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HUD Issues Utility Allowance Factors for FY 2017


The Department of Housing and Urban Development (HUD) has released the Utility Allowance Factors (UAF) for fiscal year 2017 for owners and management agents whose projects are subject to the requirements found in the Office of Housing’s Utility Analysis Notice. The dataset is updated once per year and the fiscal year 2017 UAFs are effective Feb. 11, 2017. To see the allowances for 2017, click on the Web Link provided below.
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Industry Trends


"Low-Income Housing Shown to Not Weigh on Nearby Property Values"
"Fair Housing Guidance, Property Value Research May Help Respond to LIHTC Siting Challenges"

Tax Issues and Tax Reform


"Washington Wire: How Will Tax Credits Fare Under President Trump?"
"LIHTC Market Unsettled After Election"
"What Does Equity Market Uncertainty Mean for Recent, Upcoming LIHTC Awards?"

Management and Compliance


"No Train No Gain: Why Your Staff Needs Training"

Green Building


"Green-Certified Apartments Quadruple in 5 Years"

Association News


Trump Names Carson to Lead HUD
New Guidance on Rent Comparability Studies for Section 8 Renewals
Purchase a One-Of-A-Kind Gift
HUD 2530 Has All New Regulations
NAHMA Releases 2016 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events


Industry Trends


Low-Income Housing Shown to Not Weigh on Nearby Property Values
Wall Street Journal (11/28/16) Kirkham, Chris

An analysis by real-estate tracker Trulia indicates that housing units designated for low-income residents have largely no impact on surrounding property values in major U.S. metro areas. The analysis looked at more than 3,000 projects financed using the federal Low-Income Housing Tax Credit (LIHTC) program between 1996 and 2006 in the 20 most expensive U.S. metro areas. Trulia researchers measured the change in home values for properties within a 2,000-foot radius of the LIHTC units as well as an outer ring between 2,000 and 4,000 feet. Across the 20 metro areas, the study found no significant difference in price per square foot when looking at properties closest to the low-income units and those farther out. The 20 markets chosen are the ones with the highest percentage of a median household's income needed to pay toward a monthly mortgage payment on the median home value in each market. Cheryl Young, a senior economist at Trulia who worked on the study, said the data present a "challenge to this prevailing argument around low-income housing, and shows there really isn't an effect." The majority of metro areas in the study, which included most coastal markets in California, along with New York City, Miami, Denver, and the Pacific Northwest, saw no significant differences in prices after low-income housing was built. Among the few exceptions were Boston and Cambridge, Mass., where home values closest to low-income housing increased at a slower pace than in the area slightly farther away, amounting to a difference of between $18 and $19 per square foot.
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Fair Housing Guidance, Property Value Research May Help Respond to LIHTC Siting Challenges
Novogradac (11/28/2016) Shelburne, Mark

In November, the U.S. Departments of Housing and Urban Development (HUD) and Justice (DoJ) provided guidance on how the Fair Housing Act applies to zoning. The guidance, along with Trulia's recently published research about the effect of affordable housing on surrounding property, may help address the problem of opposition to development, often referred to as NIMBY (not-in-my-backyard). The HUD/DoJ guidance updates a similar version issued 17 years ago via a series of 27 questions and answers. It clarifies that intent is not simply the mindset of those making decisions, rather "municipal zoning practices... that reflect acquiescence to community bias may be intentionally discriminatory, even if the officials themselves do not personally share such bias." Potentially problematic practices cited by the guidance include "minimum floor space or lot size requirements that increase the size and cost of housing" and "prohibiting low-income or multifamily." In its research on the nation's 20 least affordable housing markets, Trulia compared sale prices of homes within 2,000 feet of LIHTC developments to those farther away. The result was "no statistically significant difference in price per square foot" in 17 cities. This conclusion follows other research showing benefits, including Stanford University professors who recently determined "affordable housing appears to be a desirable way to invest in and revitalize low-income communities."
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Tax Issues and Tax Reform


Washington Wire: How Will Tax Credits Fare Under President Trump?
Novogradac Journal of Tax Credits (12/16) Vol. 07, No. 12 Novogradac, Michael

The Low-Income Housing Tax Credit (LIHTC) community is cautiously optimistic that the LIHTC program will be retained in the event of major tax reform under the upcoming Trump administration. However, the indirect effects of tax reform on the LIHTC could be significant. For instance, the interest expense deduction would be limited to interest income and the marginal corporate tax rate would decline to 20 percent. The overall net effects would likely make investment in the LIHTC less attractive, although the impact might not be as substantial as many predict. The fate of tax-exempt private activity bonds is less certain than the LIHTC. One possibility is that tax reform legislation or legislation to promote infrastructure investment could include improvements to the LIHTC, both protecting and strengthening it. Meanwhile, the recently announced combined $7 billion fiscal year FY 2015-16 new markets tax credit (NMTC) allocation provided momentum for supporters of the community development credit to rally to preserve it. Sen. Roy Blunt (R-Mo) cited support of the NMTC in his re-election campaign. There has been less talk about the fate of the historic tax credit (HTC), which has been left out of the Republican blueprint for tax reform but was used by Trump to help finance his Trump International Hotel in Washington, D.C. Greentech Media reported that a "Trump insider" said energy was not a top agenda item for the president-elect and that the renewable energy investment tax credit (ITC) and production tax credit (PTC) would remain in place.
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LIHTC Market Unsettled After Election
Affordable Housing Finance (11/29/16) Kimura, Donna

The possibility of broad tax reform efforts in the upcoming administration is causing concern over the Low-Income Housing Tax Credit (LIHTC) market. Investors and syndicators estimate that a decline in the business tax rate from 35 percent to 25 percent could lead to a decline of 180 to 220 basis points in the yield for a proposed investment. When an investor purchases a stream of tax benefits, both LIHTCs and tax losses, one of the components of the tax benefits would lose nearly 30 percent of its value if the tax rate falls to 25 percent, says Jeff Weiss, president of Alden Capital Partners. This is due to a 10 percent rate drop divided by the 35 percent tax rate, he explains. Many people believe 25 percent is a more realistic tax rate than 15 percent. In any case, if the corporate tax rate is reduced, LIHTC pricing will have to be lowered to maintain current market yields. Some estimate that the drop could be between 5 cents and 10 cents per dollar of credit for a 9 percent LIHTC deal. “Thankfully, a number of our investors have told us that for deals in the pipeline they are going to honor their commitments,” says Weiss, a LIHTC syndicator. James Horvick, vice president and director of originations at Raymond James Tax Credit Funds, anticipates that developers may see shorter duration letters of intent from syndicators and investors. "From a developer's perspective I would be really asking questions to your syndicator partners—what's the placement of this deal?" he says.
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What Does Equity Market Uncertainty Mean for Recent, Upcoming LIHTC Awards?
Novogradac Journal of Tax Credits (12/16) Shelburne, Mark

Prospects for significant tax reform in 2017 increased considerably as a result of the presidential election, likely resulting in lower corporate rates and potentially reducing the value of some tax benefits. As a general matter there are several ways to respond to lower pricing: less paid developer fee, "value engineering," increased debt, and/or being awarded more Low-Income Housing Tax Credits (LIHTCs). It is also important to note that any resource used for these investments would be unavailable for future production. For example, an allocator could "fix" the shortfall with an additional $100,000 in annual LIHTCs. However, doing so would result in 10 to 15 fewer low-income households having an affordable apartment in a property awarded in 2017. LIHTC equity price is a crucial component of underwriting for feasibility and providing the appropriate level of subsidy. Most states require applications to include letters from syndicators stating the amount. Therefore, deadlines over the next couple of months present a challenge and it is unlikely conditions will become clearer during the first half of 2017. However, agencies cannot hold off on starting their processes indefinitely. The solutions will need to be developed over time and will vary by state, even by deal. The only uniform component is frequent, open communication between all stakeholders, with a clear understanding of each other's goals and limitations. On a positive note, everyone wants to see previous awards succeed and the next application cycle to go forward.
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Management and Compliance


No Train No Gain: Why Your Staff Needs Training
Property Management Insider (12/01/16) Blackwell, Tim

About 54 percent of adults in the labor force say that it will be essential for them to get training and develop new skills in order to keep up with changes in the workforce, including the multifamily housing industry. According to a Pew Research Center survey, about 83 million people work in jobs that require an average or above average level of training, up 68 percent since 1980. Rapidly changing technology has altered the multifamily housing workplace, with many tasks once done manually now conducted on computers. Establishing apartment rent rates based on competition has become more complex, and maintenance technicians now carry tablets and other mobile devices. Many on-site positions do not require a college degree, but these employees still need the skills necessary to keep up with quickly evolving technology. As technology enables more employees to work remotely, additional training will be essential to ensure people are able to do their jobs no matter their location. Training can be costly for apartment owners and operators, but they and other employers must ensure their workforce is well-prepared, according to Doug Bibby, president of the National Multifamily Housing Council. "During the recession and coming out of the recession training was not emphasized," he says. "I think there is a lot of catch-up work to be done right now."
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Green Building


Green-Certified Apartments Quadruple in 5 Years
Multifamily Executive (11/18/16)

By the end of December, the apartment industry is projected to have built 59,400 new green-certified rental units in 2016 -- quadruple the number built five years ago, according to a new RENTCafé study. For the report, the online apartment-listing firm dissected the green building movement to find just how much of a movement it actually has been. The positive news is there is much to celebrate. When LEED started being widely used in the multifamily housing industry eight years ago, only 2 percent of buildings were green. In 2015, by contrast, the share of new green-certified apartments was 18 percent of the total built. Chicago is the leader with 13,800 green rental apartments on line, followed by Seattle with 11,200 units. Portland, Ore.; Washington, D.C.; Dallas; New York; Denver; Austin, Texas; Arlington, Va.; and San Francisco each boast more than 5,000 green apartments on the rental market.
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Association News


Trump Names Carson to Lead HUD

President-elect Donald Trump has chosen retired neurosurgeon and former presidential candidate Dr. Ben Carson to be the next Secretary of the Department of Housing and Urban Development. Carson has not spoken specifically on HUD’s individual programs, but has been a strong critic of HUD’s enforcement of the Fair Housing Act. On the day he announced his presidential candidacy in 2015, Carson said, “I have no desire to get rid of safety nets for people who need them. I have a strong desire to get rid of programs that create dependency in able-bodied people."
To read the announcement issued by the president-elect’s transition team, click on the Web Link below.
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New Guidance on Rent Comparability Studies for Section 8 Renewals

On Dec. 1, HUD issued substantial revisions to Chapter 9 – Rent Comparability Studies, which is part of the Section 8 Renewal Policy Guide. The transmittal cover sheet provides a summary of the changes. The policy changes will be effective for all rent comparability studies signed by the appraiser after March 1, 2017.
To review the new Chapter 9 and the appendices click on the Web Link below. Interested parties are strongly encouraged to view online training on the new chapter at https://www.youtube.com/watch?v=uSkNooMb6As&feature=youtu.be.
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Purchase a One-Of-A-Kind Gift

Order the 2017 National Affordable Housing Management Association (NAHMA) Drug-Free Kids Calendar now by clicking on the Web Link below. Do not wait—the 2015 and 2016 editions 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 also celebrated community spirit with its theme, Words That Heal: Stop Bullying, Spread Kindness.
The cost is $5.50 per calendar, which is a Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture allowable project expense.
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HUD 2530 Has All New Regulations

On Oct. 14, HUD published a 31-page final rule that revises HUD’s regulations for reviewing the previous participation in federal programs of certain participants seeking to take part in multifamily housing and health care programs administered by HUD’s Office of Housing. The final rule clarifies and simplifies the process by which HUD reviews the previous participation of participants that have decision-making authority over their projects. Only controlling participants are required to file. Under the new rules, most tax credit investors will not have to file. On Oct. 20, HUD issued Housing Notice 2016-15, a 2530 Processing Guide. To read the entire rule and processing guide or access other 2530 resources, click on the Web Link provided.
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NAHMA Releases 2016 Affordable 100 List

The National Affordable Housing Management Association (NAHMA) announces its 2016 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® (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 Student Housing Conference & Exposition
February 14-15, 2017
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NAHMA Federal Affairs Issues (Winter) Meeting
March 5-7, 2017
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NAA Education Conference & Exposition
June 21-24, 2017
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NAHMA Regulatory Issues (Fall) Meeting
October 22-24, 2017
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December 2016