As Tax Reform Heats Up, Multifamily Industry Readies

October 26, 2017                      By:    Brian Croce

The bill may be unveiled next week.

When it comes to policymaking, tax reform has been the most prominent topic of discussion in the past few weeks in the nation’s capital, with President Donald Trump calling for lawmakers to put a bill on his Oval Office desk by Thanksgiving.

Trump met with Senate Republicans Tuesday, as the details of the proposed plan were being ironed out before they’re unveiled to the public, potentially next week.

The National Apartment Association launched its Protect the Lease campaign in May.

The implications, or benefits, tax reform may have for the multifamily industry remain to be seen.

“I wish I could tell you where things were, but we’re all looking at our crystal balls anticipating next week, when we actually see something in writing,” National Apartment Association (NAA) president and CEO Robert Pinnegar told MFE Wednesday.............................Read More

What Does the Need for Affordable Housing Look Like?

October 25, 2017                               By:  Morgan Kinney

The documentary Our Journey Home comes to Houston to illustrate the benefits of much-needed public housing.

HOUSTON DOESN’T HAVE THE LOOMING public housing projects ubiquitous in cities like New York and Chicago. Those sprawling complexes and towers were largely built in the postwar decades when the Bayou City was, well, a much smaller place. Even now, as the fourth largest city, Houston Housing Authority CEO Tory Gunsolley says Houston continues to have one of the lowest rates of affordable housing for a city of its size—a shortfall only exacerbated by recent disasters.

“Post-Harvey, the need for affordable housing has increased,” Gunsolley says. “More people have realized that it is scarce, so it’s a perfect time for Our Journey Home to come to Houston.”

Set to screen in Houston Monday, Oct. 30, Our Journey Home is a 2015 documentary from ReThink, a group that educates and promotes the benefits of public housing with things like public service announcements and a songwriting contest that asked public housing residents “Why Housing Matters.” The film follows three families in public housing to illustrate how this bulwark against homelessness keeps them going, working against negative stereotypes. “Once you say you’re homeless, it’s like your character is out the window,” says one of the film’s subjects..............Read More

Affordable Housing Shortfall Continues to Grow

October 23, 2017                 By:  Steve Guggenmos

Freddie Mac finds big drop in units remaining affordable at second financing.

The shortfall of affordable rental units has widened considerably during the past six years, according to a new report released by Freddie Mac Multifamily.

The research finds that a combination of increasing rents and stagnant household incomes is causing the growing problem, which could become even worse if actions are not taken to increase the supply of affordable units commensurate with the increasing demand from lower-income renters. Previous Freddie Mac research has found that growing demand and rising costs of land and construction have led to a widening supply gap—with the country experiencing an annual shortfall of approximately 400,000 housing units, even when taking single-family starts into account.

Steve Guggenmos

The latest report takes a new approach to analyzing affordability, looking at loans that Freddie Mac Multifamily financed multiple times between 2010 and 2016. The mortgage giant examined loans covering more than 97,000 units..........Read More

Why is 'Affordable' Housing So Expensive to Build?

October 19, 2017                         By: Joe Cortright

As costs keep rising, it’s becoming harder and harder for governments to subsidize projects like they’ve done in the past.

It’s a problem that isn’t going away: the so-called “affordable” housing we’re building in many cities—by which we mean publicly subsidized housing that’s dedicated to low- and moderate-income households—is so expensive to build that we’ll never be able to build enough of it to make a dent in the housing affordability problem.

Andrew Yates/Reuters

The latest case in point is a new affordable housing development called Estrella Vista in Emeryville, California, (abutting Oakland and just across the bay from San Francisco). A non-profit housing developer just broke ground on a new mixed-use building, about three-quarters of a mile from a local BART transit station, which will include 84 new apartments. The project also houses about 7,000 square feet of retail space. The total cost: $64 million................Read More

Local Rules and Affordable Housing Options

October 16, 2017                           By: John McManus

A tide of young activists in metros that have gotten too expensive to develop will move the NIMBY needle, or move, period.

Grabar offers a microcosmic view of American housing's theme and variations here in an article, titled "San Francisco's Civil War."

The Slate sub-headline reads, "YIMBYs! Socialists! The only thing the Bay Area’s tenant activists hate more than high rent is each other."

Slate finance writer Henry

But both the title and the subhed belie the true breadth of the story, which Grabar captures in his lead sentence.

"Local politics is always, in one way or another, about housing."

Policy-makers and economists focus on national levers they might engage or release to get housing back on track compared with prior recovery periods following a cyclical trough...........Read More

Congress Has a Great Way to Create New Housing After Hurricane Disasters

October 6, 2017                               By: Kriston Capps

After Katrina, expanding tax credits helped the Gulf Coast rebuild affordable rental housing. It can work in Texas, Florida, and Puerto Rico, too.

In the aftermath of Hurricane Katrina, Congress passed one disaster recovery package with a special mission in mind. The bill was designed specifically to encourage developers to rebuild or create new affordable rental housing in the Gulf Coast. The plan worked: The 2005 act spurred millions of dollars in new investment in the recovery, creating or restoring tens of thousands of housing units for low-income families.

Local residents ride a horse by a house wiped out by Hurricane Maria in Jayuya, Puerto Rico

Congress hasn’t passed another similar disaster recovery bill since. Despite the damage wrought by Superstorm Sandy, efforts to put together the right grab-bag of tax incentives and community grants to rebuild affordably failed to materialize......Read More

Housing Shortage Stalls Economic Growth, Prices Out Workers

October 16, 2017                   By: Bendix Anderson

For many cities and towns, the lack of affordable housing threatens their economic vitality.

Cities and towns across the U.S. are competing for the attention of technology giant Amazon, which plans to create a second headquarters somewhere in the U.S.

“Quality of life,” which typically balances a town’s amenities against the cost of living there—starting with the cost of housing—is near the top of Amazon’s wish list for its new location. Cities where the cost of housing is too high are likely to miss out on the tens of thousands of new jobs and the likely billions of dollars in new investment that will come as a result of attracting Amazon’s new digs.

In this scenario, and others like it, economic development officials across the country are finally recognizing realities that may seem self-evident to affordable housing experts: A shortage of affordable housing can come with a steep cost in missed opportunities, homelessness, stalled growth, congested roads, and young people being priced out of the area..........Read More

Tackling the Affordable Housing Crisis

October 13, 2017                 By: Paul Rosta

A panel of industry veterans offered a sober assessment and strategies for progress at the Institute of Real Estate Management’s annual summit in Chicago.

Chicago—What’s ahead for affordable housing? A panel of industry veterans offered a sober assessment and strategies for progress on Wednesday afternoon at the Institute of Real Estate Management’s annual summit in Chicago.

Panelist discuss affordable housing with audience members at IREM Summit in Chicago. From left, speakers included Gwen Volk, David McGuill, Eileen Wirth and Pamela Monroe.

Funding poses a significant challenge, reported Eileen Wirth, president & CEO of the Octavia Hill Association, a century-old Philadelphia nonprofit. “Unfortunately, moving forward, it’s not looking much brighter,” she said. The Trump Administration’s proposed budget hits calls for flat funding, so that operators will be unable to count on increased payments to offset rising costs. “It will be a bit of a challenge,” she noted. “Hopefully, we won’t run into any major capital needs.”..............Read More

More Institutional Investors Warming Up to Workforce, Affordable Housing

October 9, 2017                       By: Randyl Drummer

Pension Funds, Insurers and Private Equity Jumping Into Tight US Market for Affordable Apartment Housing

Institutional investors are shelling out significant amounts of capital to take debt and equity positions in affordable and workforce housing as the long U.S. apartment bull market enters its later stages and yields tighten on new upscale apartment supply in major U.S. markets.

TruAmerica Multifamily, Beacon Communities and other apartment developers and operators have been expanding their stakes in the affordable and workforce space, while investment managers and equity and debt funds such as LEM Capital LP, TH Real Estate and Sabal Capital Partners have all recently announced ventures with well-financed funds and companies such as Allstate Corp. and large pension funds such as California State Teachers' Retirement System (CalSTRS) and Pennsylvania Public School Employees' Retirement System, which are ramping up allocations to workforce and affordable housing acquisition and development..........Read More

LIHTC Ready to Assist with the Shortage of Affordable Housing Exacerbated by Hurricanes Harvey and Irma

September 20, 2017                            By: Roman Petra

As many as 40,000 homes in Houston were destroyed by Hurricane Harvey, while the Florida Keys saw at least 25% of the homes destroyed by Hurricane Irma. Before the hurricanes, there was already a deficiency of affordable housing. Now, the need is even greater, if not dire, to bring affordable housing to those living in the hurricane devastated areas. Different agencies will focus their efforts through various programs to stimulate the development of affordable housing, but one of the best catalysts for development of affordable housing is the Low Income Housing Tax Credit (LIHTC) program, pronounced “lie-tech.” The program was created by Congress in 1986 to raise private equity for construction and rehabilitation of affordable housing by allocating federal tax credits to the owners of the developments. The private equity subsidizes the development, allowing for either some, or all, of the units to be rented at below-market rates to low income tenants.

The LIHTC program has become an integral tool for developing affordable rental housing. The LIHTC program has stimulated the construction and rehabilitation of nearly 3 million affordable homes, supports over 100,000 jobs annually, and generates approximately $9 billion in annual wages and business income. Today, as much as 30 to 40 percent of all new multifamily construction is subsidized using LIHTC. Up to 90 percent of the cost of a rental complex, with the right mix of low income units, may be returned to the owner in federal tax credits............Read More

Affordable Housing Veteran Drives RAD Forward

September 15, 2017                                 By: Donna Kimura

Tom Davis and the Rental Assistance Demonstration team are finalists for government service award.

While a student at Brown University, he volunteered with a community organization building housing in a disadvantaged neighborhood in Providence, R.I. On Friday afternoons, he would go out and help at their construction sites. “It got me interested in the issues and the questions of low-income communities and urban development,” he says.

A few years later, when Davis graduated from law school, he looked for and joined a firm that had an affordable housing practice. It was the start of a respected career in the industry that has included positions at two leading Boston-based nonprofit organizations, The Community Builders and Preservation of Affordable Housing.

For the past two years, Davis has been director of the Department of Housing and Urban Development’s (HUD’s) Office of Recapitalization, where one of his key roles is spearheading the Rental Assistance Demonstration (RAD) program, the centerpiece of HUD’s strategy to preserve at-risk public and assisted-housing developments..............Read More

Chicago's Affordable Housing Quagmire About to Get Deeper

October 3, 2017                       By: Gary Lucido

Chicago has a long standing love affair with the notion of "affordable housing" - not CHA built housing but privately developed housing that people below various income limits can afford to buy or rent and are granted access to this housing by the city. But it's not clear if they really love affordable housing or just the idea of affordable housing or if maybe they just hate gentrification. And who is "they" anyway?

In all fairness there are different constituencies who have different views on what is "affordable", where it should be located, and how it should be created. As with most things Chicago there is a messy political process for determining the policy. Best I can tell the city has had an Affordable Requirements Ordinance (ARO) in order to encourage the development of affordable housing going back to at least 2003, which was updated in 2007 and again in 2015..........Read More