Housing Plus

Housing Plus

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

By the Housing Group at Ballard Spahr

Ballard Spahr submits comments on HUD’s regulatory reform agenda

Posted in Policy

Ballard Spahr submitted comments in response to HUD’s request for assistance in identifying existing regulations that may be outdated, ineffective, or excessively burdensome.

Our comments take into account the uncertain funding environment housing authorities face. In such situations, it is only reasonable to reduce regulatory burdens so the funding can be targeted at providing and maintaining the housing infrastructure. At the same time, we are mindful of key statutory provisions and the need to maintain tenant protections as well as fair housing, civil rights, environmental, and wage rate requirements.

 

HUD Secretary States: RAD – “We need to lift the cap”

Posted in Government-Assisted Housing, Legislative Initiatives, Low Income Housing Tax Credits, Policy, Public Housing, RAD, Uncategorized

At the National Housing Conference 2017 Annual Policy Symposium on June 9, 2017, HUD Secretary Ben Carson delivered the keynote address and participated in a Q&A session with Chris Estes, President and CEO of NHC.  While much of the keynote address focused on homeownership issues, remarks made during the Q&A included such topics as the Rental Assistance Demonstration (RAD) program, Housing First, veterans housing, rural housing, fair housing, and the Federal Housing Administration. 

With respect to RAD, the Secretary called it the “perfect example” to leverage funds to provide more affordable units through public private partnerships.  He called for the lifting of the RAD cap on units (currently 225,000 units), as he described the program as a “win win situation” in the context of spreading funds further in light of fiscal constraints.  In emphasizing “enhancing public private partnerships,” the Secretary specifically mentioned the use of low-income housing tax credits.   

A recording of the Secretary’s remarks can be found here.  Remarks relating to RAD can be found beginning at time stamp 12:42 and also at 21:47.

 

 

HUD Regulatory Reform

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

The new HUD administration has been pretty quiet on the regulatory front, with only a handful of regulations and notices issued since January. That may change soon. HUD is hard at work identifying regulatory changes that might be made to comply with Executive Order (EO) 13771, “Reducing Regulation and Controlling Regulatory Costs.”  The EO requires that two regulations be eliminated for each new regulation issued and that the overall costs of new regulations, including repealed regulations, this year be zero. In February 2017, the Office of Management and Budget issued guidance for implementing the EO, and now HUD  seeks the public’s input into which regulations it could modify or eliminate.  Recommendations are due June 14, 2017.

Over the years, a number of groups and agencies have submitted recommendations to HUD for regulatory reform, and this is a good time to reconsider those proposals.  Since the request is for modifications to regulations, not statutes, recommendations should focus upon regulations and guidance that is not required by federal law.  Areas Ballard Spahr has been thinking about recommending changes include:

  • Better ways to implement prevailing wage rate requirements at mixed-use projects where the prevailing wages need not be paid for the full project;
  • Streamlining of the demolition/disposition process for public housing;
  • Modifications to site and neighborhood standards;
  • Modification of the public housing asset management rules;
  • Requirements for designation of public housing as elderly-only; and
  • Thoughtful modifications to affirmatively furthering fair housing requirements.

Request for IRS Guidance on LIHTC Issues

Posted in Low Income Housing Tax Credits, Policy

Last week at the annual meeting of the American Bar Association Forum on Affordable Housing and Community Development (Forum), Michael Novey, Associate Tax Legislative Counsel, Office of Tax Policy, U.S. Department of the Treasury, encouraged the Tax Credit Equity and Financing Committee of the Forum to consider submitting a request to the IRS for priority guidance on issues relating to the low-income housing tax credit (LIHTC). Based on discussions at the annual meeting, the Committee submitted its top five issues today, which can be found here.  Not only does the request provide background on the issues, it also describes why it is important for guidance to be provided now.

Each year the public is invited to submit recommendations to the IRS about what guidance would be helpful for the IRS to provide. This year’s notice from the IRS can be found here.  In past guidance plans, various LIHTC topics have been included, such as the right of first refusal under tax code Section 42(i)(7) and the federally or state assisted exception to the 10-year acquisition credit rule under tax code Section 42(d)(6).  Since the IRS has not yet provided formal guidance on these two important topics, they are among the issues included in the Committee’s request.

We will keep you posted if/when the IRS responds to these issues.

 

TOMORROW – June 1st – Revised RAD Forms Must Be Used

Posted in Public Housing, RAD, Section 8

Earlier in May, HUD received approval from the Office of Management and Budget of the final, revised form RAD documents. HUD had previously solicited two rounds of public comment as part of the Paperwork Reduction Act process.  Ballard’s comments to HUD’s first solicitation of comments can be found here and our comments to the second round here. The final, revised form documents reflect HUD’s incorporation of many of the submitted comments – including comments received as part of the second round of public comment in October 2016.

The May 11th RADBlast! indicates that the revised forms must be utilized for any closing package submitted to HUD on or after June 1, 2017. Many of the revised RAD documents are available in Word format on HUD’s RAD website and both the old and new forms are available on the RAD Resource Desk. For the convenience of our readers, we’ve uploaded copies of the final, revised forms for public housing RAD conversions (RAD First Component) compared to the prior form documents – and you’ll immediately notice the riders to RAD Use Agreement and the HAP Contracts have been incorporated into the body of the respected documents:

If you’ve been following the progression of the revised RAD documents and would like to see the changes made to the documents since they were published for comment in October 2016, please contact me (mohra@ballardspahr.com or 410.528.5337)  and I will be happy to send you comparison copies of these interim revisions.

Overall, HUD was receptive to stakeholder comments and the revised documents reflect the collective knowledge gleaned over the last five years. We look forward to continuing to advance the RAD program.

McClain Weighs in on Potential Effect of Trump Budget Cuts on Affordable Housing

Posted in Budget, Government-Assisted Housing, Legislative Initiatives, Policy, Public Housing, RAD, Uncategorized

In an interview with U.S. News and World Reports on “The Future of Affordable Housing in the Trump Era,” Amy McClain, who leads Ballard Spahr’s government-assisted housing practice (and is a frequent Housing Plus blogger), cautions that while she doesn’t expect budget cuts to be as severe as those proposed, funding for affordable housing is under threat. Amy notes that the proposed cuts to public housing funds could undermine the Rental Assistance Demonstration (RAD), which allows a public housing project to convert its subsidy to long-term Section 8 assistance and leverage debt and equity in order to finance the project’s rehabilitation or replacement. The post-conversion rents for RAD projects are based on the amount of public housing operating and capital funds allocated to the project pre-conversion. As Amy notes in the article, “If the public housing operating subsidy and the public housing capital fund get diminished [in the budget], then the rents are no longer viable to convert to the Section 8 platform.” Amy also emphasizes the role that affordable housing proponents can play in the budget debate. “It’s going to come down to what the advocacy groups do and the level of education for members of Congress to make sure everyone is aware of the benefit of programs and the impact that the cuts would have,” she says.

Read more about the proposed cuts to HUD’s budget here.

Tax Reform – Proposed Legislation Protecting Affordable Housing

Posted in Historic Tax Credits, Housing Bonds, Legislative Initiatives, Low Income Housing Tax Credits, New Markets Tax Credits, Policy, Tax Credits, Tax Reform, Tax-Exempt Bonds

After legislation to repeal the Affordable Care Act was pulled from the House floor last Friday, news headlines across the country began reporting that tax reform is next on the Trump Administration’s agenda. As noted in our prior blog post, tax reform that changes the corporate tax rate, the tax-exempt bonds program and the tax-credit programs will have significant impacts on the production of the affordable housing across the country.

In an effort to protect affordable housing programs, legislators have introduced amendments to the Internal Revenue Code (“IRC”) that either (1) create savings to be reinvested in affordable housing programs or (2) expand the availability of housing tax credits and fix related technical issues.

The following bills were introduced in the past 60 days –

  1. The Affordable Housing Credit Improvement Act of 2017 (S. 548) (the “Cantwell-Hatch bill”). According to The Affordable Housing Tax Credit Coalition, the bill builds upon prior bills (S. 2962 and S. 3237), also introduced by Sentor Maria Cantwell (D) and Senator Orrin Hatch (R), and includes “a new provision addressing planned foreclosures, a provision raising the cap to 30 percent from 20 percent on Difficult to Develop Areas (DDAs), additional criteria for community revitalization plans, a provision which codifies, rather than leaving up to Treasury regulations, the prohibition against any state QAP from including local approval or local contribution requirements, and other technical changes.” A section by section summary can be found here.
  2. Affordable Housing Credit Improvement Act of 2017 (H.R. 1661). The purpose of the bill, as reported in a press release issued by co-sponsor Representative Pat Tiberi (R), is to “make the financing of affordable housing more predictable and streamlined, facilitate housing credit development in challenging markets like rural and Native American communities, increase the housing credit’s ability to serve extremely low-income tenants, and support the preservation of existing affordable housing.” The bill is co-sponsored by Representative Richard Neal (D). A section by section summary can be found here.
  3. Common Sense Housing Investment Act of 2017 (H.R.948). The goal of the legislation, introduced by Representative Keith Ellison (D), is to expand the mortgage interest deduction to lower income homeowners and reinvest an estimated $241 billion in savings over 10 years into affordable housing. More information on the bill can be found here.

Bi-partisan support for these bills, especially S.548 and H.R. 1661, suggest that tax reform protecting housing tax credits is good policy. Monitoring the evolution of these bills; the President’s plan for tax reform and the industry’s response to anticipated changes in the IRC will be telling of the future affordable housing programs, especially those authorized under the IRC.

 

Housing Plus welcomes housing attorney Maia Shanklin Roberts to the blogging team

Posted in Community Development, Energy Tax Incentives, Government-Assisted Housing, Historic Tax Credits, Low Income Housing Tax Credits, Policy, Tax Credits

shankun-roberts_maia_1We are excited that Maia Shanklin Roberts has joined Ballard Spahr LLP and our Housing Plus team. Maia’s background is in community development. She worked with the Maryland Department of Housing and Community Development and the Citywide Coordinating Committee on Youth Violence Prevention in Washington, D.C.

Maia is looking forward to bringing her keen insights about community development to blog readers. She has been involved in numerous affordable housing, adaptive reuse, and mixed-use transactions involving more than $800 million in federal, state, historic, and energy tax credit syndications, tax-exempt private activity bonds, and other public financing.

Please join us in welcoming Maia to the firm and our Housing Plus team.

 

Ballard Spahr and CSG Advisors Host Another Informative Western Housing Conference

Posted in Budget, FHA and GSE Financing, FHA-Insured Financing, Government-Assisted Housing, GSE Financing, Legislative Initiatives, Policy, Public Housing, RAD, Tax Credits

Last week, Ballard Spahr in conjunction with CSG Advisors hosted its 7th Annual Western Housing Conference in Phoenix, Arizona. The Conference brought together a wide range of public and private housing professionals facilitating a dynamic conversation on current developments in government-assisted housing.

The Conference opened with a “Washington Update” – a discussion on housing policy under the Trump Administration. Panelists Emily Cadik, Director of Public Policy at Enterprise Community Partners, and Peter Lawrence, Director of Public Policy and Government Relations at Novogradac & Company LLP, brought extensive insight into the political priorities driving forthcoming changes to government-assisted housing programs.

Significant takeaways from the discussion included:

  • The concern over a predicted decrease in HUD’s budget by $6 million, as outlined by the Washington Post on March 8th. Since the panel occurred, the Trump administration’s budget blueprint for fiscal year 2018 budget was released. Housing Plus posted a blog providing an overview of the budget blueprint on March 16, 2017.
  • The elimination of one or more of the tax credit programs, private activity bonds and/or the reduction of the corporate tax rate through tax reform will have significant impacts on the availability of equity financing needed to at least sustain affordable housing development at its current levels.
  • An infrastructure bill that includes housing may be an opportunity to meet any deficits created by HUD budget cuts to the Public Housing Capital Fund and Community Development Block Grant programs.
  • The spending caps under the existing Budget Control Act also pose a threat to government-assisted housing programs, especially in light of the proposed increases in defense spending and the resulting offsets that would be needed from non-defense discretionary spending.
  • Stakeholders should continue to invite legislators and members of Congress to ribbon cuttings and site visits in their districts. These visits are critical in gaining Congressional support for government-assisted housing programs.

The second session of the Conference focused on lessons learned from implementing the Rental Assistance Demonstration (RAD) program. Nicole Ferreira, Vice President for Development at the New York City Housing Authority, and Jenny Scanlin, Director of Development at the Housing Authority of the City of Los Angeles, each provided a case study from which they described the benefits and limitations of the program and the financial structures making each deal work. Beverly Rudman, Director of the Closing/Post Closing Department in HUD’s Office of Recapitalization, provided an update on the program and described particular challenges facing her office, which oversees the RAD program. The panel highlighted the following as effective tools for successfully underwriting a RAD deal and securing community and tenant buy-in: (1) Tenant Protection Vouchers, (2) the demolition and disposition process under Section 18 of the U.S. Housing Act of 1937, (3) seller take back financing from the Housing Authority and (4) federal and local redevelopment grants.

Panelists Tom Capp, Chief Operating Officer of Gorman & Company, C.J. Eisenbarth Hager, Director of Healthy Community Polices at Vitalyst Health Foundation, and Keon Montgomery, Housing Manager for the City of Phoenix Housing Department, then provided a local perspective on how private/public partnerships can be used to create sustaining change in communities. The panel emphasized the use of health studies in the predevelopment process to generate academic research on the specific needs of the impacted community and solicit funding from public and private partners to address those needs.

The last panel focused on the changes in the affordable housing finance market. Monty Childs, Director of Loan Origination and Structuring at Freddie Mac, John Ducey, Manager of Multifamily Affordable Housing-Credit at Fannie Mae, Sarah Garland, Senior Vice President at PNC Bank, Catalina Velma, Vice President of Public Housing at the National Equity Fund, and Cody Wilson, Director at Stifel, Nicolaus & Company, each provided a unique perspective on the impact of recent and prospective economic changes (e.g. tax reform, HUD budget cuts and rises in interest rates) on the equity, bond and lending markets, as well as the increased challenge in financing small and rural projects. The panel also discussed financing tools like Tax-Exempt Loans (Freddie Mac), Reduced Occupancy Affordable Rehab (ROAR) Execution (Fannie Mae) and FHA 221(d)(4) Loans (HUD), which have been found to address some of the challenges faced in the market.

A copy of the conference materials can be found here.

If you have any questions regarding the information above, or want more information on how to register for next year’s conference, please contact Jennifer Boehm at boehmj@ballarspahr.com.

Administration’s OMB budget blueprint proposes 13% cut and elimination of many HUD programs

Posted in Community Development, Government-Assisted Housing, Legislative Initiatives, Policy, Public Housing

 

The Office of Management and Budget (“OMB”) released the Trump administration’s budget blueprint today, providing a general overview of the budget request it intends to present to Congress later this Spring.  As outlined, the blueprint calls for a 13.2% reduction through cutting over $6 billion in funding to the U.S. Department of Housing and Urban Development (“HUD”).

The blueprint describes elements that together comprise reductions to HUD programs realized, in part, by eliminating the following programs:

  • the Community Development Block Grant (“CDBG”) program ($3 billion);
  • the HOME Investment Partnerships Program (“HOME”), Choice Neighborhood Initiative, and Self-help Homeownership Opportunity Program (combined $1.1 billion reduction);
  • Section 4 Capacity Building for Community Development and Affordable Housing ($35 million).

These cuts account for over $4 billion of the total $6 billion.  The remaining cuts are likely to be drawn, in part, from the public housing capital and operating funds as suggested by the leaked budget proposals obtained by The Washington Post last week.

The blueprint also proposes the elimination of the independent Neighborhood Reinvestment Corporation and U.S. Interagency Council on Homelessness, as well as the elimination of the Community Development Financial Institutions Fund within the U.S. Treasury Department.

The OMB blueprint with regard to HUD states, “[t]he Budget also recognizes a greater role for State and local governments and the private sector to address community and economic development needs.” What is missing from this statement is that CDBG and HOME funds are disbursed through States and local governments.  Without these funds, the ability of State and local governments to meet the pressing needs of their communities are significantly hindered.

Keep in mind that the main budgetary piece of business before Congress will be (1) extending the continuing resolution of the FY 2017 budget set to expire April 28, 2017 or (2) finalizing adoption of a  Transportation, HUD FY17 appropriations bill.  The proposals in the budget blueprint will not come before Congress before then.

And, when Congress does consider an appropriations bill, it may initially consider the OMB budget blueprint, but the budget that will evolve through the Congressional process can look very different from the OMB proposals. Constituents have an opportunity to advocate to their Senators and Representatives the value of these programs for the people in their communities and the contributions these programs make to the economy.  At the end of the day, the final appropriations bill set out in the conference report developed by the House and Senate requires adoption by both chambers, with the Senate required to adopt it by three-fifths (or 60 votes), highlighting the need for bipartisan support.