Housing Plus

Housing Plus

Guidance and legal insight for all aspects of housing and community development

By the Housing Group at Ballard Spahr

Tax Reform Actualized and the Impact on Affordable Housing and Community Development

Posted in Energy Tax Incentives, Government-Assisted Housing, Historic Tax Credits, Housing Bonds, Legislative Initiatives, Low Income Housing Tax Credits, New Markets Tax Credits, Policy, Tax Credits, Tax Reform

As we know, the President has signed what was originally titled Tax Cuts and Jobs Act, the most significant overhaul to the U.S. Tax Code since 1986. The President signed the Act into law after the first of the year in order to avoid some automatic spending cuts.

In its final form, this Tax Code overhaul retains private activity bonds and the the low-income housing tax credit. However, according to A Call To Invest in Our Neighborhoods (ACTION) Campaign, the amendment of other critical provisions of the Tax Code, especially, the lowering of the corporate tax rate from 35 percent to 21 percent and the creation of a base erosion and anti-abuse tax, present concern for affordable housing, as these provisions can impact an investor’s tax credit appetite. In an analysis performed by Novogradac and Company, the final version of the bill “would reduce the future supply of affordable rental housing by nearly 235,000 homes over 10 years.” Further, it is anticipated that other changes to the Tax Code, such as those relating to bonus depreciation, depreciation, and interest expense limitations, will impact equity pricing.

The legislation also retains the new market tax credit, with no change to its expiration which is after the 2019 allocation. The 20% historic tax credit was also retained, but with significant modification, including claiming the credit ratably over 5 years.

Ballard Spahr’s Tax Group is also following the legislative developments of other provisions of the bill. Late yesterday, the Tax Group issued a thoughtful analysis of the final bill.

Please use our Tax Reform Alert Center as a resource to find more information on the bill and/or reach out to us directly.

 

 

HUD starts the rollback of affirmatively furthering fair housing?

Posted in Fair Housing, Government-Assisted Housing, Legislative Initiatives, Policy, Public Housing, RAD, Section 8

Today, HUD issued a notice extending until after October 31, 2020, the deadline for cities and other participating jurisdictions to submit assessments of fair housing (AFH), the new reporting and assessment tool required by HUD’s 2015 affirmatively furthering fair housing (AFFH) rule. Some participating jurisdictions have already submitted AFHs, and the New York Times reports today that HUD says it will stop reviewing them.  Per a prior notice from HUD, AFHs for public housing authorities, states and insular areas have not yet been due.

Today’s notice reminds HUD recipients that they still must affirmatively further fair housing, but we cannot help but wonder if this is the Trump administration’s attempt to start rolling back the AFFH rule, which has been the subject of a fair amount of controversy since its publication.  The AFHs have also raised concerns for many, including PHAs concerned about the unfunded reporting burden and the potential for enforcement if goals outlined in the AFHs are not met.

HUD rolls back PACE financing in single family FHA deals

Posted in Uncategorized

In July 2016 HUD issued guidance on the use of Property Assessed Clean Energy (PACE) assessments for single family properties with FHA-insured mortgages. In January 2017, HUD followed with guidance on the use of PACE assessments for multifamily properties with certain types of FHA insurance, HUD-held debt and rental assistance.

With the issuance of Mortgagee Letter 2017-18, FHA announced that single family properties with PACE assessments will no longer be eligible for FHA-insured forward mortgages. It is unclear if HUD will extend this policy shift to multifamily properties in the future, and we will continue to monitor any action by the agency on this topic.

To learn more about the use of PACE assessments in affordable housing development, please visit www.ballardspahr.com/PACEwebinar.

HUD Webinar on RAD Construction Completion Certification & Minority Concentration Analysis Mapping Tool

Posted in Fair Housing, Public Housing, RAD

On Thursday, November 9, 2017 HUD hosted a live webinar to provide an overview and discussion of the recently developed Completion Certification and the RAD Minority Concentration Analysis Tool. A video of the webinar can be found here along with slides from the presentation.

Construction Completion Certification. Once construction or rehabilitiation is complete, Section 1.13(B)(6) of the RAD Notice requires that Owners submit a completion certification including a cost certification and other information about compliance with requirements of the RCC.  The Office of Recapitalization recently created a module on the RAD Resource Desk entitled the “Rehab/Construction Completion Milestone” and also posted instructions on completing the certification.   Submitting the Completion of the Rehab/Construction Milestone information should be done no later than 45 days after completion of the work. The new module requires owners to provide information related to the completion of work, residents’ right of return, and Section 3 hiring achieved.  Owners should become familiar with the requested information regardless of where they are in the RAD conversion process to understand what data will be needed to complete the certification, including some information that dates back to the issuance of the CHAP.

RAD Minority Concentration Analysis Mapping Tool. HUD has released the RAD Minority Concentration Analysis Tool (the “Tool”) in order to help housing authorities assess whether a proposed site for new construction under RAD may be in an area of minority concentration.  The Tool will create a report of data required by the RAD Fair Housing and Civil Rights Notice (H/PIH 2016-17), including minority data from the Census for: 1) the Housing Market Area; 2) the census tract; 3) the area comprised of the census tract of the site together with all adjacent census tracts; and 4) an alternative geography if proposed by the housing authority. The Tool is available at https://www.huduser.gov/portal/maps/rad/home.html and requires creating a user account.

HUD issues notice of RAD extensions for PHAs in disaster areas

Posted in Government-Assisted Housing, RAD, Uncategorized

HUD issued a Notice of Extensions for PHAs in Presidentially Declared Disaster Areas.  Pursuant to the Notice, HUD is authorized, on a case-by-case basis, to grant public housing authorities located in Presidentially-declared disaster areas extensions to certain Rental Demonstration Assistance (RAD) Application submission deadlines.  These extensions may be granted to PHAs that have:  1) submitted a letter of intent to reserve their position on the RAD waiting list and subsequently been notified by HUD that they are eligible for an award following submission of a completed RAD application, portfolio award proposal, or multiphase award application; or 2) received a portfolio award and been provided 365 days from issuance of the portfolio award to submit acceptable RAD Applications for the remaining projects including in the portfolio award.  The Notice does not impose any time limitations with respect to qualifying disaster area designations.  PHAs interested in applying for an extension may either contact their RAD transaction manager directly or email RADapplications@hud.gov.

The OIG issues dozens of new audit reports

Posted in Community Development, Government-Assisted Housing, Policy, Public Housing, Section 8
Construction Sign

Just in time for the end of the federal fiscal year (September 30), the HUD Office of Inspector General (OIG) issued a flurry of internal and external audit reports over the last few weeks on a wide variety of topics. They include:

Missed the Options for Property Assessed Clean Energy (PACE) Financing webinar?

Posted in Uncategorized

If you missed our webinar on Options for PACE Financing or want to share the materials with your colleagues, you can access the presentation, white paper and recording at www.ballardspahr.com/PACEwebinar.

You can also click here to learn more about how the District of Columbia is leading the nation in PACE financing.

 

 

HUD Reminds RAD Participants of HAP Effective Date Flexibility

Posted in Low Income Housing Tax Credits, Policy, RAD

As we head into the fourth quarter, HUD sent out an e-mail reminder Friday afternoon about flexibility when establishing Housing Assistance Payments (HAP) contract effective dates in Rental Assistance Demonstration (RAD) transactions. The January 2017 revision to the RAD Notice at Section 1.13(B)(5) gives Project Owners the ability to establish a HAP contract effective date of either 1) the first day of the month after closing, or 2) the first day of the second month following closing.  For example, this flexibility allows RAD transactions that close in October to have a HAP effective date of either November 1 or December 1.

The fourth quarter has historically been the busiest time for closing RAD transactions, and HUD made this policy change to try to relive come pressure from the November closing schedule. In the reminder, HUD suggested that those with hard November closing deadlines should consider closing in October but maintaining a December HAP effective date. HUD strongly encouraged working toward an October closing if a December 1 HAP effective date is critical to the transaction.

The HUD reminder also reiterated the milestones established by HUD in March for yearend closings:

 

Step

Deadline to close by Nov. 30, 2017 Deadline to close by Dec. 31, 2017
Receive a RAD Conversion Commitment (RCC) August 16 September 15
Submit complete closing package September 1 October 1
All RAD documents approved and ready for HUD signatures November 16 December 14

HUD’s methodology for prioritizing yearend closings are based on several factors, including:

  • Adherence to the deadlines set forth in the table above.
  • Prioritization categories for CHAP processing listed in Section 1.11 of the RAD Notice.
  • Critical deadlines beyond the control of the PHA and its development team (note that HUD will require documentation of these deadlines when considering this factor).
  • Lower priority will be given to transactions when the original RCC expiration date has been extended past 90 days from issuance.

Ballard Spahr will continue to monitor any further guidance issued by HUD regarding yearend RAD closings and update our readers.

HUD Releases 2018 Qualified Census Tract & Difficult Development Area Designations

Posted in Government-Assisted Housing, Low Income Housing Tax Credits, Tax Credits

On September 11, 2017, HUD published a Notice designating the 2018 Qualified Census Tracts (QCTs) and Difficult Development Areas (DDAs) for the Low Income Housing Tax Credit (LIHTC) program. Qualified Census Tracts are those areas where either (1) 50% or more of the households have incomes below 60% of the area median gross income or (2) the poverty rate is at least 25%. Difficult Development Areas are those areas with high construction, land and utility costs relative to the area median gross income.  Both QCTs and DDAs are eligible for an increase in basis and available tax credits of up to 30%.  The Notice specifically details HUD’s methodology in determining the QCTs and DDAs through the use of fair market rents, FY2017 income limits, census counts, and other income and poverty data. An interactive map, full listing of the 2018 QCTs and DDAs, and other historical data can be accessed at https://www.huduser.gov/portal/datasets/qct.html.

These 2018 designation lists are effective for allocations of LIHTC credit after December 31, 2017, or in the case of bond transactions where tax-exempt bonds are issued and the building is placed in service after December 31, 2017. The HUD Notice also explains the effectiveness of the designations for areas not specifically on a 2018 QCT or DDA list, along with illustrative examples of the consequences of the effective date for areas that either gain or lose QCT or DDA status.

 

 

New RAD Notice of Increase in Cap and Rent Setting

Posted in Budget, Government-Assisted Housing, Policy, Public Housing, RAD, Section 8

Our friends at NAHRO have alerted us that a new RAD notice will be issued tomorrow, August 23, 2017. The notice requires PHAs who already submitted a RAD letter of interest to preserve their spot on the wait list to submit a RAD application within 60 days if they want to continue in the RAD program. Guidance is also provided for setting rents for all RAD applications awarded outside of the previous 185,000 RAD cap, or for revocations or withdrawals after May 5, 2017 below that cap; rent levels for all such awards will be set at FY 2016 funding levels.  Per the appropriations notice that extended the RAD cap, the outside deadline for final submission of multiphase award applications is extended to September 30, 2020.