Sponsored By:
Windsor Consulting


Volunteer DECA Competitive Event Judges Needed
in Louisville April 19, 26 and 27

DECA, the high school and college student association with 200,000 members who are interested in pursuing careers in marketing, management and entrepreneurship, is a partner of the NAA Education Institute (NAAEI). NAAEI and DECA have been working to create awareness of careers in the apartment industry among high school and college students. DECA will be holding its annual conference in Louisville with over 16,500 students registered to attend. NAAEI will be presenting a panel on Careers in Apartment Management on April 18 as part of DECA's Business, Management and Administration Seminar for college students.

DECA and its college division, Delta Epsilon Chi, are actively searching for 1,000 industry professionals to serve as competitive event judges at the International Career Development Conferences. If your company manages apartment communities within driving distance of Louisville, please make your employees aware of the need for professionals with experience in the fields of accounting, finance, marketing, management, retail, hospitality, tourism, and entrepreneurship. Apartment industry professional are uniquely qualified to judge a DECA competitive event. To register as a competitive event judge, complete the appropriate registration form(s) through the links listed below.

By volunteering your time and expertise, you will be helping over 16,500 high school and college students who will become the next generation of business leaders. All volunteers will receive breakfast and/or lunch, free parking at the conference site, and a certificate of appreciation to help document community service hours. Many frequently-asked-questions can be answered at

• Delta Epsilon Chi International Career Development Conference (College Division) - Galt House Hotel
o 150 volunteers needed on Monday, April 19, 2010. To register, complete the form at

• DECA International Career Development Conference (High School Division) - Kentucky Exposition Center
o 1,000 volunteers are needed on Monday, April 26, 2010. To register, complete the form
o 100 volunteers are needed on Tuesday, April 27, 2010. To register, complete the form at

If you decide to serve as a judge, please contact Maureen Lambe, Executive Vice President of the NAA Education Institute, at or 703/797-0601. Maureen is tracking the number of industry volunteers who agree to serve as judges. Maureen is also happy to answer any questions you may have about DECA. Any volunteers who hold NAAEI designations will receive Continuing Education Credit for their DECA volunteer effort.

To access videos, brochures and other information about Careers in the Apartment Industry, click on the link below.


Association News
NAAEI National Training Update
NAHMA and NAA to Co-Locate 2010 National Conferences
NAAEI Offers Webinars on Timely Apartment Management Topics
NAHMA Educational Foundation Scholarship Applications Go Digital
NAHMA Offers Tax Credit Housing Management Publication

Industry News
"Don't Be Afraid to Protest Property Tax Assessments"
"LIHTC Syndicators Hope for Recovery"
"Beware of TCAP, Exchange Pitfalls"
"Senate Approves GO Zone, Tax Credit Extension"
"Real Estate, Finance Groups Say Securitization at Risk in Overhaul"
"NMTCs and HUD Financing Deals Becoming More Common"
"Developers Hold Up Colorado Bill on Affordable Housing"
"Protecting the Industry's Access to Capital Is Top Priority for Apartment Industry"
"In Early Test for Levin, Ways and Means Releases Incentives Legislation"
"Donovan: HUD's 2011 Budget Reasserts Commitment to Rental Housing"
"8 Reasons We Need Renters"
"Apartment Building Energy Benchmarking Efforts Slowly Gain Steam"
"Building Block for Affordable Housing Growing Again"
"All Eyes Ahead"
"The Rental Breakdown"
"Opinion: The Next Housing Crisis"
"Investment Opportunity?"

Association News

NAAEI National Training Update

Certificate for Apartment Maintenance Technicians (CAMT) Training:

Since March 2009, NAAEI National Maintenance and Safety Instructor, Pablo Paz, CAMT, an apartment maintenance and training professional with over 20 years experience, has taught CAMT courses:
• in 13 cities;
• offering a total of 110 classes;
• to 266 students who enrolled in one or more CAMT classes;
• with 69 students eligible to receive their CAMT certificate; and
• with 30 people (43%) earning their CAMT certificate to date.

To learn more about CAMT training, click on the link below.

Pablo Paz will be facilitating CAMT Training in several cities. View a complete list of dates, locations and information on how to register via the link below. NAAEI offers group discounts if you would like to register a number of employees to attend CAMT programs in one or more cities. Contact: Kim McCrossen at 703/518-6141, ext. 121 or for group pricing.

Certified Apartment Manager (CAM) and National Apartment Leasing Professional (NALP) Training:

Doug Chasick, CAPS, CPM, SLE will be facilitating CAM and NALP Training in the areas listed below. NAAEI offers group discounts if you would like to register a number of employees to attend CAM or NALP programs in one or more cities. Contact Kim McCrossen (contact info above).
• CAM - Roanoke Valley Apartment Association; Sept. 20-24, 2010, Roanoke, VA; download the flyer and registration form via the link below, or contact Kim McCrossen (contact info above).
• NALP - Greater Nashville Apartment Association; April 13-15, 2010, Nashville, TN; download the flyer and registration via the link below, or contact Kim McCrossen (contact info above).

NAHMA and NAA to Co-Locate 2010 National Conferences

For the first time, NAHMA will hold its annual summer meeting in conjunction with the 2010 National Apartment Association (NAA) Education Conference & Exposition, which takes place June 22-26, 2010 in New Orleans.

The 2010 NAA Education Conference & Exposition is the largest event in the multifamily housing industry and includes world-class educators and a star-studded lineup of speakers.

Through this partnership, both conferences will address the critical needs of affordable housing communities and the apartment industry as a whole. Discounts will be available to attendees who register for both conferences.

At the NAHMA meeting, scheduled for June 23, discussions will focus on public policy related to federal legislative and regulatory initiatives that impact all of the affordable housing programs, including HUD programs (project-based Section 8, Section 8 tenant vouchers, Section 202 senior housing, and Section 811 special needs housing); the Low Income Housing Tax Credit program; and Rural Housing Service programs (Sections 515, 538 and the revitalization program), among others.

Together, the NAHMA summer meeting and the NAA Conference & Exposition are essential to smart asset management for owners and managers of LIHTC, Section 8, 202 or 236 properties. Conference sessions will include the latest information on important affordable housing topics such as REAC Inspections, Evictions, Fair Housing Complaints, Multi-Layered Financing, and Preservation Tools, among others.

Among the general session speakers at the 2010 NAA Conference is the 43rd U.S. President George W. Bush, as well as the editor of Fast Company magazine, Bill Taylor, who will speak about management trends, and Bruce Kimbrell of the Disney Institute, who will speak about customer service. The conference also features industry-related tracks for all types of apartment professionals from executives to onsite managers to leasing agents to maintenance technicians.

For more details, click on the link below and scroll to the summer meeting information.
NAAEI Offers Webinars on Timely Apartment Management Topics

In January, NAAEI began offering webinars to address current apartment management issues. Consider having your entire onsite staff “Lunch and Learn”. Group discounts are available to companies that would like to register a number of apartment communities. Contact Shana Treger, Director of Instructional Design, at 703/518-6141, ext.115 or For additional details, click on the link below.

All webinars include:
• Copies of PowerPoint presentations
• Handouts, job aids and other useful resources
• The ability to ask experts questions and receive answers

Upcoming Webinars:
• Transition to R410-A; April 5, 2010
• SHCM Webinar: Key Housing Credit Compliance Issues; April 6, 2010
• Fair Housing Ain't Fair—It's EQUAL; April 8 and 22, 2010
• Bed Bug-inar; April 29, 2010

Learn about all of NAAEI's programs that are offered online via the link below.
NAHMA Educational Foundation Scholarship Applications Go Digital

Having awarded more than $100,000 to more than 100 recipients in its first three years, the NAHMA Educational Foundation is looking forward to another year of growth for its scholarship program. The number of awards has increased steadily over the first three years. This year, the application requirements and format remain the same; however, submissions must be made online and paper copies will no longer be accepted.

"This will streamline the process at both the applicant and evaluator level,” said Wayne Fox, chairman of the Foundation. “Most importantly, this move will result in operating cost savings for the Foundation that will translate directly into additional Foundation funds being available to provide more scholarship money annually.”

"In 2009, scholarships were awarded to residents living in properties affiliated with 10 different AHMAs,” Fox said. “As a result, another of the Foundation's goals for 2010 will be to expand our coverage to additional AHMAs that have not previously received scholarship awards.”

Deadline for submission of completed applications is 10 p.m. Eastern Standard Time on May 18, 2010.

For additional information, click on the link below.
NAHMA Offers Tax Credit Housing Management Publication

The comprehensive "A Practical Guide to Tax Credit Housing Management" is available from NAHMA. The 74-page spiral-bound book is an informative yet easy-to-read primer on tax credit housing management.

The user-friendly guide will help you understand key concepts in the Low Income Housing Tax Credit (LIHTC) program, including Fractions and Credits, Eligible Basis, Qualified Basis, Minimum Set-Aside, Rules of Calculation of Income, Student Households, Amenities and Services, Non-Transient Occupancy, and more.

In addition, the book is designed as a referencew guide for the Specialist in Housing Credit Management® (SHCM®) certification. The SHCM program is unprecedented as the only national certification program supported by three national trade associations and their members. Joining NAHMA in the strategic alliance are the National Apartment Association Education Institute (NAAEI) and the American Association of Homes and Services for the Aging (AAHSA).

“As experienced affordable housing management professionals know, the tax credit program is the primary production tool for creating new affordable housing properties across every state in the country, and it is also the most important tool for rehabilitating and preserving the nation's existing stock of aging affordable housing,” said NAHMA President Daniel Murray, NAHP-e. “To maximize their careers, management professionals in the affordable housing industry must be able to demonstrate their experience and expertise in mastering the complex requirements of the tax credit program.” The publication can be ordered at NAHMA’s webstore via the link below.

Industry News

Don't Be Afraid to Protest Property Tax Assessments
Apartment Finance Today (03/10) Davila, Gilbert D.

It is important for low-income housing tax credit (LIHTC) property owners to constantly keep track of their property tax assessment. Owners need to be familiar with valuation laws and how market value is defined in their taxing jurisdiction. With regard to LIHTC properties, the most common mistake an assessor will make is to treat an asset like a conventional multifamily complex. Meanwhile, the Land Use Restriction Agreement (LURA) and LIHTC regulations restrict a property's income potential, and rule violations are severely penalized. Rental restrictions limit rent per unit at lower rates than for traditional properties of comparable size. Overhead is also higher for LIHTC owners because they need to comply with particular reporting, record-keeping, and documentation rules. The LURA determines to whom the property can be sold, and transferability restrictions may continue for 20 years even though the income tax benefits associated with the tax credits expire after 10 years. Owners should examine their property's valuation compared to other LIHTC properties on a square-footage basis. If an owner's property is assessed significantly higher, the owner can argue for a value reduction based on equality and uniformity. LIHTC owners should always be able to provide the assessor with a copy of the LURA for their property. If needed, owners can argue that the unique characteristics of the LIHTC project necessitate a different assessment approach.

LIHTC Syndicators Hope for Recovery
Affordable Housing Finance (03/10) Kimura, Donna

Low-income housing tax credit (LIHTC) syndicators have a brighter outlook this year than last, with about 76 percent surveyed by Affordable Housing Finance harboring greater optimism about the 9 percent tax credit market, while about a quarter expect the market to remain the same or worsen. "Higher yields have led to higher levels of interest from both new and returning investors," says Boston Capital chief operating officer Jeffrey Goldstein. The participating firms closed or raised over $3.2 billion in LIHTC equity and obtained 360 affordable housing developments last year. "The LIHTC market will exceed $4 billion, and more regional investors will participate as balance sheets improve," predicts Homestead Capital President Tobias Washington. "The 9 percent credit will continue to be the product of choice in our industry." On the other hand, syndicators such as Midwest Housing Equity Group CEO Jim Rieker foresee problems in raising capital in certain markets and that a further reduction in tax credit pricing could spell trouble for the program. There is much agreement that the 4 percent LIHTC market will continue struggling in 2010, with investor demand staying low for tax-exempt bond deals. Most syndicators anticipate the continued stability of tax credit prices this year, with some possible price hikes in the hot Community Reinvestment Act markets. Many syndicators' biggest worries revolve around the Tax Credit Assistance Program and the exchange program, and they will be scrutinizing the effectiveness of these programs.

Beware of TCAP, Exchange Pitfalls
Affordable Housing Finance (03/10) Hahn, Jonette; Kimm, Terry

The American Recovery and Reinvestment Act-authorized Tax Credit Assistance Program (TCAP) and credit exchange gave the low-income housing tax credit industry a much-needed shot in the arm, but Reznick Group's Jonette Hahn and Terry Kimm write that there are certain pitfalls that people should be aware of. "Most developers are accustomed to conforming with Fair Housing and nondiscrimination policies, as they have typically been required by the [housing finance agencies]," they note. "But Davis-Bacon wage rates, monitoring and reporting, and the HUD environmental approval process were not usually required for tax credit transactions that did not involve HUD programs. Davis-Bacon wage rates could increase construction costs significantly and must be included in the development budget, and the environmental approval process must be included in the development schedule. TCAP may be awarded as a grant, and basis will not be reduced. However, the grant will be taxable to the recipient. Thus, TCAP is usually awarded to a project in the form of a soft loan." Hahn and Kimm warn that because TCAP will likely be a loan to the project, there could be accumulated, unpaid interest as well as the principal due at maturity. Despite such drawbacks, the authors agree that the advantages of TCAP and the credit exchange are well worth the effort. "The pitfalls are manageable as long as they are addressed in the financial structuring before closing the ownership entities and the financing," Hahn and Kimm conclude.

Senate Approves GO Zone, Tax Credit Extension
Sun Herald (Mississippi) (03/06/10)

The U.S. Senate has approved two amendments to expand and extend Gulf Opportunity Zone tax benefits. The Senate accepted the two amendments by unanimous consent as part of the Tax Extenders Act. The first amendment, authored by Sen. Roger Wicker (R-Miss.) and co-sponsored by Sen. Thad Cochran (R-Miss.), would give Mississippi, Louisiana, and Alabama until Jan. 1, 2012, to allocate tax-exempt GO Zone bonds previously issued by Congress following hurricanes Katrina and Rita. The GO Zone bonds have been used to finance the acquisition, construction, and renovation of commercial real property in Mississippi. Traditional tax-exempt bonds can be issued only by the government and nonprofit corporations; but the GO Zone bond program, administered by the Mississippi Development Authority, allows the preferential financing to be extended to businesses. Under current law, the authority to issue these bonds expires on Jan. 1, 2011. The second amendment, also co-sponsored by Wicker and Cochran, would extend the placed-in-service date by two years for the GO Zone low-income housing tax credits.

Real Estate, Finance Groups Say Securitization at Risk in Overhaul
The Hill (03/25/10) Brush, Silla

The National Multi Housing Council and more than 20 other real estate and bank lobbying associations recently sent a letter to members of the U.S. Senate Banking Committee expressing concern about the impact of newly proposed financial regulations on lending, particularly in terms of securities backed by residential and commercial real estate loans. "This uncertainty today serves as one of the biggest impediments to new private lending and investing. Put simply, given the totality and far reaching implications of regulatory and accounting changes, there are serious concerns about the future viability of the securitization markets," said the letter. Under the proposed legislation, lenders would be required to hold on to 5 percent of the value of the loans they make; and regulations are changing to require new and higher capital limits. "These changes are now being implemented during an extraordinarily challenging time," said the groups.

NMTCs and HUD Financing Deals Becoming More Common (03/25/10) Morphy, Erika

An increasing number of Housing and Urban Development (HUD)-insured multifamily loans are being structured to generate New Market Tax Credits (NMTCs), experts say. "HUD has gotten more innovative or flexible in trying to make sure that its financing programs work better with a variety of finance programs, including low-income housing tax credits, historic rehabilitation credits, and NMTCs," says La Fonte Nesbitt, an attorney at Holland & Knight. At the same time, developers are paying more attention to NMTCs to raise equity for apartment projects that include a commercial component, says Holland & Knight attorney Douglas Banghart. However, these credits were never designed to steer the production of apartments, making it somewhat challenging -- but not impossible -- to combine NMTCs with other forms of finance in multifamily deals, says Banghart. The attorneys say that in late 2008, HUD issued the so-called Garvin memo that outlined a roadmap for HUD’s participation in deals that feature a master lease structure. That memo was further updated by the agency in 2009. Since then, more deals have come to market where HUD financing has been combined with NMTCs -- including a $108 million deal involving Washington, D.C.'s Rhode Island Ave./Brentwood Metro station, which is being financed through a blend of NMTCs, a HUD-insured loan, and a $7.2 million PILOT note.

Developers Hold Up Colorado Bill on Affordable Housing
Denver Post (CO) (03/28/10) Hoover, Tim

In Colorado, a bill that aims to preserve affordable housing -- particularly in pricey ski-resort towns -- has drawn criticism from developers and apartment owners alike who equate it to New York-style rent control. House Bill 1017 has already passed the House and one Senate committee, but its progress to the Senate floor has slowed as supporters seek to ease opponents' concerns. Proponents, which include cities, counties, local affordable housing authorities and advocates for the poor, say the legislation is needed because of a 2000 Colorado Supreme Court ruling that a Telluride ordinance requiring developers to build affordable housing violated Colorado's law banning rent controls. Proponents worry the ruling is being used to unravel existing voluntary agreements between local governments and developers. "You can have speculators coming in and snatching up properties where you have an agreement in place and going to court to get them thrown out," says Kevin Bommer, a lobbyist for the Colorado Municipal League. "If you've got two willing parties to something, that ought to be protected by law," he says. The bill clarifies that agreements between a government entity and a developer setting aside land for affordable housing are legal. It also calls for such agreements to remain in place if the property is sold. Apartment owners and developers claim that the bill does not make clear the agreements would be strictly "voluntary." Consequently, they assert, the bill enables cities and counties to strong-arm developers into including affordable units as a means of obtaining permission to build the property. Nancy Burke, lobbyist for the Colorado Apartment Association, argues, "The municipalities or local governments have the heavier hammer when it comes to negotiations."

Protecting the Industry's Access to Capital Is Top Priority for Apartment Industry
RealEstateRama (03/16/2010)

The National Multi Housing Council (NMHC) and the National Apartment Association recently issued their 2010 public policy priorities as part of their Joint Legislative Program. The organizations say their top legislative priority this year is ensuring the industry has access to capital as financial regulatory reform and the future of Fannie Mae and Freddie Mac are considered by Congress. According to Jim Arbury, senior vice president of government affairs at NMHC, "Fannie Mae and Freddie Mac have been a critical liquidity backstop for the apartment sector during the economic crisis and currently account for approximately 90 percent of the mortgage capital provided to apartment borrowers. Lawmakers need to understand the unique needs of the multifamily sector to ensure that they do not inadvertently restrict the supply of multifamily capital as they reform the single-family financing process. Apartments are critical to meeting the nation's affordable housing needs, and it is appropriate for the government to provide an effective financing system to ensure the nation's housing needs are met." Other priorities include pushing for a balanced housing policy that acknowledges the importance of rental housing; opposing "card check" legislation and an increase in carried interest taxes; and calling for more incentives and funding for green building and energy efficiency programs.

In Early Test for Levin, Ways and Means Releases Incentives Legislation
CQ Today (03/15/10) Rubin, Richard

Rep. Sander Levin (D-Mich.) on March 15 released his first draft bill as House Ways and Means Committee chairman. The bill included provisions that would allow some owners of buildings financed with tax-exempt bonds to exchange low-income-housing tax credits for direct payments from the federal government, and authorize an additional allocation and add another year to the Recovery Zone bond program for economically distressed areas.

Donovan: HUD's 2011 Budget Reasserts Commitment to Rental Housing
Affordable Housing Finance (03/10) Kimura, Donna

Department of Housing and Urban Development (HUD) Secretary Shaun Donovan says that his department's proposed $48.5 billion 2011 budget "demonstrates that there's a different kind of partner at the federal level that's committed to rental housing as a fundamental strategy in the wake of a crisis that ought to make us all step back and reassert that we need a balanced housing policy in this country. We need to be focused not just on homeownership but also on rental housing." The proposal introduces the Transforming Rental Assistance effort, with a goal of streamlining and reforming HUD's rental assistance programs. The program supplies $350 million to preserve roughly 300,000 units of public and assisted housing, boost administrative efficiency at all levels of program operations, and improve the choice of housing for residents. In addition, the proposal asks for almost $2.1 billion for Homeless Assistance Grants, a $200 million gain from the previous year. Donovan notes that the Sec. 202 program for seniors housing and the Sec. 811 program for housing for the disabled face substantial cuts under the plan. "[Secs.] 202 and 811 no longer produce something unique because the tax credit is there," he observes, adding that the programs also cannot generate housing on their own. Donovan says HUD needs to study the programs to figure out how they can work better with the tax credit and other initiatives.

8 Reasons We Need Renters
MSN Real Estate (02/26/10) Aho, Karen

The collapse of the housing market provides an opportunity to look at the rent versus buy equation, and Center for Housing Policy Executive Director Jeffrey Lubell says such an examination will show that "we really haven't been good to renters." Among other things, land-use regulations and zoning laws discourage high-density housing, and homeowners continue to benefit from property-tax and mortgage-interest deductions. However, experts say rental units are necessary for businesses to attract workers and ensure that critical workers can live in the communities they serve. While homeowners can find it difficult to sell their properties and relocate to take a new job, renters have no such restrictions. Experts also insist that rental units do not contribute to sprawl, and they help revitalize communities by stimulating business and generating jobs. The large scale of apartment developments also makes it easier to go green. Tom Davis of Preservation of Affordable Housing says, "If you're trying to get government money into the greening of buildings, the way to make an impact is at the multifamily level because you can do it at scale." When renters have access to units near their jobs, they do not have to spend money on commuting costs, leaving them more money for discretionary spending. The Center for Housing Policy also reports that rentals can boost or hold steady neighboring property values, given that well-kept occupied buildings are better than vacant lots or abandoned properties. Finally, research shows that children do better when they do not have to move often, and it does not matter whether families rent or own, meaning that a larger supply of affordable rental housing can help stabilize communities and families.

Apartment Building Energy Benchmarking Efforts Slowly Gain Steam
Multifamily Executive (02/10) Wood, Chris

Since 2008, the U.S. Environmental Protection Agency (EPA) has encouraged multifamily property owners to use the EPA Portfolio Manager Web application to monitor energy usage in apartment buildings. The agency had hoped that the data collected could be used to understand energy use in the multifamily sector and create an Energy Star certification program similar to the one in use in the commercial real estate market. The number of multifamily properties using the application has risen to about 600 properties, but more data is necessary to create a 1-to-100 ratings system for a certification program like Energy Star, says JDM Associates Consultant Bruce Armstrong. Moreover, there is a multitude of building types and energy producers that influence energy use in the multifamily sector, which can make direct comparisons of benchmarks difficult. Northeast Energy Efficiency Partnerships' Jim O'Reilly says, "Portfolio Manager is not necessarily capturing as robustly as it could all building types. There are some holes in there, and if you don't put in a good amount of baseline characteristics per property type, you are not going to get out good benchmarking information." The EPA and the National Multi Housing Council are working together to engage the multifamily industry and educate members about Portfolio Manager, which could involve making an EPA Webinar available to the apartment industry.

Building Block for Affordable Housing Growing Again
Medill News Service (02/24/10) Hom, Daniel

Affordable housing construction took a hit as demand for low-income housing tax credits (LIHTCs) -- which cover upwards of 60 percent of a development's costs -- fell as the recession depleted banks' earnings and capital. However, LIHTC activity is poised to rise in response to increased financial stability of banks and the creation of two federal stimulus programs. The government earmarked $2.25 billion for the Tax Credit Assistance Program, which allows states to provide grants to jump start developments that previously received tax credits. Meanwhile, developers can trade full tax credits back to the government when investors are scarce under the Section 1602 Exchange Program. Novogradac & Co. LLP partner Daniel Smith expects the LIHTC industry to grow to between $5 billion and $6.5 billion this year from between $4 billion and $4.5 billion currently as investors make "early commitments to invest in sizable amounts in 2010." Wells Fargo will increase its LIHTC investments to between $350 million and $450 million from between $250 million and $300 million last year, according to Bob Taylor, senior vice president and manager of tax credit fund investment. "It's the best mechanism and most efficient to provide capital for provision and increase in affordable housing," says Taylor.

All Eyes Ahead
Apartment Finance Today (02/10) Ascierto, Jerry; Shaver, Les

Market research firm Real Capital Analytics (RCA) estimates that during the year ended December 2009, distressed sales only represented roughly 15 percent to 20 percent of overall multifamily sales volume. At the same time, the volume of distressed apartments totaled $30.8 billion in December, RCA said. Linwood Thompson, managing director of broker Marcus & Millichap, forecasts, "The amount of money being raised for distressed asset purchases is going to be a lot harder to place than most people think" in coming years. Many investors feel that the peak of opportunity will come in the near future, noting that five-year, aggressively-underwritten CMBS loans from 2005 to 2007 will likely start coming due in 2010. "The next three years are going to be great," forecasts Eric Silverman, managing director of investor Eastham Capital, which is raising a $50 million opportunity fund. "Many loans coming due in 2010 and 2011 will have difficulty refinancing and will have to re-trade." These maturing CMBS deals will need to find refinancing capital, such as that from Fannie Mae and Freddie Mac. However, these lenders are doing approximately 70 percent loan-to-value (LTV) loans on higher-quality deals, while regional banks are generally not enthusiastic about non-recourse long-term loans. As a result, special servicers are likely to see increased business. For example, CWCapital Asset Management saw its portfolio of assets grow from $3 billion a year ago to $11 billion today. Economists predict that by 2012 the multifamily sector will be in full-recovery mode, but getting to that point will be challenging.

The Rental Breakdown
American Prospect (01/28/10) Potts, Monica

Federal housing policy in the 1990s marked a shift toward subsidizing homeownership for nearly every American, and when the housing market crashed in 2007 and 2008, policymakers focused their efforts on helping homeowners avoid foreclosure. However, experts say the shortage of affordable rental units and the increase in low-income renters remains a long-term problem that must be addressed. Some industry representatives believe that the best homeownership program involves renters who can afford their current units, make timely rent payments, and have good credit and some savings, but they acknowledge that not every family will have enough money to buy a house and renting will remain their best option. The industry estimates that 3 million units are needed for low-income renters. HUD Assistant Secretary for Policy Development and Research Dr. Raphael Bostic says the Obama Administration understands that housing policy needs to be more balanced and is working to eliminate the perception that homeownership is a means of building personal wealth. Bostic says the agency has boosted Section 8 voucher spending by 10 percent and altered the low-income housing tax credit program so that developers can exchange a future tax credit for upfront cash to construct affordable multifamily units. "[Once] we get back to housing [as a place] to be lived in, then we're hopeful there will be a bunch of people for whom there won't be a made dash to buy a house and renting is an OK option. We feel that the ownership/rental dichotomy is a false one, and what we're trying to do is get people housed."

Opinion: The Next Housing Crisis
AOL News (02/11/10) Merkley, Jeff; Abromowitz, David

Though the relentless foreclosure crisis continues to dominate headlines, Sen. Jeff Merkley (D-Ore.) and David Abromowitz, senior fellow at the Center for American Progress and partner at Boston-based Goulston & Storrs, say a larger and more troubling housing crisis is on the horizon -- a dearth of affordable housing. Studies from Harvard's Joint Center for Housing Studies and other experts indicate a critical need already exists for at least 5 million more affordable units for blue-collar families, especially given the recent influx of previous homeowners and Baby Boomers. Some estimates suggest that over the next three decades, the market will need more than 50 million new housing units to meet demand. There is only one national program to foster affordable housing, the Low Income Housing Tax Credit (LIHTC) program, which enables public-private partnerships to produce housing. However, the recession and dwindling profits prompted many investors to leave the LIHTC market, effectively freezing construction. Merkley and Abromowitz note that several proposals have been advanced to jump start the market, including a short-term tax credit exchange program to maintain affordable housing development, allowing investors with current LIHTC credits to use those against profits in previous years, and widening the investor base. Affordable rental housing is necessary to prevent the next housing crisis, say Merkley and Abromowitz.

Investment Opportunity?
Independent Banker (02/10) Vol. 60, No. 2, P. 45; Amdur, Thom

The federal Low-Income Housing Tax Credit (LIHTC) program represents a great opportunity for new investors, especially community banks, on account of the market slump and heavy losses suffered by the largest TARP-recipient banks. Through 2007, the LIHTC assisted in the creation of some 1.7 million affordable housing units. The present after-tax yield for LIHTC investments can surpass 10 percent to 12 percent, while investing in LIHTC could additionally offer community banks the opportunity to cultivate long-term relationships with new or existing clients. Moreover, such investments could allow banks to diversify into new markets, products, and services, as well as fortify relationships with community and political leaders. LIHTC funds may be retrieved in the event the property falls out of compliance with federal regulations.

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