Housing Plus

Housing Plus

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

By the Housing Group at Ballard Spahr

Advocating for increased funding for affordable housing – MAHC’s 2018 Housing Day

Posted in Budget, Legislative Initiatives, Low Income Housing Tax Credits, Multifamily

The Maryland Affordable Housing Coalition (MAHC) held its annual Housing Day in Annapolis today.   The event brings together over 200 affordable rental housing advocates to inform legislators of the value of affordable housing and funding needs to continue to develop and rehabilitate affordable housing in Maryland.  Housing Day also provides the opportunity to hear from State representatives regarding current issues and legislation related to the affordable housing industry.  During today’s program, many State elected and appointed officials emphasized the need to continue to think creatively to meet the increasing demand for affordable housing in Maryland – including the opportunity to focus on work force housing.

A priority of the 2018 Housing Day was to advocate for increased funding for Rental Housing Works (RHW), subordinate gap financing used solely for projects utilizing 4% low-income housing tax credits and Maryland Department of Housing and Community Development’s Multifamily Bond Program.  The Governor’s current budget proposes funding RHW at $20 million, but MAHC is advocating for a $5 million increase in this amount to $25 million in order to keep up with the demand for this popular financing.   MAHC notes that for every $1 invested in RHW generates nearly $11 in new public and private investments and each RHW project creates 174 jobs.  We heard from a number of elected officials regarding the value of speaking about RHW projects that have closed in their districts and the linked map provides a snapshot of the impact of RHW within each Maryland County.

Turning to the national stage, Molly Bryson, a Partner at Ballard Spahr, provided attendees of the 2018 Housing Day with an update on the need to continue to advocate for the expansion and enhancement of the federal low-income housing tax credit through the passage of the Cantwell-Hatch Affordable Housing Credit Improvement Act (S.548) in the U.S. Senate and the U.S. House of Representatives companion bill (H.R.1661 – Affordable Housing Credit Improvement Act of 2017).  The Cantwell-Hatch Act was recently included in the Senate’s initial version of the budget bill, but it unfortunately did not make it into the House’s approved budget bill.  Continued outreach is needed to keep up the momentum of this important legislation.

Ballard Spahr will continue to monitor both Maryland and federal legislation related to affordable housing and provide updates in future blog posts.

Trump Administration Releases FY 2019 Budget Proposing 18.3% Reduction in HUD Funding

Posted in Budget, Community Development, FHA and GSE Financing, Government-Assisted Housing, Legislative Initiatives, Policy, Public Housing, RAD, Section 8

Yesterday, the Trump administration released its proposed budget for the 2019 fiscal year. Overall, the budget proposes an $8.8 billion (18.3%) reduction in the HUD budget from the 2017 enacted level, a more drastic cut than the $6 billon HUD budget reduction the Administration proposed for fiscal year 2018. Significant proposals in the budget include:

  • Elimination of several programs including the Community Development Block Grant (CDBG), HOME Investment Partnership Program, Public Housing Capital Fund and Choice Neighborhoods
  • $17.5 billion in Section 8 annual contribution contract renewals (an $800+ million decrease from 2017 enacted level)
  • $10.866 billion in project-based rental assistance (a $50 million increase from the 2017 enacted level)
  • $110 million decrease in Housing Choice Voucher administrative fees
  • $100 million request for the Rental Assistance Demonstration (RAD) program to cover the incremental subsidy for public housing properties that would otherwise be unable to covert to Section 8 assistance
  • Proposed elimination of the unit cap for RAD conversions and September 30, 2020 deadline for RAD application submissions
  • In addition to the elimination of the Capital Fund, $1.7 billion in reductions to the Public Housing Operating Fund
  • $75 million request for the Family Self-Sufficiency program (same as 2017 enacted level)
  • $10 million request for the Jobs Plus Initiative (a $5 million decrease from the 2018 Senate recommendation)
  • Maintained funding levels for lead-based paint mitigation efforts
  • Unspecified funding request to evaluate and improve the EnVision Centers recently launched by Secretary Carson
  • $20 million increase to the Federal Housing Administration (FHA) operations (although a new fee would be imposed on FHA lenders)
  • Requirement that non-disabled persons receiving HUD assistance contribute more than 30% of their adjusted income to their housing costs

Other housing and community development components of this budget include an elimination of the Community Development Financial Institutions (CDFI) Fund grant and direct loan program, $1.8 billion request for veteran’s homelessness programs, and a funding increase for the U.S. Department of Agriculture (USDA) single family housing guaranteed loan program. A full copy of the budget proposal and related materials are available at be www.whitehouse.gov/omb/budget.

Remember that Congress is responsible for passing the budget; this is just a proposal. It remains to be seen if Congress will adopt the President’s proposal. We will continue to provide updates the budget throughout the appropriations process.

 

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.