Notes from Novogradac

Published by Michael Novogradac on September 20, 2019

As the opportunity zone (OZ) incentive continues to gather momentum and interest, Novogradac has been tracking and compiling data on opportunity funds and their plans. In June, a post in this space provided the results of an initial survey of funds raised and related information. Since that writing, activity in the OZ community has continued and based on Novogradac research the amount of capital raised by qualified opportunity funds (QOFs) is nearly $2.5 billion.

Published by Thomas Stagg on September 11, 2019

On Aug. 30 the U.S. Department of Housing and Urban Development (HUD) published fair market rents (FMRs) for fiscal year (FY) 2020 in Federal Register Vol 84 No. 169. While HUD continuously strives to provide the most accurate FMRs, it is constrained by the data that is available. Occasionally, a user will believe that the FMRs calculated by HUD do not accurately reflect the rents for the area.

Published by Thomas Stagg on September 9, 2019

As more and more developers are exploring the average income minimum set-aside, one of the looming questions is how income limits should be calculated for units that are not using the 50 percent and 60 percent limit that are published by HUD for low-income housing tax credit (LIHTC) and tax-exempt bond developments.

Published by Peter Lawrence on September 9, 2019

The need for affordable rental housing nationwide is obvious. However, the cause of this shortfall is multifaceted. A recent survey and accompanying report produced by the National Apartment Association (NAA) provides more insight into some of those factors by examining what is preventing multifamily housing–both market-rate and affordable–from being built. 

Published by Kevin Wilson on September 6, 2019

In July, California Gov. Gavin Newsom signed Assembly Bill 91, Loophole Closure and Small Business and Working Families Tax Relief Act of 2019 (A.B. 91). A.B. 91, authored by Assemblywoman Burke, Chair of the Assembly Committee on Taxation, selectively conforms California law to certain changes introduced in the 2017 federal tax reform bill (H.R. 1).  It is estimated that A.B.

Published by Mark Shelburne on September 5, 2019

According to anecdotal reports, in 2018 many low-income housing tax credit (LIHTC) developers opted for their properties to use the average income minimum set-aside (AI). The number doubtless has increased dramatically in 2019. Some buildings may be under construction or have even been placed in service.

Published by Mark Shelburne on September 5, 2019

Low-income housing tax credit (LIHTC) allocating agencies have their work cut out in implementing the average income minimum set-aside (AI). The Internal Revenue Code (IRC) leaves many aspects unresolved. One of the most important is Section 42(g)(1)(C)(ii)(I): The provision uses the word “designate” but does not define what it means.

Published by Mark Shelburne on August 7, 2019

In June 2018 the Department of Housing and Urban Development (HUD) requested comments on amendments to the disparate impact rule issued under the previous administration.

Published by Bob Ibanez, Peter Lawrence on July 31, 2019

The new markets tax credit (NMTC) has been subject to reauthorization since 2006-most recently through the Protecting Americans from Tax Hikes Act (PATH Act, 2015) that extended the credit through calendar year 2019.

Published by Peter Lawrence on July 31, 2019

Congress last week moved closer to finalizing H.R. 3877, the Bipartisan Budget Act of 2019, a two-year $2.7 trillion budget deal that would raise spending caps for fiscal years (FY) 2020 and 2021 and suspend the debt limit until July 31, 2021. The bill raises nondefense spending by $25 billion (4 percent) in FY 2020 compared to the FY 2019 spending cap, and $79 billion (15 percent) more than current law FY 2020 spending cap as mandated by the Budget Control Act of 2011 (BCA), but $9 billion less than the amount set by the House earlier this year when drafting its FY 2020 spending bills.

Published by Dirk Wallace, Michael Novogradac on July 26, 2019

Two bills recently introduced in Congress would retroactively alter rights of existing owners of low-income housing tax credit (LIHTC) properties; one bill changes the terms of rights of first refusal (ROFR) and the other alters qualified contract exit price calculation. Part I of this blog post reviewed rights of first refusal. Part II below reviews qualified contracts.

Published by Peter Lawrence on July 26, 2019

Harvard’s Joint Center for Housing Studies released its State of the Nation's Housing report last month, and among its most salient points was the decline in number of affordable homes being built.

Published by Dirk Wallace, Michael Novogradac on July 24, 2019

Two bills recently introduced in Congress would retroactively alter rights of existing owners of low-income housing tax credit (LIHTC) properties: One bill changes the terms of rights of first refusal (ROFR) and the other alters qualified contract exit price calculation. Part I of this blog post reviews rights of first refusal. Part II will address qualified contracts.

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 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 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 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.

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