The Man-Made Affordable-Housing 'Crisis'

November 29, 2018                      By: Kevin D. Williamson

Rules that prohibit cheap housing lead to ... a lack of cheap housing.

Houses in a suburb of Denver, Colo. (Rick Wilking/Reuters)

In Los Angeles, they are “back houses.” In Connecticut, they are “garage apartments.” In Philadelphia, the grander ones are “carriage houses.”

In Dallas, they are “granny flats,” and they are, for the first time in a generation, legal.

In Mandarin English, these domiciles are “accessory dwelling units,” smaller secondary residences built on the lots of other houses. They have different origins: In places where detached garages are common, many homeowners built small apartments above them, sometimes to house elderly relatives or other family members who could not quite manage on their own (an arrangement that became much more common during the Great Depression); these eventually became popular short-term residences for older teenagers, the domestic quarantine of whom is generally found to be desirable. In older and tonier neighborhoods, many began as servants’ quarters. I don’t suppose I need to explain how carriage houses got their name.........................Read More

Industry Rides LIHTC Market Changes

November 27, 2018                           By: Donna Kimura

Syndicators, investors discuss market changes, income averaging, costs.

Leading syndicators and investors discuss the low-income housing tax credit market at AHF Live: The Affordable Housing Developers Summit on Nov. 14 in Chicago.

Activity in the low-income housing tax credit (LIHTC) market gained momentum in the second half of 2018 after a sluggish start caused by the uncertainty created by the tax reform legislation.

“After people did figure out what their tax liability was they sort of came back into the market in a stronger way,” said Tony Bertoldi, executive vice president of CREA. However, there’s still a big separation between pricing expectations in terms of what investors are expecting and what developers need to make deals work, he said at AHF Live: The Affordable Housing Developers Summit in November.

Despite the market changes, a number of investors and syndicators reported being on pace to have their best year, including Bank of America Merrill Lynch, CREA, and WNC.................Read More

Affordable Housing Developers Face New Challenges

November 27, 2018                      By: Bendix Anderson

The decrease in the pricing of LIHTC credits, as well as rising construction costs may put a dent in affordable housing construction.

It’s getting harder for affordable housing developers to do new deals.

The affordable housing segment of the multifamily market is just getting used to the drop in the value of low-income housing tax credits (LIHTCs) caused by the tax reform law passed at the end of last year. Now rising interest rates and rising construction costs are making it even more difficult to build affordable housing properties.

“We are seeing the long-feared increase in interest rates,” says Patrick Sheridan, senior vice president of housing for affordable housing developer Volunteers of America. “The interest rate increases we are now experiencing are decreasing project feasibility, creating more demand for more soft debt sources.”.............Read More

10 Takeaways From AHF Live

November 16, 2018                      By: Donna Kimura, Christine Serlin

From Opportunity Zones to the LIHTC market, there was no shortage of topics at AHF's annual conference.

Here are 10 quick takeaways from AHF Live: The Affordable Housing Developers Summit held Nov. 12-14 in Chicago.

Nearly 1,200 developers, finance executives, housing officials, and service providers gathered for the annual event, which featured informative workshops and high-level discussions of the industry's hot-button issues.

1. To-do List

The No. 1 priority for LIHTC advocates is to get a fixed 4% floor for low-income housing tax credits (LIHTCs) generated by tax-exempt private-activity bonds. Novogradac & Co. has estimated that more than 65,000 additional affordable homes could be financed from 2019 to 2028 if the rate were fixed.

The industry is looking to see where legislation for the 4% fix and other housing tax credit improvements could get attached during the lame-duck Congress.

“We’re going to push really hard. I’m optimistic that we can get something done, and we’re going to be pushing really hard for all of you to get that 4% fix,” said Bob Moss, principal and national director of governmental affairs at CohnReznick............Read More

Why affordable housing is scarce in progressive cities

November 16, 2018                      By: Patrick Sisson

Plenty of factors can explain the crisis of housing affordability plaguing U.S. cities—a shortage of new construction, a lack of tenant protection, greedy developers and speculators, or a lack of upzoning. But according to San Francisco-based housing activist Randy Shaw, author of Generation Priced Out: Who Gets to Live in the New Urban America, one of the true challenges is the entrenched power and privilege of an older generation of homeowners.

San Francisco, California | Shutterstock

“No progressive city posts “Priced Out: Only the Affluent Allowed” signs in it neighborhoods,” he writes in the book’s introduction.“But that’s what’s happened.”

Shaw, who runs the Tenderloin Housing Clinic in San Francisco, has a first-hand understanding of the causes of today’s crisis, having witnessed his city’s transformation over the last few decades into a poster child for extreme housing costs. He also knows many of the traditional solutions, having pushed for the tenant protections that make San Francisco a progressive beacon for renter’s rights.....................Read More

Enacting a Phased-in 50 Percent LIHTC Allocation Increase Could Create More Than 264,000 Affordable Rental Homes

November 9, 2018                                         By: Dirk Wallace, Michael Novogradac, Peter Lawrence

While tax reform is projected to reduce the amount of affordable rental housing production financed by the low-income housing tax credit (LIHTC) by about 235,000 over 10 years, there existed prior to tax reform and still exists today after tax reform, a tremendous unmet need for more production. According to Harvard’s Joint Center on Housing Studies, more than 11 million renter households pay more than 50 percent of their income on rent. According to the National Low Income Housing Coalition, the U.S. has a shortage of more than 7.2 million rental homes that are affordable and available to extremely low-income households. The provision of the Affordable Housing Credit Improvement Act (S. 548) that would have the biggest impact on that need remains the provision to enact a permanent 50 percent allocation increase, phased in at 10 percent annually over 2019-2023................Read More

Affordable Housing Wins at the Ballot Box in 2018

November 8, 2018                        By: Jared Brey

Gregorio Casar spent Election Day trying to calm his nerves. Casar, a second-term city councilman in Austin, wasn’t up for election on Tuesday, but voters were slated to decide on a $250 million affordable housing bond measure that he helped craft. He got to his polling place at 6 a.m., an hour before it opened, and says he “wasn’t even close to being the first in line.” It was a high-energy election. Texas Democrats were fired up by the prospect that the Congressman Beto O’Rourke of El Paso might pull off an upset and unseat Republican Senator Ted Cruz. And outside the state, it seemed like the whole country was at stake.

A city hall rally held by the Keep Austin Affordable coalition in June 2018.

When the votes were counted, O’Rourke had narrowly lost, but Austin’s Proposition A had passed with flying colors, earning more than 73 percent of the vote.

“When we were first putting this package together, there were a lot of people who I really respect who said that a $250 million housing bond was a failure out of the gate,” Casar says. “Last night, all across Texas, but in Central Texas especially, our communities showed that the world of the possible is much broader than people might have imagined when people show up and fight and are inspired, and when people show up and vote.”....................Read More