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Affordable Housing News & Views - March 2017

New GAO Report: LIHTC and the Role of Syndicators

The U.S. Government Accountability Office’s (GAO) latest report on the Low-Income Housing Tax Credit (LIHTC) industry, Low-Income Housing Tax Credit: The Role of the Syndicators,  includes data from CohnReznick’s Tax Credit Investor Services team. The report outlines the characteristics of syndicators and the services they provide; it is strictly informational and does not make any recommendations for further action.

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Insights Video – Leveraging Renewable Energy

CohnReznick partner Joel Cohn discusses the latest technologies in solar energy and how they can help meet the energy needs of multifamily/affordable housing residents.

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From Law360: Logjams, Likely Litigation Surround LA Development Measure

Tomorrow, March 7, Los Angeles voters will decide on Measure S, also known as the “Neighborhood Integrity Initiative,” which could place a two-year moratorium on most development projects that require a zoning plan amendment. If approved, the measure could impact the future of development and affordable housing in the city. 
In a recent Law360 article, Beth Mullen, partner and National Director -Affordable Housing Industry Practice at CohnReznick, said, “For the most part, they're very concerned. It definitely would put deals that they have been working on hold if it passes. In Los Angeles, they need every affordable housing unit that can be built. To potentially put deals on hold for two years ... is a problem."

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VASH and LIHTC Can Work Together to Support Veterans in Housing and Beyond

Quinn Gormley, director of real estate consulting at CohnReznick, contributed to a blog that discusses the importance of making continued careful execution of the Veterans Affairs Supportive Housing voucher (VASH) a priority for HUD. As the article notes, VASH’s primary goal is to not only end veteran homelessness overall, but to sustain veterans in permanent housing. Overall, the program has been extraordinarily successful in meeting these goals. Since its inception, over 85,000 vouchers have been awarded, motivating Congress to provide new funding in 2012, making an additional $75 million available that fiscal year.

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Mark your calendar. We hope to see you at these events.

CohnReznick Featured Events

16th Annual New Markets Tax Credit Summit

May 16-18 - Miami Beach, FL

CohnReznick Speakers: Bob Moss
CohnReznick Speaker: Bob Moss
TDHCA Board Meeting – March 23
CAHP Meeting – March 23
CohnReznick Speaker: Ken Baggett, Katy Breazeale, Bob Moss and Linda Rowland 
CohnReznick Speakers: Matthew Barcello and Nick Ratti
CohnReznick Speaker: Marshall Phillips
CohnReznick Speaker: Bob Moss
TDHCA Board Meeting – April 27
News stories and headlines from the previous month

National News

Anticipation is mounting as signs in Washington indicate 2017 will be the year of tax reform. While lowering tax rates and eliminating tax breaks may be helpful in many areas, it does little to help low income families that need housing.  
Swelling supplies of apartment units are prompting big banks to pull back from new projects, forcing developers to scramble for capital, in a sign that the U.S. apartment industry headed for a downturn.  The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. 
Donald Trump was elected president on a get-tough platform related to the enforcement of existing immigration laws. The administration’s newly released policy to crackdown on illegal immigrants and speed the deportation process has, not surprisingly, intensified divisions in a politically split environment. However, Bloomberg News has come out today with an article that argues that the Trump Administration’s enforcement of laws related to illegal immigration will damage the housing market. 
Since the election, “uncertainty” has been a buzzword among economists. The direction of U.S. policy is not clear on major issues ranging from immigration to tax reform. But the fundamentals of the apartment sector are relatively strong despite it all.  
The specter of tax reform hangs over the low-income housing tax credit (LIHTC) market, threatening a slowdown in affordable housing production this year.  Even though tax reform may be a year or more away, it’s already triggered major shifts in the industry as LIHTC investors have pulled back since the November election, caused housing credit pricing to fall.  
The bank helped financed 13,200 affordable housing units last year. Bank of America Merrill Lynch Community Development Banking (CDB) reported providing nearly $4 billion in loans, tax credit equity investments, and other real estate development solutions to create housing for individuals, families, veterans, seniors, and the formerly homeless across the United States in 2016.  
Red Stone Equity Partners, LLC ("Red Stone Equity"), a privately-owned real estate finance and investment company specializing in multifamily funds and financings, announced that it raised $578 million of tax credit equity in 2016 and surpassed $3.3 billion of tax credit equity raised since the firm's inception in 2007. 
President Donald Trump has promised to revitalize America's aging roads, bridges, railways and airports, but a plan put forward by his economic advisers relies on a transportation financing scheme that hasn't been tried before and comes with significant risks.  
While it is too soon to tell how the new administration will affect the construction and cost of affordable housing, the nation's 75 million baby boomers are weighing in with their housing concerns. According to a new survey of 1000 Americans aged 55+ from The NHP Foundation, a not-for-profit provider of service-enriched affordable housing, 30% experience anxiety about being able to afford where they live at least once a month, with 42% of retirees reporting such anxiety at least once daily. When asked what causes the greatest anxiety, 46% of respondents said they worry about "the ability to afford desirable retirement living."  
Facing an impending tax overhaul from the Trump administration, members of the House and Senate have moved to protect a program that gives tax credits to businesses that create jobs and other economy boosters in low-income communities.  The U.S. Treasury’s New Markets Tax Credit (NMTC) program, which targets poor zip codes both urban and rural, has gained bipartisan support and many friends in both the urban development and business worlds since its implementation in 2000. Two new bills introduced last week — both called The New Markets Tax Credit Extension Act of 2017 — would make the program permanent.  
Wells Fargo & Company (NYSE: WFC) has been named the largest investor in affordable multifamily housing in the U.S., according to research conducted by accounting firm, CohnReznick LLP. With increasing demand for affordable rental options across the nation, Wells Fargo is helping to bridge the affordability gap as the number one investor in Low Income Housing Tax Credits for affordable multifamily housing in the U.S., with $9 billion in investments over the last five years.  “There is a significant affordable housing crisis impacting the country right now,” said Mark Myers, head of Wells Fargo Commercial Real Estate. “Demand for affordable rental housing continues to be extremely high with many people paying a disproportionate percentage of their income on rent. As the largest commercial real estate lender in the country, being able to help meet the need for more affordable living options for our customers and communities is a top priority for Wells Fargo.”
Women have a large presence in affordable housing. They’re developers, policymakers, advocates, and finance executives. Their overall numbers may not be large, but their impact is huge. In recognition of that fact, Affordable Housing Finance, for the second year, profiles 10 women who are shaking up the industry, taking on the challenges of turning empty land into homes, assembling billions of dollars in funding, and pushing for key policy changes. While women are gaining ground in the male-dominated field of real estate, the majority still experience advancement barriers, including gender bias, according to a white paper released by the Commercial Real Estate Women (CREW) Network at the end of 2016. Women in the study reported that a lack of mentorship is their No. 1 barrier to success. We asked several of this year’s influential women to share their best career advice. Their wisdom is good for men and women alike.
Tax reform in and of itself is not necessarily bad for the low-income housing tax credit (LIHTC), writes Jeff Whiting, president and CEO of CREA, in a guest commentary in The Hill. And, it may be positive for all parties, "especially the housing credit’s true beneficiaries, the millions of veterans, seniors, working families, people with special needs and other residents who live in affordable housing." Whiting, president emeritus of the Affordable Housing Tax Credit Coalition, sees an opportunity for the affordable housing industry to work with Congress on tax policy. He writes:  Advocates must reinforce this message with the Trump administration and Congress, noting that we are committed to working with them to protect and strengthen the housing credit throughout tax reform, with an eye on at least maintaining, and perhaps expanding, current production levels to keep America’s housing affordability challenges from further harming our economy, communities, and families.

© 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.


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