Tax overall could mean big changes for developers working affordable housing, historic properties

November 29, 2017                                     By: Sara Freund

For those concerned with recent proposals to overhaul the nation’s tax code, it can feel like they’re dealing with a giant pile of what-if and if-then scenarios. The proposals from the House and Senate aren’t winning over everyone, but do they ever? But within the tax bill lie a few key components that are important for the commercial real estate industry in Chicago. This includes changes to the New Markets Tax Credit program and the federal Historic Tax Credit program.

On Nov. 16, the House passed a significant tax overhaul, just two weeks after the bill was unveiled. Eyes are now on the Senate, where members will attempt to move ahead with their own proposal. There are significant differences between the House bill and the Senate bill, but what’s important for many Republicans is to deliver the first major legislative victory for President Trump.

In the House bill, the new markets tax credit, the federal historic tax credit and the non-historic rehabilitation credit would be eliminated after 2017. The HTC program is an important tool for incentivizing the redevelopment of older buildings—something that developers, planners and preservation advocates value greatly. The NMTC program was initiated to incentivize community development and economic growth through tax credits that attract investors to distressed communities................Read More

The Tax Overhaul Could Mean Falling Home Prices and Less Affordable Housing

November 28, 2017                          By: Charlie Herman

The Senate this week is expected to vote on Republican-sponsored legislation to overhaul the nation’s tax code. A vote could come as early as Thursday, but before that happens, there’s going to be a lot of horse-trading to secure enough Republican votes to pass the bill (Democrats are united in their “no” vote).

If it feels like this all happening really fast, it is. Republicans want to get a bill to the President to sign before Christmas. In the rush, keeping track of any changes in the Senate’s version is challenging. And if a tax bill does get more than 50 Republicans, then the legislators from both chambers will have to meet and iron out the differences between the two bills.

So while there isn’t a final version yet, it’s clear from the House bill and the outline from the Senate for how it plans to pay for tax cuts (that will still add $1.4 trillion to the deficit over the next 10 years) that the tax overhaul will affect homeowners and renters in the New York City and New Jersey area...................Read More

Tax Proposal Threatens Affordable Housing in Iowa

November 21, 2017                       By: Deidre Schmidt & Eric Burmeister

While you might not realize it, tax policy is housing policy.

Current tax reform proposals might seem benign, but in their current form they could negatively impact the housing of thousands of families, children, veterans, seniors and people with disabilities.

(Photo: J. Scott Applewhite, AP)

The Low Income Housing Tax Credit has been the primary way the private sector has built affordable housing ever since the last round of tax reform under President Reagan.

However, because these tax expenditures are complex and not direct and immediate subsidies, they are hard to understand for most people. They are therefore vulnerable to elimination without a complete appreciation of the consequences.

With just a few pieces of information, we believe each of us can understand and influence what happens to our country’s most extensive affordable housing program................Read More

LIHTC Market Waits for Tax Reform Resolution

November 20, 2017                  By: Donna Kimura

Investors and syndicators discuss the equity market at AHF Live.

“Welcome to disruption 2.0.”

That was the greeting from Mark Siranovic, senior vice president for multi-investor fund markets at the National Equity Fund and one of the panelists on the Tax Credit Equity Outlook Power Panel at AHF Live in Chicago.

Fred Copeman, Stephen Daley, Marge Novak, and Mark Siranovic (left to right) discuss changes in the low-income housing tax credit market and the AHF Live conference in Chicago.

Siranovic and other low-income housing tax credit (LIHTC) syndicators and investors detailed the changing dynamics of the market as Congress works to overhaul the tax system. The market was jolted by the 2016 election, which gave Republicans control of the White House and both houses of Congress and increased the prospects for tax reform.

“Last year, you had the three-month blowup of the market, and then we found equilibrium again,” Siranovic said. “A couple of weeks ago, you started phase two of that. I think the market will quickly adjust once somebody can give us an accurate and final set of guidelines and rules to play by.”.................Read More

Fannie, Freddie to Re-Enter LIHTC Market

November 17, 2017                               By: Donna Kimura

Each GSE is allowed to invest $500 million annually in housing credits.

Fannie Mae and Freddie Mac are returning to the low-income housing tax credit (LIHTC) market as investors.

The government-sponsored enterprises were given the go-ahead to invest in housing credits on a limited basis by the Federal Housing Finance Agency (FHFA), which cited several factors for its decision, including furthering the enterprises’ mission to support affordable housing and ensuring that they could provide “a countercyclical role in the LIHTC market in the future if needed.”

Each enterprise will have an annual investment limit of $500 million, less than a 5% market share for each. Within this funding cap, any investments above $300 million in a given year are required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors. These investments are designed to preserve affordable housing, support mixed-income housing, provide supportive housing, or meet other affordable housing objectives.

Fannie Mae and Freddie Mac were two of the nation’s largest LIHTC investors, representing an estimated 35% to 40% of the market, before being placed into conservatorship by FHFA in 2008. The enterprises’ financial condition deteriorated during the housing market crash, requiring government intervention................Read More

Freddie Mac to invest $500M in Low-Income Housing Tax Credit Market

November 17, 2017                  By: WFGNTIC

REPOSTED DIRECTLY FROM INMAN NEWS. THIS CONTENT HAS NOT BEEN MODERATED BY WFG NATIONAL TITLE.

Freddie Mac today announced its re-entry into the Low-Income Housing Tax Credit (LIHTC) market as part of the newly launched Duty To Serve program, an initiative geared toward addressing persistent affordable housing problems by preventing foreclosures, responsibly expanding credit, educating future borrowers, counseling current borrowers and supporting affordable rental housing.

Freddie Mac’s first investment is expected to close in January 2018, with a $500 million annual investment cap. Freddie Mac will partner with and invest through experienced LIHTC syndicates, focusing mainly on markets that are often overlooked of underserved by most investors.

The LIHTC program provides incentives to multifamily property owners and investors to build and maintain quality affordable housing for low and very low-income households across the United States.............Read More

A Provision Buried In The House Tax Bill Could Slow Affordable Housing Construction

November 17, 2017                         By: Arthur Delaney

Republicans are rushing to pass a tax bill that could have all kinds of side effects.

WASHINGTON ― A little-noticed provision in the Republican tax reform bill that passed the House on Thursday could have a big impact on affordable housing construction.

Speaker of the House Paul Ryan, along with his leadership, celebrate passing the House tax bill.

The House bill maintains a tax subsidy for low-income housing construction, but ends the tax-free status of certain bonds that builders rely on to arrange financing.

Developers say the mere threat of the policy change already has them scrambling to close deals for upcoming projects before the end of the year, when funding could disappear.

Chris Akbari, president the Itex Group, a development company in Texas, said his firm is in the process of closing a $49 million deal to buy and rehabilitate a low-income apartment complex in Houston....................Read More

Affordable housing advocates say Trump tax reform bill is 'devastating'

November 3, 2017                           By: Jeff Andrews

Elimination of private-activity bonds would lead to steep drop in affordable housing units

Affordable housing advocates were cautiously optimistic that the House tax reform bill would have only modest effects on low-income housing after the Trump administration’s framework explicitly retained the tax credit responsible for virtually all construction and preservation of low-income housing units—the Low-Income Housing Tax Credit (LIHTC).

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While the House’s tax reform bill released Thursday does include LIHTCs, the unexpected elimination of private-activity bonds would have devastating effects on the construction and preservation of affordable housing. When combined with other changes the bill proposes, accounting firm Novogradac & Company estimates a loss of nearly 1 million affordable housing units produced over 10 years........................Read More

America's affordable-housing stock drops

October 23, 2017                  By: Washington Post

Decline seen from 2010 to 2016

This neighborhood is in Cary, N.C. CREDIT: Bloomberg photo by Luke Sharrett

The number of apartments deemed affordable for very low-income families across the United States fell by more than 60 percent between 2010 and 2016, according to a new report by Freddie Mac.

The report by the government-backed mortgage financier is the first to compare rent increases in specific units over time.

It examined loans that the corporation had financed twice between 2010 and 2016, allowing a comparison of the exact same rental units and how their affordability changed............Read More

What Trump's tax reform could mean for affordable housing

November 2, 2017                               By: Jeff Andrews

An explainer on the corporate tax rate cut that could cause a drop in new affordable housing

The affordable housing shortage in the United States was put in stark terms in October when Freddie Mac reported that homes available to very low-income Americans dropped by more than 60 percent in just six years between 2010 to 2016.

The units, developed for people who make less than 50 percent of the area median income, have began to run short because of rising rents, stagnant wages, and fluctuations in federal programs that subsidize housing.

To affordable housing advocates, it’s a clear signal that the country can hardly sustain a disruption to the construction of new affordable housing. Yet that’s what the Trump administration’s tax reform proposal— highlighted by a corporate income tax cut from 35 to 20 percent — risks doing if the tax incentives big banks receive to invest in affordable housing projects are weakened............Read More

House Bill Seeks 50% Increase in LIHTCs

October 31, 2017                  By: Affordable Housing Finance

The latest legislation comes from Rep. Suzan DelBene.

U.S. Rep. Suzan DelBene (D-Wash.) introduced the Access to Affordable Housing Act to increase the low-income housing tax credit (LIHTC) by 50% today.

“Making sure that every American has a safe and affordable place to call home is a moral imperative that we must address,” DelBene said in a statement. "To help lift families out of poverty and expand access to affordable housing, we need to increase the low-income housing tax credit. Washington has seen it firsthand. Housing options are not keeping pace with demand, and my legislation would help ensure more families can find stable, affordable housing.”

Reps. Adam Smith and Pramila Jayapal are co-sponsors of DelBene’s bill—all of whom represent Washington’s King County, where housing demand and costs have sky rocketed in recent years. In their state, nearly 400,000 households pay half their income in rent...............Read More