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HUD Corrects EIV System Errors
The Department of Housing and Urban Development (HUD) issued a statement saying the Enterprise Income Verification (EIV) system data issues reported in July have been resolved. All EIV reports are up to date and the system is fully functional. Owners/agents who encountered problems must proceed in obtaining and reviewing EIV reports in accordance with Chapter 5 of HUD Handbook 4350.3. To review the Handbook, click on the Web Link below.
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Industry Trends
"Rising Interest Rates Are Another Blow to Affordable Housing Market"
Tax Issues and Tax Reform
"Opportunity Zones and Tax Credits: A Match Made In…?"
"Senator Proposes Federal Tax Credits for Renters"
Congress
"Affordable Housing Crisis Spurs Greater Activity on Capitol Hill"
HUD-Related Activity
"As Affordable Housing Crisis Grows, HUD Sits on the Sidelines"
State and Local Activities
"Texas Awards $76.6 Million in LIHTCs"
Management and Compliance
"Best Practices for Nonprofits Entering Affordable Housing"
Association News
NAA Launches Transformation of Parking Survey Report
CAMT + E Micro-Credential Available
REWIND 2018 Now Available
2018 Q2 Apartment Jobs Snapshot
NAAEI Unveils Updated RPM Careers Website
NAHMA Releases New 2018 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
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Industry Trends
Rising Interest Rates Are Another Blow to Affordable Housing Market
Wall Street Journal (08/14/18) McCaffrey, Orla
Rising interest rates are undermining efforts to build more affordable housing by driving down the amount of debt used to fund deals, says Michael Novogradac, managing partner of Novogradac & Co. Developers note the rates offered by major national lenders have risen steadily in the past two years. At Bridge Housing, one of the largest affordable housing development groups on the West Coast, both short- and long-term debt rates have climbed. The permanent debt rate was 4.18 percent for a Bridge project completed in the Mission District of San Francisco in 2016. This year, a proposed development less than a mile away, with the same developer and a similar amount of debt, closed at a rate of 5.06 percent. "It makes the difference between feasibility and infeasibility," says Cynthia Parker, president and chief executive of Bridge Housing. "Developers have to pull things out of units, and it may take a bit longer because you have to assemble other funding sources. By the time you get those, you might have to rebid out the project and it might be more expensive." Production of affordable units is expected to reach 97,000 in 2018, according to a Novogradac estimate. That is up from 2017 but notably below 2015 and 2016 levels. Over the next decade, the number of units built is forecast to decline by 230,000, thanks to the lower corporate tax rate introduced by last year’s tax bill and subsequent devaluation of Low-Income Housing Tax Credits.
Tax Issues and Tax Reform
Opportunity Zones and Tax Credits: A Match Made In…?
Apartment Finance Today (08/01/18) Vielma, Catalina
Many developers and housing finance agencies want to know how Opportunity Zones work with housing tax credits. Catalina Vielma, senior vice president, equity production, at Boston Financial Investment Management, says it is important to understand that Opportunity Zone investors likely will not be the same investors that provide most of the capital for the Low-Income Housing Tax Credit (LIHTC) program. LIHTC investors mainly are major institutional banks, while Opportunity Zone investors are more likely to be high-net-worth individuals, managed investment funds, life insurance companies, and mutual funds that regularly realize significant capital gains. This means that Opportunity Zone tax incentives will be unavailable to most banks. "To be clear, banks are not prohibited from investing in LIHTC projects located in Opportunity Zones, but they will do so without generating the additional Opportunity Zone tax benefit," she says. Vielma adds, "To date there has been very little guidance from the IRS on how the Opportunity Zone provisions are supposed to work. The IRS has announced a self-certification process for establishing Opportunity Zone Funds, under which each will simply attach a self-certification form to the fund's first-year tax return. By the end of the summer we hope to see technical guidance from the IRS covering a variety of topics including the treatment of debt and whether investment partnerships will be allowed to space the pay-in of their capital to match the development process for LIHTC equity and other real estate development projects."
Senator Proposes Federal Tax Credits for Renters
CPA Practice Advisor (08/10/18) Murphy, Katy
Sen. Kamala Harris (D-Calif.) has unveiled a proposal to give federal tax credits to millions of low and moderate-income households nationwide who pay more than 30 percent of their incomes on rent and utilities. The measure reflects a growing concern about how those of modest and little means are struggling to pay ever-greater shares of their income on shelter. Nearly one-third of renters in California, approximately 1.5 million households, are sending more than half of their income to their landlords, the department found. The Harris bill would benefit households earning up to $100,000 annually, and in high-cost regions up to $125,000, who pay more than 30 percent of their pre-tax income on rent, electricity, gas, and water. Very low-income residents would receive a dollar in tax credits for every dollar they spend over 30 percent, while those with higher incomes would receive less for each dollar. Meanwhile, a bill sponsored by California Sen. Steve Glazer (D-Orinda) would increase state tax credits for low-income renters in the state for the first time since 1979. The California Franchise Tax Board, which collects income taxes, estimates the credits would cost the state $60 million next year and $110 million by 2022-23 — less than one-tenth of a percent of the state's current $139 billion general fund budget.
Congress
Affordable Housing Crisis Spurs Greater Activity on Capitol Hill
Affordable Housing Finance (07/30/18) Gasson, David
David Gasson, executive director of the Housing Advisory Group, is confident that affordable housing advocates in Congress will soon propose and pass bipartisan legislation to strengthen and expand the Low-Income Housing Tax Credit (LIHTC), historic tax credit (HTC), and affordable housing in general. An important piece of legislation is the proposed Affordable Housing Credit Improvement Act, which includes the 50 percent cap increase in the 9 percent LIHTC and fixes the 4 percent credit floor. Advocates continue to work with Sen. Maria Cantwell (D-Wash.) and the bill's other sponsors on getting some or all of the bill acted on this year. Sen. Kamala Harris (D-Calif.) has introduced the Rent Relief Act, a proposal that would create a refundable tax credit for renters paying more than 30 percent of their gross income on housing annually. Congressman James Clyburn (D-S.C.) is considering legislation that would increase the 9 percent and 4 percent credit percentages and increase the state allocations to offset the reduction in housing resources that resulted from the 21 percent corporate tax rate. In addition, Reps. Darin LaHood (R-Ill.) and Earl Blumenauer (D-Ore.), along with Sens. Bill Cassidy (R-La.) and Ben Cardin (D-Md.), introduced the Historic Tax Credit Enhancement Act in the House and the Senate. The legislation calls for eliminating the basis boost adjustment required when using the HTC in conjunction with other tax credits including the LIHTC, resulting in more resources for these deals.
HUD-Related Activity
As Affordable Housing Crisis Grows, HUD Sits on the Sidelines
New York Times (07/28/18) P. A1 Thrush, Glenn
Housing and Urban Development (HUD) Secretary Ben Carson is proposing to raise minimum rents paid by the poorest households in public housing from $50 per month to $150. Over the past month, he also been working with Rep. Dennis A. Ross (R-Fla.), who is drafting legislation to allow local housing authorities to raise rents and carry out reforms to streamline the process of verifying the poverty of applicants, according to aides. HUD statistics indicate that an estimated 12 million Americans now spend more than half of their earnings on housing. Some observers say a more immediate threat to affordable housing is the massive tax bill passed by Congress last year. Novogradac & Company estimates that demand for the $9-billion-a-year Low-Income Housing Tax Credit (LIHTC) could decline as investors realize savings through the tax cuts. The firm estimates that nearly 235,000 fewer apartments could be built over the next decade as a result of the tax code overhaul. A bipartisan coalition was able to expand LIHTCs by an additional $400 million, but that is unlikely to offset the damage done by the tax measure. Meanwhile, Carson has instructed his policy staff to come up with proposals to push local governments to reduce zoning restrictions on new projects, especially low-cost manufactured housing. In addition, HUD will begin working with landlords nationwide to develop ways to make housing vouchers more attractive and more inclusive, aides say.
State and Local Activities
Texas Awards $76.6 Million in LIHTCs
Apartment Finance Today (08/02/18) Serlin, Christine
The Texas Department of Housing and Community Affairs (TDHCA) has awarded $76.6 million in Low-Income Housing Tax Credit (LIHTC) allocations to 72 affordable housing developments in the state. The 2018 credits reflect the four-year 12.5 percent increase to the per capita LIHTC allocation that was part of the omnibus spending bill earlier this year. The LIHTCs will help finance the construction of 64 new developments with 4,997 units and the rehabilitation of eight properties with 560 units. TDHCA’s at-risk set-aside, which totals more than $11.5 million, will be used for the rehab or redevelopment of aging properties that could soon lose their rental subsidies. "High-quality affordable housing serves as a vital component to the state’s economic prosperity, accommodating an ever-expanding workforce and meeting the needs of households living on fixed incomes," said Tim Irvine, executive director of TDHCA. "The tax credits allocated today give cities and communities long-term solutions for sustainable and purposeful growth, providing a positive impact on local economies by retaining existing households and attracting new residents."
Management and Compliance
Best Practices for Nonprofits Entering Affordable Housing
Affordable Housing Finance (07/27/18) Grubman, Stewart A.
Nonprofits that seek to make an impact in the affordable housing arena should consider creating partnerships with full-time investors, says Stewart A. Grubman, a partner-in-charge at PKF O’Connor Davies. This involves closely evaluating the partnership agreement as it takes shape and knowing everything it entails prior to signing. Both investors and partners have expectations surrounding how the development will be run and potential returns on their capital investment, so a nonprofit needs to honestly evaluate if it has the capabilities and mindset to oversee an essentially for-profit operation within their organization. Ongoing duties will include managing the property, handling accounting duties, and navigating tax consequences, which could necessitate hiring an outside property management company or expanding the capabilities of internal staff. A nonprofit's affordable housing development team should include an experienced CPA, attorney, and architect or general contractor with multifamily housing experience. Syndicators can help link investors and financing sources to specific development opportunities. Finally, it is important to realize that if a development does not meet the milestones required under the partnership agreement, the investor may request a repayment of development fees previously paid to the nonprofit. In extreme cases, the nonprofit could be asked to step aside, and should not expect any leniency from lenders or investors in any part of the process. It is essential to take a long-term approach with affordable housing initiatives and regard initial challenges as valuable lessons learned for future efforts.
Association News
NAA Launches Transformation of Parking Survey Report
Multiple factors are converging to disrupt everything we know about parking: its physical structure, format, design, cost and, perhaps most important, demand. Apartment community developers, owners and operators who are not yet addressing this in their business plans will find themselves missing opportunities for operational efficiencies and maximizing revenue sources. To find out more about trends in car usage, parking availability and parking rent premiums, visit the link below.
CAMT + E Micro-Credential Available
The NAA Education Institute announces the availability of an energy efficiency micro-credential for Certificate for Apartment Maintenance Technicians (CAMT) credential holders. This course is designed for apartment maintenance technicians who are preparing to take a larger role in improving and managing energy efficiency in the communities they serve. Apartment maintenance technicians who hold the CAMT credential may enroll in CAMT+E, complete the online course and successfully pass the online exam to earn the micro-credential. To enroll, visit the Web Link below.
The Principles of Energy Efficiency online course is also available as a stand-alone course and may be purchased at https://www.gowithvisto.org.
REWIND 2018 Now Available
REWIND 2018, featuring can’t miss education sessions from Apartmentalize, the rental housing industry’s premier event, is now available for purchase. REWIND 2018 consists of more than 80 sessions recorded at the Apartmentalize conference, including topics such as changing the perception of affordable housing, emergency preparedness, cybersecurity and employee retention. To purchase REWIND 2018, visit the Web Link below.
2018 Q2 Apartment Jobs Snapshot
NAAEI brings you its quarterly workforce update: The Apartment Jobs Snapshot, which highlights labor force trends in the rental housing industry. The profile examines total job posting trends by position and geography as well as average salaries, time required to fill a position and the top skills found in job postings. To read the report, click the Web Link below.
NAAEI Unveils Updated RPM Careers Website
Be sure to check out www.RPMcareers.org and note the call to action: Join Our Talent Network. To date, more than 500 people have signed up to join the Talent Network and NAAEI has begun to engage them with targeted emails that provide insights into the apartment careers in which they are interested. To learn more, click on the Web Link provided.
NAHMA Releases New 2018 Affordable 100 List
The National Affordable Housing Management Association (NAHMA) announces its new 2018 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 NAHMA News, 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® (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.
Upcoming Events
NAA Maximize
October 1-3, 2019
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NAHMA Biannual Top Issues in Affordable Housing Fall Conference
October 21-23, 2018
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LeadingAge Annual Meeting and Expo
October 28-31, 2018
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NAA Assembly of Delegates
November 14-17, 2018
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NAHMA Biannual Top Issues in Affordable Housing Spring Conference
March 3-5, 2019
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LeadingAge PEAK Leadership Summit
March 17-20, 2019
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NAHMA Biannual Top Issues in Affordable Housing Fall Conference
October 27-29, 2019
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