Congress Approves the FY 2012 HUD Budget
Joint Committee on Deficit Reduction Fails to Reach an Agreement
Why Elder Homelessness Is A Growing Concern
NAHMA Offers Green Housing Management Publication
"The Future of Rural Rental Housing Finance"
"Cautious Forecast for LIHTC Market"
"U.S. Supreme Court Lets Oakland Section 8 Ruling Stand, Renters Stay"
"LIHTC Ceiling Increase Announced"
"California Sees Jump in LIHTC Volume"
"Tax Reform Ahead"
"White House, Agencies Cut Red-Tape for Some Multifamily Housing Developers"
"Tax Credits Are More Efficient Than Cash Grants"
"Rental Projects Grow"
"A Search for Subsidized Housing, Simplified"
"Inside the Guide: FHA Serves Up a New MAP Guide"
"Despite High Pricing, Experts Say LIHTC Market Is Stronger Than Ever"
"Meetings Focus on Affordable Housing Issues"
"Study Clarifies the Energy Savings in Retrofitted Buildings"
"Hope for Housing"
Congress Approves the FY 2012 HUD Budget
On Nov. 18, President Obama signed into law the fiscal year (FY) 2012 Transportation, Housing and Urban Development (THUD) Appropriations bill (Public Law Number 112-55). The legislation provides $37.3 billion in new funding for the Department of Housing and Urban Development (HUD). This is a $3.8 billion reduction from FY 2011 levels, and $4.7 billion below the President’s request. A continuing resolution (CR) included in the legislation will keep the remainder of the government running through Dec. 16 as Congress continues to consider FY 2012 funding for other agencies.
While the funding levels for many of HUD's core programs were protected, the fiscal 2012 “minibus” eliminates funding for the Section 202 new development program. However there is a little good news for the preservation of senior housing. The conference report for the act includes first-time funding for the Senior Preservation Rental Assistance Contract (SPRAC), which will provide rental assistance for unassisted residents of older Section 202 properties that are refinanced and preserved, many of them with tax credits.
Both the ability to refinance the oldest 202 inventory and to provide rental assistance for unassisted seniors who would be displaced by a rehab and refinancing were provisions of the Section 202 reform legislation that became law in January 2011. Funding for SPRAC had not been available until now. HUD has been working on the regulations to implement SPRAC since the beginning of the year and industry is hopeful they will be available shortly, now that there are funds explicitly available.
The conference report also includes a demonstration program - known as Rental Assistance Demonstration (RAD) (formerly known as PETRA or TRA) - which permits public housing authorities to convert operating subsidies and capital funds to section 8 project based assistance. The demonstration includes no new money and is limited to 60,000 units. This is a much less ambitious proposal than previous proposals which would have converted existing project based section 8 contracts to a new form of section 8. For rent supplement and RAP properties that are eligible for tenant protection vouchers, under the RAD authority the tenant protection assistance may be converted to project based section 8 vouchers as long as the residents are consulted and the housing authority administering the tenant protection vouchers agrees to the change.
As a new source of tenant protection assistance, there is $10 million for tenant protection vouchers in situations where Sections 236 or 221(d)(3) mortgages and rental assistance contracts mature and non-profit owners could not prepay without HUD permission. The enhanced vouchers can be converted later to project based vouchers.
The conference report also includes authority to extend the Mark to Market Program until September 30, 2015 for those HUD insured mortgages with section 8 rents that exceed market and need to be restructured to lower the rents. Extension of the program authority also means additional refinancing tools for this inventory.
For specific funding amounts, and a detailed analysis of the appropriations bill click on the link below.
Joint Committee on Deficit Reduction Fails to Reach an Agreement
Just before Thanksgiving the Congressional Joint Committee on Deficit Reduction (Super Committee) cried “Uncle” and admitted that there would be no agreement on a deficit and debt reduction plan for the next 10 years that would achieve $1.2 trillion in savings through a balanced plan of savings in spending, both discretionary and mandatory, and of increased revenues. By way of background, as part of the deal on raising the debt limit in August, Congress created what became known as the Super Committee (12 members of Congress, 6 Rs and 6Ds, evenly divided between the House and Senate). The Super Committee was charged with reducing all expenditures by an additional $1.2T to reduce the deficit and it had the power to cut all programs (including Medicare, Social Security, Medicaid) and to increase taxes or to make whatever changes to programs it could get agreement on. More importantly, any agreement reached by the Super Committee would get an up/down, majority vote, no filibuster, no amendments once it was presented to Congress. Under the original agreement, if the Super Committee failed to reach consensus, then in January, 2013, funds equally divided between domestic discretionary and defense and security discretionary funding would be sequestered - or cut - from the overall cap established for discretionary spending.
The failure of the Super Committee to propose a deficit and debt reduction plan now may lead to this budget sequestration in January 2013. If sequestration is imposed it will impact primarily the discretionary side of the budget. Certain entitlements or mandatory spending such as Medicaid, SSI, SS, CHIP, Food Stamps, veterans benefits and retirement benefits are exempt from sequestration, and cuts in Medicare to providers are limited to 2%. Low income housing programs are not exempt from sequestration. For domestic discretionary spending programs, estimates are that the across-the-board cut will be 9% if sequestration is imposed. The overall cap will be reduced and the appropriations committee will divide up the cuts.
The betting is that sequestration will be avoided somehow because the defense cuts are abhorrent. What that will mean is that a deficit deal will have to be reached, although that will be difficult in an election year. A deficit deal will likely focus primarily on mandatory or entitlement spending, and revenues or reform of the tax code. Also likely is more focus on so-called tax expenditures, including the low income housing tax credit and the mortgage interest deduction. Reductions in or elimination of both have been discussed by various deficit reduction committees and commissions including Simpson-Bowles, Rivlin-Domenici, the Gang of Six (Senators), and the Super Committee.
For additional legislative news, click on the link below.
Why Elder Homelessness Is A Growing Concern
At the recent Housing Policy Forum held during the LeadingAge 50th Anniversary Annual Meeting in Washington, DC, Mark Hinderlie, president and CEO of Hearth of Boston, introduced LeadingAge members to one of the thorniest housing policy concerns: the disturbing increase of homelessness among elders and near elders in our nation’s communities.
Mr. Hinderlie began his presentation by describing how homeless providers and advocates talk about the problem of elder homelessness. When homeless advocates talk about elder homelessness, they are talking not only about those 62 and older, but also those who are between the ages of 51 and 62. The reason for this age range is that homelessness and the chronic health conditions resulting from living on the streets cause these older adults to be functionally and physically equivalent to unhealthy seniors.
Mr. Hinderlie went on to outline:
• The growing problem of elder and near-elder homelessness, citing the growth nationally of seniors and near-elders in already in shelters or becoming homeless.
• The causes for elder and near-elder homelessness (poverty and the lack of affordable housing).
• The problems associated with older adult homelessness.
• One of the primary solutions to the growing problem: an increase in the availability of affordable services enriched or supportive housing for seniors such as those funded under the Section 202 program – long on LeadingAge’s policy agenda.
Hearth is a supportive housing provider for homeless seniors in the Boston area and along with the Corporation for Supportive Housing has been the recipient of grant funds from the Retirement Research Foundation to establish a National Initiative on Elder Homelessness to explore the state of the need and to make recommendations about how to address the growing problem.
To view the presentation powerpoint, click on 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.
The Future of Rural Rental Housing Finance
Multi-Housing News (11/11) McGuire, Ginger
Federal budget recommendations and legislative proposals are raising questions about the future of federal financial support for rural affordable rental housing projects and about how these much-needed developments will be funded in coming years. Although other funding avenues such as Fannie Mae, Freddie Mac, or FHA are available and effective, none provides the same dedication to rural America as do the Rural Development programs. The high demand for affordable rural housing units often goes unnoticed in the mainly urban United States, but the poverty rate is consistently higher in rural areas (15.1 percent) than in urban areas (12.9 percent), suggesting a pressing need for new and/or updated units. As such, it is disappointing to many that current budget cuts may adversely impact rural funding sources. The USDA 538 program, created in 1996, provides financing for new rural properties and preservation of older 515 apartments. To date more than 699 rural affordable housing projects have been guaranteed with the Section 538 program. However, the program is one of the early casualties in the budget deficit cuts. Without program changes, the prospects appear to be bleak; and if the program does not continue, rural developers would have to be creative and persistent in their pursuit of capital. Section 538 was created as a funding source for new construction and a source for rehabilitation dollars, and to be used along with existing sources, such as Rental Assistance (RA), to keep rents low. Many are eager to find viable solutions to finance the next generation of rural housing, and HUD has previously made forays into rural America, and may do so again, though urban and suburban areas are more often its comfort zones. Specific experience and delivery systems are needed to finance housing in the countryside. The hope of making the 538 program revenue neutral is still alive. For those who need a solution now, there are some alternate funding programs that appear to be working as a substitute for the 538. These include accepting 538-approved projects into the FHA 221(d)(4) program for processing, granting loans from a government-sponsored entity like Fannie Mae or Freddie Mac, and using tax-exempt bonds with a Fannie Mae credit enhancement.
Cautious Forecast for LIHTC Market
Housing Finance (11/09/11) Kimura, Donna
Low-income housing tax credit (LIHTC) investors and syndicators are much more reserved going into 2012 than they were a year ago. Several leading firms are no longer projecting growth like they did last year and are instead conservatively anticipating their investment volumes to be roughly the same as this year. That is a sign that the overall market may be tightening up after a big spike in pricing and drop in yields, a trend that could trigger some economic investors to stop or slow down on their investing. There is question as to whether investors besides banks will remain active LITHC buyers in 2012. “When you look at the larger banks, I think the top six of us account for almost 50 percent of the marketplace,” said Beth Stohr, president of U.S. Bancorp Community Development Corp. “The remaining 50 percent, that bucket, is less loosely known. That may cause some adjustments in the marketplace, but I think they’re yet unknown.” In the last few years, RBC Capital Markets Tax Credit Equity Group has closed about $500 million to $600 million in annual LIHTC investments. “We’ll do that again in 2011 and hope to do the same in 2012,” said Craig Wagner, director of business development. “[But] there are a lot of unknowns out there.” The investor landscape is already shifting; RBC’s last fund had 12 investors -- eight insurance companies and four banks -- whereas the company’s new fund will have mostly banks and only a few insurance companies. That appetite of insurance companies and other economic investors is one of the big question marks going into 2012, according to Wagner. The varied expectations could suggest a coming equilibrium, according to David Leopold, senior vice president at Bank of America Merrill Lynch, who manages the origination of LIHTCs, New Markets Tax Credits, and historic tax credits at the bank. Another critical industry issue will be the return of the floating rate on 9 percent LIHTCs. Unless Congress acts to continue to have a 9 percent fixed rate or state allocating agencies come up with alternative plans, the industry will likely have to go back to underwriting deals at a lower rate beginning next spring, which could create a difficult transition period for deals.
U.S. Supreme Court Lets Oakland Section 8 Ruling Stand, Renters Stay
San Francisco Chronicle (11/30/11) P. C2 Egelko, Bob
The U.S. Supreme Court has upheld an appeals court decision that blocked an apartment owner in Oakland from evicting low-income tenants after dropping out of the Section 8 program. The high court denied review of the case, Mortimer Howard Trust vs. Park Village Apartment Tenants Association, 11-36, without comment. Landlords have not had much success in their attempts to evict Section 8 participants in order to charge higher rents. Last February, the Ninth U.S. Circuit Court of Appeals in San Francisco let stand the January 2010 ruling by U.S. District Judge Saundra Brown Armstrong that favored the group of 15 elderly renters. The court said that Park Village Apartments had the right to leave the Section 8 program, but noted that a 2000 federal law "provides tenants a right to remain in their rental units" as long as they continue to pay their share of the rent and give landlords no other legitimate reason to evict them. The attorney for the owners of the apartment complex, Paul Alaga, called the appeals court ruling "an egregious invasion of the rights of private property owners" in seeking the review by the U.S. Supreme Court.
LIHTC Ceiling Increase Announced
Housing Finance (10/21/11)
The Internal Revenue Service recently announced that the state low-income housing tax credit (LIHTC) ceiling will be the greater of $2.20 multiplied by the state population, or $2,525,000, in 2012. That is an increase from $2.15 multiplied by the state population, or $2,465,000, this year. The amount used to calculate the state ceiling for the volume cap for private-activity bonds will be the greater of $95 multiplied by the state population, or $284,560,000, next year. This is a change only to the small state minimum, which is $277,820,000 this year.
California Sees Jump in LIHTC Volume
Affordable Housing Finance (10/11) Kimura, Donna
This year has been a significant one for low-income housing tax credits (LIHTCs) and tax-exempt bonds in California. The California Tax Credit Allocation Committee (CTCAC) reserved credits to 101 developments this year compared with 75 in 2010, reports William Pavao, executive director of the committee. Furthermore, credits per unit have fallen by approximate 24 percent, while volume is higher for 4 percent credits as they return to pre-recession levels. The committee has awarded these credits to 103 projects to date along with roughly a dozen more pending, compared with 49 deals last year. The California Debt Limit Allocation Committee (CDLAC) experienced greater demand for bond financing, with about 140 applications in 2011 compared with 67 last year. The increase has been credited to such things as a ramp-up in the New Issue Bond Program, according to CDLAC program manager Misti Armstrong. CTCAC, CDLAC, the Department of Housing and Community Development, and the California Housing Finance Agency are co-sponsoring a study to assess the costs of developing affordable housing compared with market-rate developments. The study will include factors that impact the cost of affordable housing.
Tax Reform Ahead
Multi-Housing News (11/11) Berger, Matthew
Many public policy officials say that the nation’s tax code needs to be reformed in order to generate economic growth and make the nation more globally competitive. Matthew Berger, vice president of tax for the National Multi Housing Council (NMHC), says his organization is keeping an eye on key issues and key threats within tax reform that could affect the apartment industry. Many seek to cut the 35 percent tax rate applicable to multinational corporations, but there is a danger this change could come at the expense of partnerships, which are frequently established by apartment developers, investors and operators. Accordingly, apartment executives should ask their lawmakers to oppose any tax reform proposal that would seek to force partnerships with incomes over certain thresholds to pay tax under the corporate system. The Low Income Housing Tax Credit (LIHTC) program also could theoretically be harmed during tax reform negotiations should lawmakers look to trim credits and deductions. The council also is keeping an eye on the carried interest tax, which has been a fundamental part of real estate partnerships for decades. Investing partners grant a carried interest to the general partners to recognize the value they bring to the venture as well as the risks they take. Some have suggested that one reason the economy became overleveraged in the lead-up to the financial crisis was because the tax code favors debt over equity, and proposals have emerged to eliminate this disparity by scaling back the current deduction for business interest. Doing this, however, would greatly increase the cost of debt financing and severely hamper new construction. Finally, Congress must make major policy decisions prior to the end of 2012, when the Bush-era tax rates expire and peak income tax rates rise. Though it is not clear how Congress will address these tax provisions, two things are apparent: tax policy will be at the forefront of Congress’s agenda in the coming weeks and months, and the industry must be prepared to advocate for its priorities as policymakers move forward to ensure multifamily housing is not a disadvantaged relative to other industries under any future tax code.
White House, Agencies Cut Red-Tape for Some Multifamily Housing Developers
Housing Wire (11/07/11) Panchuk, Kerri
The Obama Administration has rolled out a pilot program to remove the need for redundant inspections and other repetitive regulatory practices for federally subsidized properties. The program recognizes that many subsidized apartments generally rely on multiple sources of state and federal funding, and that those funding providers already require developers to conduct multiple inspections and other procedural checks. Eliminating these redundancies could save as much as $28.8 million per year. Affordable multifamily developers underwent 22,546 inspections on 10,485 properties in 2007--a number that could be halved by the pilot program, according to federal officials. The pilot program will begin in Wisconsin, Michigan, Washington, Minnesota, Oregon, and Ohio.
Tax Credits Are More Efficient Than Cash Grants
Novogradac Journal of Tax Credits (11/11) Novogradac, Michael J.
Despite successful track records, tax credit programs continue to come under attack by a handful of critics who suggest that cash grants might be more effective. To defend cost-effective programs such as the low-income housing tax credit (LIHTC) and new markets tax credit (NMTC) against such attacks, Novogradac & Company has been commissioned to analyze the efficiency of the tax credits compared to that of comparable cash grants. Simply put, Novogradac has found that, when compared to cash grant programs, tax credits are a more efficient way for the federal government to support affordable housing, community development, renewable energy, and historic preservation. In March 2011, the Government Accountability Office (GAO) issued a report suggesting that Congress consider converting the NMTC program to a cash grant program. However, an analysis commissioned by the NMTC Working Group shows that the NMTC is more efficient at delivering subsidy to qualified active low-income community businesses (QALICBs) than is a hypothetical comparable cash grant program. The analysis reveals that the NMTC, at a price of 68 cents per credit, is more efficient than a cash grant program in providing benefits to QALICBs. Furthermore, it shows that as the price paid per NMTC rises, the comparative efficiency of the NMTC rises as well; at a price of 75 cents per credit, the NMTC is at least 15 percent more efficient than a cash grant program would be. Still, there are more ways to make the NMTC perform even more powerfully. Instead of converting the NMTC to a cash grant program, the NMTC Working Group suggests that addressing technical matters can help the program work even better. The group also analyzed suggestions that the LIHTC could be exchanged for a cash grant program. Its analysis found that LIHTC-financed properties have a remarkable track record, particularly when compared to the performance of other federal government subsidies of affordable rental housing. The report identified several key structural reasons for the LIHTC's remarkable track record: the involvement of a third-party for-profit partner; the placement of construction, lease-up, and occupancy risk on the sponsors and investors instead of the federal government; the delivery of LIHTC benefits over time; and state and federal oversight. Novogradac also examined claims that cash grants are significantly more effective and could be less expensive than the renewable energy production tax credit (PTC) or investment tax credit (ITC). However, conclusions made in this argument fail to consider a number of important strengths that the ITC and PTC bring to the table that a cash grant does not, not the least of which are recapture risk, borrowing financing costs on cash grants, and after-tax effects. Finally, while the historic tax credit has not been specifically proposed for replacement by a cash grant program, it shares many characteristics of the programs that have been attacked. As such, Novogradac says historic preservation advocates should be prepared to defend the HTC in case the suggestion is advanced. Working in their favor is a well-documented track record that the HTC has for creating jobs while accomplishing its congressionally mandated purpose. All in all, Novogradac concludes that tax credits are a more effective way for the federal government to support affordable housing, community development, renewable energy, and historic preservation.
Rental Projects Grow
Amarillo Globe-News (11/26/11) Welch, Karen Smith
At a mid-November Bloomberg Commercial Real Estate Summit in New York, Susan Wachter of the University of Pennsylvania Wharton School said that the "apartment's moment" has arrived as credit constraints continue to hamper U.S. housing market growth. A recent Morgan Stanley report said that the current housing market fundamentals have created a "rentership society" in the United States. "With the homeownership rate already in decline, we think it's safe to say that the ownership society is suffering. Over the past two years, the . . . U.S. rental housing market has begun a solid recovery. Indeed, rental vacancy rates have fallen faster than they ever have, and rents are rising across the country," noted the report. The National Multi Housing Council (NMHC) quarterly survey of apartment market conditions indicated that nearly 67 percent of respondents saw an uptick in planning or actual new construction on multifamily properties. NMHC chief economist Mark Obrinsky says, "Powerful demographic trends along with changing attitudes about homeownership and tighter mortgage underwriting continue to drive a shift toward renting, which is fueling a ramp-up in new construction." NMHC has said that changes in demographics further highlight the need for changes to federal housing policy, with NMHC President Doug Bibby noting, "Families with children made up more than half the households decades ago. But they made up only one-third of households in 2000, and by 2025, they will be closer to one-fifth. In their place are growing numbers of households who are more likely to choose renting -- single parents, couples without children and empty nesters. By 2025, singles and unrelated individuals living together will comprise 40 percent of households."
A Search for Subsidized Housing, Simplified
New York Times (10/20/11) Gregor, Alison
A new interactive Web site created by New York University lets renters and buyers track nearly all the privately held subsidized housing in New York City. The need to monitor affordable units, which were quickly vanishing in the last 10 years as market-rate real estate skyrocketed, led city officials to ask the university's Furman Center for Real Estate and Urban Policy to compile the database, called the Subsidized Housing Information Project. The database has extensive data on about 304,800 affordable rental and co-op units in about 2,600 properties. The database consolidates information from 50 public and private data sources, a testament to how complicated affordable housing programs are in New York City, said Vicki Been, faculty director of the Furman Center. That complexity has made it difficult to manage the affordable housing supply.
Inside the Guide: FHA Serves Up a New MAP Guide
Affordable Housing Finance (10/11) Ascierto, Jerry
The Federal Housing Administration (FHA) has released a highly anticipated new version of its Multifamily Accelerated Processing (MAP) guide, which consolidates all of the agency's multifamily housing program changes and guidance into one place. The new guide offers a single point of reference, is designed to help improve the FHA's long processing times, and aims to provide clarity around affordable housing deals. Phil Melton, director of affordable housing debt at Centerline Capital Group, remarks, "In the long run, the new guide is positioning FHA to be a more relevant player in the affordable housing space."
Despite High Pricing, Experts Say LIHTC Market Is Stronger Than Ever
Novogradac Journal of Tax Credits (11/11) Hill, Jennifer
Low-income housing tax credit (LIHTC) prices have continued to trend steadily upward since last year's rebound, and the industry is focused on sustaining the market's momentum. However, for a variety of reasons, the long-awaited higher prices may be too much of a good thing, according to panelists at Novogradac & Company LLP's Affordable Housing Tax Credit Conference in San Francisco, Calif. September's session was called "Resurgence of the LIHTC Market." Investors are playing catch-up on their Community Investment Act (CRA) requirements and are driving up prices in hotter areas like New York and California, explained Kim Pardoe, a senior vice president of acquisitions at The Richman Group. Economic investors are also playing a role, as evidenced by the fact that developers in virtually every state are able to find equity. With yields hovering below 5 percent, an expected shift in the market is likely to stem from the departure of economic investors. Some industry participants have drawn parallels between today's LIHTC market and that of 2005, said Russell Ginise, managing director, tax credit investments at RBC Capital Markets. Still, while panelists said today's market is very different from 2005, it is similarly volatile, and some are calling for moderation. That is a call not too unfamiliar to the industry. Last fall, when prices jumped to the 90-cent range, syndicators said pricing was getting too hot, too fast and threatening the market's long-term stability, and they called for balance between prices and yields, cautioning developers not to focus on short-term gains by pushing for higher credit prices. Developers have enjoyed the recent high credit prices; but with so many investors competing for the same deals, they can out-price each other only to a certain point. Ginise and Pardoe said that in isolated cases they would consider making small adjustments to the length of guarantees, operating deficit guarantees and guarantor strength, depending on the property location and the developer's track record. Pricing aside, the quality of the investment product and the strength of deals and sponsors have never been stronger, said Ginise. The same is also true for syndicators. Looking ahead to next year, the panelists predicted a fairly stable overall market, with a possible slight drop in pricing accompanied by higher yields.
Meetings Focus on Affordable Housing Issues
Milwaukee Journal Sentinel (11/14/11) Walker, Laurel
A total of nine public meetings have been scheduled throughout southeastern Wisconsin over the next month, all of which will focus on a regional housing plan now in development by the Southeastern Wisconsin Regional Planning Commission. Started more than two years ago, the goal of the new study is to identify the availability and character of housing in the seven-county region and place greater emphasis on affordable housing issues. Initial studies have found that while the region's existing housing stock is in good shape overall, 36 percent of households in southeastern Wisconsin had a "high housing cost burden" -- or monthly housing costs that exceed 30 percent of gross household income. In addition, the plan examines imbalances between jobs and housing. For instance, suburban communities typically have more lower-wage jobs than they have low-cost housing, which could be corrected with additional multifamily housing.
Study Clarifies the Energy Savings in Retrofitted Buildings
New York Times (11/09/11) Satow, Julie
A new study shows that retrofitting buildings with energy-conserving technology can significantly reduce spending on fuel and electricity. Deutsche Bank Americas Foundation and Living Cities, a nonprofit partnership of 22 foundations and financial institutions, commissioned the report, which examined nearly 19,000 affordable housing units in New York City that had undergone energy efficiency retrofits. The study found that these changes resulted in a 19 percent savings on fuel bills and a 10 percent savings on electricity across the portfolio. This translates into $240 in fuel savings and $70 in electrical savings per apartment every year. "We have been looking for the secret sauce," says Ben Hecht, the president and chief executive of Living Cities. "This study is definitely the first foray into data, and that is going to be critical to convince owners and lenders of the importance of retrofitting buildings." The study's authors hope the results will go beyond persuading building owners to institute environmentally beneficial retrofits. They hope that lenders will use this data and consider underwriting larger loans to landlords based on the projected savings that come from retrofitting buildings. "The study informs what we hope will be a new set of lending practices that places real monetary value on energy efficiency improvements," says Sam Marks, the vice president of Deutsche Bank Americas Foundation.
Hope for Housing
Putnam Investments (09/01/2011) Jerrett, Daniel L.; Emre, Onsel
Fixed income analysts Daniel Jerrett and Onsel Emre believe the next housing cycle will focus on multifamily. They say the last housing boom resulted in a glut of single-family houses, and converting these houses to multifamily and rental market units would help grow the U.S. economy. "Once housing makes a more definitive turn, particularly through a residential construction's rental-market repositioning of existing housing stock, we expect housing's contribution to real GDP to turn positive," they write. With higher return on investment in the rental market, they expect more houses to be transformed into rentals, especially in urban locales. They point out that the rental vacancy rate has dramatically decreased since mid-2009. They conclude, "Going forward, we expect the rental housing market will see continued improvement. With would-be buyers still sitting on the sidelines and construction interests more firmly focused on the conversion of multifamily units, rental properties have bright prospects. … Many of those who purchased houses they were unable to support will head back into the rental market. Meanwhile, as the prices of owned property continue to find their floor on a national basis, the prices of rented property will rise to accommodate the shift."
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