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Congressional Budget Office Issues Report on Federal Housing Assistance Programs
The Congressional Budget Office has issued a report on federal housing assistance programs for low-income households. The report provides details on three main housing assistance programs: Housing Choice Vouchers, Project-Based Rental Assistance and Public Housing. Similar information and analysis on the Low-Income Housing Tax Credit Program along with federal block grant programs that provide housing assistance through state and local governments is also provided. In addition, the report assesses budget and policy options for altering that assistance. The entire 48-page report can be read or downloaded by clicking the Web Link below.
Tax Issues and Tax Reform
"Early Analysis of New Partnership Audit Rules' Impact on LIHTC Transactions"
Congress
"Ryan Unveils Sweeping $1.6 Trillion Deal on Government Funding, Taxes"
"What Congressional Leadership Changes Mean"
"How to Make the Case for Affordable Housing in Washington"
Green Building
"The No. 1 Green Building Benefit: Lower Operating Costs"
"Dodge: Green Building Doubling Every Three Years"
Industry Trends
"Report: Land-Use Rules Thwart Affordable Housing"
"Harvard Report Says Higher-Income Individuals Being Affected by Rising Rents"
Association News
HUD Uses Small Area Fair Market Rents to Determine 2016 Difficult Development Areas
JCHS Report Finds Unprecedented Rental Housing Demand
NAHB Estimates Number of People Benefiting from Housing Credit
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
Early Analysis of New Partnership Audit Rules' Impact on LIHTC Transactions
Lexology (11/18/15) Hickey, Edward R.; Kraus, Daniel L.
The Bipartisan Budget Act of 2015 (BBA) includes a complete overhaul of the procedures that apply to Internal Revenue Service (IRS) audits of partnerships, and is expected to have a significant impact on low-income housing tax credit (LIHTC) transactions. The BBA repeals Tax Equity and Fiscal Responsibility Act audit rules in place since 1982 and the reporting and audit procedures for electing large partnerships in effect since 1998. The new rules also appear to provide that the statute of limitations generally is three years from the later of the due date of tax returns without regard to extensions, and the filing of the partnership's tax return. For many LIHTC investors, the new format could be a welcome change because tolling agreements and other larger corporate considerations result in a considerably longer statute of limitations period. Additionally, the "tax matters partner" has been eliminated and replaced with the new concept of a "partnership representative." Subject to regulations to be issued by the IRS, the new rules provide the opportunity to elect out of partnership-level tax and shift the burden to the partners after the notice of final partnership adjustment. The ability to compel or forbid this election is likely to be a focus for LIHTC investors. For investors seeking to exit a partnership, this may provide added comfort because subsequent audits would not impact the investor. Parties attempting to complete LIHTC secondary market transactions will need to consider risk allocation negotiations.
Congress
Ryan Unveils Sweeping $1.6 Trillion Deal on Government Funding, Taxes
The Hill (12/16/15) Wong, Scott; Lillis, Mike; Bolton, Andrew
House of Representatives Speaker Paul Ryan (R-Wis.) reported that Congressional leaders have reached a sweeping year-end deal on taxes and funding the government after days of intense negotiations. The agreement locks in the minimum 9 percent low-income housing tax credit rate floor. The House and the Senate are expected to vote on the agreement this week, and should it pass, President Obama is quickly expected to sign it into law.
What Congressional Leadership Changes Mean
Novogradac Journal of Tax Credits (12/15) Vol. 06, No. 12 Novogradac, Michael J.
The recent elections of Rep. Paul Ryan (R-Wis.) as the new speaker of the House and Rep. Kevin Brady (R-Texas) as chairman of the House Ways and Means Committee could have implications for the affordable housing community. The Housing Advisory Group reports that Ryan has shown a growing appreciation for the low-income housing tax credit (LIHTC). In the near term, the chief concern is the need for Congress to extend a number of tax provisions that expired at the end of 2014. It is hoped the package will include the 9 percent floor LIHTC extension for 2015 and 2016, as was passed in July by the Senate Finance Committee. Brady has been clear that extenders legislation is on his list of immediate priorities. However, the fate of the 4 percent floor for LIHTC used to finance the acquisition of existing property is less clear. This provision is included in bipartisan legislation sponsored by Rep. Pat Tiberi (R-Ohio) and more than 70 of his House colleagues. Some predict the pending fiscal year 2016 omnibus spending bill that must be passed by Dec. 11 could be a legislative vehicle for the extenders. The historic tax credit (HTC) community's priority is the recently introduced Historic Tax Credit Improvement Act, H.R. 3846, which seeks to update and enhance the HTC.
How to Make the Case for Affordable Housing in Washington
Affordable Housing Finance (11/23/15) Kimura, Donna
Former Illinois congressman-turned-lobbyist Marty Russo says the affordable housing industry needs to build influence to make its case. "Use your influence in Congress so Congress wants to help you," he said at AHF Live: The Affordable Housing Developers Summit in Chicago. Speaking to developers, Russ said advocates of the low-income housing tax credit (LIHTC) need to form a relationship with their state Congress member. For instance, developers can invite lawmakers to tour their LIHTC developments to demonstrate how the program is working. It is also essential to have facts "to educate the member and staff," said Russo, noting the LIHTC generates $7.1 billion a year in economic income and the foreclosure rate for LIHTC properties is less than 1 percent. Russo also said it is important to know what to ask for. "Don’t leave a meeting without saying to your member of Congress, 'I would love your support for X, Y, or Z,'" he said. Russo recalled that the LIHTC program was established largely because Rep. Charlie Rangel (D-N.Y.) was its champion back in 1986. As Rangel prepares to retire and other housing supporters having already left office, Russo's approach will be even more relevant.
Green Building
The No. 1 Green Building Benefit: Lower Operating Costs
Environmental Leader (11/23/15) Hardcastle, Jessica Lyons
The lower operating costs of green buildings is cited as the greatest benefit of green building by about 70 percent of survey respondents in the World Green Building Trends 2016 report by Dodge Data & Analytics. The 1,000 building professionals from 69 countries surveyed expected more than 60 percent of their projects to be green projects by 2018, with the largest percent of activity in the commercial building segment. The main drivers of the trend are client demands, environmental regulations, and environmental concerns. Water management is emerging as a primary concern in urban areas, according to Navigant Research analyst Benjamin Freas. Increasingly energy-efficient building controls, such as HVAC, lighting, and other equipment, are another growth area, which will see a continued integration of information and building technology that will provide more data to optimize building operations. “This is enabling better integration between building systems and providing more data to building systems," Freas says. "In turn, with more data, buildings can operate beyond the scope of optimized local systems to improving operation on a building level.” On a global scale, green buildings can play a key role in helping manage climate change, according to the U.S. Green Building Council.
Dodge: Green Building Doubling Every Three Years
Construction Dive (11/18/15) Slowey, Kim
Green building is doubling every three years, according to preliminary research from Dodge Data & Analytics' World Green Building Trends 2016 report. The report also cites increased pressure from clients and tenants for sustainability and an increase in green building in emerging economies. The biggest barrier to green building continues to be higher perceived costs, but that has declined from 80 percent of respondents in 2008 to 50 percent of respondents in the latest survey. Meanwhile, developing countries list a lack of political support as a key barrier. The survey included more than 1,000 architects, engineers, contractors, owners, specialists, and consultants in 69 countries. The largest percentage of future green building projects, 46 percent, is the commercial building segment. Reducing energy and water consumption are listed as top priorities, while the top benefit of green buildings is listed as lower operating costs.
Industry Trends
Report: Land-Use Rules Thwart Affordable Housing
Affordable Housing Finance (12/10/15) Kimura, Donna
A new report from George Mason University's Mercatus Center suggests strict land-use regulations are contributing to rising housing costs in many American cities. Zoning regulations and other policies can be beneficial, but can also impede the supply of housing and cause housing prices to rise, say researchers Sanford Ikeda and Emily Washington. The report reviews key literature that measures the price effects of a variety of land-use regulations. For instance, one study calculated that land-use regulations imposed "regulatory taxes" of at least 10 percent in some of the most expensive U.S. cities, including Los Angeles, New York, and Washington, D.C. Minimum-lot size rules, density rules, parking requirements, urban growth boundaries, and historic preservation rules also contributed to higher housing costs. The report concluded that such land-use rules take "a disproportionate bite out of the purchasing power of a city’s lowest-income individuals.” Experts advocate creating a "zoning budget" to set a ceiling on how much local politicians can restrict growth via land-use regulations as well as implementing "tax increment local transfers," which transfer a portion of the increase in the tax base from any new land development to nearby property owners.
Harvard Report Says Higher-Income Individuals Being Affected by Rising Rents
New York Daily News (12/13/15) Liotta, Paul
People are being increasingly priced out of cities due to excessively high rents, according to new research from Harvard. A report by the Harvard Joint Center for Housing Studies found rental cost burdens are affecting more moderate-income renters earning as much as $45,000 per year. The report found that 43 million families and individuals are renting, an increase of nearly 9 million households since 2005. "Too many families earning less than $50,000 per year are having to make trade-offs between putting a roof over their heads and food on the table," said the center's Chris Herbert in a statement. The report found in 2014, households that spent more than half their incomes on rent also spent 38 percent less on food, 55 percent less on healthcare, and 45 percent less on retirement savings than those in affordable housing. "Housing assistance programs have been unable to fill the gap, with some core programs subject to draconian reductions," Herbert said. "The Low-Income Housing Tax Credit remains critical to addressing both production and preservation of affordable rentals, but by itself cannot address all need." Julia Stasch, president of the John D. and Catherine T. MacArthur foundation that helped fund the report, said more needs to be done on the part of lawmakers.
Association News
HUD Uses Small Area Fair Market Rents to Determine 2016 Difficult Development Areas
On Nov. 24, HUD published in the Federal Register its annual list of Difficult Development Areas (DDAs) and Qualified Census Tracts (QCTs), which are used in the Low-Income Housing Tax Credit (LIHTC) program. For the first time, HUD used Small Area Fair Market Rents (SAFMRs) to establish the 2016 DDAs. SAFMRs are calculated for ZIP codes or portions of ZIP codes. LIHTC properties developed in DDAs or QCTs receive a 30 percent “basis boost,” enhancing the equity in a project.
The effective date for using the new DDAs and QCTs will be July 1, 2016, rather than Jan. 1, 2016. HUD is also extending from 365 days to 730 days the period for which the 2016 DDAs and QCTs remain in effect for projects located in areas that subsequently lose their DDA or QCT designations but for which applications are submitted in 2016.
To review the Nov. 24 Federal Register notice, visit http://www.gpo.gov/fdsys/pkg/FR-2015-11-24/pdf/2015-29953.pdf. The 2016 lists of DDAs and QCTs are available by clicking the Web Link below. To learn more about comprehensive DDA changes, visit the Notes from Novogradac blog.
JCHS Report Finds Unprecedented Rental Housing Demand
The Joint Center for Housing Studies (JCHS) of Harvard University has released “America’s Rental Housing: Expanding Options for Diverse and Growing Demand,” a report on the record growth of rental housing demand. The study found that between 2005 and mid-2015, the number of renter households increased by 9 million—the largest gain in any 10-year period on record. JCHS reported that as the rental market continues to tighten, affordability challenges grow for both low- and moderate-income households. The report explored how expanding Low-Income Housing Tax Credit (LIHTC) and U.S. Department of Housing and Urban Development (HUD) funding could better serve cost-burdened households. Read the report click the link below.
NAHB Estimates Number of People Benefiting from Housing Credit
The National Association of Home Builders (NAHB) has released an analysis of how many people have benefited from the housing credit, finding that approximately 6.5 million low-income households, or roughly 13.3 million people, have lived in affordable apartments financed by the housing credit between 1986 and 2013. Read more about the NAHB’s estimate by clicking the Web Link.
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 Meeting
March 6-8, 2016
More info
NAHMA Public Policies Forum
June 15, 2016
More info
NAA Education Conference & Exposition
June 15-18, 2016
More info
NAHMA Regulatory Issues Meeting
October 23-25, 2016
More info
Abstract News © Copyright 2015 INFORMATION, INC.
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