Notes from Novogradac

Published by Mark Shelburne on July 22, 2019

The Affordable Housing Credit Improvement Act of 2019 (AHCIA) proposes an unprecedented expansion and modification of the low-income housing tax credit (LIHTC).

Published by Michael Novogradac on June 28, 2019

In May, Novogradac began surveying the funds listed on Novogradac’s Opportunity Funds Listing as to dollars raised and investment plans. The opportunity funds are listed as a free service to potential community development funding recipients. The information listed is based on information provided to Novogradac by the listed contact person for each company.

Published by Dirk Wallace, Michael Novogradac, Peter Lawrence on June 5, 2019

One of the most important provisions of the Affordable Housing Credit Improvement Act (AHCIA) of 2019 is the proposal to increase 9 percent allocations. This provision is justified by the tremendous unmet need for more affordable rental housing production.

Published by Dirk Wallace, Michael Novogradac, Peter Lawrence on June 5, 2019

Novogradac projects nearly 66,000 additional rental homes could be financed from 2020 to 2029 if a provision is enacted to establish a minimum 4 percent floor for low-income housing tax credits (LIHTCs) generated by tax-exempt private activity bonds issued for multifamily housing. This would greatly enhance the LIHTC, an incentive that the National Council of State Housing Agencies’ 2017 Factbook reports is already responsible for the creation of more than 1 million affordable rental homes from 1987 through 2017.

Published by H. Blair Kincer on June 5, 2019

Last year Congress enacted a new tool to extend the reach of the low-income housing tax credit (LIHTC) to meet the country’s varied affordable rental housing needs: the average income test. Since its enactment, the option has generated a lot of discussion and raised many questions about its implementation. Now, as developers and states have started using the average income test option, its applicability can be better assessed.

Background

Published by H. Blair Kincer on June 5, 2019

In 2017, LIHTC properties’ overall expenses grew 2.3 percent while their revenue grew 2.7 percent, according to the Novogradac 2019 Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties. This difference in growth resulted in the largest year-over-year NOI increase (3.3 percent) seen in eight years.

Published by Dirk Wallace, Michael Novogradac, Peter Lawrence on June 4, 2019

Today, Sens. Maria Cantwell, D-Wash.; Johnny Isakson, R-Ga.; Ron Wyden, D-Ore.; and Todd Young, R-Ind. introduced S. 1703 the Affordable Housing Credit Improvement Act of 2019 (AHCIA). This comprehensive low-income housing tax credit (LIHTC) legislation builds on a similar bill introduced in 2017 during the last Congress, S. 548.  Reps. Suzan DelBene, D-Wash.; Kenny Marchant, R-Texas; Don Beyer, D-Va.; and Jackie Walorski, R-Ind.

Published by H. Blair Kincer on May 30, 2019

As noted in this space last month, overall expenses for low-income housing tax credit (LIHTC) properties in 2017 grew by 2.3 percent, a return to previous norms. However, while the overall LIHTC operating expense growth was more in line with the trend previous years, the Novogradac 2019 Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties found that one category of expenses for LIHTC properties saw a sizable increase in 2017: real estate taxes.

Published by H. Blair Kincer on May 29, 2019

As part of a research effort focusing on underserved markets, Freddie Mac last year published a paper studying why Middle Appalachia is one of the hardest-to-serve housing markets, particularly for renters. Middle Appalachia is a rural region stretching from southern Ohio to western North Carolina on both sides of the Appalachian Mountains. As Freddie Mac reports, market factors facing the region are part of the reason Middle Appalachia is an underserved housing market, including population losses, low median incomes and the prevalence of persistent poverty counties.

Published by Peter Lawrence on May 23, 2019

The House Appropriations Transportation-HUD (THUD) Subcommittee released its $75.8 billion fiscal year (FY) 2020 spending bill May 22, which was approved by the subcommittee earlier today.

Published by Kevin Wilson on May 21, 2019

The budget for California’s next fiscal year is expected to be completed in the next month and through the budget process, leadership will determine the extent to which the state will provide state income tax opportunity zones (OZ) incentives to encourage investment in distressed communities. This process is an important opportunity for California to leverage this new community development tool to enhance the efficiency of other state, county or city programs that have limited resources.

About Conformity

Published by H. Blair Kincer on May 20, 2019

After some volatility in 2015 and 2016, the year-over-year change in overall expenses for low-income housing tax credit (LIHTC) properties in 2017 was more in line with the previous norms: an increase of 2.3 percent, according to according to the Novogradac 2019 Multifamily Rental Housing Operating Expense Report-Survey and Analysis of LIHTC Properties.

Published by Peter Lawrence on May 13, 2019

Previous posts in this space have discussed the oft-overlooked housing needs of rural America and the need to shine a light on how rural areas, just like their urban counterparts, are struggling to meet the affordable housing needs of their residents.

Published by Bob Ibanez on May 10, 2019

This month, Inclusiv, formerly known as the National Federation of Community Development Credit Unions, will present the third of three webinars for its members about the New Markets Tax Credit (NMTC) program.

Published by Matt Meeker on May 6, 2019

The second tranche of opportunity zones (OZ) regulations have provided renewable energy tax credit (RETC) investors additional clarity. This is particularly welcome for investors wishing to claim an investment tax credit (ITC) for a solar property in conjunction with the OZ inventive and it’s possible this additional clarity will help some investors move off the fence.  

About the OZ Incentive

Published by Michael Novogradac on April 26, 2019

As investors, business owners and fund managers, and their tax advisors, continue to review the recently released proposed opportunity zones (OZ) regulations, a number of issues and likely effects have been identified, and many continue to be discussed and evaluated. Additional guidance and clarification will be needed from Treasury and the Internal Revenue Service on many of these issues and possible effects.

Published by Michael Novogradac on April 17, 2019

The second tranche of opportunity zones (OZ) guidance released today brings added regulatory clarity for investors, fund managers and others seeking to bring much needed equity capital to operating and real estate businesses in OZs. The 169 pages of proposed regulations include updates to portions of previously proposed regulations. The 169-page volume of regulations necessitates a two-part blog post.

Published by Peter Lawrence on April 4, 2019

In August 2018 the Office of the Comptroller of the Currency (OCC) released an advanced notice of proposed rulemaking (ANPR) soliciting public comment on reform of Community Reinvestment Act (CRA) regulations.  Nearly 1,500 national, state and local organizations and businesses submitted comments to OCC in response to the ANPR, a sample, comprised of key affordable housing and community development associations and sta

Published by Bob Ibanez on March 25, 2019

Recently, community development financial institutions (CDFIs) from around the country meet for a two-day conference in Washington, D.C. It was the first public appearance for new CDFI Fund Director Jodie Harris, who replaced Annie Donovan when she stepped down in early January. In addition to Harris’s keynote address, there was also a CDFI Fund panel comprised of the new deputy director for policy and programs as well as staff from certification, compliance monitoring and evaluation, financial strategies and research, the grant-based programs and bond guarantee program offices.

Published by Michael Novogradac on March 21, 2019

Five months ago, the Treasury department issued its first tranche of proposed regulations concerning the opportunity zones (OZ) tax incentive, releasing 74 pages of regulations, a revenue ruling, an updated Q&A docum

Published by Michael Novogradac on March 19, 2019

The Internal Revenue Service (IRS) released 2019 population figures in Notice 2019-19, indicating the 2019 low-income housing tax credit (LIHTC) ceiling and tax-exempt private activity bond (PAB) cap for all states will increase. From 2018-2019, the U.S. population increased by 1,448,256 people to 327,167,434 in total, representing a 0.4 percent gain.  U.S. territories lost more than 140,000 people, a 3.8 percent decrease.

Published by Peter Lawrence on March 18, 2019

On March 12, House Ways and Means Committee Members Terri Sewell, D-Ala.; Tom Reed, R-N.Y.; Jason Smith, R-Mo.; and Senators Roy Blunt, R-Mo.; and Ben Cardin, D-Md., introduced the New Markets Tax Credit Extension Act of 2019 (H.R. 1680, S. 750).

Published by Peter Lawrence on March 11, 2019

The Trump administration today released its $4.7 trillion fiscal year (FY) 2020 budget request, which includes $750 billion in defense spending including overseas contingency operations and other adjustments and $567 billion for nondefense spending including adjustments.  The proposed base nondefense discretionary spending cap is $543 billion, a cut of $54 billion from FY 2019 spending cap.

Published by Michael Novogradac on February 19, 2019

Any question about the level of interest in proposed Internal Revenue Service (IRS) regulations concerning the opportunity zones (OZ) incentive was answered last Thursday.

Published by Peter Lawrence on February 15, 2019

On Feb. 14, Congress passed H.J. Res. 31, the Consolidated Appropriations Act, 2019 including fiscal year (FY) 2019 funding for Homeland Security, the Agriculture; Commerce, Justice, and Science; Financial Services and General Government, Interior and Environment; State and Foreign Operations; and Transportation-HUD (THUD) annual spending bills, averting another partial federal government shutdown that would have begun after the temporary stop-gap funding bill, the continuing resolution was scheduled to expire on Feb. 15.

Published by Nicolo R. Pinoli on February 15, 2019

As part of tax reform signed into law on Dec. 22, 2017, a new tax, the base erosion and anti-abuse tax (BEAT), was implemented on international corporate taxpayers. The BEAT is intended to provide a new minimum tax for international taxpayers who make payments to overseas affiliates.

Published by Peter Lawrence on February 14, 2019

After a delay related to the 35-day partial government shutdown, the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund awarded more than $142 million in Capital Magnet Funds (CMF) during its fourth funding round for fiscal year (FY) 2018 on Feb. 13. The 38 awardees were selected from 116 applications, which requested more than $570 million in awards this CMF round.

Background

Published by Peter Lawrence on February 11, 2019

As changes to Community Reinvestment Act (CRA) regulations are considered and developed, it is imperative to consider how those changes could affect regulated financial institutions and their investment and lending activities.

Published by Peter Lawrence on January 28, 2019

In the affordable housing community, the concept of opportunity areas has drawn increasing interest and consideration, particularly in recent research. For housing advocates, understanding what constitutes a high opportunity area and how living there can benefit low-income residents will inform decisions on where to locate affordable rental housing so that the best possible outcomes are realized by residents.  

Background

Published by Thomas Stagg on January 21, 2019

Like little children on the eve of their birthday, from tenant to landlord to investor, people around the country are anxiously awaiting the 2019 Department of Housing and Urban Development (HUD) income limits (or maybe it is just the few of us who have chosen to read this blog post). Either way as the calendar turns to a new year, our thoughts turn to HUD income limits.

When will income limits be released?

Published by Bob Ibanez on January 16, 2019

Since the expiration of the continuing resolution to fund portions of the federal government, including the Treasury Department, on Dec. 21, the Community Development Financial Institutions (CDFI) Fund has suspended its services, including access to the CDFI Fund help desks and the CDFI Fund Awards Management Information System (AMIS). Because non-essential CDFI Fund staff, including New Markets Tax Credit (NMTC) program office staff, have been furloughed the partial U.S.

Published by Peter Lawrence on January 16, 2019

New data about existing affordable rental housing paints a worsening picture of the affordable housing crisis. Recent research by the University of Pennsylvania shines a light on the potential loss of more than 1 million homes of federally subsidized housing from the affordable housing stock. The major threats to affordable housing are highlighted, including how changes in funding can lead to housing loss. Current events put this particular risk factor in stark relief – the ongoing partial government shutdown is exacerbating and accelerating the problem of preservation, with 1,150 U.S.

Published by Peter Lawrence on January 8, 2019

On Jan. 3, the first day of the 116th Congress, the House of Representatives passed H.R. 21, the Consolidated Appropriations Act including funding for the Agriculture; Commerce, Justice, and Science; Financial Services and General Government, Interior and Environment; State and Foreign Operations; and Transportation-HUD (THUD) annual spending bills, enabling the federal agencies the bills fund to reopen during the partial government shutdown that began Dec. 21.

Published by Bob Ibanez on December 21, 2018

The Community Development Financial Institutions (CDFI) Fund recently released a summary report and public data on new markets tax credit (NMTC) investments through fiscal year (FY) 2016. Updated annually, the data once again reflects the flexibility of the NMTC with respect to the types of businesses financed with flexible or non-traditional rates and terms.

Published by Peter Lawrence on December 20, 2018

With Democrats taking control of the House, of the numerous issues that may find their way to Congress’s 2019 docket, infrastructure is one of the most notable. Infrastructure saw much fanfare in 2017 through mid-2018, especially with the release of the administration’s infrastructure principles in February, but progress stalled because of lack of agreement. And now, the subject is seeing renewed interest as infrastructure is one of the few major issues that could garner bipartisan support in the current political climate. 

How we got Here

Published by Bob Ibanez on December 18, 2018

In November, the Community Development Financial Institutions (CDFI) Fund released data that reveal the diversity of institution types (i.e. banks, credit unions, loan funds and venture funds), products and services offered by CDFI Fund awardees, and resulting impacts in low-income communities.

Published by Bob Ibanez on December 11, 2018

The New Markets Tax Credit (NMTC) program was authorized as part of the Community Renewal and Tax Relief Act of 2000. Since then, the Community Development Financial Institutions (CDFI) Fund has made 1,105 awards totaling $54 billion in tax credit authority. Out of the pool of successful allocatees, only 12 awards or approximately 1 percent have gone to either an affiliate of a credit union (Self Help Ventures Fund) or the sponsor of a credit union (Hope Enterprise Corporation).

What Credit Unions should know about the NMTC

Published by Peter Lawrence on December 10, 2018

Harvard’s Joint Center for Housing Studies (JCHS), as part of its ongoing analysis of the State of the Nation’s Housing Report, recently released a look at characteristics of older adult households. Housing America’s Older Adults 2018, the latest in a series of JCHS reports on housing older adults, looks at 2016 data for older adult households, those headed by individuals 50 years of age or older.

Published by Michael Novogradac on November 29, 2018

Forty years ago this month–Nov. 6, 1978–President Jimmy Carter signed legislation that created America’s first federal historic tax credit (HTC), a 10 percent investment tax credit for commercial buildings that were at least 20 years old and retained at least 75 percent of their existing walls.

Published by Peter Lawrence on November 28, 2018

Not all states issue multifamily private activity bonds (PABs) each year, and the number of states issuing no multifamily PABs has varied widely since 2000, according to data reported by the Council of Development Finance Agencies (CDFA). The lowest number of states issuing no multifamily PABs was 2003, with only seven states reporting no issuance of multifamily PABs. With the onset of the financial crisis, that number grew to 30 in 2011. As the nation recovered, the number of states issuing no multifamily PABs fell to 10 in 2016, increasing slightly to 11 in 2017.

 

Published by Thomas Stagg on November 28, 2018

As more and more developers and state agencies explore income averaging, one of the biggest questions is what happens if a unit goes out of compliance. Unfortunately, this is a difficult question to answer without knowing the details of the low-income housing tax credit (LIHTC) project, and in some cases without more information from the IRS. This discussion will examine some of the most hotly discussed topics around non-compliance in LIHTC projects that have elected the average income minimum set-aside.

Impact of the Minimum Set-Aside

Published by Michael Novogradac on November 20, 2018

The Internal Revenue Service published Revenue Procedure 2018-55, announcing the amounts of unused low-income housing tax credit (LIHTC) carryovers allocated to qualified states for calendar year 2018. The $2.69 million of unused LIHTC carryovers was placed in a national pool and reallocated to 32 qualified states and Puerto Rico.

About the National Pool

Published by Peter Lawrence on November 15, 2018

Housing stakeholders often have difficult choices to make due to various constituent needs, housing policy directives, and limited resources with which to work. As 2020 approaches, another issue is looming on the horizon:  low-income housing tax credit (LIHTC) properties that will start to reach “year 30,” the year in which some LIHTC properties are no longer obligated to adhere to income and affordability requirements.

Published by Bob Ibanez on November 13, 2018

The Office of the Comptroller of the Currency (OCC) is currently soliciting comments in connection with an advance notice of proposed rulemaking (ANPR) aimed at updating the regulations that implement the Community Reinvestment Act (CRA) of 1977. The original intent of the CRA was to help meet the credit needs of the communities that banks serve.

Published by Dirk Wallace, Michael Novogradac, Peter Lawrence on November 13, 2018

Novogradac projects more than 65,000 additional rental homes could be financed from 2019 to 2028 if a provision is enacted to establish a minimum 4 percent floor for low-income housing tax credits (LIHTCs) generated by tax-exempt private activity bonds issued for multifamily housing. This would greatly enhance the LIHTC, an incentive that the National Council of State Housing Agencies’ 2016 Factbook reports is already responsible for the creation of more than 1 million affordable rental homes from 1987 through 2016.

Published by Peter Lawrence on November 8, 2018

As reported previously, the multifamily bond market was robust in 2017 at a record $15.3 billion in bond issuance sustaining the historically high levels from 2016 despite the threat of tax reform. To put these levels into context, it is helpful to revi

Published by Peter Lawrence on November 7, 2018

On Nov. 6, Democrats took control of the House while Republicans retained control of the Senate. According to the Associated Press, Democrats have been declared the winner in 220 House seats, Republicans in 194 seats and 21 seats are still uncalled. Of those 22 races, Democrats are leading in nine, and Republicans are leading in 12. Assuming those races proceed as predicted, and the leading candidates in the 21 uncalled races are eventually confirmed, Democrats will have 229 seats in the House and Republicans will have 206.

Published by Michael Novogradac on November 1, 2018

In 2017, the 50 states and the District of Columbia reported issuing a record $15.3 billion in multifamily rental housing bonds, representing a 9.3 percent increase from the previous record $14 billion reported issued in 2016, according to the Council of Development Finance Agencies (CDFA). The $21 billion in reported combined multifamily and single family mortgage revenue bond issuance represents a 13.6 percent increase in the portion of the cap used for housing from 2016, when states reported a total of $18.5 billion for housing bond issuance.

Published by Peter Lawrence on November 1, 2018

Time and again, one of the criticisms of the low income housing tax credit (LIHTC) is that housing it finances is disproportionately located in high poverty and/or racially segregated communities.  Moreover, many of these critics claim that the LIHTC stakeholders are actively exacerbating the problem by purposely siting LIHTC developments in high poverty and racially segregated communities.

Published by Michael Novogradac on October 26, 2018

Lame-duck sessions of Congress–the final weeks of a two-year term, those that follow an election–are a Rubik’s Cube of legislative periods. There are multiple moving pieces, each affecting others.

For affordable housing, community development and historic preservation advocates, the 2018 lame-duck session could be fertile ground for long-desired legislation. Or Congress could decide to work on the bare minimum before heading home for the holidays. It depends on moving pieces and how they each affect others.

Published by Michael Novogradac on October 19, 2018

(Updated  Monday, Oct. 22, 2018, 8:25 a.m.)

Published by Peter Lawrence on October 12, 2018

The Internal Revenue Service (IRS) has moved one step closer to releasing long-awaited guidance on the Opportunity Zones (OZ) incentive. On Sept. 12, the IRS sent proposed OZ regulations to the Office of Information and Regulatory Affairs (OIRA), a division of the White House Office of Management and Budget (OMB).

Published by Bob Ibanez on October 10, 2018

Now that the opportunity zone (OZ) nomination and designation process has been completed and the Internal Revenue Service (IRS) has published an initial list of 15 frequently asked questions, community and economic development practitioners and policy makers are now focusing on soon to be released proposed regulations from the IRS.

Published by Peter Lawrence on October 4, 2018

Some believe the affordable housing crisis is an urban or even inner-city problem, but new research from the Housing Assistance Council (HAC) highlights the fact that there is a crisis in rural America as much as there is for urban American. Furthermore, HAC’s research shows that not only has the low-income housing tax credit (LIHTC) proven instrumental in creating affordable housing but it has also created this housing in rural parts of the country where the need for such housing is greater than many imagine.  

Published by Bob Ibanez on September 26, 2018

The Internal Revenue Service (IRS) is currently working on guidance on how the qualified opportunity zone (OZ) benefit under Internal Revenue Code (IRC) 1400Z-2 will be administered. Thus far, the IRS has posted a list of Frequently Asked Questions about OZs with additional guidance in the form of interim regulations anticipated in the very near future.

Published by Thomas Stagg on September 14, 2018

On Sept. 13, the U.S. Census Bureau the released the 2017 American Community Survey (ACS) data.  With the release of the 2017 ACS data, Novogradac & Company is able to estimate the national median income, state median incomes as well as low-income housing tax credit (LIHTC) income limits for many areas through 2020.

About the Calculations

The (ACS) is an integral part of HUD’s calculation of area median income. The 2018 ACS data will be used by HUD to calculate the 2020 income limits for LIHTC and Section 8 properties.

Published by Thomas Stagg on September 6, 2018

On Aug. 31, the U.S. Department of Housing and Urban Development (HUD) released the fair market rents (FMR) for fiscal year (FY) 2019.

Background

Published by Peter Lawrence on August 31, 2018

The Office of the Comptroller of the Currency (OCC) released August 28 an advanced notice of proposed rulemaking (ANPR) soliciting public comment on reform of Community Reinvestment Act (CRA) regulations.

Published by Peter Lawrence on August 29, 2018

The Urban Institute’s companion reports on the low-income housing tax credit (LIHTC), “Past Achievements, Future Challenges,” “How It Works and Who It Serves,” and one with