the Robert Wood Johnson Foundation, KeyBank, and Goldman Sachs committed more than $70 million to launch the fund, the largest pilot pay-for-performance project to finance services coordination and affordable housing. The fund combines federal low-income housing tax credits (LIHTCs) for capital development with a pay-for-performance model to provide access to up to 10 years of incentive payments to housing developments. Developments are required to provide on-site, social services coordination to improve resident and property outcome measures in five areas, including health and wellness, housing stability, and education. Goldman Sachs, through its Urban Investment Group, committed $30 million to the fund through a LIHTC equity investment in a limited partnership with the National Affordable Housing Trust to support the new construction or substantial rehabilitation of family housing projects nationwide.
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Tax Issues and Tax Reform


Exiting From a Low Income Housing Tax Credit Project in Year 15: What Should Be Considered?
Lexology (08/03/15) Switzer, Stephen W.

General partners or managing members of projects using low-income housing tax credit (LIHTCs) that closed more than 12 years ago should begin the process of determining what will happen when the investor exits in the 15th year. Following a period of strict compliance with the Tax Reform Act of 1986, the investor will no longer be in any danger of losing any of the LIHTC or other tax benefits. Managing entities also usually will be happy to have investors out of the transaction because they tend to place some fairly burdensome requirements on their partners. Managing entities should first reevaluate the entire project by examining its physical condition, continuing viability and possible future uses. They can dispose of the project by exercising a right of first refusal or other purchase option, purchasing the investor's interest in the ownership entity or by pursuing an arm's length sale to a third party. The manager entity should consider other factors such as exit taxes, expiring rent subsidies and the status of any restrictive covenants, and restrictions on public housing units financed with HOPE VI or capital funds. Early planning is the key to a successful transition.
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State and Local Activities


California Awards Cap-and-Trade Funds
Affordable Housing Finance (09/09/15) Kimura, Donna

California's innovative cap-and-trade carbon emissions auction program is helping fund affordable housing across the state. Under the program, big companies that emit greenhouse gas are given a limit on their emissions, and those that exceed their cap must reduce their emissions or buy allowances to pollute through a state auction. Revenues from the auctions go to state projects that help reduce carbon emissions, such as the Affordable Housing and Sustainable Communities Program. The Strategic Growth Council recently approved $122 million in loans and grants for projects that will help reduce emissions by supporting more compact, infill development patterns and encouraging the use of public transportation. The grants and loans went to 26 developments, which will offer more than 2,000 housing units, in addition to two transit-friendly infrastructure projects. Developers say the program is important, especially with the loss of funding following the elimination of local redevelopment agencies in 2012.
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Low-Income Housing Efforts Get Boost, But Demand Remains High
The Colorado Statesman (08/20/15) Vela, Vic

Colorado Gov. John Hickenlooper recently commended the Colorado Housing and Finance Authority (CHFA) and the state's Department of Local Affairs, which oversees the Division of Housing, for their collaboration in the $5.3 million award of low-income housing tax credits. The incentives will help finance the construction of 282 units in Denver, Greeley, and Lakewood for those who are homeless or have severe special needs. In 2014, CHFA allocated $16.6 million overall in federal tax credits for the construction and preservation of 1,558 affordable rental units in the state, according to CHAFA spokeswoman Jerilynn Martinez, and this year, CHFA is allocating $40.2 million in low-income housing tax credits, which will support the building of more than 2,800 affordable rental units in the state. However, "The demand has always exceeded the supply. Therein lies the issue," says CHFA's Chris White. He says for every dollar CHFA allocates in low-income housing tax credits, "historically there's been three or four dollars in demand." Meanwhile, rents in Denver have increased 5 percent a year since 2010, among the highest increases in the nation. Data from the Center on Budget and Policy and Priorities shows that 164,600 low-income households in the state use more than half their income on rent, 24 percent more than before the Great Recession.
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HUD-Related Activity


HUD at the Crossroads
Affordable Housing Finance (09/09/15) Kimura, Donna

President Lyndon B. Johnson signed legislation creating the U.S. Department of Housing and Urban Development (HUD) on Sept. 9, 1965. The 50th anniversary of HUD presents a time to reflect on the agency's achievements and the direction it should take next. Many of the department's programs were created to fix prior wrongs, and rental assistance is its biggest program and expenditure. HOPE VI enabled HUD to rebuild public housing in a more sustainable manner and there has been recent reductions in homelessness. However, when it comes to affordable housing, it seem like HUD is running a race only to have the finish line move father and farther away, as the affordable housing gap has widened across the country. "The greatest HUD failure is the 'silent' affordability gap that has been growing since HUD was created as a cabinet-level department," says Rick Lazio, leader of the Affordable Housing Industry Team at the Jones Walker law firm and former U.S. representative from New York. Housing leaders say there is a need for better partnerships, more unified programs and greater funding for urban revitalization.
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HUD Watchdog Issues Report
Washington Post (08/18/15) Rein, Lisa

A new report from the watchdog for the U.S. Department of Housing and Urban Development (HUD) describes tenants earning more than the maximum income for government-subsidized housing as an "egregious" abuse of the system. One family in New York with an annual income of almost $500,000 raked in $790,500 in rental income on its real estate holdings in recent years, while more than 300,000 families that really qualify for public housing lingered on waiting lists. More than 25,000 public housing tenants are "over income," and 45 percent of them are making $10,000 to $70,000 a year more than the income threshold of public housing. About 1,200 exceeded the income limits for nine years or more. Although over-income families account for only 2.6 percent of the 1.1 million families receiving public housing assistance, the audit says HUD has not taken sufficient steps to address the issue. However, HUD officials say the inspector general is "overemphasizing" the problem. They say evicting over-income families could "negatively affect their employment and destabilize properties."
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Management and Compliance


Expert Stresses Focus on Efficiency in Building
The Columbian (WA) (08/20/15) Oliver, Gordon

Consultant Mark LaLiberte delivered a seminar on efficient building design to 50 guests, including building contractors, state legislators, and utility and government officials, during an event sponsored by the Building Industry Association of Clark County.  In his presentation, LaLiberte discussed the rapid advances in building science as the building industry works to achieve a national goal of net-zero energy consumption in new buildings by 2030. Consumer demand for energy efficiency, comfort, and healthier built environments is helping drive the market.  Challenges include finding skilled workers, such as subcontractors who can properly install efficient heating and cooling systems that maximize potential savings, and getting appraisers and lenders to correctly value those assets.  LaLiberte pointed out construction efficiencies, such as installing the most heavily insulated windows on the side of the house exposed to the most weather extremes helps offset added costs, but the benefits of those measures also must be matched with scaled-down furnaces and air conditioning units to be effective.  LaLiberte works to educate the industry instead of pursuing government mandates, believing market-driven efforts are more effective than regulations.
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Association News


Don’t Miss LeadingAge’s Annual Meeting

Don’t miss the signature experience that is the LeadingAge Annual Meeting. The premier meeting for aging services professionals across the continuum is coming up Nov. 1-4 in Boston. The event features expanded educational offerings just for affordable and market-rate housing providers.

Be sure to explore all the housing sessions being offered this year. Here are just a few you will not want to miss:
  • 134-A: Low-Income Housing Tax Credit Program: Pitfalls to Avoid
  • 142-D: Fair Housing Requirements for HUD Communities
  • 35-G: Memory Support for Independent Housing Residents
  • 148-G: Tax-Exempt Bonds: What You Need to Know
Browse the full education program online or download the brochure by clicking on the Web Link below.
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Report Recommends Joint IRS-HUD Oversight of LIHTC Program

A report from the Government Accountability Office (GAO) suggests that a joint administration between the IRS and HUD would benefit the LIHTC program. The report suggests that the IRS currently lacks appropriate resources to engage in more than minimal oversight of the program. It notes that, since 1986, the IRS has conducted seven audits of 56 state housing finance agencies (HFA) on which the IRS relies to administer and oversee the program.

Under joint administration, the report suggests the IRS could retain responsibilities consistent with its mission to enforce taxpayer compliance, while HUD, with its experience working with HFAs on other affordable housing programs, would manage oversight on the LIHTC program. In order to enact the GAO’s suggestion, Congress would need to designate HUD as a joint administrator of the LIHTC program. To read the GAO report, click on the Web Link provided.
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Industry Groups Oppose Joint IRS-HUD Oversight Recommendation

LIHTC industry groups have opposed the GAO’s recommendation that suggests a joint administration between the IRS and HUD would benefit the LIHTC program, according to a recent article in the Tax Credit Housing Management Insider. To read the article in its entirety, click the Web Link.

In an August 2015 letter to key congressional stakeholders, industry groups emphasized the following points in opposition to the recommendations:
  • HUD has no experience in administering the LIHTC program and has little capacity to take on this responsibility;
  • More resources should be given to the IRS to increase oversight as the GAO found no problems with the LIHTC;
  • The LIHTC program continues to exceed the intent of Congress when it was enacted 30 years ago. It has produced nearly 2.8 million affordable rental homes, leveraged $100 billion in private capital and supported more than 3 million jobs since its enactment; and
  • The Treasury Department believes that the responsibility for interpreting and enforcing the provisions of the Tax Code should remain entirely with the IRS. But Treasury is supporting research and analysis by HUD on the program’s effectiveness.
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Learning on the Go with Webinar Wednesdays

Join National Apartment Association Education Institute (NAAEI), Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series to provide SHCM designates with access to industry thought leaders to discuss innovative ideas, best practices and emerging trends. These webinars will give participants the tools they need to become industry superstars in their own right. To review upcoming webinars or to register, click on the Web Link below.
  • Oct. 7, Eric Broughton presents Unclog Your Profits! Master the Art of Maintenance, Procurement and Purchasing Intelligence
  • Oct. 21, Tiffany Zwiefelhofer presents Marketing with Little or No Money
  • Nov. 4, Mike Whaling presents Social Media: What Have You Done for Me Lately?
  • Nov. 18, Rick Ellis presents The Resident Is Not the Problem-How to Overcome Resident Problems and Problem Residents … and Know the Difference
  • Dec. 2, Bill Szczytko presents Escaping the Echo Chamber-Tech and Marketing Tips from Outside of Multifamily
  • Dec. 16, Kate Good presents Your 2016 Marketing Playbook
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Purchase a One-Of-A-Kind Gift

Order the 2016 National Affordable Housing Management Association (NAHMA) Drug-Free Kids Calendar now by clicking on the Web Link below. Don’t wait, the 2015 edition sold out.

The calendars feature outstanding original artwork by children, seniors and adults with special needs living in affordable multifamily housing. This year’s contest celebrated community spirit with its theme and subtheme, Our Hands Are United: Reach Out and Be a Good Neighbor.

The cost is $5.50 per calendar, which is a HUD and U.S. Department of Agriculture allowable project expense. The calendars will be shipped in mid- September.
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NAHMA Releases 2015 Affordable 100 List

The National Affordable Housing Management Association (NAHMA) announces its 2015 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 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® certification program invite your company to become a Specialist in Housing Credit Management® (SHCM®) 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 (formerly AAHSA, the American Association of Housing and Services for the Aging).

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

NAHMA Regulatory Issues Fall Meeting
October 25-27, 2015
More info

LeadingAge Annual Meeting and Expo
November 1-4, 2015
More info

LeadingAge PEAK Leadership Summit
November 16-18, 2015
More info
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September 2015