NAAHL in the News
Bill Seeks to Create ‘Neighborhood Homes’ Tax CreditBy: Donna Kimura, Affordable Housing Finance | June 24, 2019
Lawmakers have proposed a federal tax credit that would fuel the rehabilitation of deteriorated single-family homes in distressed neighborhoods.
Introduced by Reps. Brian Higgins (D-N.Y.) and Mike Kelly (R-Pa.), the Neighborhood Homes Investment Act (NHIA) seeks to build on the success of the low-income housing tax credit (LIHTC) for multifamily housing properties.
It gets to the core of a challenging problem: Many distressed neighborhoods have a large number of single-family homes, says Buzz Roberts, president and CEO of the National Association of Affordable Housing Lenders.DOWNLOAD PDF
Congress Dangles Tax Credits to Boost Supply of Affordable HousingBy: Job Prior, American Banker | June 18, 2019
The 2017 federal tax overhaul sharply reduced banks’ tax rates, but it also provided less incentive for banks to invest in affordable housing.
As banks’ tax bills have declined, the tax credits used by developers to build more affordable housing have simply become less attractive to banks.
Yet the supply of affordable rental properties continues to shrink, so now some lawmakers are proposing legislation that aims to renew banks’ interest in the tax credits and bring more affordable homes to markets that badly need them.DOWNLOAD PDF
Four Years, $13 Million and Dozens of Hands: How ‘Affordable Housing’ Gets Made in AmericaBy: Andrea Riquier | May 22, 2019
The apartment building at 410 Cedar St. in Washington, D.C., is undergoing a multiyear restoration that aims to keep it affordable for its current residents and for generations to come.
Jennifer Sumler has lived in her apartment building on Cedar Street in the Takoma section of Washington, D.C., for her entire life, but the sound she heard one late November evening a few years ago was like nothing she’d ever experienced.
“All of a sudden the sky got dark and there was a ‘Wizard of Oz’ moment,” recalled Sumler, who’s 50. “Leaves started to whip up. There was this ferocious wind. Then there was this noise. It was loud and really otherworldly.”DOWNLOAD PDF
Groups Push ‘Access and Affordability’ in Letter on GSE ReformBy: Scotsman Guide | March 1, 2019
Twenty-eight organizations in the real estate industry, including the National Association of Realtors (NAR), Mortgage Bankers Association (MBA) and the National Association of Affordable Housing Lenders (NAAHL), sent a letter Friday to the Federal Housing Finance Agency urging for reforms to Fannie Mae and Freddie Mac.
The letter, addressed to acting FHFA director Joseph Otting, highlights the need for reforms to the government-sponsored enterprises (GSEs) that prioritize access and affordability in the mortgage market. According to a message from the NAR, the letter was crafted after “months of collaboration on essential GSE reform principles that promote stability in the housing finance system.”DOWNLOAD PDF
We Already Know What to Do About the Housing CrisisBy: Buzz Roberts, Impacting Our Future/USA Today | March 2019
Wouldn’t it be great to have a way to build and renovate affordable apartments that could bring government, the private sector and local communities together as partners; that could produce quality homes that would fit local needs and improve neighborhoods; that could serve families, the elderly and even the disabled and the homeless well for decades; that Republicans, Democrats, developers and communities could all get behind?
We already have that. It’s called the Low Income Housing Tax Credit, and it may be one of America’s best kept secrets. Since 1987, this “Housing Credit” has produced over three million affordable apartments and now accounts for about 30 percent of all apartments with similar rents. Harvard University called the Housing Credit America’s most successful affordable housing development policy ever.DOWNLOAD PDF
Experts Say Some OZ Investments Should be CRA EligibleBy: Mark O'Meara, Novogradac | February 5, 2019
The Community Reinvestment Act (CRA) of 1977 provides a framework for financial institutions, state and local governments and community organizations to promote banking services to all members of a community.
“The CRA remains the primary driver of bank financing,” according to Local Initiatives Support Corporation’s (LISC’s) comments in response to the advance notice of proposed rulemaking (ANPR) pertaining to reforming the CRA regulatory format. “CRA has been a critical, if not the most critical, resource available to facilitate the flow of private capital into underinvested communities. It has been successful not only for the communities and community residents that have benefited from these investments, but also for the banks–who have managed to find new and profitable investment opportunities that generally perform as well or better than other bank investments.”DOWNLOAD PDF
Three Keys to CRA ModernizationBy: Buzz Roberts, Novogradac | February 2019
Modernizing Community Reinvestment Act (CRA) rules presents both threats and opportunities for community development, which under CRA includes affordable housing, economic development, neighborhood stabilization and revitalization, community services, and disaster area recovery.
The Office of the Comptroller of the Currency’s (OCC) advance notice of proposed (ANPR) rulemaking last August attracted more than 1,500 public comments. Here are three key issues whose outcome will determine CRA’s future role in community development.DOWNLOAD PDF
Affordable Housing Insiders Keep Close Eye on CRA Reform ProposalsBy: Brad Stanhope, Novogradac | February 2019
The Community Reinvestment Act (CRA) has been around for more than 40 years and its current regulations are 23 years old.
“I think it’s needed,” said Tony Alfieri, managing director of tax credit investors at RBC Capital Markets. “[CRA regulations] have been out there over 40 years and change is needed because the banks’ operating landscape has changed dramatically. It’s also needed [to improve] efficiency.”
The CRA requires three agencies–the Office of the Comptroller of the Currency (OCC), the Federal Deposit Investment Corporation (FDIC) and the Federal Reserve (Fed)–to oversee whether depository institutions meet the credit needs of their surrounding communities, particularly low and moderate-income neighborhoods. One of the biggest factors in that is affordable housing, which has increasingly been defined by investment in low income housing tax credit (LIHTC) equity.DOWNLOAD PDF
Recovery from Shutdown Will Be Long and DifficultBy: Adriel Bettelheim, POLITICO | January 25, 2019
After 35 days of mass furloughs, bureaucratic inertia and a culminating wave of airport delays, nine shuttered federal agencies began laying plans to creak back to life Friday after President Donald Trump announced a short-term deal to reopen the government.
It won’t happen overnight.
The shutdown froze court cases, curtailed drug reviews and food safety inspections and sidelined investigations into matters like Facebook’s data security practices. The IRS fell behind on preparations to handle millions of tax returns. The E-Verify system the Homeland Security Department runs to help businesses determine whether employees are eligible to work in the United States went offline. And the EPA twice scuttled a public hearing on a proposal to roll back a major climate rule for future power plants.DOWNLOAD PDF
Will This Be CRE Lenders’ New Best Friend?By: Andy Peters, American Banker | October 29, 2018
Commercial real estate lenders could be getting a shot in the arm at just the right time. Low-income communities across the country are set to benefit from a new federal rule designed to encourage economic development. Tax benefits will accrue to investors who put money into projects located in thousands of districts designated as Opportunity Zones. That in turn could stimulate more construction lending at a time when overall CRE lending has stagnated.
Projects that otherwise would not get a second glance may now be appealing, said Roger Shumway, chief credit officer at the $1.3 billion-asset Bank of Utah in Ogden. “I see it opening up some areas that we haven’t had before,” Shumway said. “I can see it helping us quite a bit.”DOWNLOAD PDF
OCC Launches CRA ModernizationBy: Buzz Roberts, Novogradac | October 2018
The first overhaul of Community Reinvestment Act (CRA) regulations in a generation began with the Office of the Comptroller of the Currency’s (OCC) publication of an advanced notice of proposed rulemaking (ANPR) Sept. 5.
The final policy could reshape how banks finance affordable housing and other community development activities.
The OCC is one of three federal agencies responsible for CRA. OCC oversees national banks, the Federal Reserve Board supervises state-chartered banks that are members of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) examines other state-chartered banks. It is unusual for one agency to go it alone on a major regulatory initiative, suggesting that the Fed and FDIC are not yet on board, but OCC hopes the three agencies will unite when it’s time to propose a specific plan.DOWNLOAD PDF
Treasury Recommends CRA ModernizationBy: Buzz Roberts, Novogradac Journal of Tax Credits | June 2018
The Treasury Department has recommended that federal banking regulators significantly update how they implement the Community Reinvestment Act (CRA) to reflect sweeping industry changes and serve communities better. The next move is up to the three federal banking agencies.
Under the new leadership of Joseph Otting, the Office of the Comptroller of the Currency (OCC) has made modernizing CRA a top priority, which it has promised to start soon by publishing an advance notice of proposed rulemaking (ANPR), perhaps in concert with the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC). CRA policies are normally set jointly by the three banking agencies to promote consistency. After the ANPR is published and public comments are received and reviewed, a proposed rule would be the next step and then, following another round of comments, a final rule.DOWNLOAD PDF
Draft Senate GSE Reform Bill Would Scale Back Affordable Housing LendingBy: Buzz Roberts, Novogradac Journal of Tax Credits | March 2018
A widely leaked draft Senate bill would overhaul the secondary mortgage market and scale back commitments to affordable mortgages.
Offices of the senators working on the draft, Bob Corker, R-Tenn., and Mark Warner, D-Va., say the draft is not final and neither senator has formally committed to it.
The draft bill is the newest attempt at housing finance reform, the last big unfinished business of financial system reform in the aftermath of the Great Recession. After the Federal Housing Finance Agency (FHFA) took Fannie Mae and Freddie Mac–the so-called government sponsored enterprises, or GSEs–into conservatorship in 2008, the Treasury Department invested $187 billion to keep them operating and to support the housing market. The GSEs since returned to financial health and paid $271 billion in dividends to Treasury, but they remain in conservatorship.DOWNLOAD PDF
Low Income Housing Tax Credit Gets Boost from Spending BillBy: Brian Collins, American Banker | March 26, 2018
WASHINGTON — Congress approved a significant increase in the Low Income Housing Tax Credit program in passing a trillion-dollar budget bill last week.
This is the first increase in the tax credit in “over a decade,” Sen. Maria Cantwell, D-Wash., a longtime champion of the program, said in a press release.
The program currently provides states and local LIHTC-allocating agencies with nearly $8 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation or new construction of rental housing targeted to lower-income households.
The Cantwell provision will increase the allocation of LIHTCs by 12.5% over the next four years, at a cost of nearly $3 billion.DOWNLOAD PDF
Republican Tax Plan Could Grind Affordable Housing Construction to a Virtual HaltBy: Andrea Riquier, MarketWatch | November 8, 2017
The tax plan proposed by Congressional Republicans will likely decimate production of new affordable rental housing, even as housing shortages across the country are driving rents higher and taking ever-larger shares of Americans’ incomes.
The plan released last week by the House Ways and Means Committee preserves a well-regarded program called the Low Income Housing Tax Credit — but effectively guts it. That’s because about half of all low-income housing credit development is done in conjunction with private activity bonds, a financing method that the plan scraps.
Private activity bonds are tax-exempt bonds issued by municipal government entities for special projects, often involving a private developer. In each of the five years after the recession, an average of about $5 billion of PABs were issued for housing, according to the Council of Development Finance Authorities. Issuance surged to $14 billion in 2016.
What’s more, the other half of all affordable housing deals, which rely purely on the tax credit program, would become more expensive as tax rates go down and make tax credits worth less.
“It’s shocking. It’s devastating,” said Michael Novogradac, who runs an accounting consultancy that tracks the tax credits. Novogradac estimates the changes together will result in a reduction of about two-thirds of new affordable housing units each year for the next decade.
Banks to Trump: Spare Affordable Housing ProgramsBy: Alan Kline, American Banker | March 15, 2017
Under construction on a parcel of land in Boston’s inner city that has been vacant for more than four decades is a $21 million, five-story apartment complex that will eventually house 40 low-income families or individuals.
Boston Private Bank is providing much of the financing, though Esther Schlorholtz, its director of community investment, said it could not do so without a fair amount of government support.
To cover the costs of building and operating the property and still keep rents affordable for tenants, the developer needed to obtain several layers of financing assistance that included two different types of tax credits and zero-interest loans or grants through two federal programs administered by the U.S. Department of Housing and Urban Development.
Those federal programs, Schlorholtz said in an email, “are key to making the entire financing work. They fill the project gap that no one else funds.”
But will those programs, which bankers and housing advocates say are crucial to helping solve the country’s chronic shortage of affordable housing, be around much longer?
The Trump administration’s budget for fiscal 2018 calls for slashing HUD’s budget by 13% from current levels, largely by eliminating the Community Development Block Grant program and the HOME Investment Partnerships Program.
Thomas FitzGibbon, a former executive with MB Financial in Chicago and now an independent consultant, said that to make projects affordable for both the developer and residents, banks need programs like HOME and block grants to close deals. He added that if the programs are eliminated or curtailed, some banks could have trouble meeting their Community Reinvestment Act obligations.
“Under CRA, one of the things banks are challenged to do is drive capital into capital-starved markets, and it can be hard to do that without some kind of government subsidy,” he said.
Benson “Buzz” Roberts, the president and CEO at the National Association of Affordable Housing Lenders, said that the programs have provided a strong return on their investments. Citing HUD’s own numbers, he said that every dollar of HOME funds invested in the development of low- and moderate-income housing since 1992 has brought in $4.26 of private investment. In all, it has helped developers build, fix up or acquire more than 1.2 million homes and apartments.
“That’s a lot of production,” he said. HOME “has had a tremendously positive effect on distressed communities, and it’s been very cost-effective.”DOWNLOAD PDF
Trump Tax Plan, Not Even On Drawing Board, Is Already Roiling Rental HousingBy: Andrea Riquier, MarketWatch | February 28, 2017
Developers, financiers, and owners of low- and moderate-income rental housing are scrambling for patches for lost equity
The housing development known as A.O. Flats, announced in March 2016, was hailed as exactly what Boston needed: affordable rental homes in a mixed-use building, just steps from a transit station. It would mean 78 middle-class families and residents – nurses, teachers, service workers – could afford to rent in Jamaica Plain, one of the city’s most sought-after neighborhoods, an area where 2-bedroom apartments are renting for about $2,000 per month, according to Zillow.
A.O. Flats was in a sweet spot, according to Bart Mitchell, president of The Community Builders, the nonprofit housing developer behind the project. “People embraced the idea of housing production being needed near transit, in a neighborhood for people with higher incomes but having it be for moderate incomes as well.”
The project was supported by the City of Boston and The Community Builders and had funding through a national initiative called the Low Income Housing Tax Credit, a program that’s enabled more than 43,000 housing units to be built over the past three decades.
But in November, after Donald Trump’s surprise victory, planned construction on A.O. Flats came to a screeching halt. The LIHTC distributes federal tax credits to the states, which work with developers to determine the best projects to meet local needs — everything from apartments to senior housing.
Prospect of Tax Reform Upends Affordable Housing FinanceBy: Kristin Broughton, American Banker | January 12, 2017
The mere whiff of corporate tax reform is said to be causing delays in bank-backed financing for low-income housing projects amid a severe U.S. shortage of affordable units.
Investments by banks in housing developments have hit snags in the two months since Republicans swept the elections, according to bankers, auditors and affordable-housing advocates.
The sense that tax reform is within reach for the first time in decades “immediately slowed things down,” said Rob Likes, national manager for community development at KeyBank. “We’re hearing about that from our clients and from the market.”
What’s the connection? The affordable housing market relies heavily on subsidies through the low-income housing tax credit program. Developers use the credits to fund as much as 70% of the cost of new housing projects. Banks make equity investments in the projects by buying the tax credits and in return claim a range of tax benefits over a 10-year period.
“Different banks are approaching this differently,” said Buzz Roberts, CEO of the National Association of Affordable Housing Lenders, whose members include several large and regional banks.
Some banks have taken a “bit of a pause” on making new investments, Roberts said, describing it as a “prudent” move as banks wait for clarity on corporate rates (and thus potential tax savings) drop. Such decisions leave last-minute gaps in financial plans that have taken years to finalize, observers said.DOWNLOAD PDF
Panel Discussions Focus on Housing Policy in Next AdministrationBy: Shannon Rieger, Harvard Joint Center for Housing Studies | December 20, 2016
From tax reform to fair housing, the incoming Trump administration and new Congress are likely to adopt policies that could greatly affect housing, particularly affordable subsidized housing, noted speakers at a conference held in Boston last week. Organized by The New England Housing Network, a broad coalition of housing and community development organizations from the six New England states, the December 16th event focused on what the new administration and Congress will “do about the unmet need for affordable housing in our country” and what advocates can do to encourage a robust federal affordable housing agenda in 2017.
Speakers, including national experts, state officials, and leading advocates from throughout New England, touched on a variety of issues, including tax reform, the future of Government Sponsored Enterprises (GSEs), infrastructure initiatives, anti-poverty programs, and fair housing policies. Everyone noted that many current programs and initiatives are threatened and that much of the discussion is speculative because there is tremendous uncertainty surrounding the Trump administration’s plans, as well as the likelihood that Congress may not support the new administration’s policies. Nevertheless, panelists discussed several potential strategies for bringing together an effective coalition to advocate for affordable housing at a particularly challenging time.
Discussants also noted that Treasury Secretary designate Steven Mnuchin and key members of Congress appear to significantly disagree on GSE reform. Mnuchin has said he is interested in seeing that Fannie Mae and Freddie Mac are taken out of “government ownership,” restructured, and privatized. However, Congress has not demonstrated support for a “recap and release” of the GSEs. These disagreements may impede any efforts to reform GSEs, noted several panelists.
The conflicting perspectives about both issues within the Republican Party will make it hard to substantially change the tax code or restructure the GSEs, said Benson “Buzz” Roberts, President and CEO of the National Association of Affordable Housing Lenders. He also noted that “inertia is the most powerful third party in the United States”, and may slow down or even block substantial changes in tax policy or GSE reform in the next several years.DOWNLOAD PDF
Will Ben Carson Put Julián Castro’s HUD Legacy in Jeopardy?By: Bill Lambrecht, San Antonio Express-News | December 17, 2016
Housing and Urban Development Secretary Julián Castro returns to San Antonio next month out of government for the first time in more than seven years, leaving behind an agency whose missions could be threatened by Congress and the new administration.
President-elect Donald Trump’s campaign vow to make “inner cities” a beneficiary of $1 trillion in infrastructure work over a decade brings a measure of hope to advocates of affordable housing.
Federal budgets could pose the biggest threat to HUD, given a return of spending caps next year and Trump’s promise to divert non-defense spending to the Pentagon.
But Benson “Buzz” Roberts, who heads the National Association of Affordable Housing Lenders, said he is encouraged by Trump’s pronouncements about investing.
The goal of investment might best be reached through the new infrastructure spending Trump talks about, coupled with an investment tax credit to rehab homes in downtrodden areas, Roberts said.
“The president-elect has spoken about trying to attract investment in distressed neighborhoods and the importance of making those neighborhoods good places to live,” Roberts said. “He has said he is committed to helping these neighborhoods, so I take him at his word.”DOWNLOAD PDF
Housing Advocates Seek New Tax Credit to Renovate Run-Down HomesBy: Brian Collins, National Mortgage News | December 8, 2016
Affordable housing advocates are seizing on President-elect Donald Trump’s call for tax reform, hoping that a new tax credit program to revitalize run-down homes in distressed neighborhoods will be attractive to the incoming administration.
The National Association of Affordable Housing Lenders is pushing an initiative to create the Neighborhood Homes Tax Credit, which will provide tax incentives for the renovation and construction of owner-occupied homes.
“It is a strategy to revive distressed neighborhoods with significant poverty that have a lot of single-family homes that are in tough shape,” said Buzz Roberts, president and chief executive of NAAHL.DOWNLOAD PDF
Brown ‘Open to Figuring Out’ GSE ReformBy: Ian McKendry, American Banker | December 1, 2016
The debate over housing finance reform appears to have new life as both Democrats and the next administration appear ready to take up the issue.
“I am very open to figuring out how we do this. I am just not sure where the [Trump] administration is,” said Sen. Sherrod Brown, D-Ohio., on Thursday while referencing comments Treasury Secretary-designate Steve Mnuchin made a day earlier.
Mnuchin said that the issue was on his top 10 list of things to deal with, pledging to “get it done reasonably fast.”DOWNLOAD PDF