Country / Language

Affordable Housing News & Views - June 2017


Housing Tax Credit Monitor 

On an equity-weighted average basis, participants in our latest survey (April 2017) reported a $0.92 net equity price and a 5.51% IRR among surveyed national multi-investor funds. Average IRR increased from the 4.61% level reported in the May 2016 issue of this publication. Read more insight from CohnReznick’s Tax Credit Investment Services team in the latest Housing Tax Credit Monitor.

Read more

Community Redevelopment: LIHTC and NMTC Working Together

Connecting housing with other community revitalization projects helps spur the growth and maintain the synergy established. Along with LIHTC investments, the New Markets Tax Credit (NMTC) program’s impact on revitalizing communities has particular emphasis when it comes to Roxbury, a neighborhood just south of downtown Boston. Since 2004, over 10 projects have utilized NMTC to invest more than $100 million in Roxbury. In this video, three projects in particular are focused: Hibernian Hall, Tropical Foods and Melnea Hotel.

Watch the video

Eliminating Organizational and Process Chaos
While most companies have established defined processes and controls for their most critical functions, few have successfully transformed their entire organization into a process-driven culture. In fact, they continue to rely on a multitude of ad-hoc workflows to support the organization.
 
Achieving optimized process performance is difficult and, even in the best performing organizations, a never ending quest. Shifting priorities and workloads, lack of access to critical instructions and policies, and an inability to focus can result in lost productivity and greater risk.

Read more

 
We will be attending and/or speaking at these events. We hope to see you!

CohnReznick Featured Events

Annual Affordable Housing Conference - September 6-8: Las Vegas, NV

 
CohnReznick Speakers: Beth Mullen, Quinn Gormley, Mike Celkis, Katy Breazeale, Dan Worrall 
 
News stories and headlines from the previous month

National News

The solution will come from various sources working together. The concern voiced so often today about housing affordability reflects a sobering truth: Rents are rising more quickly than wages—and most new houses and apartments are priced such that only the wealthiest people can afford to live in them. “We have an affordable housing crisis. In the rental housing space, that crisis is very acute,” says David Brickman, executive vice president and head of the multifamily business for Freddie Mac.  
 
The internet giant plans to give a homeless shelter a permanent home inside an office building it is building in Seattle, reports Nick Wingfield of The New York Times. Amazon will pay the utilities for Mary’s Place, which will occupy the space rent free, although the organization will continue to pay its own staff. The move will help Seattle's large homeless population and Amazon's reputation in the community.  
 
Imagine what the world would look like if President Reagan and Congress had not created the Low Income Housing Tax Credit (LIHTC) in 1986. Without it, three million affordable rental homes might not have been built. Some 6.7 million people would have had to look elsewhere to have a roof over their heads—people who were struggling to make ends meet, many of them seniors, veterans, people with disabilities, or parents whose kids needed a safe place to grow up. 
 
Projects fill holes in budget by using both credits. The end of 2016 brought both good news and bad news for affordable housing developer the Pacific Companies. First the good news: Bow Street Apartments, its plan to build 98 affordable apartments in Elk Grove, CA, won a reservation of hard-to-get federal Low Income Housing Tax Credits (LIHTCS). The bad news is that the month before, prices for LIHTCs had dropped sharply. These deals are very complicated – and might not work for every project. However, this structure has helped, and officials in states, like Virginia and California, now encourage developers to mix LIHTCs in this way. CohnReznick just discussed this very topic during a short webinar last month. You can access it here.
 
Fannie Mae and Freddie Mac are trying to remedy a shortage through loan programs designed to help property owners continue to operate these properties efficiently at lower rents. Fannie Mae and Freddie Mac are creating a suite of loan programs for the development and maintenance of inexpensive apartments that working Americans can afford without cash subsidies from federal housing programs. Fannie Mae has a new program that supports new apartments built under local “inclusionary zoning” guidelines. Freddie Mac is offering lower interest rates on loans for properties that commit to saving energy, bringing down tenant utility bills. And both agencies continue to provide flexible financing for the kind of older apartment properties that are most likely to be priced affordably. 
 
The son of a minister, Ohene Asare grew up poor. His family immigrated from Ghana when he was 8 and settled down in West Bridgewater, Mass., a town 30 miles south of Boston, where he was one of the few black students at the local public school. “It was us and this Jewish family,” Asare remembered. “It was a field day.” His white classmates bullied him, sometimes using racial slurs. His father transferred Asare when he was 14 to Milton Academy, which awarded Asare a scholarship that covered tuition and board. His parents still had to take out loans worth about $20,000 for his living expenses. But the academy set Asare up for future success.  
 
Jeff Weiss, president of Alden Capital Partners, dissects recent changes in the low-income housing tax credit market, expectations for the second half of the year, and how developers can keep their deals moving forward. 
 
Mercy Housing, one of the largest developers and owners of affordable housing in the nation, has committed to employ “active design” strategies at 80% of its communities. The move comes as the nonprofit teams with Partnership for a Healthier America (PHA), an organization dedicated to solving the childhood obesity crisis. Active design requires that residents have space to exercise, that housing providers promote healthy eating, that residents have a place to store their bikes securely, and much more. “PHA understands something we’ve intuitively known for a long time,” said Jane Graf, CEO and president of Mercy Housing, in a statement. “Medical care happens in the doctor’s office and in hospitals. Health happens in communities, at school, at the office, and, most importantly, at home.” 
 
Mercy Housing, one of the largest developers and owners of affordable housing in the nation, has committed to employ “active design” strategies at 80% of its communities. The move comes as the nonprofit teams with Partnership for a Healthier America (PHA), an organization dedicated to solving the childhood obesity crisis. Active design requires that residents have space to exercise, that housing providers promote healthy eating, that residents have a place to store their bikes securely, and much more. “PHA understands something we’ve intuitively known for a long time,” said Jane Graf, CEO and president of Mercy Housing, in a statement. “Medical care happens in the doctor’s office and in hospitals. Health happens in communities, at school, at the office, and, most importantly, at home.” 
 
Phoenix has the largest disparity between needy households and low-income housing tax credit (LIHTC) units, according to a new report from MPF Research, the intelligence arm of RealPage. The city has just 6.08 housing credit units per 100 low-income households, ranking it the lowest out of the top 50 apartment markets studied by the firm. Phoenix was followed by Pittsburgh (6.13) and Syracuse, N.Y., (6.27). Several notable LIHTC developments, including Cedar Crossing by Native American Connections, have recently opened in Phoenix. Looking at the other end, LIHTC apartments were the most prevalent in Richmond, Va., where there are 22 housing credit units for every 100 low-income households, according to researchers. Kansas City was next with 21.68 units followed by Virginia Beach/Norfolk, Va., with 21.05 units. 
 
Slate Property Group founders Martin Nussbaum and David Schwartz recently visited The Real Deal’s offices, where they voiced support for income averaging at properties that qualify for the Low Income Housing Tax Credit, or LIHTC. As it stands, an individual’s income at buildings that receive the tax credit cannot exceed 60 percent of the area’s median income. The new method would allow developers and landlords to combine that figure among all tenants — thus opening the door to ultra-low- and middle-income earners. “So you could do some at 30 percent, some at 40 percent, some at 100 percent,” Schwartz said. “I think in New York we have a huge homeless crisis, so we have to hit these very low income people, and at the same time, I think the middle class has been priced out of New York.” 
 
AHF caught up with Tom Capp of Gorman & Co., Brett Johnson of Overland Property Group, Meg Manley of McCormack Baron Salazar, and Matt Rieger of the Housing Trust Group at the recent AHF Live: Housing Developers Forum in New Orleans. All their firms are on this year’s AHF 50 list of top developers. They reveal how they are approaching the current environment of lower low-income housing tax credit (LIHTC) pricing and identify the traits that made their companies leaders in the field.  
 
The National Apartment Association and the National Multifamily Housing Council are concerned that looming tax reform might have a bad impact on the rental housing industry. So they have initiated a grassroots program to raise the alarm. The flagship of the program is a website for the initiative - Protect The Lease. Launching with a website and press releases from two 501(c)(6) trade associations that each gross over $20 million seems a little more AstroTurf than grassroots, but maybe that is just me. They were very kind to let me have a sneak peek at the website, so maybe I should be a little nicer. The website tells us that multifamily housing is a very big industry that a lot of people work in. And it provides apartments, which is where a lot of people, you know, live. The way they correlate all this with tax reform is a little indirect. Frankly I think the logic is a bit disingenuous in most cases, but here is how it works. There are six impacts that Protect The Lease is concerned with and you need to drill down through each impact to find the tax principle that is, in their view, related. 
 
Every town and city in the country faces different challenges that make it difficult to create housing that’s affordable to all the different people who need it. But to a surprising degree, the biggest challenge developers face in this arena isn’t necessarily the actual construction of such projects, but, rather, the building of another crucial element behind affordable housing: consensus. Developments that have the support of local political leaders and the people who live nearby can overcome the more traditional challenges associated with development, such as high costs and restrictions. Without that support, however, proposals to build affordable housing often fail. Indeed, many a plan has struggled against what seems to be a bitter resistance to any new development. “NIMBY is the biggest barrier,” says Chris Estes, president and CEO of the National Housing Conference (NHC). “Fear of change cuts across a broad range of neighborhoods and incomes.” 
 

© 2017 CohnReznick LLP

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

 

Search Our People

Search Our People

Look ahead. Gain insight. Imagine more. Is your business ready to break through?

View our new TV commercial..

Industry Outlooks

Industry Outlooks

Gain insight into what is ahead for the Commercial Real Estate, Technology and Middle Market Private Equity industries.

READ MORE

Learn about our upcoming events.

READ MORE

Working With Us

Working With Us

What makes CohnReznick different from others in our profession? And what should our clients come to expect when working with us? The answer is The CohnReznick Advantage. Contact us to learn how we can out the CohnReznick Advantage to work for your business.


People

The value of an organization is determined by the skills and qualities of its leaders. With more than 280 partners serving clients nationwide, CohnReznick is renowned for the diverse experiences, knowledge and backgrounds of its leadership.

Learn More

Services

We align our services in three segments: Accounting and Assurance, Tax, and Advisory. This approach allows us to provide holistic solutions to complex business problems and to seize upon opportunities requiring an integrated approach.

Learn More

Industries

Accounting and tax issues different significantly based on an organization's industry. We provide clients with expertise in nearly two dozen industries – we know the opportunities, the obstacles, the competitive landscape.

Learn more

Insights

CohnReznick professionals are thought leaders in their industries. Clients benefit from relevant and timely economic, legislative and industry insights that can keep them a step ahead of competition.

Learn More

Global Reach

Our involvement in the Nexia International network of firms enables us assist our clients wherever they do business-providing local expertise and connections wherever they needed. Nexia is comprised of 20,000 professionals operating in over 100 countries.

Learn More