Notes from Novogradac
Every year, thousands of affordable homes are at risk of being lost. However, provisions in the Build Back Better Act (BBBA) could alleviate some of that loss.
When it comes to operating expenses for affordable housing properties, bigger properties in 2020 appeared to benefit from the economy of scale in certain expense categories.
That’s one of the takeaways from the 2021 Novogradac Multifamily Rental Housing Operating Expenses Report, which provides information on expenses (and income) for affordable housing properties financed by low-income housing tax credit (LIHTC) equity.
As noted in Novogradac’s summary of the Nov. 3 version of the Build Back Better (BBB) reconciliation legislation, the overall framework of the set of renewable, clean energy and energy-efficiency tax incentive proposals as included in the September version was largely retained. However, the Nov.
The first year of the COVID-19 pandemic resulted in increases in both income and expenses for affordable multifamily properties, according to the 2021 Novogradac Multifamily Rental Housing Operating Expenses Report.
The Build Back Better (BBB) legislation contains several expansions and improvements to the low-income housing tax credit (LIHTC). Of these, the most unique and complex is a way for properties to raise the maximum allocation by providing extremely low-income units.
The House Rules Committee released Nov. 3 a revised draft of the $1.75 trillion Build Back Better (BBB) reconciliation legislation, which if enacted, would represent the largest expansion of affordable housing and community development spending, as well as affordable housing and green energy tax incentives in a single piece of legislation ever.
Novogradac estimates the latest version of the $1.75 trillion Build Back Better (BBB) reconciliation legislation–released by the House Rules Committee Nov. 3–would finance 936,900 affordable homes over 2022-2031.
Before the onset of the COVID-19 pandemic, the percentage of tax-exempt private activity bonds (PABs) used for multifamily housing had been largely trending upwards. The Council of Development Finance Agencies’ (CDFA’s) The latest report shows this trend continued through 2020.
In 2020, the nation’s 11 Federal Home Loan Banks (FHLBanks) helped house about 40,000 low-income and moderate-income households, including about 21,600 very low-income households through the distribution of about $392.7 million in Affordable Housing Program (AHP) funds.
According to the Federal Housing Finance Agency’s (FHFA’s) report on 2020 activities, the 2020 Low-Income Housing and Community Development Activities of the Federal Home Loan Banks, the amount of AHP funds the FHLBanks distributed in 2020 was 14% lower than the previous year because the banks had received lower smaller net earnings compared to 2019.
More households are spending a greater percentage of their income on housing than they had previously, according to a U.S. Department of Housing and Urban Development (HUD) report.
HUD’s biennial Worst Case Housing Needs 2021 Report–released to Congress in July and to the public Sept. 30–found that 7.77 million renter households experienced worst case needs in 2019, slightly increased from 7.72 million in 2017, leaving less of their income for other vital expenses such as food and healthcare.
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