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Politics, Policy & Election 2016

This article discusses the upcoming 2016 elections, upcoming legislation, and advocacy efforts in the field of politics and policy. It explores the potential impact of the election on affordable housing and analyzes the policy platforms of Secretary Hillary Clinton and Donald Trump. The article also examines the current state of legislation and advocacy in areas such as low-income housing tax credits, HUD, GSEs, and NMTC.

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Politics, Policy & Election 2016

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  1. Politics, Policy & Election 2016 Breakfast & General Session dgasson@bostoncapital.com Mike Morrison Novogradac & Company LLP mike.morrison@novoco.com David Gasson Boston Capital @dsgasson Beth Mullen CohnReznick beth.mullen@cohnreznick.com Bryan Keller RubinBrown bryan.keller@rubinbrown.com @RubinBrownRE www.novoco.com

  2. Agenda Looking Ahead to 2016 (and 2017) 2016 Elections Upcoming Legislation Advocacy Efforts GSEs www.novoco.com

  3. So, what should we expect for the remainder of 2016? www.novoco.com

  4. So, what should we expect for the remainder of 2016? www.novoco.com

  5. Sep. 30 Fiscal year end Mar. 15 Debt limit extension expires Dec. 31 Various extenders expire, including ITC for certain technologies, 45L, 179D Nov. 8 Presidential election Oct. 5 Today Jan. 20 Presidential inauguration SEP OCT NOV DEC JAN FEB MAR President-elect transition period 2016 2017 16 days left in session for 2016 House in Session 22 days left in session for 2016 Senate in Session www.novoco.com

  6. Presidential Candidates and Affordable Housing SECRETARY HILLARY CLINTON DONALD TRUMP www.novoco.com

  7. Presidential Candidates and Affordable Housing SECRETARY HILLARY CLINTON DONALD TRUMP • Includes housing as part of her policy platform • Calls to increase supply of affordable rental homes by expanding annual LIHTC allocations for areas most in need • Plans to create incentives at state and local level to enact effective land use rules and other regulations to promote development of new rental housing www.novoco.com

  8. Presidential Candidates and Affordable Housing SECRETARY HILLARY CLINTON DONALD TRUMP • Includes housing as part of her policy platform • Calls to increase supply of affordable rental homes by expanding annual LIHTC allocations for areas most in need • Plans to create incentives at state and local level to enact effective land use rules and other regulations to promote development of new rental housing www.novoco.com

  9. Presidential Candidates and Affordable Housing SECRETARY HILLARY CLINTON DONALD TRUMP • Includes housing as part of her policy platform • Calls to increase supply of affordable rental homes by expanding annual LIHTC allocations for areas most in need • Plans to create incentives at state and local level to enact effective land use rules and other regulations to promote development of new rental housing www.novoco.com

  10. Presidential Candidates and Affordable Housing SECRETARY HILLARY CLINTON DONALD TRUMP • Has not stated a position • However, his father developed a substantial amount of unsubsidized affordable rental housing in NYC www.novoco.com

  11. www.novoco.com/journal www.novoco.com

  12. Presidential Election www.novoco.com

  13. November 2016 Republican Democrat Democrat www.novoco.com

  14. November 2016 www.novoco.com

  15. November 2016 Republican Republican Republican www.novoco.com

  16. November 2016 PROTECTING OURSELVES SEEKING RESOURCES The “Defensive” Path The “Offensive” Path www.novoco.com

  17. Low-Income Housing Tax Credits November 2016 Ensuring LIHTC is retained in all future tax reform bills Pushing for a 50 percent increase and Cantwell-Hatch improvements The “Defensive” Path The “Offensive” Path www.novoco.com

  18. HUD Low-Income Housing Tax Credits Trying to restore more HUD funding and eliminating RAD unit cap Minimizing cuts The “Defensive” Path The “Offensive” Path www.novoco.com

  19. GSEs HUD Retaining some form of government involvement in mortgage finance Increasing GSE multifamily activity The “Defensive” Path The “Offensive” Path www.novoco.com

  20. NMTC GSEs Ensuring the NMTC is not repealed before 2019 and at least gets extended beyond that Permanence, increase in authority, inflation adj. The “Defensive” Path The “Offensive” Path www.novoco.com

  21. Direction of the Country Source: RealClearPolitics.com (9/28/16) www.novoco.com

  22. www.novoco.com

  23. Clinton v. Trump Donald Trump 44.4% Hillary Clinton 46.7% Clinton v. Trump v. Johnson v. Stein Source: Real Clear Politics 9/28/16 Hillary Clinton 43.1% Donald Trump 41.5% Jill Stein 2.4% Gary Johnson 7.4% www.novoco.com

  24. Current Polls – Trump v. Clinton 47.4 Clinton (D) +3.0 44.4 Trump (R) Source: Real Clear Politics 9/29/2016 www.novoco.com

  25. Recent Presidents Who Had Major Tax Bills the Year of their Inauguration OBAMA BUSH CLINTON BUSH REAGAN CARTER www.novoco.com

  26. Current House and Senate Leadership HOUSE SENATE SEN. MCCONNELL Majority Leader Kentucky SEN. REID Minority Leader Nevada REP. RYAN Speaker Wis. - 1 REP. PELOSI Minority Leader Calif. - 12 www.novoco.com

  27. Current House and Senate Leadership Potential future HOUSE SENATE SEN. REID Minority Leader Nevada SEN. SCHUMER Minority Leader New York SEN. MCCONNELL Majority Leader Kentucky REP. RYAN Speaker Wis. - 1 REP. PELOSI Minority Leader Calif. - 12 www.novoco.com

  28. Legislation and Advocacy www.novoco.com

  29. S. 2962 Affordable Housing Credit Improvement Act of 2016 Announced May 19, 2016 Sen. Cantwell D-Washington Sen. Hatch R-Utah Sen. Wyden D-Ore. Sen. Schumer D-N.Y. www.novoco.com

  30. S. 2962 Affordable Housing Credit Improvement Act of 2016 Announced May 19, 2016 Sen. Cantwell D-Washington Sen. Hatch R-Utah Sen. Wyden D-Ore. Sen. Schumer D-N.Y. www.novoco.com

  31. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Sen. Cantwell D-Washington Sen. Hatch R-Utah www.novoco.com

  32. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 New, expanded bill includes: • 50 percent increase • Income-averaging • Minimum 4 percent rate Sen. Maria Cantwell D-Washington www.novoco.com

  33. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Additional Resources • Give states discretion to provide 30% basis boost for bond-financed projects • Repeal QCT population cap • Relocation costs included in eligible basis • No basis reduction for certain energy tax incentives • Indian areas generally treated as DDAs Sen. Maria Cantwell D-Washington www.novoco.com

  34. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Financial Feasibility • 50% basis boost for ELI units • Modify student occupancy rules • Codify increased tenant income guidance • Modify 10-year rule • Limits apply to acquisition basis • Adopt uniform income eligibility for rural projects Sen. Maria Cantwell D-Washington www.novoco.com

  35. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Other • Simplify the LIHTC student rule • Clarify the ability to claim LIHTCs after casualty losses • Replace the ROFR with a purchase option • Add Native American projects as QAP selection criterion • Modify the rent-setting rule Sen. Maria Cantwell D-Washington www.novoco.com

  36. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Other • Clarify the community revitalization plan • Prohibit local approval or contribution requirements • Change the official name of the LIHTC Sen. Maria Cantwell D-Washington www.novoco.com

  37. Affordable Housing Credit Improvement Act of 2016 , Part 2 S. 3237 Largest impact on equity for bond deals: • Minimum 4 percent • State discretionary boost of up to 30% in areas outside of DDAs/QCTs • Repealing population cap on QCTs • Automatic DDA for Indian areas Sen. Maria Cantwell D-Washington www.novoco.com

  38. Middle Income Housing Tax Credit • Each state would receive $1 of MIHTCs per capita, minimum annual ceiling of $1,140,000 • Any credits not allocated by the states to middle-income projects are carried forward and added to the state’s annual allocation of LIHTCs • Maximum credit for each project: 50 percent of PV of qualified basis • Comments due December 21 Sen. Wyden D-Ore. www.novoco.com

  39. www.novoco.com

  40. www.taxcredithousing.com www.novoco.com

  41. www.novoco.com

  42. www.novoco.com/products www.novoco.com

  43. www.novoco.com/products www.novoco.com

  44. GSEs www.novoco.com

  45. GSEs Capital Requirement and Investment Portfolio • 2008 Agreement with Treasury - GSE bailout • Capital Reserve • Quarterly Dividend • Net Worth over Capital Reserve • Fannie Mae and Freddie Mac will have no Capital Reserve by 1/1/2018 • Wind down Investment Portfolio • $250 billion by 12/31/2018 Mel Watt Federal Housing Finance Agency Director www.novoco.com

  46. In calendar year 2015, contributions were set aside by Fannie Mae & Freddie Mac • Watt December 11, 2014 letters to Fannie Mae, Freddie Mac • Grants for affordable rental housing that targets extremely low-income individuals and households • HUD released interim rule on January 30, 2015 • HUD announced HTF state allocations on May 5 • Once state HTF allocation plans are approved, states can award HTF grants to developments 46 Mel Watt Federal Housing Finance Agency Director 2015 2014 2016

  47. 2016 State Housing Trust Fund Allocations Top 10 State HTF Allocations Coincidentally, the absolute minimum needed for statutory allocations $174M $93M Colorado $3,000,000 2016

  48. Preliminary 2017 estimate using 1st and 2nd quarter of 2016 10-Q filings from Fannie/Freddie Top 10 State HTF Allocation Estimates Coincidentally, the absolute minimum needed for statutory allocations $229M $123M Colorado $3,410,810 2017

  49. HUD Budget Note: amounts in Millions www.novoco.com

  50. www.novoco.com

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