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Congress Tackles Home Internet Expansion
Rep. Nikema Williams (D-GA) and William Timmons (R-SC) introduced the bipartisan Home Internet Accessibility Act on Sept. 8. The act, if passed, will gather information on all federally assisted housing that cannot support broadband service and will task the Department of Housing and Urban Development (HUD) with producing an action plan, including retrofitting, to close internet service gaps across our country. Additionally, the bill would ensure that lawmakers can identify the disparities in internet access and its direct impact on underserved populations. The Home Internet Accessibility Act was referred to the House Financial Services Committee for further consideration. To view the press release, visit
https://nikemawilliams.house.gov/posts/congresswoman-nikema-williams-b
ipartisan-colleagues-introduce-bill-to-expand-internet-access-in-homes
-across-the-country. To read the bill, click on the Web Link below.
Congress
"Benefits of Tax Credit Investments Mostly Preserved in Inflation Reduction Act, But Significant Questions Remain"
Asset Management
"Settlement in a Low-Income Housing Tax Credit Year 15 Appeal"
Industry Trends
"The State of Housing Supply: ‘Not Enough Homes to Go Around’"
"FHFA Proposes New Methodology, Benchmark Levels for Fannie, Freddie Multifamily Housing Goals in 2023-2024"
Management and Compliance
"Navigating the Competitive AHP Application Process"
Tax Issues and Tax Reform
"A Model for Neighborhood Renewal"
State and Local Activities
"Florida's Orange County OKs Plan to Add More Affordable Housing"
Association News
Avoid Shipping Delays; Preorder 2023 Calendars Today
Become an Award-Winning Community
Pencil In the NAHMA October Meeting in Your Daily Planner
NAHMA Releases 2022 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Upcoming Events
Congress
Benefits of Tax Credit Investments Mostly Preserved in Inflation Reduction Act, But Significant Questions Remain
Notes from Novogradac (08/12/2022) Elphick, Brad; Novogradac, Michael
The Inflation Reduction Act of 2022 (H.R. 5376) includes a 15% corporate minimum tax on book income. Specifically, it applies to corporations with average adjusted financial statement income for a three-taxable-year period ending with the current taxable year of more than $1 billion. The act provides an adjustment to allow accelerated depreciation to reduce financial statement income, and also allows for general business credits, including the Low-Income Housing Tax Credit (LIHTC), new markets tax credit (NMTC), historic tax credit (HTC), and renewable energy tax credits (RETCs), to be taken against this minimum tax. The Inflation Reduction Act also states that "if the taxpayer is a partner in a partnership, adjusted financial statement income of the taxpayer with respect to such partnership shall be adjusted to only take into account the taxpayer’s distributive share of adjusted financial statement income [AFSI] of such partnership." This language appears to require the corporation to record the flow-through AFSI income and/or losses of the partnership to determine its own AFSI. For tax credit investments that are recorded using the proportional amortization method or other similar methods that account for income or losses "below the line," this adjustment for investments in partnerships appears to require that income or loss be recorded "above the line" for purposes of determining the corporation's AFSI. Ideally the U.S. Department of Treasury should offer guidance regarding these matters, preferably with an example related to how tax credit investments would be accounted for under the proportional amortization method.
Asset Management
Settlement in a Low-Income Housing Tax Credit Year 15 Appeal
Forbes (08/15/22) Reilly, Peter J.
Year 15 is an important part of projects funded by the Low-Income Housing Tax Credit (LIHTC) because it serves as an exit point for the investor entity. The Section 42 LIHTC program allows not-for-profit sponsors (NFPs) to have a "right of first refusal" (ROFR) to acquire the project for outstanding debt plus any exit taxes of the investor. In recent years, investor entities, sometimes second-hand holders of the interests, have failed to abide by the traditional ROFR strategy. They assert that ROFR is not the same thing is an option. Brooklyn, New York-based Riseboro Community Partnership (RCP) wanted to exercise the ROFR to take ownership of the Stockholm Manor property, comprising 35 units of LIHTC affordable housing at 420 Stockholm Street in the Bushwick. The investor limited partner, then an affiliate of AIG, said the ROFR could not be exercised until it stated it wanted to sell and a third party had made a bona-fide offer. Judge Raymond Dearie of the U.S. District for the Eastern District of New York, ruled against RCP in 2020 in the case Riseboro Comunity Partnership Inc. v. SunAmerica Housing Fund 662, prompting RCP to appeal to the Second Circuit which drew the amicus brief from New York Attorney General Letitia James. On July 1, 2022, RCP announced that it had reached a settlement with Blackstone through its affordable housing portfolio company April Housing. RCB will acquire a majority interest in the properties and Blackstone has committed to donate $1.2 million over 15 years to fund resident support services.
Industry Trends
The State of Housing Supply: ‘Not Enough Homes to Go Around’
Affordable Housing Finance (09/02/22) Salandro, Vincent
Economic uncertainty, inflation, and rising mortgage rates are clouding the picture for the U.S. housing market, which is also facing a structural deficit of both for-sale and rental homes. During the “Getting Serious About Housing Supply: The State of the U.S. Housing Market” webinar hosted by the Bipartisan Policy Center, Jeff Tucker, senior economist of economic research at Zillow, and Caitlin Sugrue Walter, vice president of research at the National Multifamily Housing Council (NMHC), shared the current conditions and challenges facing the rental sector. Walter noted the lack of housing supply is an issue facing the rental side of the housing market. Research suggests 600,000 units are currently needed at a variety of price points to deal with supply shortages and another 3.7 million units will be needed by 2035, according to Walter. Regulatory costs are among the chief contributors to higher building costs and delayed construction schedules in the multifamily market. In addition to supply concerns, the sector has seen double-digit rent growth since the second quarter of 2021, which, coupled with migration trends, has caused some markets that have traditionally been more affordable to become less so for renters. A result of the structurally underbuilt housing market is there are less household formations among individuals in the 30- to 50-year-old cohort. Tucker said there should be between 4 and 6 million more households than currently exist based on current population data. The lack of household formation transmits through individuals “doubling up” in multifamily properties or moving back home with parents.
FHFA Proposes New Methodology, Benchmark Levels for Fannie, Freddie Multifamily Housing Goals in 2023-2024
Notes from Novogradac (08/19/2022) Lawrence, Peter
In August, the Federal Housing Finance Agency (FHFA) published new methodology and benchmark levels for multifamily housing goals for Fannie Mae and Freddie Mac for 2023 and 2024. The proposed rule would set a percentage of each government-sponsored enterprises' (GSEs') annual multifamily loan acquisitions to be affordable to each of three different categories. The low-income goal would be 61%, the very-low-income subgoal would be 12%, and the low-income small multifamily subgoal would be 2%. The GSEs' low-income goal in 2022 is 415,000 homes (compared to 315,000 in 2021); 88,000 very low-income subgoal (compared to 60,000 in 2021); and 23,000 small multifamily low-income subgoal for Freddie Mac and 17,000 for Fannie Mae (compared to 10,000 for both GSEs in 2021). By limiting the multifamily goals to only 2022, FHFA could use the most recent data available when setting its 2023-2024 goals—data that should incorporate any significant changes caused by the COVID-19 pandemic. Under the proposed rule, the GSEs would continue to report on the number of multifamily homes acquired each year, with each GSE ensuring that the percentage of homes that are affordable meets or exceeds the benchmark level. The proposed percentage-based benchmark levels would require the GSEs to continue to support the affordable housing market as their mortgage acquisitions increase, rather than potentially reducing their focus on supporting affordable multifamily properties once the minimum numeric benchmark levels are achieved, according to FHFA. The FHFA opened a 60-day comment period that closes on Oct. 17.
Management and Compliance
Navigating the Competitive AHP Application Process
Housing Finance (09/09/22) Núñez, Marietta; Cicourel, Eric
Many loan and grant programs are available to streamline the construction of homes for lower-income families and homeless people. For instance the Federal Home Loan Bank of San Francisco's (FHLBSF) Affordable Housing Program (AHP) provides gap funding to projects that address low-income housing needs in Arizona, California, Nevada, and other regions where its bank members do business. FHLBSF sets aside 10% of its net income each year to fund the program, with the majority of the dollars allocated to the AHP general fund and a portion set aside for the bank's WISH down payment assistance program. The AHP general fund grants can be as large as $1 million, and are facilitated through member institutions that partner with nonprofit organizations and affordable housing developers. In the 2022 program cycle, 39 affordable housing developments received $31.9 million in grants to preserve or create 2,712 housing units. Prospective projects must be feasible and demonstrate a need for a subsidy that will either be used or will help secure other financing within 12 months of grant approval. A rental housing project must reserve 20% of its units for households that are at or below 50% of the Department of Housing and Urban Development area median income (AMI), while owner-occupied housing must serve households that are at or below 80% of the AMI. If the project fails to achieve what is presented in the application, the organization may be liable to pay money back to the bank. Projects generally score higher if they are shovel-ready, rely on donated property, or address the needs of homeless people. Projects that indicate they may lead to greater community stability have a greater likelihood to succeed.
Tax Issues and Tax Reform
A Model for Neighborhood Renewal
Washington Post (08/18/22) Morrison, Jim
A pair of St. Louis-based lawyers, Donna and Howard Smith, created an innovative model 14 ago using a federal tax credits program to finance for-sale affordable housing. They collaborated with the city’s Habitat for Humanity nonprofit to initially build more than 67 houses and over the next decade, using $18.3 million in tax credits investments to build a total of 103 affordable homes across the city. Through their corporation SmithNMTC, the Smiths guided nonprofit community development entities nationwide to use nearly $500 million in New Markets Tax Credits to build more than 4,200 for-sale affordable homes in about 30 other cities. The majority of federal support for affordable housing and infrastructure passes through the Low-Income Housing Tax Credit, which contributed $10.4 billion in 2021. An Urban Institute report estimated that buying a home is more affordable than renting in two-thirds of American counties. “This is a direct way of building wealth for families," says William Carson, vice president at U.S. Bancorp Community Development Corp. "That is a way of getting people out of intergenerational poverty." The model developed by the Smiths means that the Housing Partnership Network, a nonprofit collaborative of more than 100 community and development organizations, can take an allocation of tax credits and spread them among a number of local partners nationwide, thereby reducing legal and administrative costs.
State and Local Activities
Florida's Orange County OKs Plan to Add More Affordable Housing
Orlando Business Journal (09/13/22) Lynch, Ryan
The Orange County commission on Sept. 13 voted for a new three-year plan to create and preserve affordable housing, unanimously approving the county's Affordable Housing Trust Fund's plan to allocated $50.8 million for fiscal-years 2023-2025. The trust fund's goal is to create or preserve 2,554 affordable housing units over that period, up from the 1,310 expected between fiscal years 2020 and 2022, the first three years of the fund. The county's Housing for All Task Force has a goal to create or preserve about 30,000 units of both affordable (about 11,000 units) and attainable/workforce housing (about 19,000 units). The county currently has hit 52% of its affordable housing goal and is behind on its attainable/workforce housing goal. "With all of that, I see great promise in what we are doing for the future," Orange County Mayor Jerry Demings said. "There's a lot of successes, but a lot more that needs to be done."
Association News
Avoid Shipping Delays; Preorder 2023 Calendars Today
Preorder your 2023 NAHMA Drug-Free Kids Calendar and be one of the first to own this one-of-a-kind collection of talented residents’ artwork. Avoid shipping delays by downloading the order form and sending it in today. The calendars will begin shipping in late September. The calendar cost is $5.50 each, which is a Department of Housing and Urban Development and U.S. Department of Agriculture allowable project expense.
Purchase calendars before Nov. 11, and you are automatically entered in the lucky draw for prizes, including NAHMA meeting registrations, books, and gift cards. There is a small shipping and handling fee for each calendar.
The calendars feature outstanding original artwork by children, seniors, and adults with special needs living in affordable multifamily housing. The underlying message for the annual calendar contest is always a drug-free theme. Still, the association wanted to open the door for more avenues of expression, so a subtheme was incorporated into the poster contest. This year’s subtheme is Healthy Is Happy: Nutrition and Fitness Propel Us Forward.
For more information about the 2023 NAHMA Drug-Free Kids Calendar, click on the Web Link below.
Become an Award-Winning Community
Think you have an award-winning community and want to enter the NAHMA 2022 Communities of Quality (COQ) Awards competition? The submission deadline for entries to the COQ Awards program is Nov. 3. The Communities of Quality (COQ) Awards recognize outstanding property management companies providing the highest quality of safe, affordable multifamily rental housing in communities across the country. Download the COQ Awards application brochure today.
A property must first apply for and achieve national recognition as a NAHMA Community of Quality with a minimum score of 325 points on its National Recognition application to enter the awards competition. Not a COQ nationally recognized property? That’s OK. AHMAs accept applications for the national program year-round.
For more information about the awards program, click on the Web Link.
Pencil In the NAHMA October Meeting in Your Daily Planner
Registration for the National Affordable Housing Management Association (NAHMA) Biannual Top Issues in Affordable Housing fall conference is open. NAHMA members and affordable housing industry partners will meet in person in the District of Columbia from Wednesday, Oct. 26-Friday, Oct. 28. Register for the conference and book your room today.
With a focus on the top issues facing affordable housing, the meeting, Oct. 26-28, takes place at the Fairmont Washington, 2401 M St. NW, Washington, DC. The NAHMA room block single/double rate is $369. The discounted rooms are booked on a first-come, first-served basis and expire on or before Oct. 3, depending on availability. Reserve your room online today, https://book.passkey.com/event/49909285/owner/56417/home.
For more information, click on the provided Web Link.
NAHMA Releases 2022 Affordable 100 List
The National Affordable Housing Management Association (NAHMA) announces its 2022 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 issue of NAHMA News. 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 two 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) and the National Apartment Association Education Institute (NAAEI).
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 becoming a SHCM Company, click on the Web Link below.
Upcoming Events
NAHMA Biannual Top Issues in Affordable Housing Fall Conference
October 26-28
https://www.nahma.org/meetings/
NAA Assembly of Delegates
November 15-17
https://www.naahq.org/meetings-events/upcoming-meetings
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