Notes from Novogradac
The number of cost-burdened households (those paying more than 30 percent of their income on housing) aged over 65 has reached a new high of 10 million, according to "Housing America's Older Adults 2019," a supplemental report to the State of the Nation’s Housing Report, released by Harvard’s Joint Center for Housing Studies (JCHS).
Housing finance agencies issued $14.7 billion in tax-exempt multifamily rental housing bonds in 2018, a 3.7 percent decrease in multifamily issuance from last year, according to the Council of Development Finance Agencies (CDFA).
Novogradac estimates the U.S. median income will increase by just under 4 percent in 2020 and 3.4 percent in 2021. The change in U.S. median income is especially important as increases in low-income housing tax credit (LIHTC) and Section 8 income limits are limited to the greater of 5 percent or two times the change in U.S. median income. Based on this formula, the cap for 2020 will be just under 8 percent and the cap for 2021 will be just under 7 percent. This is a slowdown in median income growth from the last couple of years, however, it is still very robust growth in median income.
The U.S. as a whole has lost nearly 4 million low-cost (see definition below) rental homes since 1990, according to a recent working paper released by the Harvard Joint Center for Housing Studies (JCHS). “Documenting the Long-Run Decline in Low-Cost Rental Units in the U.S. by State” looks at the loss of affordable housing supply nationally and through an individual state analysis to view the magnitude of the loss, as well as the timing of the loss, variance across states.
The Internal Revenue Service (IRS) published Revenue Procedure 2019-41, announcing $2,709,998 of unused low-income housing tax credit (LIHTC) allocated from the national pool to 31 qualified states for calendar year 2019. (Note that the term state includes a possession of the United States and constitutional home rule cities Chicago and New York City.)
Investment in opportunity zones (OZs) continues to grow, with qualified opportunity funds (QOFs) focused on residential development leading the way.
In 2018, the Federal Home Loan Banks (FHLBanks) awarded approximately $458 million in Affordable Housing Program (AHP) funds, approximately a 15 percent increase from 2017, according to the Federal Housing Finance Agency’s (FHFA) recently released 2018 Low-Income Housing and Community Development Activities of the Federal Home Loan Banks.
On Feb. 26, 2019 the Internal Revenue Service (IRS) published final regulations regarding low-income housing tax credit (LIHTC) allocating agencies’ responsibilities for monitoring properties’ compliance. The provisions replaced temporary requirements contained in Rev. Proc. 2016-15 and represent a significant departure from current practices.
The Treasury Department is widely expected to release updated opportunity zones (OZ) regulations in the near future–with the regulations first going to the Office of Information and Regulatory Affairs, perhaps this month, for clearance before being released to the public 30-plus days later.
Treasury is expected to release updated opportunity zones (OZ) regulations in the coming weeks, and we expect that the updated regulations will merge the first two tranches of regulations into one and provide more clarity on many remaining issues, as well as some outright changes. Before their release, however, Treasury must first send the updated regulations to the Office of Information and Regulatory Affairs (OIRA) for their review and comment, after which, the regulations can be released.
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