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LeadingAge to Hold Annual Meeting in Dallas, TX,
October 27-30
There are a lot of reasons for housing providers and tax credit professionals to attend the LeadingAge Annual Meeting and Expo at the Dallas Convention Center in Texas, October 27–30, not the least of which is the networking opportunities. Full conference details are available via the link below.
Tax Issues and Tax Reform
"NMTC Advocates Push Congress"
"A Win-Win-Win for Affordable Housing"
State and Local Activities
"Mississippi Uses All Low-Income Housing Tax Credits"
"LePage Lifts Ban on Tax-Exempt Bonds"
"Berkeley City Council to Reassess Affordable Housing Fee"
HUD-Related Activity
"HUD Proposes Fiscal Year 2014 Fair Market Rents"
Green Building
"Green Building Should Not Cost More, Report Says"
Industry Trends
"It Could Have Been Worse: Operating Expenses 2012"
"FHFA Asks for Ideas on GSEs' Future, Industry Puzzled"
"Syndicators Mull Rest of Year"
Association News
LeadingAge Conference Offers a Range of Sessions for Affordable Senior Housing Providers
Married Same Sex Couples Qualify Under the LIHTC Student Rule
Preserving The LIHTC Program – A Win-Win-Win for Affordable Housing
Fair Housing Policies and Redevelopment Priorities Clash:
Town of Mount Holly Offers it’s Perspective
NAHMA Announces 2013 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Tax Issues and Tax Reform
NMTC Advocates Push Congress
Apartment Finance Today (09/13) Anderson, Bendix
Advocates of the New Market Tax Credit (NMTC) program say it is essential that lawmakers expand NMTC and make it a permanent part of the tax code. "The New Market Tax Credit has leveraged billions of dollars in private investments," points out Bob Rapoza, a spokesman for the New Markets Tax Credit Coalition, which delivered a letter to Congress on Sept. 17 signed by more than 1,200 business and community leaders. In June, U.S. Sens. Jay Rockefeller (D-W.Va.) and Roy Blunt (R-Mo.) unveiled the New Markets Tax Credit Act of 2013 (S. 1133). This legislation calls for making the program a permanent part of the Internal Revenue Code and strengthening the potential impact of the credit by raising the yearly NMTC allocation. The current authorization for the NMTC expires on Dec. 31. However, Congress is currently engaged in a showdown over a potential government shutdown as the federal fiscal year ends Oct. 1 and the national debt exceeds the debt limit the U.S. government established for itself. At the same time, much of the groundwork for comprehensive tax reform has been laid, including negotiations held in summer in the House Ways and Means Committee led by Rep. David Camp (R-Mich.) Prominent members of the Senate Finance Committee, such as Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), had called for a "blank slate approach" to tax reform.
A Win-Win-Win for Affordable Housing
U.S. News & World Report (09/05/13) Dietz, Robert
The Low-Income Housing Tax Credit (LIHTC) was created in 1986 as part of a tax reform initiative, and since then has financed the construction of more than 2.5 million homes for low- and moderate-income Americans. As tax policies are again under review in Congress, it is crucial that the LIHTC be preserved, says Robert D. Dietz, an economist with the National Association of Home Builders. When buildings are placed into service under the LIHTC program, rental homes are provided for families at or below 60 percent of area median income, who pay rent of no more than 30 percent of their income. The 2010 American Community Survey found that 19.4 million renting households (49 percent of all renting households), were rent burdened or paid more than 30 percent of their total income in rent. The same data indicate that 25 percent of all renting households paid more than half of their income in rent. Affordable housing credit also helps create jobs. The National Association of Home Builders estimates that the construction activities financed by the tax credit support roughly 95,000 jobs and generate $7.1 billion in economic income annually. The Housing Commission of the Bipartisan Policy Center's February 2013 report pointed out that during the program's 24 years history, LIHTC properties have experienced a foreclosure rate of only 0.62 percent, significantly lower than other forms of real estate, due to the strong oversight and allocation process that is required under current law. Ideally, the 9 percent minimum credit rate policy that was enacted in 2008 should become permanent, otherwise the volume of equity available for affordable housing projects would decline, based on the formula that assigns the credit amounts.
State and Local Activities
Mississippi Uses All Low-Income Housing Tax Credits
Associated Press (09/15/13)
Mississippi is among the few states where requests for affordable housing tax credits exceed the available funds, according to David Hancock, vice president of federal reporting and research for Mississippi Home Corporation, which manages federal housing grants in the state. He says the U.S. Department of Housing and Urban Development pays for the credits to finance new construction and rehabilitation of existing sites to house low-income wage-earners. "Mississippi is one of maybe three states that have a larger number of requests for tax credits in comparison to what we have available," he told a housing forum recently. "We were able to fund 45 percent of the total number of applicants. There are states in the Northeast that give money back to the Treasury Department because they don't have as many requests." Seventeen developers in 2012 received more than $6.6 million in tax credits for low-income housing, The Vicksburg Post reported. Brownstone Inc. won two awards to renovate rental property in Vicksburg for the Aeolian for seniors and the former Carr Central school building for low-income families. Both are expected to open in 2014. Meanwhile, an initiative by Mississippi Gov. Phil Bryant seeks to create more low-income housing near hospitals, says Steve Hardin, director of the Mississippi Development Authority's community services division. Five proposed areas for the program are in or around Jackson, near the University Medical Center, Hardin says.
LePage Lifts Ban on Tax-Exempt Bonds
MaineToday.com (09/16/13) Bouchard, Kelley
Maine Gov. Paul LePage has removed a moratorium that prevented the Maine State Housing Authority from issuing federally subsidized tax-exempt bonds. For the past two years, the moratorium blocked the construction of hundreds of affordable housing units. The authority will soon launch the process of assessing housing proposals ahead of issuing as much as $120 million in tax-exempt bonds over the next three years, says Deborah Turcotte, the authority's spokeswoman. The authority has a list of 56 pending housing projects worth $218 million overall poised to create more than 2,000 new or renovated affordable and subsidized apartments across Maine. However, it remains to be determined which projects will qualify for funding. In early 2011, the governor halted the authorization of tax-exempt bonds issued by the authority as part of LePage's efforts to reign in the state's debt. When private investors purchase these bonds, they instantly obtain a 4 percent federal tax credit intended to facilitate low-income housing development. The authority usually approves a few 4 percent housing projects each year, Turcotte says, as well as some privately financed projects annually that compete for roughly $3 million in 9 percent federal tax credits allocated to the state. Approval of the 9 percent projects continued during LePage's bond ban.
Berkeley City Council to Reassess Affordable Housing Fee
Daily Californian (09/08/13) Fu, Alison
The Berkeley (Calif.) City Council on Sept. 10 took up the issue of affordable housing in the city. Currently, a city ordinance addresses the low-income housing shortage by giving apartment developers the option of incorporating affordable units into their building plans or paying a fee to the city to help pay for separate affordable housing projects. The city hopes to encourage the latter, which would let local government have a greater hand in regulating the low-income housing supply. Although affordable housing units are technically being developed through either option, some city councilmembers are concerned about the extent to which the city is able to oversee developers building and allocating the units themselves. After the City Council approved the Affordable Housing Mitigation Fee in October, it found that all developers went with the first option -- allocating 10 percent of their units to low-income tenants -- over the second option of paying the fee of $28,000 per apartment unit. The fees would have been pooled into the city's Housing Trust Fund, which also collects money from government grants to help finance local affordable housing projects. The council in February lowered the fee's amount by $8,000 per unit for developers who submit plans to build by early next fall, in hopes that the lower fee would encourage developers to pay into the fund. But so far, only one project has agreed to pay the fee.
HUD-Related Activity
HUD Proposes Fiscal Year 2014 Fair Market Rents
Novogradac Journal of Tax Credits (09/13) Vol. 4, No. 9 Ksor, Dat
Proposed fair market rents (FMRs) for HUD fiscal year (FY) 2014 are higher than FY 2013 FMRs for roughly 54 percent of counties and lower for about 46 percent of counties, according to a new report from the U.S. Department of Housing and Urban Development. Even though most counties will see an uptick, the average change in FMR is a drop of 0.18 percent. By contrast, in the FY 2013 FMRs 89 percent of counties saw an increase from the year prior and the average change was an increase of 8 percent. For properties that are part of the Low-Income Housing Tax Credit (LIHTC) program and the tax-exempt bond (TEB) program, the changes directly impact income limits for properties located in High Housing Cost (HHC) areas where HUD uses the FMRs to calculate income and rent limits.
Green Building
Green Building Should Not Cost More, Report Says
Environmental Leader (09/13/13)
M&G Investments has released a report that discusses the return on investment associated with using green building methods when constructing or retrofitting commercial buildings. The report noted that green building methods will not necessarily cost more than traditional construction and renovation methods so long as cost strategies, program management, and environmental strategies are taken into consideration from the beginning of the project.
The report also noted that the upfront costs associated with using green building methods are being driven down by the increased maturity of the green building supply chain. The growing availability of people who are skilled in green building methods, as well as the increased availability of the tools that are used in these methods, also are helping to reduce upfront costs. In addition, the report noted that any extra construction costs associated with the use of green construction are generally outweighed by the reduced energy costs associated with operating green buildings, usually within a reasonable period of time. However, the report also noted that green building projects need to be supported by strong project management and leadership as well as "robust" commissioning if such projects are going to deliver value.
Industry Trends
It Could Have Been Worse: Operating Expenses 2012
Affordable Housing Finance (09/13) Anderson, Bendix
In general, affordable housing managers were not severely impacted in 2012, bypassing significant increases in operating costs, according to the 2013 Income/Expense Analysis: Federally Assisted Apartments report released Aug. 27 by the Institute of Real Estate Management (IREM). Among the affordable properties in the survey, operating costs rose on average by roughly 2 percent or 3 percent in 2012. For various property types, the data indicates that operating costs rose or fell for idiosyncratic reasons. In contrast, cost increases affected nearly all property types during the past two years. "This year you didn't have consistency… Each property type is very different,” says Matthew O'Hara, income/expense analysis manager for IREM. According to IREM's findings, properties subsidized by the Sec. 202, Sec. 236 and Sec. 8 family programs, depending on the building type operating expenses, were either up within a range of $0.30 to $2.28 per square foot of rentable area or down (within a range of $0.12 to $1.22 per square foot). For Sec. 8 elderly/handicapped housing, operating expenses declined within a range of $0.14 to $0.99 per square foot, and for all types of Sec. 221(d)3 federally subsidized properties, operating expenses in 2012 vs. 2011 were up within a range of $0.47 to $1.26 per square foot. Meanwhile, utility costs could rise this year amid rising demand as the recovery strengthens and disturbances in the Middle East; the price of oil rose above $100 a barrel in July and is once again nearing $110.
FHFA Asks for Ideas on GSEs' Future, Industry Puzzled
Apartment Finance Today (09/13) Machak, Lindsay
The Federal Housing Finance Agency (FHFA) seeks public comment on alternative solutions for reducing the role of Fannie Mae and Freddie Mac's multifamily presence in the upcoming year. National Multi Housing Council Vice President of Capital Markets David Cardwell says, "We favor having as liquid a market as you possibly can. The demand for apartments over the next decade is going to be huge. It's costly to build and they're expensive to maintain and we need to reinvest in the stock that is there, not take away from it." One FHFA proposal would limit or eliminate short-term financing options, but push for longer term permanent financing. FHFA also is looking for feedback on what would happen if it simplified and standardized loan products. Cardwell suggests that limiting business activity could enable alternative sources of capital to provide financing to developers, and FHFA officials already ordered the GSE's to reduce their loan volume by at least 10 percent before the end of 2013. "Their actions have already had some ramifications on the marketplace. Borrowers are indicating concern over whether the GSE programs will be ramped back every year to a point where they are not going to be a viable source anymore," he says.
Syndicators Mull Rest of Year
Affordable Housing Finance (09/13) Vol. 21, No. 6, P. 20 Kimura, Donna
According to low-income housing tax credit (LIHTC) syndicators, LIHTC prices averaged 90 cents per dollar of credit at the middle of the year and that price should remain the same in the near future. The average hasn't changed much since the fourth quarter of 2012 and is about 3.5 percent higher than a year ago. Yields in national multi-investor funds rest at 7 percent to 7.5 percent, which explains why the market has stabilized recently. However, in larger urban areas competition between bank investors attempting to meet Community Reinvestment Act (CRA) requirements deals are going for $1.14 per dollar of credit. The majority of syndicators think the market will remain at its current level, but several factors like competition, multi-investor funds, and CRA buyers could force second half adjustments. Syndicators will also be keeping a close eye on rising interest rates, the Financial Accounting Standards Board (FASB), and the tax reform efforts in Congress. The FASB has been considering a change to the effective-yield method and tax reform could have a major impact on LIHTC.
Association News
LeadingAge Conference Offers a Range of Sessions for Affordable Senior Housing Providers
The LeadingAge Annual Meeting and Expo at the Dallas Convention Center in Texas, October 27–30, offers key sessions to providers of housing and/or services to low-income seniors. For details and an interactive summary, click on the link below.
Highlights include:
Sunday October 27
8:00 a.m. – 12:00 p.m. Deep Dive Workshops (Adaptive Leadership, Governance, or Home Health)
3:30 p.m. - 5:00 p.m.
3-A. Services Beyond Walls: Supporting Older Adults at Home
22-A. Affordable Living and Veterans Care 103-A. Understanding REAC Inspections
104-A. A Collaborative Partnership to Reduce Hospitalizations
167-A. Health and Wellness in Affordable Housing
Monday October 28
8:00 a.m. - 9:30 a.m.
5-B. Support and Services at Home: A Caring Partnership
4-B. Where Will We Live? Serving People with Disabilities
46-B. Strategies to Preserve and Refinance Affordable Properties
153-B. Legal Issues Forum (AEDs, DNRs, and guns in housing)
154-B. Federal Response to Prevent Elder Abuse
10:00 a.m. - 12:00 p.m. General Session: Can Not-for-Profits Truly Change the World? - Dan Pallotta
3:30 p.m. - 5:00 p.m.
155-C. Housing Policy Forum
26-C. 2013 Idea House: A Model for Aging in Place
85-C. Leadership Roundtables: The Stories of Inspirational Leaders
Tuesday October 29
8:00 a.m. - 9:30 a.m.
9-D. LeadingAge Innovations Fund: A Focus on Housing Plus Services
112-D. How to Get the Most Out of Your Maintenance Dollars
115-D. PACE and Senior Housing Partnerships
157-D. Home and Community-Based Services Policy Forum
10:00 a.m. - 12:00 p.m. General Session: Uncovering the Secrets of Longevity - Dan Buettner
3:30 p.m. - 5:00 p.m.
11-E. Working with Residents with Mental Illness
3-E. Senior Housing Preservation: What Makes an "A" Execution?
13-E. Telemonitoring for Aging in Place
118-E. Energy Management for Increased Operational Efficiency
Wednesday October 30
8:30 a.m. - 10:00 a.m.
119-F. HUD Management Update (detailed TRACS 202 D update, PBCA and funding issues, etc.)
15-F. The Innovations Home: Aging in Place Differently
121-F. Home and Community-Based Services: Insights from Providers
12:30 p.m. - 2:00 p.m.
164-G. Addressing Reasonable Accommodations Requests
16-G. Psychological First Aid: Response and Recovery to Traumatic Events
57-G. From Collaboration to Revitalization: The Rivertown Neighborhood Story
122-G. Telehealth and Remote Monitoring: Selection and Implementation
2:30 p.m. - 4:00 p.m.
166-H. HUD Fair Housing Requirements for Senior Properties
42-H. More Than Paint and Fabric: Renovating a Senior Community
76-H. Undercover Boss: Lessons from the Frontline
182-H. Expanding Services through Intergenerational Programs
Married Same Sex Couples Qualify Under the LIHTC Student Rule
On August 30, Grace Robertson of the IRS notified the LIHTC industry that legally married same-sex couples qualify for the married student exemption under the student rule. Revenue Ruling 2013-17, provides guidance on how it applies within the LIHTC program and can be found via the link below.
Text of IRS ruling follows:
"On August 29th, the IRS and Treasury released Revenue Ruling 2013-17, providing guidance for the treatment of same-sex marriages. To summarize, for Federal tax purposes:
1. The terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.
2. The Service adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages.
3. The terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.
Application
Revenue Ruling 2013-17 will be applied prospectively as of September 16, 2013. Except for specific instances described in the ruling, affected taxpayers also may rely on this revenue ruling for the purpose of filing original returns, amended returns, adjusted returns, or claims for credit or refund for any overpayment of tax resulting from these holdings, provided the applicable limitations period for filing such claim has not expired.
Specific to IRC §42 and 100% full-time student households, the exception under IRC §42(i)(3)(D)(ii)(II) for students who are married and can file a joint return applies to married same-sex couples as described in #2 above. Further, the exception can be applied retroactively to same-sex couples currently occupying low-income units.
For example, if a same-sex married couple is in the process of being evicted because they are both full-time students and were determined to be ineligible for the exception, then the exception is applied retroactively and the couple does not violate the requirement that a unit not be occupied entirely by full-time students."
Preserving The LIHTC Program – A Win-Win-Win for Affordable Housing
On Thursday, September 5th, U.S. News and World Report published an article written by Robert Dietz on the benefits of the low income housing tax credit (LIHTC) program. The name of the article is "A Win-Win-Win for Affordable Housing." Mr. Dietz describes the tremendous need for affordable housing across the country, how the LIHTC program works to create and preserve affordable units, and its many economic benefits to our industry and for society as a whole. To read the article, click on the link below.
Fair Housing Policies and Redevelopment Priorities Clash:
Town of Mount Holly Offers it’s Perspective
Earlier this year, the federal Department of Housing and Urban Development finalized a rule aimed at clarifying the issue. That rule states the agency has “long interpreted the act to prohibit practices that have an unjustified discriminatory effect, regardless of intent.”
A three-pronged test must be used to apply the rule: The plaintiff initially must prove that discrimination occurred. If the first condition is met, the defendant must prove that its practice was necessary to achieve “more substantial, legitimate and nondiscriminatory interests.” The plaintiff then has to prove there was a less discriminatory alternative available.
In its brief, the township argues that “the statute cannot be interpreted to allow disparate-impact claims against a local government that has adopted an otherwise valid plan to redevelop the blighted area without discriminatory intent. A contrary interpretation would require local governments to account for race in every redevelopment decision.”
The township claims that forcing it to consider issues of race when moving forward with redevelopment raises constitutional questions and contradicts the original intent of the Fair Housing Act.
“Because such decisions affect the lives and livelihood of the citizens in the redevelopment zone and the wider community at large, they are among the most sensitive, politically complex decisions local officials are called upon to make. … Absent proof of purposeful discrimination — and there is no such claim at issue here — requiring local officials to inject race into this equation would transform race from ‘an element of our diverse heritage’ into ‘a bargaining chip in the political process,’ “ the brief states.
Establishing disparate-impact claims as a violation of the act likely would force public officials to “allow neighborhoods to decline” since they will be fearful of lengthy legal battles.
“The prospect of disparate-impact suits may simply deter local officials from taking action in minority-predominated blighted areas at all,” the brief argues.
The case has been garnering national attention from legal experts because of its potential impact on the housing and lending industries, as well as other towns looking to redevelop blighted neighborhoods.
Another issue to consider is how the recently proposed rule on “Affirmatively Furthering Fair Housing” may impact local planning and funding priorities. Read the AFFH proposed rule at http://www.gpo.gov/fdsys/pkg/FR-2013-07-19/pdf/2013-16751.pdf.
NAHMA Announces 2013 Affordable 100 List
The National Affordable Housing Management Association (NAHMA) recently announced the release of the NAHMA 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 (see link below).
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 RentalHousingDeals.com, and task force members, Janel Ganim, Property Solutions; Jed Graef, MRI Software; Dave Layfield, ApartmentSmart.com; Mark Livanec, Yardi; Lori Russell, RealPage; Gustavo Sapiurka, RealPage; and Shari Smith, Choice Property Resources, Inc. For more details, click on the link below.
Become a Specialist in Housing Credit Management® (SHCM®) Company!
The three national associations sponsoring the Specialist in Housing Credit Management® certification program invite your company to become a Specialist in Housing Credit Management® (SHCM®) Company, a corporate designation created specifically to honor management companies that successfully maintain a significant portion of their properties and staff to the high standards of the SHCM certification program. The SHCM program, developed especially for management companies involved with properties developed and operated under the Low Income Tax Credit (LIHTC) program, is sponsored by the National Affordable Housing Management Association (NAHMA), the National Apartment Association Education Institute (NAAEI), and LeadingAge (formerly AAHSA, the American Association of Housing and Services for the Aging).
Earning the SHCM Company® designation publicly demonstrates that a company is among the finest managers of LIHTC housing in the industry.
For more details on how to become a SHCM Company, click on the link below.
Abstract News © Copyright 2013 INFORMATION, INC.
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