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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.
Tax Issues and Tax Reform
"Report: LIHTC Property Expenses Grew by 2.98 Percent in 2013"
"What You Need to Know About Recapitalizing Affordable and LIHTC Housing"
Congress
"Sen. Isakson: Make the Case for the LIHTC"
"Bill Seeks to Change LIHTC Student Rule"
State and Local Activities
"THDA Reports on Past and Future of Tennessee's LIHTC"
HUD-Related Activity
"HUD Releases Report on QAP Incentives"
Green Building
"Huge Energy Savings in VA Affordable Housing Apartments"
Management and Compliance
"Consider Tax Appetite in Picking Best Financing for Energy Efficiency"
Association News
2015 HOME Income Limits and Rents
IRS, HUD Guidance on Tenant Income Increases, Conflicts with Other Housing Programs
LeadingAge Annual Meeting to Offer Range of Senior and Tax Credit Housing Sessions
HUD Publishes Glossary of Multifamily Affordable Housing Preservation Terms
Multifamily Housing Policy Drafting Table
Connect, Learn, Grow at NAA’s Educational Conference and Expo
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Tax Issues and Tax Reform
Report: LIHTC Property Expenses Grew by 2.98 Percent in 2013
Apartment Finance Today (06/15) Kimura, Donna
A new report from Novogradac reveals that operating expenses at low-income housing tax credit (LIHTC) developments rose 2.98 percent in 2013, or about $130 per unit. The increase was slightly higher than the annualized growth rate of 2.82 percent for LIHTC properties from 2010 to 2013, according to the 2015 Novogradac Multifamily Rental Housing Operating Expense Report -- Survey and Analysis for LIHTC Properties. H. Blair Kincer, a partner in the firm's Washington, D.C., office, says the report confirms some conventional industry wisdom about operating multifamily rental real estate. "For example, the number of units in a multifamily rental housing property affects total median expenses per unit because of the economies of scale present in larger LIHTC properties," according to Kincer. Still, the analysis provides greater insight into operating expense trends. Of note, it shows that the difference in expenses between large and small LIHTC properties is not as significant as sometimes thought. The report offers strong benchmarking tools for LIHTC developers, investors and others, says Novogradac.
What You Need to Know About Recapitalizing Affordable and LIHTC Housing
Multi-Housing News (06/09/15) Fiur, Jessica
Many low income housing developments are coming to the end of their tax credit lifecycle. In MHN's recent webinar, Preserving and Recapitalizing Low Incoming Housing Tax Credit and Affordable Housing, presenters discussed how to reinvigorate affordable housing. David Smith, founder and chairman, Recap Real Estate Advisors, said it is currently difficult to get LIHTC for properties, though syndicators are plentiful. Getting creative with financing is not always beneficial, so the simplest approach can sometimes be the best one. "If you see an affordable property that is physically obsolete, nine times out of 10 it has overly engineered financing," Smith said. Conducting research is essential for success, which includes looking at the local market, similar properties, and how the industry itself is faring. "You want a good market, but not too good," said Andrew Davenport, regional vice president, Michaels Development Company. Joshua Reiss, assistant vice president, Hunt Mortgage Group, observed that, "You don't approach your lender until you know your goals, timing constraints, and your business plan." He adds there are several motivations for a one-step recapitalization, including long-term fixed interest rates, ability to finance moderate to substantial rehabilitation, ability to seek supplemental financing on Fannie Mae or Freddie Mac Loans, and reduced transaction costs versus the two-step process.
Congress
Sen. Isakson: Make the Case for the LIHTC
Affordable Housing Finance (06/12/15) Kimura, Donna
The low-income housing tax credit (LIHTC) industry must continue to make a case for LIHTCs, according to U.S. Sen. Johnny Isakson (R-Ga.). Speaking at AHF Live: Housing Developers Forum in Pentagon City, Va., Isakson said there will be no tax reform this year and it is unlikely next year as well, but tax reform will be more of an issue in 2017 and 2018. The former Realtor said the industry has a great story to tell about LIHTCs, how it is improving the quality of housing, attracting private capital and lessening government involvement. A great case for preservation can be made, but without lobbying, there may be no LIHTC program when tax reform takes place. Not too many members of Congress are familiar with LIHTCs and understand affordable housing, according to Isakson. The industry should stress how LIHTCs have re-energized affordable housing in a way that government agencies have not. "It's using the tax code as a catalyst to attract capital to build a product that otherwise might not be built and developed that will benefit the people in the country," said Isakson.
Bill Seeks to Change LIHTC Student Rule
Affordable Housing Finance (05/22/15) Kimura, Donna
U.S. Sens. Al Franken (D-Minn.) and Rob Portman (R-Ohio) seek to reintroduce a bipartisan bill that would allow full-time students who have recently experienced homelessness to be eligible for low-income housing tax credit (LIHTC) apartments. The LIHTC program's "student rule" prohibits LIHTC funds from being used to construct dormitories. However, it provides no exception for homeless and recently homeless youth or veterans, so students may lose access to LIHTC housing if they go to school full-time. If these students choose to attend school part-time to retain their LIHTC housing eligibility, they may lose access to grants, loans, and scholarships for which only full-time students qualify. "The introduction of this bill utilizing the LIHTC shows the recognition by Congress of the valuable tool the credit has become—and its ability to serve various housing needs," says Bob Moss at CohnReznick. The legislation is being co-sponsored by Sens. Patty Murray (D-Wash.), Susan Collins (R-Maine), and Angus King (I-Maine). Portman observes, "Students shouldn't have to choose between stable housing and going to school full-time. By giving low-income students access to affordable housing while they attend school, we can help to ensure that they are able to graduate and succeed."
State and Local Activities
THDA Reports on Past and Future of Tennessee's LIHTC
Chattanoogan (06/11/15)
A lack of affordable rental housing prompted the Tennessee Housing Development Agency (THDA) to issue a new study on the state's Low Income Housing Tax Credit (LIHTC) program, which the agency manages in the state. THDA Executive Director Ralph M. Perrey says, "We need to make it as attractive as possible for developers to invest in affordable rental housing so that people of low income aren't overlooked and left behind." THDA sees opportunities in prioritizing projects in areas that are both in a Qualified Census Tract (QCT) and part of a Community Revitalization Plan (CRP). Cities use CRPs to generate new job opportunities and economic revitalization in low income neighborhoods. As Congress increases the nationwide cap on Rental Assistance Demonstration (RAD) projects from 60,000 units to 180,000 units, THDA anticipates a surge in LIHTC applications once additional RAD funding becomes available in the state. To help connect Tennessee families with rental housing in their price range in their area, THDA operates the TNHousingSearch.org website, where property owners can list vacancies for free. A total of 940 properties have qualified for the LIHTC program in Tennessee to date, comprising roughly 46,000 rental units. The total tax credits available for projects in Tennessee is determined by the IRS on an annual basis, and applications in Tennessee always vastly exceed demand.
HUD-Related Activity
HUD Releases Report on QAP Incentives
Novogradac Journal of Tax Credits (06/15)
The U.S. Department of Housing and Urban Development (HUD), Office of Policy Development and research in May released the report, "Effect of QAP Incentives on the Location of LIHTC Properties." The report researches how qualified allocation plans (QAPs) can shape the site patterns of LIHTC developments by examining how the changes in state QAPs correlate to the changes in the types of neighborhoods where tax credit developments are sited within a given state. The report addresses two specific issues: whether changes in QAP priorities between 2002 and 2010 associated with changes in the poverty rates of the neighborhoods where LIHTC developments are built; and whether different priority structures appear to be more effective in driving the location of LIHTC developments. The report is available at www.taxcredithousing.com.
Green Building
Huge Energy Savings in VA Affordable Housing Apartments
Public News Service (06/01/15) Heyman, Dan
Virginia's affordable housing is poised to have a huge energy efficiency payoff by taking some basic steps, according to two new studies. The National Housing Trust and the Natural Resources Defense Council are part of a broad coalition examining the issue. Michael Bodaken, executive director with the housing trust, says basic measures like compact florescent bulbs, low-flow faucets, double-pane windows, and better insulation could yield significant results in existing affordable apartments, with $21 billion in energy savings predicted in eight states over the next 20 years. In Virginia, the return could be nearly three times the cost, he says. For owners of affordable housing such as housing trusts, Bodaken says the upgrades mean keeping units on the market longer and keeping rents down, while utilities would likely see fewer unpaid bills and lower collection costs. He says there are about 400,000 affordable apartment units in Virginia and many could use the improvements. "Older buildings with inadequate insulation, lousy windowpanes, air filtration issues," says Bodaken. "This is something we can control and make money doing it." Meanwhile, the Virginia Housing Coalition and Virginia Conservation Network recently hosted an efficient housing press tour at the Somanath Senior Apartments in Richmond, Va. The studies found families in Virginia's affordable housing apartments could potentially slash 20 percent from their natural gas consumption and nearly 30 percent from their electricity use.
Management and Compliance
Consider Tax Appetite in Picking Best Financing for Energy Efficiency
FacilitiesNet (07/01/15) Kim, Charlotte
Facility managers who plan to outsource energy efficiency or other sustainability projects have several options when considering how to contract for or finance such projects. When considering and evaluating a third-party tool, such as an operating or capital lease, an energy savings performance contract, or an efficiency services agreement, one threshold question to answer is whether the facility owner could take advantage of any applicable tax credits. If the project includes renewable energy generation using solar panels or other technologies, it may qualify for state or federal tax credits. Not all facility owners have the ability or desire to use applicable state and federal tax credits, but if the project does qualify for any such credits, it’s a consideration that would affect how the project is financed. The next threshold question to examine is whether and to what extent the facility owner is willing to accept performance risk. Third-party financing options may be structured to shift this performance risk from the facility owner to the contracting third party to varying degrees. Closely related to the performance risk question is how to allocate risk and responsibility for financing an energy efficiency or sustainability project. All three third-party financing options — lease financing, energy performance contracting, and efficiency services agreements — offer different ways to finance energy efficiency improvements that do not require an up front capital expenditure by a facility owner. Lease financing is widely used and very familiar to many facility managers. Facility managers should keep in mind how U.S. accounting treatment of leases is changing and check any applicable existing debt covenants when considering lease financing options.
Association News
2015 HOME Income Limits and Rents
On Thursday, May 7, HUD posted the income limits, https://www.hudexchange.info/manage-a-program/home-income-limits/, and maximum rents, https://www.hudexchange.info/manage-a-program/home-rent-limits/, for the HOME program for 2015. They were effective June 1. It is important to remember that it is possible for project-specific HOME income limits to go down. Owners are not allowed to hold their HOME income limits harmless as they are in the LIHTC program. If the fair market rents for a county or metro area goes down, it may drive the HOME rents down. Tip: For a blended HOME/LIHTC unit, qualify an applicant at the lesser of their HOME and LIHTC income limits, and charge a resident no more than the lesser of the HOME or LIHTC maximum allowable rent. A recent article by Jo Ikelheimer further addresses timing issues and implications–read the article at by clicking on the Web Link below.
IRS, HUD Guidance on Tenant Income Increases, Conflicts with Other Housing Programs
The IRS recently released a memo, entitled “Low-Income Housing Credit—Noncompliance Resulting from Conflicting Program,” directed to examiners auditing LIHTC issues. The memo recommends to examiners that not renewing a tenant’s lease—when a tenant in a low-income unit who upon initial occupancy satisfied the applicable income limitation but experiences a rise in income that exceeds certain thresholds that violates other program’s requirements—should not be determined to mean that the building is not a qualified low-income building under § 42(c)(2).
As in past rulings, this memo confirms that Section 42(g)(2)(D)(i) protects initially qualifying households from being displaced as their income rises, and § 42(g)(2)(D)(ii) applies if a tenant’s income increases above 140 percent of the applicable income limit, unless good cause exists to not renew a lease, an owner is required to continue the tenancy. What is new is that this memo indicates that an owner may avoid loss of credit by extending the low-income housing commitment, but timing for executing this extension is essential. Read the memo by clicking the Web Link below.
HUD also confirmed in a January 2015 memo, http://portal.hud.gov/hudportal/documents/huddoc?id=occupprotectionshudassthsg.pdf, that eviction of an otherwise qualified resident because they do not meet tax credit income limits is prohibited.
LeadingAge Annual Meeting to Offer Range of Senior and Tax Credit Housing Sessions
The 2015 LeadingAge Annual Meeting and Expo will be held in Boston, Nov. 1-4. Registration and hotel blocks will open in late July 2015. Affordable senior housing sessions will cover everything from “Maximizing Income from Section 8 Contracts” (G. Dunaway); “Pitfalls to Avoid in Low-Income Housing Tax Credit Programs” (H. Berk); to “Reasonable Accommodations” (K. Williams) and “Caring for LGBT Older Adults”; and a range of sessions focused on senior housing with services including “Building a Culture of Wellness” and “Understanding Hoarding Behaviors in Older Adults.”
To find more information on the conference, check out the Web Link.
HUD Publishes Glossary of Multifamily Affordable Housing Preservation Terms
On March 3, HUD’s Multifamily Office of Recapitalization published a glossary of terms commonly used to describe multifamily assisted properties and affordable housing preservation transactions. This document is part of a series of resources that HUD is developing for multifamily property owners describing the various options that are available to preserve and recapitalize their affordable properties.
A Web Link to the glossary is below.
Multifamily Housing Policy Drafting Table
HUD has announced its plans to making it easier to do business with FHA Multifamily (MF) Housing—they are calling it the Multifamily Housing Policy "Drafting Table." A unique webpage will be their newest resource for posting drafts of upcoming proposed policies. Currently, only the draft MAP guide is posted, but hopefully future guidance and/or proposed rules in development will be shared there.
Read more about it at the Web Link below.
Connect, Learn, Grow at NAA’s Educational Conference and Expo
Be sure to register for the National Apartment Association (NAA) June Education Conference and Expo with affordable housing education sessions, June 24-27. More details can be found by clicking the Web Link below. The National Affordable Housing Management Association (NAHMA) sessions this year are:
Thursday, June 25, 9-10 a.m.
NAHMA Presents 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. The third case is before the court at press time of this write up. The principal question before the court: Does the Fair Housing Act establish the concept of and provide for claims under disparate impact?
Moderator: Kris Cook, executive director, NAHMA
Speakers: Harry J. Kelly, Nixon Peabody LLP; Michael W. Skojec, Ballard Spahr LLP
Thursday, June 25, 10:15-11:15 a.m.
NAHMA Presents 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.
Moderator: Kris Cook, executive director, NAHMA
Speaker: David A. Smith, chairman and founder, Recap Real Estate Advisors
Thursday, June 25, 11:30 a.m.-12:30 p.m.
NAHMA Presents 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.
Moderator: Kris Cook, executive director, NAHMA
Speakers: Adriana Guzzo, director of marketing, Peabody Properties; Nancy Reno, vice president of marketing and training, Housing Management Resources, Inc.
Friday, June 26, 9-10 a.m.
NAHMA Presents 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 the U.S. 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 HUD, rural housing and housing credit programs.
Moderator: Larry Keys Jr., director of government affairs, NAHMA
Speakers: Kris Cook, executive director, NAHMA; Greg Brown, senior vice president of government affairs, NAA
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
NAHMA Public Policy Issues Forum
June 24, 2015
In conjunction with the NAA Education Conference & Exposition
More info
NAA Education Conference & Exposition
June 24-27, 2015
More info
NAHMA Regulatory Issues Forum
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
Abstract News © Copyright 2015 INFORMATION, INC.
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