Notes from Novogradac
Each year the U.S. Department of Housing and Urban Development (HUD) publishes a list of difficult to develop areas (DDAs). Low-income housing tax credit properties located in areas that are designated as DDAs are eligible for a 130 percent boost in eligible basis for determining the amount of LIHTCs a building can generate.
Background
The 2018 income data released by the U.S. Department of Housing and Urban Development (HUD) provide an opportunity to examine trends nationally as well as at the local market level.
Nationally, the income data illustrates a stark contrast in the nation’s economy today as compared to four years ago. Below is the area median income (AMI) map Novogradac published showing the change from 2013 to 2014 (red represents negative income growth while green is positive growth).
In the seven years Novogradac has analyzed operating and expense data for low-income housing tax credit (LIHTC) properties, operating expenses for buildings geared toward senior tenancy have been consistently lower than for family properties.
The gap between operating expenses for low-income housing tax credit (LIHTC) properties that are acquired and rehabilitated and those that are newly constructed is the largest it’s ever been, according to the 2018 Novogradac Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties.
Late last month the Joint Committee on Taxation (JCT) released its Estimates of Federal Tax Expenditures for Fiscal Years 2017-2021. As in years past, the report highlights the comparatively low cost of the low-income housing tax credit (LIHTC), historic tax credit (HTC), renewable energy production tax credit (PTC), renewable energy investment tax credit (ITC), and new markets tax credit (NMTC) compared to other tax expenditures.
Until 2015, operating expenses for low-income housing tax credit (LIHTC) properties grew at a fairly consistent pace. And while there was growth in 2015, year-over-year change was much slower than in years past, increasing just 1.3 percent.
At the time of this writing, eight state low-income housing tax credit (LIHTC) allocating agencies have made statements or issued guidance about how they will implement the new set-aside option known as income averaging (IA). Other allocating agencies around the country likely will look to these examples.
Background
The Senate Appropriations Transportation-HUD (THUD) Subcommittee approved its $71.4 billion fiscal year (FY) 2018 spending bill June 7.
The Capital Magnet Fund (CMF) is among the programs singled out in the president’s 2018 rescission package.
The House Appropriations Transportation-HUD (THUD) Subcommittee approved its $71.8 billion fiscal year (FY) 2018 spending bill May 15, which is expected to be approved by the full House Appropriations Committee May 23.
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