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IRS Releases 2016 LIHTC and Bond Caps
The IRS issued the inflation-adjusted Low-Income Housing Tax Credit (LIHTC) and private activity bond caps for 2016 in Revenue Procedure 2015-53. For calendar year 2016, the amount used under § 42(h)(3)(C)(ii) to calculate the state housing credit ceiling for the LIHTC is the greater of (1) $2.35 multiplied by the state population, or (2) $2,690,000. This is an increase over the 2015 amounts, which were $2.30 and $2,680,000. The amount used under §146(d) to calculate the state ceiling for the volume cap for private activity bonds in 2016 is the greater of $100 multiplied by the state population (the same as 2015) or $302,875,000, up from $301,515,000.
Tax Issues and Tax Reform
"Steady Stream of Capital Continues to Flow in LIHTC Market"
"Demand for Affordable Housing Builds Interest in Income-Restricted Tax Credit"
State and Local Activities
"Jay Czar: Interest in Housing Tax Credits 'Higher Than Ever'"
"Sacramento Report: Housing Advocates Assess What Went Wrong This Session"
HUD-Related Activity
"HUD Seeks Smoking Ban in Public Housing"
Green Building
"Berkeley Council Endorses 'Green Affordable Housing Package'"
Industry Trends
"The Next Chapter"
"Unlimited Demand for Affordable Housing"
"Unaffordable Housing: A Root Cause of Social Inequality"
Association News
‘Rewind’ Summer Meeting Educational Sessions
Learning on the Go with Webinar Wednesdays
Learn About Multifamily Housing
Purchase a One-Of-A-Kind Gift
NAHMA Releases 2015 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Tax Issues and Tax Reform
Steady Stream of Capital Continues to Flow in LIHTC Market
Apartment Finance Today (11/09/15) Kimura, Donna
Demand for low-income housing tax credits (LIHTC) is back to the days before the recession, and analysts say it may stay there for the near future. Despite expectations for a correction, prices have remained strong throughout the year. "My expectation is we will continue to see robust demand among investors for tax credit investments,” said Todd Crow, executive vice president and manager of tax credit capital for PNC Real Estate. “Based on where the market is today, my opinion is we are at all-time highs in tax credit pricing." A change in prices will likely be moderate, according to Crow, who is also president of the Affordable Housing Tax Credit Coalition. “I don’t know if I would call it a correction,” he says. “Maybe just a little bit of the froth out of the market.” One key will be what happens when economic investors begin budgeting for the next year. Ryan Sfreddo, managing director of investor relations at Red Stone Equity Partners expects the LIHTC market to hold its course for a little while longer. “Although my crystal ball is shattered and beyond repair, I tend to think that the 2016 LIHTC market will begin not all that differently than the way it is ending 2015, from both a pricing and term perspective,” he said.
Demand for Affordable Housing Builds Interest in Income-Restricted Tax Credit
MiBiz (11/08/15) Manes, Nick
As demand for housing in downtown Grand Rapids, Mich., and its near neighborhoods continues to grow, developers need to strike a critical balance between market-rate and “affordable” housing, according to Mark McDaniel, president and CEO of Lansing-based nonprofit real estate financial institution Cinnaire. Much of the group's work is geared toward managing investment funds for low-income housing tax credits (LIHTC). Despite the recent growth of market-rate housing in many urban areas, demand for LIHTC remains high all over Michigan, according to data from the Michigan State Housing Development Authority (MSHDA), the agency that administers the federal funds. According to MSHDA's standards, a developer receives the credits based on a percentage of units being offered as rent-restricted and income-restricted for a period of at least 18 years. The agency's most widely-used incentive is a roughly 9 percent credit based on construction or rehabilitation costs, according to MSHDA officials. MSHDA received requests for more than $193 million in LIHTC funds since August 2012 and awarded about $75.5 million over the same period.
State and Local Activities
Jay Czar: Interest in Housing Tax Credits 'Higher Than Ever'
Albuquerque Business First (11/05/15) Guzman, Stephanie
Among Downtown Albuquerque's new apartment construction in the last several years, many projects were made feasible via unique financing mechanisms, including low income housing tax credits administered through the New Mexico Mortgage Finance Authority (MFA). Projects that have emerged from the program include Casitas de Colores, Silver Gardens, Silver Moon Lodge, and Downtown @ 700. Other projects now under construction include the Imperial Building, Cuatro, and Madera Crossing. MFA Executive Director Jay Czar says the entity has financed more than 400 multifamily rental units in the Downtown area over the past seven years. He says the low income housing tax credits essentially cover about 70 percent of the construction costs of the project, and the developer only has to finance the other 30 percent. Czar adds, "We award four to seven projects every year and we get around 16 to 20-plus applications. We've even seen applications from more out of state groups, from Montana to Ohio and Texas." For the Imperial Building, the developer's ability to access the credits enabled it to finance several floors of market rate and low income apartments. Each project that seeks tax credits must go through a rigorous review process, says Isidoro Hernandez, the MFA's deputy director of programs. He says projects are given points based on walkability, being near transportation centers, energy efficiency, and other factors.
Sacramento Report: Housing Advocates Assess What Went Wrong This Session
Voice of San Diego (11/06/15) Libby, Sara; Srikrishnan, Maya
The performance of affordable housing bills in California's legislative session has disappointed many advocates. Gov. Jerry Brown signed several bills to help low-income housing developers and vetoed another. One more bill is waiting to be picked up again in January. Affordable housing advocates at the recent San Diego Housing Federation Conference expressed disappointment at the failure of bills that would have had greater impacts on the development of low-income housing. One bill signed into law will create a framework for the state spending of funds from the National Housing Trust Fund. A second bill directs funding from Prop. 47 toward mental-health treatment and housing assistance. The vetoed bill would have expanded California's Low-Income Housing Tax Credit by $100 million annually for 5 years. Marina Wiant, policy director of the California Housing Consortium, and Matt Schwartz, CEO of the California Housing Partnership Corporation, say that they will try to get more affordable housing initiatives in the budget to avoid asking for more tax credits or state funds.
HUD-Related Activity
HUD Seeks Smoking Ban in Public Housing
NBC News (11/13/15)
On Thursday, HUD proposed a new rule to require the more than 3,100 public housing agencies nationwide to ban smoking at their properties. HUD Secretary Julian Castro issued a statement that read: "We have a responsibility to protect public housing residents from the harmful effects of secondhand smoke, especially the elderly and children who suffer from asthma and other respiratory diseases." He estimates the ban would safeguard the health of over 760,000 children, as well as save approximately $153 million in annual health care costs, repairs, and preventable fires. Specifically, the rule would prohibit lit tobacco products in all residences, indoor common areas, and administrative offices. In addition, smoking would be banned outdoors within 25 feet of housing and administrative buildings. It has been six years since the agency started encouraging public housing agencies across the United States to adopt smoke-free policies in their buildings and common areas, and there are currently more than 228,000 public housing units that are smoke-free. The proposed rule would impact the more than 940,000 units where smoking is still permitted. The general public now has 60 days to comment. The ban would go into effect a year and a half after the rule is finalized.
Green Building
Berkeley Council Endorses 'Green Affordable Housing Package'
San Jose Mercury News (10/29/15) Lochner, Tom
The city council of Berkeley, Calif., recently postponed many housing-related items on its agenda, but did endorse a "Green Affordable Housing Package" proposed by Councilwoman Lori Droste. The proposal would prioritize housing over parking in new housing developments. Parking requirements would be eased or even removed in some cases, particularly for housing near mass transit. The proposal also would remove structural and procedural barriers from the approval process for building affordable housing. While many council members praised the package, some warned that it needed to include specifications that will deliver affordable housing for residents and not just profit for developers. The council unanimously sent the package on to the Planning Commission and the city manager for further study. It would be applied to residential buildings with two or more units.
Industry Trends
The Next Chapter
Affordable Housing Finance (11/17/15) Kimura, Donna
In cities nationwide, aging buildings are being abandoned, including schools and factories. Rather than being razed, however, many of these buildings are being converted into affordable housing to provide homes for low- and moderate-income families. Adaptive-reuse projects have been a key component of the work of WinnDevelopment, which has found good business opportunities in overlooked markets. "We're able to go in and address the community needs. Oftentimes, that's mixed-income housing," says Larry Curtis, president and managing partner of WinnDevelopment. The firm recently completed an $11.7 million, 52-unit development in Lowell, Mass., one of several repurposed mill buildings in the region. Half of the apartments are affordable to households earning between 30 percent and 60 percent of the area median income, and half are market rate. A structural engineer was involved in the project from the start, so that if a problem surfaced, the cost of addressing it could come from the project's construction contingency. The project was financed with four different tax credits—federal and state low-income housing tax credits (LIHTCs) and federal and state historic tax credits—purchased by Bank of America Merrill Lynch.
Unlimited Demand for Affordable Housing
GlobeSt.com (11/16/15) Rogal, Brian J.
KeyBank hopes to make a major expansion in the affordable housing sector. Key's community, development, lending, and investment segment recently brought together six senior-level leaders to focus on affordable housing, leading a team of more than 50 professionals. The goal is to double the size of the business in the next three years and drive the expansion of Key’s affordable housing platform from 12 to 50 states. Robert Likes, who was named national manager of Key's CDL/I segment in June, will lead the effort. Key officials say they anticipate adding more professionals to the team in the next 12 months. Likes says the team will build relationships with the country's top affordable housing property owner-operators and developers that want to build or preserve affordable housing. Services provided will include construction, acquisition, bridge-to-re-syndication, and preservation loans, as well as equity investments for low-income housing projects, especially Low Income Housing Tax Credit financing. "Affordable housing is perhaps the best performing of all the major property types in the last few decades," Likes adds. "It's very low risk and nearly unlimited demand. Additional services include credit, agency, and HUD mortgage executions.
Unaffordable Housing: A Root Cause of Social Inequality
Affordable Housing Finance (11/12/15) Burns, Richard F.; Vaccaro, Thomas G.
Unaffordable housing contributes to many “quality-of-life” problems in the United States, and they may worsen as the issue affects households at increasing incomes, write Richard F. Burns, president and CEO of the NHP Foundation (NHPF), and Thomas G. Vaccaro, senior vice president of NHPF. A study by the NYU Furman Center and Capital One found that the percentage of low- and moderate-income renters struggling with heavy rent burdens increased significantly in many U.S. areas in 2006-2013. Governments at all levels are already overwhelmed by current housing needs, and cannot provide enough assistance. Although the low-income housing tax credit program has helped to create and preserve affordable housing, the number of credits allocated to states does not meet community needs. Burns and Vaccaro argue that government should make housing services a priority to help reduce social inequality. They suggest that the affordable housing crisis could be relieved also by renewing interest among the philanthropic community and encourage support for housing funding.
Association News
‘Rewind’ Summer Meeting Educational Sessions
NAA’s Education Institute (NAAEI) is presenting its “REWIND” program, offering recorded video and PowerPoint-synced audio sessions. Order 50-plus of the education sessions that were presented by industry speakers featured at the 2015 Education Conference & Exposition in Vegas.
The entire 2015 Rewind series is available for $199, a $100 savings for SHCM Designates only. Please enter the coupon code REWIND199 at checkout to receive your SHCM discount. NAHMA sessions this year were:
Disparate Impact and Multifamily Affordable Housing
Under the doctrine of disparate impact, normal practices in the development, rehab and management of housing may be considered discriminatory and illegal if they result in disproportionate “adverse impact” on certain classes of persons, even if the practices are not intended to discriminate. The concept of disparate impact has been hotly debated in real estate and legal circles, and has reached the U.S. Supreme Court for resolution on three occasions, with the first two cases being settled before the court could issue a ruling. In the third case, the principal question decided by the court: Does the Fair Housing Act establish the concept of and provide for claims under disparate impact? Presenters: Harry Kelly, Nixon Peabody LLP; and Michael W. Skojec, Ballard Spahr LLP.
The Business Case for Retrofitting to Service Enrich Your Senior Housing
Baby boomers are rapidly turning “senior” in large numbers. Providing affordable housing and health care for this population will be two of the most important public policy challenges faced in the coming years. The solutions need not be mutually exclusive, however; in fact, studies show that providing service-enriched housing to seniors and enabling them to age in place in quality, supportive and affordable rental housing provides massive savings to Medicare and Medicaid, and, moreover, that retrofitting existing senior housing can make good business sense. Presenter: David A. Smith, Recap Real Estate Advisors.
Unique Considerations for Marketing Affordable Housing
Like most aspects of managing affordable multifamily housing, the marketing of properties is subject to government regulation, including the creation and implementation of an Affordable Fair Housing Marketing Plan. Learn how, beyond the regulations, rules, audits and paperwork, management agents are able to keep the property full on a bare-bones marketing budget. Presenters: Adriana Guzzo, NALP, Peabody Properties; and Nancy Reno, Housing Management Resources, Inc.
Key Federal Legislative and Regulatory Issues Impacting Affordable Multifamily Housing
The world of affordable multifamily housing is not only highly regulated by three federal agencies, but it is also highly dependent on the ability of Congress to pass timely and sufficient annual funding bills. This session will focus on key current federal legislative and regulatory issues facing providers of multifamily affordable housing participating in the Department of Housing and Urban Development (HUD), rural housing and housing credit programs. Presenters: Larry Keys, NAHMA; Kris Cook, CAE, NAHMA; and Greg Brown, National Apartment Association.
To purchase session records, click on the link below.
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. Watch for the 2016 series to be announced soon.
- 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
Learn About Multifamily Housing
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. To order a copy click on the link below.
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.
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.
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.
Upcoming Events
NAA Student Housing Conference & Exposition
February 16-17, 2016
More info
NAHMA Federal Affairs Issues Forum
March 6-8, 2016
More info
NAA Education Conference & Exposition
June 15-18, 2016
More info
NAHMA Public Policies Forum
June 16-18, 2016
More info
NAHMA Regulatory Issues Forum
October 23-25, 2016
More info
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