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Entry Deadline Nears for NAHMA 2013 Communities of Quality Awards Submissions
The submission deadline for entries to NAHMA's 2013 Communities of Quality Awards program is Nov. 8, 2013. The Communities of Quality Awards recognize outstanding property management companies providing the highest quality of safe, affordable multifamily rental housing in communities across the country. To enter the 2013 Communities of Quality (COQ) Awards competition, a property must have achieved National Recognition as a NAHMA Community of Quality with a minimum score of 325 points on its National Recognition Application. For COQ award program details, click on the link below. For details on completing an initial National Recognition Application, visit the webinar at https://www.youtube.com/watch?v=95U3ckWkyVA.
Tax Issues and Tax Reform
"Macroeconomic Scoring of Tax Reform Proposals Could Improve Outlook for Investable Tax Credits"
"Iowa View: We Need to Protect Housing Throughout Tax Reform"
"Investors' Hot-Button Issues"
Congress
"Federal Budget Cuts Raise Affordable-Housing Rents"
State and Local Activities
"Inclusionary Zoning Making Slow Progress"
Green Building
"'Green' Building Incentive Nears End"
Management and Compliance
"Yellow Paint Warnings"
"Multi-Tenant Housing Security: How Access Control and Video Fit Into Your Needs and Budget"
Court-Related Activity
"Section 42 Housing Could Cost Miss. Coast Counties Millions"
Market and Program Trends
"Treasury Announces $325 Million in Community Development Bonds"
Association News
NAHMA 2014 Calendars Now Available For Purchase!
FHA Reform, LIHTC Bills in Senate
NAHMA Announces 2013 Affordable 100 List
Become a Specialist in Housing Credit Management® (SHCM®) Company!
Tax Issues and Tax Reform
Macroeconomic Scoring of Tax Reform Proposals Could Improve Outlook for Investable Tax Credits
Novogradac Journal of Tax Credits (10/13) Vol. 04, No. 10 Novogradac, Michael J.
Tax reform plans are now being formed by House Ways and Means Committee Chair Dave Camp (R-Mich.) and Senate Finance Chair Max Baucus (D-Mont.). House Republicans advocate revenue neutral tax reform, while the budget adopted by the Senate calls for $975 billion in new revenue. Tax reform proposals will be scored on a "conventional" basis, but under House Rule XIII(3)(h)(2), the Joint Committee on Taxation (JCT) will also provide a macroeconomic impact analysis to examine the wider macroeconomic revenue impact of various tax proposals. House rules require the JCT staff to provide a macroeconomic impact analysis of all tax legislation reported by the Ways and Means Committee. The reference point used for revenue estimates by JCT staff is the Congressional Budget Office's (CBO) 10-year projection of federal receipts, referred to as the "revenue baseline." The majority of economists agree that there are macroeconomic effects from the low-income housing tax credit (LIHTC), new markets tax credit (NMTC), historic tax credit (HTC) and renewable energy tax credit (RETC) programs. For instance, the LIHTC supports roughly 100,000 multi-family rental units annually, which typically represents a quarter to a third of all yearly multi-family construction. For LIHTC and NMTC, the revenue costs are spread over a multiple years, and the macroeconomic benefits are highest in the early years of the projects subsidized. Under macroeconomic scoring, these two tax credits might be deemed revenue positive, or at least revenue-neutral, over a 10-year scoring period.
Iowa View: We Need to Protect Housing Throughout Tax Reform
Des Moines Register (10/10/13) Garrett, Dan; Liette, David
The authors of this commentary note that Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking Republican Orrin Hatch of Utah have indicated that they are drafting tax reform legislation by starting with a "blank slate," meaning that every provision will have to earn its way into the tax code by proving it helps to grow the economy, make the tax code fairer, or promote other important policy objectives. The authors say such a plan increases the importance of understanding "that eliminating America's main tool for creating affordable housing — the low income housing tax credit or housing credit — would hurt Iowa's economy and weaken our communities." They call the housing credit a flexible tool that is targeted to meet specific local needs, and that "represents the best of what public-private partnerships can do to help strengthen neighborhoods, leveraging nearly $100 billion in private capital over the past quarter century." The housing credit is virtually the only source of capital to address the widening gap between the number of available affordable apartments and low-income renters in need of housing. It is also a critical catalyst for economic development in Iowa, where it has created more than 27,000 jobs and led to $2.1 billion of local income and $203 million in state and local tax revenue. Nationally, it supports approximately 95,000 jobs each year, mostly in the small-business sector. The authors warn that if tax reform leads to the reduction or elimination of the housing credit, "Iowa and our country will face a severe loss of affordable units, leading to fewer jobs, less revenue and more hardship for many already struggling communities."
Investors' Hot-Button Issues
Affordable Housing Finance (10/13) Vol. 21, No. 7, P. 24 Kimura, Donna
The low-income housing tax credit (LIHTC) market has been on a pretty good run this year, but investors still have their concerns and will be watching several issues this fall. The No. 1 issue for Laura Bailey, managing vice president, community development finance, at Capital One, is preserving a rainy day fund for emergencies. Bailey also notes that market veterans want to see some risk sharing with the developer on deals with project-dedicated Sec. 8 contract, and that interest rates are another big story. Beth Stohr, director of new production for affordable housing tax credit investments at U.S. Bancorp Community Development, agrees that rising interest rates is a primary difference from a year ago, noting that they can create gaps in a project's budget, which can cause deal delays. "One solution could be to defer the developer's fee into cash flow," she says. David Leopold, senior vice president and tax credit equity executive at Bank of America Merrill Lynch, is watching to see what happens with potential accounting changes, such as with the effective-yield method, which could present investments in a simpler way on financial statements. He is also keeping a close eye on cuts to federal and local housing budgets and the spread in LIHTC prices.
Congress
Federal Budget Cuts Raise Affordable-Housing Rents
Palo Alto Weekly (10/20/13) Kadvany, Elena
Large numbers of people in Santa Clara County, Calif., live in Section 8 housing, a federal program that provides housing vouchers for low-income families, the elderly, and disabled. Federal sequester cuts reduced $21 million from the Housing Authority of the County of Santa Clara's Section 8 funding in March; the authority was able to came up with $6 million. The authority provides affordable housing for more than 16,500 households via the Section 8 program. The county agency opted to raise rents and make other cost-saving changes to the housing program rather than evict occupants. As of Sept. 1, Section 8 residents must pay 35 percent of their gross monthly income towards rent, up from an average of approximately 27 percent, according to the county housing authority. Utilities, child care, health insurance, and other allowances that previously were taken into account when determining a resident's rent were eliminated. Furthermore, the county housing authority altered its voucher policy by adopting the U.S. Department of Housing and Urban Development's minimum standard for how many bedrooms a Section 8 family can qualify for. As of Sept. 1, the head of the household receives one room, plus one additional room for every two people, irrespective of age or gender. Georgina Mascarenhas, director of property management for the Palo Alto Housing Authority, says the Palo Alto Housing Corporation has long wait lists for all unit sizes, and waiting lists for Section 8 sites only open every five to seven years.
State and Local Activities
Inclusionary Zoning Making Slow Progress
Greater Greater Washington (09/24/13) Cort, Cheryl
Washington, D.C., has launched an affordable housing program called Inclusionary Zoning (IZ) that requires developers to set aside 8 percent to 10 percent of new housing in projects with more than 10 units for households earning between 50 percent and 80 percent of the area median income. This translates into incomes between $42,778 and $69,530 for a household of two, with rents for one-bedroom apartments in the program ranging from $1,006 and $1,610 a month, while similar condominiums sell for between $116,600 and $220,100. Of the 28 available units, one for-sale unit had been sold and 14 rentals have been leased as of July, but the city's Office of Planning says an additional 262 IZ units are planned for 24 different projects. Subsides for IZ's affordable units are generated via a density bonus, allowing more units than could otherwise be built there. IZ integrates below-market-rate homes into a larger, market-rate development to create below-market rate units wherever new housing is being built. The city recently changed the standard covenant in mortgages for IZ units that release any price constraints in the event of a foreclosure. Developers can use a lottery system or create their own DHCD-approved marketing plan to find and select applicants for IZ units. The city's Department of Housing and Community Development also hopes to have new nonprofit assistance in place by October 1.
Green Building
'Green' Building Incentive Nears End
NuWire Investor (10/01/13) Anderson, Bendix
Many building owners and commercial developers are racing to use the Energy Efficient Commercial Building Tax Deduction before it expires. By upgrading HVAC systems, lighting, and building envelopes, building owners can qualify for up to a $1.80 per-square-foot tax deduction. The program currently is set to expire Dec. 31, but commercial real estate advocates are lobbying Congress to extend and expand the program. Owners can apply for improvements made in the last six years, if the improvements meet independent certification that they cut energy costs. Other tax incentive programs from state and local governments and local utility companies also encourage and help owners and developers make their commercial properties more energy efficient.
If the program is renewed, it also may be expanded to include real estate investment trusts. Including REITs in the program would enable them to pass tax benefits along to their tenants. They also would be able to count a cash grant for energy improvements as a real estate asset, maintain their federal tax status, and make the incentives more valuable. The Obama administration is pushing Congress to also "incentivize" energy efficient development and rehabs. "The President believes that a new, more flexible tax credit is necessary to optimize investment opportunities for building owners and real estate investment trusts," according to the White House website.
Management and Compliance
Yellow Paint Warnings
Journal of Property Management (10/13) Vol. 78, No. 5, P. 46 Pereira III, Julius
Using yellow paint on pedestrian walkway areas demands careful consideration. Yellow is used to mark parking areas along curbs, and also is a cheap way to direct pedestrians' attention to uneven walkway conditions. In one instance, yellow paint was applied along the curb to designate a no-parking zone, but it was only applied to a portion of the side flares on the curb ramp. Painting the entire flared sides of the curb ramp could lower pedestrians' chances of involvement in subsequent litigation, since they would take greater care and not trip at the unpainted portion of the side flare. In another example, the painted curb extended along the side of a concrete ramp that linked a parking lot level with a sidewalk level, and there was a small but dangerous difference in elevation between sections of the sidewalk along the top section of the ramp between the end of the paint and the column. Painting the entire difference in elevation could have inexpensively lowered involvement in the subsequent lawsuit. In each case, the yellow-painted areas distracted the user from the unpainted, uneven walkway segments. Consequently, the use of yellow paint should not draw attention away from conditions that pedestrians should be aware of.
Multi-Tenant Housing Security: How Access Control and Video Fit Into Your Needs and Budget
Security (09/13) Vol. 50, No. 9, P. 94 Hodgson, Karyn
Video and access control are the discretionary aspects of security technology that can help multi-tenant housing environments protect their residents. Video can help with assessment and evidence, but other security measures will be needed to keep problems from moving to another part of the property. Access control is an active deterrent, but if it is not convenient residents will try to circumvent it. Choosing how and when to implement access and video is where misconceptions, unrealistic expectations and mistakes most often occur. In a perfect scenario, the best option is integration between access and video, and ultimately life safety as well, to create a stronger security tool that allows for maximum protection, according to integrators and consultants. Multi-tenant facilities may have to decide whether to phase-in both technologies and start smaller, or go fully with one technology then add the other later. They can start small because it is better to have something than nothing. If the budget allows for one or the other and the existing structure is not already safe and secure, the first step should be access control.
Court-Related Activity
Section 42 Housing Could Cost Miss. Coast Counties Millions
Jackson Clarion-Ledger (MS) (10/22/13)
A recent ruling by the Mississippi Supreme Court will likely cost more than $6 million in tax revenue for the state's Gulf Coast counties, cities, and schools, according to tax assessors. The ruling relates to how counties calculate the value of Section 42 federally subsidized tax-credit housing for tax purposes. Jackson County Tax Assessor Benny Goff informed the Board of Supervisors on Monday about the ruling, the Sun Herald reports. Goff pointed out that tax-credit housing built on the Coast in the wake of Hurricane Katrina enabled the federal government to help private companies construct subsidized apartment complexes offering lower rent to low-income people. The Supreme Court ruling calls for tax assessors to adhere to state taxing rules that say a county should not include the subsidy in the value.
Market and Program Trends
Treasury Announces $325 Million in Community Development Bonds
Affordable Housing Finance (10/13)
The inaugural round of the Community Development Financial Institutions (CDFI) bond guarantee program will offer $325 million for investment in low-income communities across the country. The Treasury Department will guarantee the bonds, which have maturities up to 29.5 years, and the Federal Financing Bank will purchase them. TriSail Funding, a subsidiary of Bank of America, will serve as the qualified issuer for Enterprise Community Loan Fund and Local Initiatives Support Corp. (LISC). Enterprise and LISC will each use $50 million in proceeds to support affordable housing and other commercial development projects. The Community Reinvestment Fund in Minneapolis will serve as the qualified issuer for The Community Development Trust, which has received a term sheet for $125 million in bonds that will be used to preserve and expand affordable housing. And Opportunity Finance Network in Philadelphia will serve as the qualified issuer for Clearinghouse CDFI and bonds that will help advance its work. Under the federal credit program, bond proceeds are debt instruments that must be repaid.
Association News
NAHMA 2014 Calendars Now Available For Purchase!
NAHMA is pleased to announce that the 27th edition of its Drug-Free Kids Calendar is now available for purchase. The calendars feature outstanding original artwork by children and seniors and special needs adults living in affordable housing.
In addition to the drug-free message, this year’s contest had a sub-theme that reinforces a message about positive uses of time. The theme was “We are One Family” and the sub-theme was “Friends Make the World a Nicer Place.”
The full-color calendars feature the artwork of children and seniors who reside in affordable, multifamily housing all across the country. Children (grades K-12), seniors (age 62 or older) and special needs residents competed in the national calendar contest and winners were selected by a panel of independent judges. Children and seniors competing in the national contest are selected from the thousands who participate in the regional poster contests sponsored by local Affordable Housing Management Associations (AHMAs) across the country.
The grand-prize winner receives a $2,500 scholarship from the NAHMA Educational Foundation, national winners receive $1,000 scholarships and Honorable Mentions receive a $100 scholarship. In addition, the grand-prize-winning artwork is printed on the cover of the 2014 calendar, with the other artwork appearing inside and on the back cover.
Calendars are $5.50 each and can be ordered from NAHMA’s website at http://www.nahma.org/store/index.html, or by calling (703) 683-8630 ext. 115. Because of its strong anti-drug message, the calendar is an allowable project expense for managers of housing subsidized by HUD and the Department of Agriculture. Tax credit properties that purchase calendars benefit twofold: by supporting the drug-free message and their own commitment to social services, and potentially obtaining more points in the funding-allocation process.
Below is a complete list of contest winners (along with the name and location of their apartment complex, the name of the housing management company, and the local AHMA). For more information about the contest or to contact a local AHMA, see NAHMA’s website at www.nahma.org
GRAND-PRIZE WINNER
* Anna Wen, Grade 12, Kukui Tower, Honolulu, HI, EAH Housing, AHMA NCNH
WINNERS
* Toni Gilbert, Senior, Lenola School Apartments, Moorestown, NJ,
Moorestown Ecumenical Neighborhood Development, Inc. (M.E.N.D.), JAHMA
* Daniah Alzubaidy, Grade 3, Casa Mesa Estates, Mesa, AZ, Biltmore Properties, AHMA PSW
* Christian Vera, Grade 10, The Fairways, Worcester, MA, First Realty Management, NEAHMA
* Kenny Camacho, Special Needs, Winteringham Village, Toms River, NJ, Interstate Realty Management, JAHMA
* Marissa Ibarra, Grade 12, Strathern Court Apartments, Sun Valley, CA, Thomas Safran & Associates, AHMA PSW
* Jamaurio McMillian, Grade 8, Winteringham Village, Toms River, NJ, Interstate Realty Management, JAHMA
* Zoe George, Grade 6, Casa Mesa Estates, Mesa, AZ, Biltmore Properties, AHMA PSW
* Melvin Stevenson, Grade 9, Eastgate Schoolhouse Road Estates, Clarksdale, MS, Southland Management Corp., SAHMA
* Jennifer Lauzon, Grade 7, Bay Village, Fall River, MA, First Realty Management, NEAHMA
* Vivianna Salcido, Grade 9, Strathern Park Apartments, Sun Valley, CA, Thomas Safran & Associates, AHMA PSW
* Claudemyre Benoit, Grade 12, Davis Commons, Brockton, MA, First Realty Management, NEAHMA
* Katherine Camacho, Special Needs, Winteringham Village, Toms River, NJ, Interstate Realty Management, JAHMA
* Vivian Lee, Grade 12, Kukui Tower, Honolulu, HI, EAH Housing, AHMA NCNH
HONORABLE MENTIONS
* Gamalia Cruz, Grade 7, Kensington Townhouses, Philadelphia, PA, The Michaels Organization, PennDel AHMA
* Delores Johnson, Special Needs, Irving Apartments, Denver, CO, Archdiocesan Housing, Rocky AHMA
* Marte Craig, Grade 9, Southpark Apartments, Columbus, OH, American Apartment Management Company, MAHMA
* Tayah Teel-Sullivan, Grade 4, Greene Hills Estate, Springfield, VA, NDC Real Estate, Inc., Mid-Atlantic AHMA
* Janice Mendoza, Grade 1, Sherwood Apartments, Edinburg, TX, Wedge Management, SWAHMA
* Betty Rodkey, Senior, Leonard Court Apartments, Clearfield, PA, Central PA Development Corp., Inc. and Central PA Community Action, Inc., PAHMA
* Jazmin Moreno, Grade 10, Fawn Ridge Apartments, The Woodlands, TX, BSR Trust, AHMA ET
FHA Reform, LIHTC Bills in Senate
Two key bills affecting affordable housing – Federal Housing Administration (FHA) reform and Low Income Housing Tax Credit (LIHTC) rate preservation – are under consideration in the Senate.
The Senate Committee on Banking, Housing and Urban Affairs passed S 1376, the FHA Solvency Act of 2013. Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) authored the bill, which seeks to give FHA tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA’s reverse mortgage program.
Under S 1376, FHA would be:
• Required to review premium levels each year to ensure that they are set at a level that will cover the expected risk the agency faces and allow it to maintain the required capital reserve ratio.
• Given the authority to increase its annual mortgage insurance premium (MIP) from 1.55 percent to 2.05 percent. A minimum annual MIP of .55 percent would be established as well.
Washington Senator Maria Cantwell (D) introduced S 1442, a bill to make permanent the temporary 9 percent floor for volume cap Housing Credits and create a new 4 percent floor for volume cap Housing Credits used for acquisition. The current 9 percent floor will expire in January 2014, raising the risk of delays in affordable housing development due to increased rates.
S 1442 would also:
• Eliminate the financial risk of the current floating rate system;
• Simplify state administration; and
• Create stability for owners and investors of Housing Credit developments.
The same bill was introduced in the last Congress by former Senator Olympia Snowe of Maine.
For an overview of legislative news related to affordable housing, visit the NAHMA website at the link below.
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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