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New REAC Enforcement and ‘Demand for Corrective Action’ Notice
The Department of Housing and Urban Development (HUD) released Notice H2018-08, which demonstrations the agency’s escalating attention to property physical conditions—based on scoring, as well as other indicators of unsatisfactory physical conditions that do not require a technical REAC fail. To learn more, click on the Web Link below.
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Industry Trends
"Affordable Housing Developers Face New Challenges"
Tax Issues and Tax Reform
"Novogradac Survey: Tax Reform’s Impact Varies, Depending on Perspective"
State and Local Activities
"California Lawmakers Launch Wave of Proposals to Fund Low-Income Housing"
"Portland Weighs New Strategy for 2016 Housing Bond"
Management and Compliance
"How to Recruit and Retain Top Maintenance Staff"
Green Building
"Green Building Poised for Growth by 2021"
Rural Development Related Activity
"Rural Housing Service Will Collect Data on USDA Low-Income Housing Program"
Association News
LeadingAge Conferences in 2019
New Report Explores LIHTC Preservation Challenges Beyond Year 30
Updated Fact Sheets Show the Housing Credit’s Impact in Each State
NAHMA Releases 2018 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Industry Trends
Affordable Housing Developers Face New Challenges
National Real Estate Investor (11/27/18) Anderson, Bendix
Many plans to develop affordable housing rely on tax-exempt financing, combined with 4 percent Low-Income Housing Tax Credits (LIHTCs). Because 4 percent LIHTCs provide less equity than 9 percent LIHTC, these development projects require a substantial loan to pay for the cost of construction. Rising interest rates have cut deeply into how large a loan these projects can support. Borrowers who take out permanent loans have been largely spared, even though the yield on the 10-year Treasury bonds, the benchmark for many permanent loans, rose by more than 100 basis points in 2018. Lenders have been cutting into their own profits to keep originating loans without substantially increasing the interest rates they offer. The prices investors pay for LIHTCs fell by more than a dozen cents for each dollar of tax credit, reducing the total amount of affordable housing that the program is likely to produce by about 235,000 over 10 years, an analysis by Novogradac and Co. reveals. To curb the damage, lawmakers passed a 12.5 percent increase in the amount of 9 percent LIHTC allocations over the next four years and an income averaging option for LIHTC properties. These changes should allow the LIHTC program to produce roughly 28,4000 additional homes over the next decade. At the state level, California and Oregon have passed new bond programs, while Colorado has created its own state housing tax credit program. Several cities have created new housing trust funds.
Tax Issues and Tax Reform
Novogradac Survey: Tax Reform’s Impact Varies, Depending on Perspective
Novogradac & Company LLP (12/04/2018) Stanhope, Brad
An informal online survey by Novogradac found that 48.8 percent of respondents said tax reform had a moderately negative impact on their business in 2018. Out of five optional answers, tax reform having a "moderately positive" impact was the next most popular answer at 18.6 percent. That tax reform "greatly improved" and "greatly hurt" the business tied at 11.6 percent of respondents, while only 2 percent of respondents said tax reform did not affect their business. A key provision was the drop in the corporate tax rate from 35 percent to 21 percent, resulting in reduced appetite for many tax credits. Kim Datwyler, executive director at Neighborhood Nonprofit Housing, a developer and owner of affordable housing properties in Utah, attributes a shortage of affordable housing to a combination of tax reform, tariffs, and labor shortages. During 2018, approved Low-Income Housing Tax Credit (LIHTC) developers began to pass on the credits, prompting Utah's housing agency to step in and provide state credits to fill the gap. However, that did not completely resolve the situation. Mike Hynes, CEO of Lexington, Ky.-based Winterwood Inc., observes, "The market pretty much stabilized, but what changed is the site selection and the technical details. The sites we looked at aren’t able to [pencil out] anymore–they need a basis boost or help. We might have been able to overcome the gaps at the full previous tax-reform rate, but it’s pretty much put a strain on local resources."
State and Local Activities
California Lawmakers Launch Wave of Proposals to Fund Low-Income Housing
Los Angeles Times (12/04/18) Dillon, Liam
State lawmakers in California have unveiled proposals that could provide an infusion of public subsidies for low-income housing developments in the state. Several new bills call for funding low-income housing through a revival of an urban redevelopment program and by increasing tax credits to fund new projects. Lawmakers are hopeful that the legislation will pass because California Gov.-elect Gavin Newsom campaigned on allocating more money to housing. They also point out that the state budget’s bottom line remains strong. "Our housing crisis is dire and persistent, and our state must be just as aggressive and persistent in order to solve it," says Assemblyman David Chiu (D-San Francisco). "With a new governor and an extraordinary budget surplus, now is the time to make significant, ongoing investments in affordable housing." Chiu's Assembly Bill 10 calls for raising the state's allocation of low-income housing tax credits by $500 million, reflecting a fivefold increase over the current limit and the amount proposed by Newsom during his gubernatorial campaign. The system allows housing developers to apply to the state for credits that investors buy to lower their own tax payments. Gov. Jerry Brown vetoed an attempt to boost the tax credit in 2015, citing costs to the state budget.
Portland Weighs New Strategy for 2016 Housing Bond
Oregonian (12/04/18) Njus, Elliot
The Portland Housing Bureau is preparing to overhaul its 2016 affordable housing bond after voters in Oregon passed Measure 102 in November, giving cities more flexibility to spend bond dollars. The amendment allows local governments to put bond money toward privately owned projects. The city said it is moving closer to signing a contract with an independent auditor to monitor the housing bond, a condition of the measure passed by voters. Portland's elected auditor is also preparing a report to be released next year. Furthermore, the legislation allows proceeds from Portland’s bond to be combined with revenue from selling federal Low-Income Housing Tax Credits or to support projects belonging to housing nonprofits. The housing bureau still must complete its pledge to create 1,300 homes, half of them with two or more bedrooms for families and 600 for households making less than 60 percent of the area median income. Portland Housing Bureau is still seeking legal opinions from its bond counsel and the city’s Office of Management & Finance about what the city is allowed under the new legal framework. The amendment could impact a bond-funded housing development at Southeast 30th Avenue and Powell Boulevard, a site the city purchased in 2017 using $3.7 million in lodging taxes. The housing bureau is now considering offering the project to an affordable housing developer to complete, says Karl Dinkelspiel, the bureau’s affordable housing programs manager.
Management and Compliance
How to Recruit and Retain Top Maintenance Staff
Multifamily Executive (11/29/18) Hogrebe, Tony
The number of qualified, high-performing maintenance technicians trails the amount needed in today's apartment sector. That makes finding and retaining such staffers more important than ever in the current multifamily housing landscape. Amid a thriving economy, these professionals have a definite advantage given the multitude of opportunities available to them. Meanwhile, with the industry tasked with developing a projected 4.6 million new rental apartments by 2030, according to the National Multifamily Housing Council, apartment operators will have to exhibit increased focus, develop an innovative culture, and get creative in an effort to attract and retain such top talent. To identify the best talent, keep up with the typical marketing channels, advertising sources, and recruiting groups. Also keep in mind that referrals often generate the most-qualified workers, especially for maintenance positions that demand a specific skill set. Start the retention process early, too. Workers should feel like they are engaged with the company's mission, are well informed, and are being given all the tools necessary to perform their jobs at a high level to make their residents happy.
Green Building
Green Building Poised for Growth by 2021
Air Conditioning, Heating & Refrigeration News (11/26/18)
Significant increases in green building activity are expected in 19 countries over the next three years, indicates the Dodge Data & Analytics World Green Building Trends 2018 SmartMarket Report. Nearly half of survey respondents expect that the majority of their projects in the next three years will be green buildings, according to the report, to which the U.S. Green Building Council (USGBC) contributed. Two-thirds of survey participants report that using a rating system like LEED allows them to create a better performing building, and more than 50 percent of respondents believe that rating systems provide third party verification that ensures buildings are operating in a sustainable manner. The study also found that improving occupant health ranked first among social drivers for green building, followed by encouraging sustainable business practices and improved worker productivity. Nearly two-thirds of respondents expect to see building operating costs decrease by at least 6 percent within the next 12 months, while more than 80 percent expect this same rate of return in the next five years, the USGBC says. Moreover, the percentage of owners reporting that new green buildings have an asset value more than 10 percent greater than traditional buildings has nearly doubled since 2012.
Rural Development Related Activity
Rural Housing Service Will Collect Data on USDA Low-Income Housing Program
Politico Pro (12/07/18) Crampton, Liz
The U.S. Department of Agriculture's Rural Housing Service plans to study its data on its housing properties to better identify trouble spots and make plans to address those issues. RHS, the arm of USDA that supports low-income housing in rural areas, will begin to collect information about its portfolio, such as where homes receiving assistance are located, vacancy rates and measurement of market supply and demand, says Joel Baxley, RHS administrator. The "comprehensive data dive" is expected to start at the beginning of 2019 and be completed by August, he says. "Once we can get a handle on that type of information, then we can start dividing this portfolio into risk pools," he said. As part of the process, it will identify which properties need to remain in a multi-family housing program and which ones could be transferred to the authority of other organizations, such as nonprofits groups. The effort comes after a Government Accountability Office report in May found that USDA is not equipped to preserve low-income housing, in large part because the department lacks the tools and information needed. Joyce Allen, deputy administrator for multi-family housing, says RHS supports GAO's recommendations and will work to provide more "transparency" and "clarity" regarding the department's work. Some housing advocates warn that rural regions are facing a looming housing crisis as developers given USDA loans are nearing paying them off and the properties could exit the multi-family program, known as Section 515, as mortgages mature.
Association News
LeadingAge Conferences in 2019
Join 8,000-plus dedicated aging services professionals, Oct. 27-30, in San Diego, Calif., to exchange ideas, explore new strategies and master the latest best practices in aging services for the LeadingAge annual meeting. Hone your skills as leaders, network with a more intimate gathering of approximately 2,000 other like-minded professionals, and voice your passion for older adults on Capitol Hill during our newly redesigned Leadership Summit, March 17-20, in Washington, D.C. For more information, click the Web Link below.
New Report Explores LIHTC Preservation Challenges Beyond Year 30
The National Low Income Housing Coalition and the Public Assisted Housing Research Corporation released a report, “Balancing Priorities: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30” that highlights the number of Low-Income Housing Tax Credit (LIHTC) properties that are nearing the end of the mandatory compliance period and the risk of them exiting affordability restrictions. To read the report, click on the Web Link provided below.
Updated Fact Sheets Show the Housing Credit’s Impact in Each State
The ACTION Campaign’s state fact sheets have been updated with the most recent data to show the housing credit’s impact and the affordable housing needs that remain in every state. New to the state fact sheets this year is data demonstrating the impact that a 50 percent increase in the housing credit, as proposed in the Cantwell-Hatch Affordable Housing Credit Improvement Act, would have in each state. To find out more, visit the link below.
NAHMA Releases 2018 Affordable 100 List
The National Affordable Housing Management Association (NAHMA) announces its 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 CampusConnex
February 12-13, 2019
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NAHMA Biannual Top Issues in Affordable Housing Spring Conference
March 3-5, 2019
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NAA Advocate
March 5-6, 2019
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LeadingAge PEAK Leadership Summit
March 17-20, 2019
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NAA Apartmentalize
June 26-28, 2019
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NAHMA Biannual Top Issues in Affordable Housing Fall Conference
October 27-29, 2019
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News summaries © copyright 2018 SmithBucklin
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