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Welcome to SHCM Newsbriefs!

Welcome to the premiere issue of SHCM Newsbriefs -- a new bimonthly newsletter designed to help SHCM-certified professionals stay at the top of their industry.

Specially designed for - and only available to - holders of the SHCM designation, the newsletter will include concise articles on key news-breaking issues of importance in the tax credit arena, as well as the latest updates on the SHCM program, exam offerings, and training opportunities.

SHCM Newsbriefs is just one of the many benefits of earning the coveted Specialist in Housing Credit Management (SHCM) certification, a program supported through the strategic alliance of the National Affordable Housing Management Association (NAHMA), the National Apartment Association (NAA), and the American Association of Homes and Services for the Aging (AAHSA). By earning your SHCM certification, you have demonstrated your expertise, experience and professionalism in the pre-eminent housing credit industry.

If your email address should change in the future, please let us know, so that you can continue to stay at the top of your profession and receive SHCM Newsbriefs. Email address changes should be sent to Brenda.moser@nahma.org as soon as possible.

Thank you for supporting the SHCM program!

With best regards,

Kris Cook, CAE
Executive Director, NAHMA


Headlines

Association News

How the SHCM Exam was Developed
SHCM Supported by Alliance of Three National Associations

Industry News


"Project-Based Voucher Rents for Units Receiving Low-Income Housing Tax Credits"
"HUD Should Update Its Policies and Procedures to Keep Pace With the Changing Housing Market"
"Property Management the Affordable Way"
"Complex Housing"
"Low Income Housing Developers Get City Tax Credits"
"Most Affordable Housing in New Orleans Is in Jeopardy"
"Studies: Low-Income Housing Not a Threat"
"Tax Credits Included in Assessment of Low-Income Apartments"
"Affordable-Homes Gap Growing, Report Shows"
"Rumbles Continue Over Fair Trade of Land for Housing"
"Reviving the Inner City: Four projects show how to revitalize blighted neighborhoods"


Association News

How the SHCM Exam was Developed

Development of the SHCM exam was based on an exacting process established for national certification programs to ensure the exam is a reliable and pyschometrically valid testing tool for its subject matter. NAHMA retained a well-respected third-party consultant to assist in this process. For a full report on how the SHCM exam was developed, please click below. The test questions on the SHCM exam are reviewed and updated on an annual basis using this same exacting process.
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SHCM Supported by Alliance of Three National Associations

The SHCM certification is designed by management professionals for management professionals to ensure they have attained the knowledge, experience and competence required to excel in the housing credit property management industry. As experienced affordable housing management professionals know, the LIHTC 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. 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 LIHTC program. Earning your SHCM enables you to do just that. The SHCM is offered through an alliance of the National Affordable Housing Management Association (NAHMA), the National Apartment Association (NAA) and the American Association of Homes and Services for the Aging (AAHSA). For more details on this unique strategic alliance of three national associations, please click below.
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Industry News

"Project-Based Voucher Rents for Units Receiving Low-Income Housing Tax Credits"
Housing & Urban Development Documents and Publications (05/01/07)

HUD has announced a revision to a final rule published in October 2005 that imposed a ceiling for Project-Based Voucher (PBV) rents in buildings with Low-Income Housing Tax Credit (LIHTC) units that is equivalent to the LIHTC rent. Before the rule was enacted, rents on these PBV units could be set higher in some areas, based on the fair market rent. In making the decision to revert to the previous rules regarding PBV units, HUD took into consideration comments made by public housing agencies and other housing industry representatives after the new rule's November 2005 implementation stating that the new policy would lower the supply of LIHTC units and make it difficult for new low-income housing developments to obtain financing. The latest proposed rule eliminates the PBV rent cap in buildings with LIHTC units, instead requiring a subsidy layering review by HUD or a HUD-approved entity to determine whether rents should be reduced.
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"HUD Should Update Its Policies and Procedures to Keep Pace With the Changing Housing Market"
GAO Reports (04/07) Williams, Orice

A GAO report notes that the organization was tasked to assess HUD's efforts to preserve affordable housing and provide recommendations on how to improve these efforts. HUD offers a number of tools and incentives to property owners seeking additional funding to support their Section 8 properties. Program officials and others whom GAO interviewed said that to supplement HUD's tools, nonprofits and housing industry representatives also encouraged Section 8 owners to obtain funds through programs outside of HUD, such as the Low-Income Housing Tax Credit (LIHTC) program and tax-exempt bonds. HUD officials told GAO that they did not consistently collect data on Section 8 properties that had used tax credits or tax-exempt bond financing. Section 8 owners, property managers, and industry representatives GAO interviewed indicated that owners generally did not opt out of the project-based Section 8 program because of dissatisfaction with HUD's preservation efforts but because of market factors. Some property owners, managers, and industry representatives expressed frustration with some of HUD's polices and practices, which they said could drive some property owners out of the program. Specifically, managers and owners expressed concern with HUD's lack of flexibility in policies such as the one-for-one replacement requirement, which prohibits reductions in the total number of Section 8 units in a property. Meanwhile, project-based Section 8 owners also combine HUD preservation tools and incentives with non-HUD preservation tools such as the LIHTC and tax-exempt bonds to provide additional funds for rehabilitation. By combining incentives, the owner would have enough resources for capital improvements while at the same time ensuring that the property remained affordable through use agreements for at least 30 years. To be eligible for consideration under the LIHTC, a proposed property must: be a residential rental property; commit to one of two possible low-income occupancy threshold requirements; restrict rents, including utility charges, in low-income units; and operate under the rent and income restrictions for 30 years or longer in accordance with written agreements with the agency issuing the tax credits. A member of the National Affordable Housing Management Association (NAHMA) told GAO that the owners of an Iowa property rented to elderly tenants had difficulties filling efficiency units. NAHMA officials said that one of the owner's major obstacles in converting to one-bedroom units was getting HUD's approval to waive the one-for-one replacement policy. This lack of flexibility on the part of HUD in insisting upon one-for-one replacement, rather than--for example--evaluating each case on its own merits, could hinder the preservation of certain project-based Section 8 units. The GAO recommends that HUD expedite its reconsideration of the one-for one replacement requirement for project-based Section 8 housing and broaden its consideration to all project-based Section 8 housing properties on a case-by-case basis.
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"Property Management the Affordable Way"
UNITS (03/07) Vol. 31, No. 3, P. 33; Grill, Mindy

Approximately 85 percent of affordable-housing communities across the country have taken advantage of property management software, giving affordable-housing managers more time to focus on customer service. In addition to handling rent payments, maintenance requests, and other routine tasks, the newest property management applications take care of income qualifications, simplify certifications and re-certifications, calculate tax credit rents, and manage waiting lists. They also enable the seamless electronic transmission of reports to government Web sites and ensure that the community is in compliance with government regulations. Web-based property management software provides additional benefits, namely automatic data backups and updates to housing regulations. Experts recommend that affordable-housing communities in need of a property management application select the solution that meets a majority of their needs, make sure the vendor backs up and stores data on a regular basis, and choose a vendor that offers training and support.
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"Complex Housing"
Rochester Democrat & Chronicle (NY) (04/15/07) P. 1A; Bryant, Erica

Affordable housing for independent seniors will become even more vital as baby boomers leave the workforce, but as it stands now, waiting lists for these apartment homes are already taking seniors over two years to reach the top. Government aid is available to create these affordable homes for seniors, but the competition is heated because projects of this nature are often not cost-effective without government assistance. American Association of Homes and Services for the Aging CEO Larry Minnix urges lawmakers to expand the availability of low-interest government loans for senior housing. In Monroe County, New York, Rural Opportunities beat out several other affordable housing project proposals to receive low-income tax credits to expand its Ada Ridge Court complex to include an additional 49 one- and two-bedroom apartments. Company CEO and President Stuart Mitchell notes that without the credits the cost of rent in this type of housing would increase four times the going rate, which is between $350 and $450 monthly. Seniors First Communities and Services President and CEO James E. DeVoe notes, "We [in the Rochester, N.Y., community] are interested in getting away from fancy construction with chandeliers and looking more toward places that are safe and affordable and clean. For a lot of folks, they really only have Social Security and pensions. This community needs more options in the $1,000 a month range."
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"Low Income Housing Developers Get City Tax Credits"
Real Estate Weekly (04/11/07) Vol. 53, No. 35, P. 2C

Under a second round of funding, the New York City Department of Housing Preservation and Development (HPD) awarded $3 million in federal Low Income Housing Tax Credits (LIHTCs) for 709 units of housing. HPD says of the 709 units, 91 percent--or 646 units--will have reduced prices for low-income families. HPD previously awarded $12.47 million in LIHTCs under the first funding round for 2006, involving 1,241 apartments. Such credits will help construct or refurbish inexpensive apartments city-wide. HPD Commissioner Shaun Donovan says some of the credits specifically target senior citizens and young people. To qualify for LIHTCs, developments must feature significant refurbishment or new construction, with at least 20 percent of apartments set aside for low-income households. Developers apply to HPD to compete for the distribution of tax credits during funding rounds, and are awarded based on factors indicated in the city's Qualified Allocation Plan. Developments that have received LIHTCs in the most recent round include Vicinitas Hall in the Bronx, which was awarded credits to build 68 low-income units, of which 41 will serve young people and the remaining 27 will serve low-income families. Riverdale Osborne Towers in Brooklyn was awarded credits for 542 units, including 463 for low-income families.
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"Most Affordable Housing in New Orleans Is in Jeopardy"
Wall Street Journal (04/11/07) P. B6; Dunham, Kemba J.

Developers who received $170 million in federal tax credits to build low-income rentals in Louisiana to replace those wiped out by Hurricane Katrina have only until the end of 2008 to complete their projects, but just 5 percent of the planned units are presently in the works. Private developers estimate that upwards of 80 percent of the projects that have been given tax credits may not be built, mainly because the tax credits do not offer enough funding. Developers are reporting an explosion in insurance premiums of as much as 500 percent since the storm--along with a 30-percent increase in the cost of erecting a two-bedroom apartment--adding that the state's low-income residents cannot afford rents that would allow the developers to turn a profit. NHP Foundation CEO Ghebre Selassie Mehreteab warns, "Developers of affordable housing will lose money on nearly every single project in New Orleans." Mehreteab says $10.3 million in donations from the state of Qatar, the Ford Foundation, Freddie Mac, and the Freddie Mac Foundation are the only reason his organization will be able to construct 3,000 low-cost units along the Gulf Coast, insisting that developers need soft loans and grants in order to proceed. Other developers are finding it difficult to persuade investors to purchase the tax credits, as it remains to be seen whether displaced hurricane victims will come back to live in the new units. In the meantime, the Louisiana Recovery Authority will distribute close to $600 million in federal community-development block grants to help developers, and the state housing finance agency is pushing for an extension in the 2008 deadline.
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"Studies: Low-Income Housing Not a Threat"
Altoona Mirror (04/06/07) Kibler, William

Much to the dismay of residents within Pennsylvania's Cricket Knolls development who are worried about the value of their properties, developer S&A Homes is seeking tax credits to finance the construction of 21 affordable units for low-earner families. "People hear low income and immediately think of something bad," according to S&A executive Andy Haines, but some research suggests that those fears are likely unwarranted. While a 1999 study from the University of Pennsylvania found that tax credit development did depress nearby property values to some small extent, a 2006 University of Texas study showed that homes situated within a half-mile of tax credit properties boasted value 2.1 percent higher than residences up to a mile further away. Also, a 2002 analysis conducted by University of Wisconsin researchers concluded that tax credit housing had no impact on home worth in Madison and Waukesha and Ozaukee counties--although it did slightly lower property values in larger Milwaukee. S&A's own experience with two existing tax-credit projects in State College, meanwhile, suggests that adding low-income housing to a market-rate development does not have negative ramifications.
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"Tax Credits Included in Assessment of Low-Income Apartments"
Appraisal Journal (Quarter 2, 2007) P. 1; Stiegler, M.H.

The Supreme Court of Idaho has ruled that tax credits issued under the federal Low Income Housing Tax Credit Program have been appropriately taken into account when determining the value of two low-income apartment complexes in Payette County. At issue was whether the tax credits should be considered when determining the real property assessments of the apartments for tax purposes. The county's approach in assessing the apartments--owned by two partnerships in Payette County--was to take into consideration the reduced rental payments and the value of the tax credits. The Board of Tax Appeals backed the county's strategy, but the partnerships opposed the move and appealed to a trial court. The trial court determined that the tax credits should be omitted from consideration because they represent a contract right. Subsequently, the county appealed, and an appellate court determined that the tax credits actually were rights that belong to the land and therefore did not exist separately from an ownership right in the low-income housing. This essentially reversed the trial court's decision. "Because the tax credits are rights and privileges that directly relate to the real estate, they are properly considered in assessing the value of low-income housing," said the appellate court.
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"Affordable-Homes Gap Growing, Report Shows"
Central Penn Business Journal (03/23/07) Dagan, David

Affordable-housing needs in York County are greater than developers can handle according to new research, which was commissioned after the YorkCounts coalition raised concerns in 2004. Although the results of the June 2006 study neither attempt to quantify an exact number of affordable units required nor identify a price range where there is a shortfall, what it does calculate is that the number of households in the county earning between 30 percent and 60 percent of the area's median income would expand by more than 8,100 by 2011. Conversely, the study points out, developers have only several hundred new affordable units of housing coming to market over the next five years. The demand for low-cost shelter will be especially high among the 55-and-older set, according to the research. To deal with the issue, the study recommends a number of alternative funding sources that developers should consider as well as the establishment of a loan fund that nonprofit developers of affordable housing could tap into for pre-development costs. Additionally, researchers call for zoning more acreage for medium- and high-density uses as well as mixed use; they also recommend further study to determine whether the county's major employers can be rallied to build affordable housing near their buildings. Steve Snell of the Realtors Association of York and Adams Counties says business should not discount the importance of affordable housing--especially if they are located near residential areas. "They should want to help stabilize that community or that particular neighborhood," he states. Moreover, he points out, having workers live near their jobs should reduce parking needs, curtail tardiness, and increase employee morale.
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"Rumbles Continue Over Fair Trade of Land for Housing"
Real Estate Weekly (04/11/07) Vol. 53, No. 35, P. 1C; Wolffe, Danielle

Developers and community board members in New York City remain at odds over the idea of inclusionary housing, although most believe the program would help address the 3 percent housing vacancy rate. Manhattan has used the inclusionary housing program for over a decade, and over the past three years areas such as Jamaica Queens, South Park Slope, and Williamsburg/Greenpoint have used it for large scale projects. The trade-off of larger floor plates for low income housing seems more likely due to the need for affordable housing. While some affordable housing advocates have called for mandatory inclusionary zoning, Real Estate Board of New York members have been just as vocal in opposition because of the potential negative impact on prices. "The beauty of the program is that, by using a density bonus, we create an enormous incentive and I think that the record shows over the past two years that developers will choose to exercise that option and create affordable housing in their projects," says Rafael Cestero, former deputy of development for the New York City Department of Housing Preservation and Development, and senior vice president for field and regulatory operations with Enterprise Community Partners, an affordable housing finance group. He believes tax credits that provide tax breaks to developers who offer affordable housing in their projects and subsidy incentives could be used to encourage the building of low income housing.
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"Reviving the Inner City: Four projects show how to revitalize blighted neighborhoods"
St. Louis Post-Dispatch (05/03/07) P. C4

Developer efforts and public-private partnerships are helping to revitalize blighted or under-utilized neighborhoods in the St. Louis area, according to four case studies presented Wednesday. The projects, including 1111 Mississippi Lofts in Lafayette Square, were presented at the Urban Land Institute St. Louis Investments in Progress expo at the Chase Park Plaza. Developments that spark revitalization come in different forms. The mixed-use project called 1111 Mississippi Lofts helped bring life to a building left unused and deteriorating for a decade. The $9.2 million project is home to 15,000 square feet of commercial space, 36 apartments - all occupied - and a restaurant bearing the name of the building, said Wendy Timm, chief financial officer and chief operating officer for Clayton-based Conrad Properties. The development received more than $3.3 million in state and federal historic tax credits and helped create affordable housing options for young professionals in the Lafayette Square neighborhood, Timm said. "In the long term, we hope it encourages others to invest in the community," she said.
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June 2007