Tax Credit Advisor Article Archives

The Obama Administration has answered that question with an ambitious focus on energy efficiency. It launched the Better Buildings Challenge in 2011 and aims to reduce energy use among buildings, from residential to commercial to public, by 20% over the next 10 years. The Department of Energy, which spearheads the initiative, convened more than 900 participants for the 2015 Better Buildings Summit in Washington, DC, this May.

In accordance with congressional mandates, every state issues a Qualified Allocation Plan (QAP) explaining the criteria it will use in awarding Federal 9% Low Income Tax Credits (LIHTC). The topic is particularly hot because the U.S. Supreme Court is expected to issue its decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., which involves Texas’ allocation of LIHTCs, and focuses on whether the Fair Housing Act of 1968 outlaws only intentional discrimination.

Whenever politics, public policy and competing interests converge, the effects can be explosive
and controversial.

New money from pension funds, life insurance companies and commercial banks is flowing into apartments with affordable rents. These private equity investments in affordable housing are just a trickle so far – but they may soon become a flood.

Life was good, or it should have been, for Gerry General, the general partner of a partnership that owned Good Life Lofts, a 150 unit low-income housing tax credit (LIHTC) property, located in Rising Rents, USA. But Gerry was a “glass half-empty” guy. As he tried to relax aboard his 34 foot Tartan sailboat, becalmed on the waters of Lake Erie, the future of Good Life Lofts weighed on his mind.

For many low-income seniors, access to quality, affordable in-home care is a pipe dream. If a tenant qualifies for services under Medicaid it normally means a trip to the nursing home, which nobody wants. In progressive Minnesota, where thinking outside of the box is a way of life, developer Tom Schuett has developed a business model that allows him to provide round-the-clock home healthcare to his tenants while getting reimbursed by the state.

“The best way to change the world,” iconic folksinger and social activist Pete Seeger once said, “is to find a positive story and tell it.”

On his first day as Principal Deputy Assistant Secretary for Housing, Edward Golding was asked by the Office of Public Affairs to sit for his official photograph – instead, as a playful joke, he considered sending over a photo of Albert Einstein.
Five weeks later, when I shook Golding’s hand prior to sitting for this interview, I noticed the resemblance right away. And while he may not be a world-famous physicist, Golding is a gifted economist, who has spent the past quarter century working in the mortgage finance industry and advocating for policies that strengthen access to affordable housing.

Acertain $10-billion-a-year industry faces systemic catastrophic risk, for which we are entirely uninsured.
Today’s tax credit properties would not exist without insurance. Today, a LIHTC property without insurance is unfinanceable and un-ownable. It must have title insurance, fire insurance, casualty and personal injury insurance, and flood insurance if relevant. Many properties expect the tenants to buy renter’s insurance, many loans have mortgage insurance.

Operating an affordable housing company is an intricate endeavor. Project development and finance tends to get most of the attention, but operations and maintenance, human resources and asset management are equally important disciplines, particularly as companies mature. As a means of helping educate our members and help build capacity across our industry, NH&RA has been exploring a diverse array of approaches, models and best practices aimed at increasing portfolio value, reducing operating expenses and mitigating company risk. One result of this effort is the Preservation Through Energy Efficiency Road Show, which has visited six cities thus far and was featured prominently in a recent Tax Credit Advisor article. This month I’d like to share some additional ideas and initiatives we have learned about.

“New Markets Tax Credits are coming of age,” says one experienced dealmaker. “Or, maybe it’s more accurate to say people are growing more sophisticated in their use of NMTCs.”

National Church Residences (NCR) is earning a half-million dollars a year in extra rental income, simply because the nonprofit changed the way it calculates the utility allowances at 25 affordable housing properties.