NAHMA Co-locates Summer Meeting with NAA Education Conference and Expo - June 22-25, 2011 in Las Vegas

NAA and NAHMA are co-locating their summer meetings at Mandalay Bay in Las Vegas in late June, and offering discounted registrations to both events. At the NAHMA Public Policy Issues Forum, to be held as a full-day meeting on June 22, discussions will focus on public policy related to federal legislative and regulatory initiatives that impact all of the affordable housing programs, from HUD programs (project-based Section, Section 8 tenant vouchers, Section 202 senior housing, and Section 811 special needs housing); to the Low Income Housing Tax Credit program; to Rural Housing Service programs (Sections 515, 538 and the revitalization program).

The Keynote Luncheon Speaker at the NAHMA meeting will be Carol Galante, HUD’s Deputy Assistant Secretary of Multifamily Housing.

In addition to the full day of meetings on June 22, NAHMA will conduct specific sessions devoted to affordable housing issues as part of the NAA conference, as follows:

Thursday, June 23, 9-10:30:
NAHMA Presents Case Studies on Creative Turnaround of Troubled Properties into Award-Winning Affordable Housing
Industry practitioners will present three case studies in which troubled properties were renovated into award-winning affordable rental housing. Each of the properties received a 2010 NAHMA Vanguard Award, which celebrates success in the multifamily affordable housing industry by recognizing and benchmarking new, quality, multifamily affordable housing development. Participants will learn the successful tools and techniques for turning these troubled properties into outstanding examples of affordable rental housing.

Thursday, June 23, 10:45-12:15:
NAHMA Presents Preserving Aging Affordable Housing, and When to Green and Not to Green in the Process
Recognized industry experts will present case studies on tools and techniques for preserving affordable housing, from operational to financial considerations. In particular, participants will learn how to decide when to convert to green technology or management techniques based on financial and operational considerations during the preservation process.

Friday, June 24, 8:30-10:00:
NAHMA Presents Top Ten Tips for Preparing for and Successfully Completing your Tax Credit Compliance Reports and Inspections
Tax credit properties are subject to monitoring by both state agencies and investors/syndicators. Although requirements vary, they generally include mandating that owners provide data on a quarterly or annual basis for each LIHTC unit, certifying annually that they are in compliance with Section 42, systematic review of tenant files, physical inspection of the units, and a desk audit of all applicable site-specific tax credit information. Non-compliance can result in significant consequences, including recapture of the tax credits by the IRS. In this session, industry experts provide key techniques for preparing for and successfully completing tax credit compliance reports and inspections.

Friday, June 24, 12:45-2:00:
NAHMA Presents Managing Conflicting Requirements in Multi-Financed Affordable Housing
A majority of affordable housing properties today have used multiple layers of financing to make the properties viable, whether in the development phase or rehab. Such layers of financing can include Project-based Section 8 or vouchers, LIHTC, HOME, CDBG, RD, bonds, etc. However, each of these programs comes with its own regulatory requirements - and often these requirements are in conflict. Non-compliance can result in severe consequences, including recapture of the financing by a government agency. A panel of industry experts will provide key tools and techniques for managing the conflicting regulatory requirements on affordable properties with multiple-layers of financing.

The NAA Education Conference and Exposition will feature keynote speakers Condoleezza Rice, Secretary of State (2005 – 2009) and Daniel Pink, Best-Selling Author will be Keynote Speakers.

For more information and registration details click on the link below.


Association News
NAHMA Announces 2011 Vanguard Award Winners
NAHMA Announces 2011 Affordable 100 List
Deadline Announced for NAHMA's 2011 Communities of Quality Awards Submissions
NAHMA Offers Green Housing Management Publication

Industry News
"Fannie Ramps Up Mod Rehab for Affordable Housing"
"Non-Profit Community Developers Face Challenging Financing Environment"
"LIHTC Changes Weighed"
"Construction Debt Grows Cheaper for Affordable Housing Developers"
"WHEDA Adjusts LIHTC Pricing Assumptions"
"Still Hungry?"
"Study: Affordable Rental Housing Scarce"
"Fannie Mae Focuses Multifamily Efforts on Affordable Housing Market"
"Lawmakers Must Consider Apartment Sector's Unique Needs as They Weigh Housing Finance Reform Options"
"Affordable Housing Programs Look to Take Paper Out of the Equation"
"Improving Job Market Ignites Sharp Rise in Apartment Rents"
"HUD Chief Suggests Study of Renters' Tax Credit"
"Fannie and Freddie Are Crucial to the Rental Market, Too"
"A Missed Opportunity? Apartment Complexes Offer Major Solar Potential"
"Hunting Down Alternative Sources of Development Financing"
"Property Compliance: The California Tax Credit Allocation Committee"
"Low-Income Housing Tax Credits State Briefs: Louisiana"
"HUD Awards $61 Million Nationwide to Tribal Communities to Improve Housing and Spur Economic Development"

Association News

NAHMA Announces 2011 Vanguard Award Winners

NAHMA is pleased to announce the winners of its annual Affordable Housing Vanguard Awards, which were created to recognize newly developed affordable multifamily housing communities that showcase quality design and financing through their development.

The Vanguard Awards celebrate success in the multifamily affordable housing industry by recognizing and benchmarking new, quality, multifamily affordable housing development. The award:
* Pays tribute to developers of high-quality affordable housing;
* Demonstrates that exceptional new affordable housing is available across the country, and that it is a positive addition to any neighborhood;
* Demonstrates that the affordable multifamily industry must be creative and innovative to create exceptional properties given the financing and other challenges to development;
* Highlights results of private-public partnerships required to develop today’s affordable housing;
* Shares ideas for unique design and financing mechanisms with industry practitioners to further stimulate creative development in the affordable multifamily industry.

The 2011 winners are:
New Construction – Under 100 Units
Presented to City Arts, Baltimore, MD
Owner: Homes for America
Management Company: WinnResidential

New Construction – Over 100 Units
Presented to The Commons at Buckingham, Columbus, OH
Owner: The Commons at Buckingham Housing Ltd Partnership
Management Company: National Church Residences

Major Rehab of an Existing Rental Housing Community
Presented to Ashland Village, San Leandro, CA
Owner: Ashland Village Apartments, LP
Management Company: Eden Housing Management, Inc.

NAHMA Announces 2011 Affordable 100 List

NAHMA recently announced the release of its 2011 Affordable 100, a list of the 100 largest affordable multifamily property managers, ranked by affordable unit counts. The list is available at NAHMA’s website, via the link below, as well as in the June issue of Affordable Housing Finance magazine and June issue of Units magazine.

The Affordable 100, created in an effort to accurately determine the size of the portfolio of affordable multifamily units receiving federal subsidy in the United States, lists affordable units containing at least one of following federal subsidies: HUD Project-based Assistance, Section 42 LIHTC, HOME funds, bonds and USDA Section 515.

The goal of this survey is to produce a list of the 100 largest affordable multifamily property managers, ranked by affordable unit counts. NAHMA believes that benefits of the survey will include:

* It will set a foundation for annually identifying an accurate count of available affordable units by a credible, national organization.

* It will provide valuable historical information to advocate on behalf of developers, owners, managers, and most importantly, the residents who rely on federal funds.

* It will aid in convincing federal departments and agencies to cooperate, and in working together, to assist in the preservation of affordable housing and the creation of improved housing policy.

* It will ensure a continued subsidy stream based on actual need.

NAHMA would like to extend its sincere thanks to the NAHMA Survey Task Force, without whose hard work and support this survey would not be possible. In particular, sincere appreciation goes to Task Force Chair John Yang of, Inc., and task force members, Allan Pintner (Millennia Housing Management, LTD.), Sara Dunnington (, Inc.), Jennifer Tang (, Inc.), Mark Livanec (Yardi), Scott Nelson (Realpage) and Evelyn Arias (Realpage).
Deadline Announced for NAHMA's 2011 Communities of Quality Awards Submissions

The submission deadline for entries to NAHMA's 2011 Communities of Quality Awards program is November 11, 2011. The Communities of Quality Awards recognizes outstanding property management companies providing the highest possible quality of safe, affordable multifamily rental housing in communities across the country.

NAHMA is also pleased to announce that this year’s Communities of Quality® (COQ) Awards Program will again be sponsored by HD Supply Multifamily Solutions, a leading supplier of maintenance and renovation products to the multi-housing industry.

“It is with great pride that NAHMA continues to promote and manage the Communities of Quality® Program. Year after year, winners of NAHMA’s Communities of Quality® Awards demonstrate the commitment of property owners and managers nationwide to provide low- to moderate income residents with the quality affordable housing that is worthy of resident and community pride,” said NAHMA President Scott Reithel, NAHP-e.

“As a leading supplier to multifamily properties nationwide, HD Supply Multifamily Solutions is extremely proud to support an award that honors those properties making changes to enhance their communities and ultimately resident life.” said Walter Morgan, National Account Manager, HD Supply Multifamily Solutions. “Giving back to the community is a value HD Supply associates incorporate into their personal and work life, and it is a pleasure to actively share this value with our customers in the multifamily industry.”

COQ awards entry materials should be submitted to NAHMA by November 11, 2011, c/o NAHMA COQ Awards Entry, 400 N. Columbus Street, Suite 203, Alexandria, VA 22314. Award winners will be notified in early January 2012 and will receive their awards in a special ceremony at the NAHMA 2012 winter meeting in Washington, DC, on Monday, March 12.

Now in its 19th year, the awards competition will include five categories:
* Exemplary Family Development
* Exemplary Development for the Elderly
* Exemplary Development for Residents with Special Needs
* Exemplary Development for Single Room Occupancy Housing
* Outstanding Turnaround of a Troubled Property

An overview for participating in the COQ program is available via the link below.
NAHMA Offers Green Housing Management Publication

A new publication, Green Housing: A Practical Guide to Green Real Estate Management, is now available from the National Affordable Housing Management Association (NAHMA). The 82-page spiral-bound book is an informative yet easy-to-read primer on green real estate management, and covers all of the basic concepts, such as energy efficiency, indoor environmental quality, resource efficiency, site sustainability, water efficiency, integrated pest management, tenant green education, and creating a green operation and maintenance plan.

According to a recent report by the U.S. General Services Administration, green buildings have 13% lower maintenance costs and consume 26% less energy. Though there is a common perception that “going green” can be cost-prohibitive, property management professionals and building owners and developers are discovering that greening their properties is not only cost-effective but can be truly profitable. Green Housing, by real estate professional and certified green-building expert Barry P. Weaver, is a timely manual for those who have the desire but not a great deal of capital to accomplish green upgrades.

The book may be purchased for $35 per copy, plus $5 shipping and handling, via NAHMA’s webstore via the link below.

Industry News

Fannie Ramps Up Mod Rehab for Affordable Housing
Multifamily Executive (05/11) Ascierto, Jerry

Fannie Mae and Freddie Mac's affordable housing programs are focused on preservation deals this year, especially tenant-in-place rehabs, and Mod Rehab programs are generating interest. Fannie Mae no longer puts a cap on per-unit rehab amounts, has begun to offer a maximum two years of interest-only (IO) in such deals, and now does 35-year amortizations. To consider two years of IO and 35-year amortizations, the company requires that the loan term be 15 years or longer. Freddie Mac also has been involved with Mod Rehab programs, particularly in New Issue Bond Program deals. Freddie Mac offers IO periods for mod rehab transactions but did not disclose specific parameters. The company also offers both fixed and variable-rate bond credit enhancements. The Federal Housing Administration is attempting to expand its Sec. 223(f) program to include higher levels of per-unit rehab dollars.

Non-Profit Community Developers Face Challenging Financing Environment
Multi-Housing News (05/11) Foong, Keat

One of the key challenges to non-profit community development companies is a "constrained funding environment," according to Eileen M. Fitzgerald, CEO of NeighborWorks America. Equity is the most important piece of funding for affordable housing development or rehabilitation because it can go the furthest in making possible lower rents, Fitzgerald says. However, current forms of equity are becoming more limited, and it is competitive to obtain allocations under the Low Income Housing Tax Credit program. Federal sources of grants for non-profit developers, including HOME and the Community Development Block Grant, are receiving cuts. Tightening of credit also is a significant financing obstacle. Non-profit developers must be creative when facing these challenges. "Sometimes, they have to produce less housing," Fitzgerald says. "Some are focusing more on acquisitions and rehabilitation than new construction, and others are expanding their footprints to other localities." Fitzgerald says non-profit community owners of affordable housing face other challenges, such as spiking energy prices. One solution, she says, is to execute rehabs that incorporate green measures to reduce utility costs. NeighborWorks, a congressionally chartered organization, distributes grants and loans and provides advice and training to non-profit community organizations. There are currently 235 organization members that own tens of thousands of affordable housing units across the United States.

LIHTC Changes Weighed
Affordable Housing Finance (05/11) Kimura, Donna

The Obama administration is seeking to broaden the low-income housing tax credit (LIHTC) program through two proposals that are part of its fiscal 2012 budget and tax package. The proposals include a new “income-averaging” option designed to enable properties to serve households whose average income is no greater than 60 percent of the area median income (AMI) and with no individual household above 80 percent. Current caps limit LIHTC apartments to households earning no more than 60 percent of the AMI. Another proposal would allow certain preservation projects financed with 4 percent credits to be eligible for a 30 percent basis boost. Small and rural markets are expected to benefit since many families are ineligible for an apartment because they earn slightly more than the current 60 percent cap. The change would allow these families to rent a tax credit apartment, giving property owners a larger pool of renters to draw from. The change also may benefit those in high-cost housing markets, according to observers. It is still unclear if income-average calculations need to be done on a building-by-building or an overall project basis. If an owner must comply with requirements for every building, it would make compliance challenging, according to Joe Hagan, president of the Affordable Housing Tax Credit Coalition and president and CEO of the National Equity Fund, Inc.

Construction Debt Grows Cheaper for Affordable Housing Developers
Housing Finance (05/11/11) Ascierto, Jerry

Interest rates are lower across most markets, thanks to more competition in the banking sector, but high-barrier major markets have seen Community Reinvestment Act-motivated banks becoming even more aggressive again in winning deals. Kyle Hansen, an executive vice president in the commercial real estate group at Minneapolis-based U.S. Bank, says, "We’ve seen significant competition in the coastal markets as well as the major metros in the rest of the country. Pricing has probably come down at least 50 basis points [bps] over the last year." The London Interbank Offered Rate (LIBOR), a benchmark in pricing construction loans, has been consistently low for the past few years. Recently, interest rate floors have been removed, while spreads over LIBOR are between 250 to 325 bps, prompting all-in rates of 3 percent to mid-3 percent. Developers are in a better position to negotiate construction debt compared to the same time last year. The New Issue Bond Program (NIBP) has helped launch many deals last year and this year, but the program is scheduled to end in December, so the private sector must pick up the slack. Early positive indications suggest that investors have begun to generate interest in 4 percent low-income housing tax credit (LIHTC) deals. "A lot more equity is being raised in 2010 and 2011 than in the couple years prior," Hansen says. "All of that equity is having a hard time finding a home in 9 percent deals. So naturally some of that demand is spilling over into 4 percent deals." Tax-exempt bond deals are becoming more viable, though the new construction side is still challenging. Many lenders and investors may prefer in-place acquisition-rehabs using 4 percent LIHTCs.

WHEDA Adjusts LIHTC Pricing Assumptions
Affordable Housing Finance (05/11)

The Wisconsin Housing and Economic Development Authority (WHEDA) confirms that it recently modified pricing assumptions for projects receiving 2011 low-income housing tax credit (LIHTC) reservations. WHEDA determined that credit pricing has improved over the last year, and the pricing assumptions used for the applications were "significantly below" current market. Now, awarded proposals should be able to secure pricing of at least $0.06 higher than that used in their Application One. According to WHEDA, the price increase will result in smaller credit awards for almost all applicants because fewer credits will be needed to achieve the expected equity investment.

Still Hungry?
Apartment Finance Today (04/11) Ascierto, Jerry

The Federal Housing Administration (FHA) is concentrating more on affordable housing after modifying its underwriting requirements in 2010. The changes--a reduction in leverage levels and higher debt service requirements--are less conducive to market-rate developments. The FHA is also focusing on four principles in its Sec. 221(d)(4) program: sustainability, green development, urban, and affordability. The FHA has also implemented a new 18-month absorption requirement for (d)(4) deals that is affecting some developers, which previously had two years to stabilize. Many developers are now reexamining the size of their projects, such as proposing two 150-unit phases rather than a single 300-unit deal, for example. Any market-rate (d)(4) deal that exceeds 150 units or is worth more than $15 million must go to the FHA’s new National Loan Committee (NLC), which reviews deals from regional offices prior to granting final approval. Launched in September 2010, the NCL reviewed 41 applications and rejected only one deal outright in its initial four months. The FHA also hopes to update its Sec. 223(f) program later in 2011 to allow for more significant levels of rehabilitation on both market-rate and affordable deals. The program currently offers light-rehab dollars, and anyone seeking to do more needs to go through the lengthier Sec. 221(d)(4) program. The FHA hopes to strengthen the 223(f) program to more closely resemble something like Freddie Mac’s Mod Rehab program.

Study: Affordable Rental Housing Scarce
Washington Post (04/26/11) ElBoghdady, Dina

A new Harvard University study concludes that the share of apartment residents who spend more than half their income on housing is at its highest level in half a century. Approximately 26 percent of those who rent--about 10.1 million people--spent more than half their pre-tax household income on rent and utilities in 2009, as incomes declined dramatically from their peak at the start of the decade even as rents kept rising. The supply of rental housing, especially for the working poor, has not kept up with demand in part because of a shortage of apartments, a key source of new rentals. Developers cut back on such projects when the economy deteriorated in 2009, which drove down vacancies and boosted rents. Analysts say they expect rents to keep climbing as developers try to ramp up new projects and catch up with demand. The demand is driven up in many areas by families who lost their homes to foreclosure during the housing bust and ended up searching for rental housing. Meanwhile, as the job market recovers, more newly employed young adults appear to be seeking their own apartments instead of living with their parents, putting even more upward pressure on rental rates. By 2009, 7.5 percent of moderate-income renters spent more than half their income on rent, twice as many as in 2001, according to the study. "It's a real squeeze for the lower-income and moderate-income families, and we're even starting to see it affecting middle-income families, too," says Erick Belsky, managing director of Harvard's Joint Center for Housing Studies. "The prospects for improvement any time soon are dim." The Harvard study analyzed 6 million units that apartment owners were renting in 1999 for less than $400 a month. It found that nearly 12 percent of them were demolished by 2009, and a larger number were no longer available because of other factors, such as disrepair or conversion to non-residential use.

Fannie Mae Focuses Multifamily Efforts on Affordable Housing Market (05/16/11) Chappell, Carisa

A new white paper, "Fannie Mae and Workforce Rental House," emphasizes the need for more rentals, particularly affordable ones, across the United States. Fannie Mae says there are not enough affordable rentals to meet demand, with the economic and housing downturn and a changing attitude toward homeownership bolstering rental demand. Fannie Mae says just 6.5 million of the 15.2 million rental units in the United States are affordable to households earning less than 50 percent of the median income in their area. Only 2.4 million are affordable to those earning less than 30 percent of the area median income. Ken Bacon, executive vice president of Fannie Mae's Multifamily Mortgage Business, says demographics are favorable for the rental market over the long term, citing a jump in older rental households and an increase in 20- to 34-year-olds, who are deemed the prime renting demographic. Bacon says that Fannie Mae's mission will focus more on the multifamily market, pointing out that consistent, reliable liquidity is needed. "Our multifamily business has long served as a reliable source of funding for apartment owners," he says. During the past two years, Fannie Mae contributed $37 billion in debt financing for the multifamily market. Bacon adds, "REITs, as well as private owners and developers, will continue to play an important role in developing, owning, and operating safe, quality rental housing at various rental levels."

Lawmakers Must Consider Apartment Sector's Unique Needs as They Weigh Housing Finance Reform Options
Sacramento Bee (05/26/11)

At a May 26 U.S. Senate Banking Committee hearing on housing finance reform, Equity Residential Executive Vice President and CFO Mark Parrell testified on behalf of the National Multi Housing Council and the National Apartment Association, stressing that in order for the apartment industry to meet demand for affordable and workforce housing, the government must continue to support the secondary mortgage market. Parrell emphasized that the mortgage crisis did not involve Fannie Mae and Freddie Mac's multifamily programs. He stated, "Their multifamily programs have outperformed the private markets and have default rates of less than one percent--one-tenth the size of the delinquency/default rates plaguing single family. And they remain profitable. They have generated $2 billion for the federal government since they were placed in conservatorship." He said lawmakers need to exercise caution when repairing problems in the single-family mortgage market so that they do not cause a shortage of capital in the apartment market. Parrell noted, "Private capital is good at financing higher-end properties in top-tier markets, but it is not as good at supporting the more complex deals, workforce housing or housing in second-tier markets." More people are opting to rent in the current economy, and renters could account for more than 50 percent of all new households created in the current decade. Parrell said that Congress should keep in place elements of the existing system that work, noting that the GSEs' multifamily programs "can serve as a model for a continued federal guarantee for rental housing in a reformed housing finance model."

Affordable Housing Programs Look to Take Paper Out of the Equation
Affordable Housing Finance (05/11) Ascierto, Jerry

The affordable housing industry continues to take steps toward a paperless future. In the fourth quarter, the Department of Housing and Urban Development (HUD) plans to introduce a new version of the Tenant Rental Assistance Certification System (TRACS), which will enable owners to send verification and voucher files into HUD's database to update resident and unit information, and create a bill for how much money HUD owes. "The impact is going to be significant, it will change virtually every compliance screen in [Yardi] Voyager's work flow," says Mark Livanec, vice president of affordable housing sales for Yardi Systems. A pilot program will be launched with the rollout of TRACS 202D to serve as a test for a new electronic vouchering system. Meanwhile, RealPage has unveiled an automated repayment service to help owners manage the process of paying back some subsidy to HUD when they uncover misreported income by tenants. The service is part of RealPage's standard service, and will be free to all existing OneSite Affordable customers. "We're taking those manual calculations and paperwork out of the hands of the site managers, and we also created a log where we can document every step, every letter, every attorney fee, anything," says Gustavo Sapiurka, general manager of affordable housing at RealPage. Also, PropertyBridge is now offering a service, Pay by Cash, that allows residents to pay rent with a digital money order, and the funds will be in the bank the next day, rather than a few days later or more with physical money orders.

Improving Job Market Ignites Sharp Rise in Apartment Rents
USA Today (05/06/11) Schmit, Julie

Market researchers expect 2011 apartment rents to have the largest annual increase in four years, with Reis predicting a 4.3 percent increase and MPF Research forecasting a rise of more than 5 percent. The main cause behind the increase is job growth, which has helped many younger workers move out of their parents’ house. Those workers are still more likely to rent than buy, as lending standards remain tight and house values continue to drop. Lack of supply also has pushed rents higher, as construction is down to 40,000 new units this year, compared to an annual average of 130,000 for the past decade. The strongest markets are San Jose and New York City, both MPF and Reis say. First-quarter rents in San Jose and New York City rose 4.6 percent and 4.4 percent, respectively, from last year's first quarter, compared to a 2 percent average increase for the rest of the country. Other markets with increases of more than 3 percent are suburban Virginia and Maryland; San Francisco; Rochester; Portland, Ore.; and Denver.

HUD Chief Suggests Study of Renters' Tax Credit
MarketWatch (04/26/11) Zibel, Alan

U.S. Housing and Urban Development Secretary Shaun Donovan has indicated the Obama Administration is examining whether a new tax credit for renters should be considered to relieve the scarcity of affordable housing. During a conference at which Harvard's Joint Center for Housing Studies reported that renters have become increasingly squeezed over the past decade, Donovan called for a revamp of today's low-income housing credit and for an expansion of the Community Reinvestment Act, which prods banks to make loans in low-income communities. Donovan made a particular plea for ideas on a renter's tax credit, though he did not advocate a specific proposal himself. He said the existing low-income tax credit, which benefits people who invest in low-income housing, has indeed stimulated the construction of affordable housing. However, he said the tax break had become the third-largest corporate tax deduction, suggesting that it could be more efficient to provide tax benefits directly to people with low and moderate incomes. Donovan cautioned that any new tax credit would have to be revenue-neutral, meaning that its cost to the Treasury would have to be offset by eliminating other tax breaks or by cutting spending somewhere else. Donovan encouraged housing advocates to become more strategic and creative about designing more efficient mechanisms to finance affordable rental housing, particularly through tax policy. "The low-income housing tax credit has been the most critical tool in building and preserving rental housing in the last quarter century," he said. "As we have a broader conversation about tax policy we also have to recognize that the low-income housing tax credit is the third largest corporate deduction."

Fannie and Freddie Are Crucial to the Rental Market, Too
Baltimore Sun (05/02/11) Skinner, Raymond A.

In an op-ed in the Baltimore Sun, Raymond Skinner, secretary of the Maryland Department of Housing and Community Development (DHCD), supports preserving the role of Fannie Mae and Freddie Mac in the rental housing sector.

The firms' multifamily rental loan portfolios both have performed well, he notes, providing clear proof that smart underwriting drove multifamily rental lending decisions even during the housing crisis. Additionally, their ability to offer long-term fixed-rate financing helps multifamily rental property owners keep debt costs -- and, thus, rents -- low, which is critical for working- and middle-class families.

He says, "Even before the homeownership crisis, Fannie and Freddie were important sources of long-term fixed-rate financing, allowing multifamily rental property owners to lock into fixed payments amortized over long periods." Skinner adds, "In short, the involvement of these entities in cooperation with DHCD and others have kept the lending marketplace for rental housing going strong during the most severe economic downturn since the Great Depression."

A Missed Opportunity? Apartment Complexes Offer Major Solar Potential
Solar Industry Magazine (04/11) Lillian, Jessica

California's new, enhanced renewable portfolio standard (RPS) aims to significantly increase the demand for solar power and other forms of renewable energy in the Golden State. Now that this RPS has been signed into law, large-scale deployment of distributed rooftop PV is an increasingly desirable option for meeting renewable energy needs. A new preliminary study from the Los Angeles Business Council (LABC) shows that apartment community rooftops -- an often-neglected market opportunity -- could serve as an ideal host for a potential 300 MW solar PV capacity in L.A. alone. The report states, "Given the economies of scale and the number of large, flat rooftops on multifamily buildings, this sector is likely to be the second most cost-effective (after commercial and industrial) for solar in the city. In short, it will be easier and less expensive to harness significant quantities of solar power from multifamily roofs than from single-family homes or smaller commercial rooftops." The reason for this is the large, flat roofs often found on apartment communities where five or more units tend to be suitable for installations of at least 50 kW. LABC says that this threshold offers the most cost-effective deployment. Additional research showed that many of the city's neighborhoods with the highest density of suitable multifamily housing rooftops correspond with high-poverty areas that would stand to benefit most from the economic gains associated with solar development. For example, a 300 MW initiative would create more than 4,500 direct and indirect job-years, as well as provide lucrative opportunities for solar equipment and service providers up and down the supply chain. Additionally, PV deployment could greatly improve apartment residents' quality of life either by slashing their own individual utility costs or cutting the apartment owner's costs and allowing those savings to be channeled into site improvements or resident savings. However, LABC researchers found that success depends on the implementation of certain policies that either do not currently exist or that must be modified in order for the projects to prove successful.

Hunting Down Alternative Sources of Development Financing
Multi-Housing News (05/11) Foong, Keat

While equity financing appears abundant, it is available generally only for the top construction projects. Debt financing may be more readily available than equity thanks to the continued presence of Federal Housing Administration (FHA)-insured financing. "For developers or developer groups with good track records, we are seeing a fair amount of activity," says David Reznick, co-founder and chairman of the Reznick Group. Institutional investors will look for 8 percent to 9 percent in cumulative returns, up to 12 percent carried interest when that is achieved, and for the developer to maintain 10 percent skin in the game, Reznick adds. Also, high net worth individuals want to shelter their taxable passive activity income using other rental properties; this capital is usually obtained from people the developer already knows, is not institutional, and the projects are not always MSAs. Among debt financing, the U.S. Department of Housing and Urban Development's FHA 221(d)(4) new construction and substantial rehabilitation mortgage insurance program has become a big source of financing for new market-rate developments. The construction loan can be rolled over into the permanent debt, but the financing process can take six months to a year. HUD has begun to emphasize affordable housing, considering affordable projects represent a very small percentage of the projects being insured compared to market-rate projects.

Property Compliance: The California Tax Credit Allocation Committee
Novogradac Journal of Tax Credits (05/11)

The California Tax Credit Allocation Committee (TCAC) announced that recipients of funds under the Section 1602 low-income housing tax credit (LIHTC) exchange program must submit evidence of 90 percent occupancy by income and rent qualified tenants for those properties prior to the last draw percentage. An outside third party must determine 90 percent occupancy, according to the notice. TCAC also said that it will monitor and regulate all properties that received assistance from the American Recovery and Reinvestment Act in the same manner as it monitors the 4 percent and 9 percent of LIHTC properties.

Low-Income Housing Tax Credits State Briefs: Louisiana
Novogradac Journal of Tax Credits (05/11)

Louisiana Gov. Bobby Jindal has announced support for a legislative effort to consolidate the state's housing agencies, including the Louisiana Housing Finance Agency (LHFA), into a single agency. The proposed Louisiana Housing Corporation would oversee the state's housing funds and unite nearly 30 separate housing-related programs currently managed by five organizations. The corporation would be comprised of LHFA, Louisiana Land and Trust, and several housing programs administered by the Office of Community Development. Additional programs under the State Department of Health and Human Services and the Department of Children and Family Services also would be assessed for inclusion. The governor's office says that the staff employed by these five agencies serve overlapping functions and that the creation of a unified organization would include staff reductions and the elimination of multiple boards. Jindal's office said that a single agency also would increase accountability and allow the state to better attract and leverage capital in the credit markets.

HUD Awards $61 Million Nationwide to Tribal Communities to Improve Housing and Spur Economic Development
U.S. Department of Housing and Urban Development (04/18/11)

Tribal communities in 20 states will receive more than $61 million in competitive grants from the U.S. Department of Housing and Urban Development (HUD) for building or improving housing or economic development for lower-income families. The grants will be awarded through HUD's Indian Community Development Block Grant Program and are aimed at improving living conditions for those families most in need, says HUD Secretary Shaun Donovan. "This is an investment to promote neighborhood development, produce affordable housing, and help create much-needed jobs," he said. The grants can be used not only for building or improving housing, but also for infrastructure such as roads or water and sewer facilities. Past recipients have built community and health centers, shopping centers, manufacturing plants, restaurants, and gas stations.

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June 2011
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