1 / 54

HOUSING ON THE HILL

Explore the impact of tax reform on LIHTC legislation, HUD budget, GSE reform, and more at the Housing Colorado Conference. Learn about LIHTC equity pricing, rental homes, and business income. Gain insights into the FY18 Omnibus's effect on affordable housing. Discover potential legislative vehicles for affordable housing credits.

thays
Download Presentation

HOUSING ON THE HILL

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. HOUSING ON THE HILL for the 2018 Housing Colorado NOW! Annual Conference MikeMorrison, CPA Novogradac & Company LLP Amy Broadwater RubinBrown David Gasson Boston Capital Beth Mullen CohnReznick www.novoco.com

  2. Agenda Impact of Tax Reform and FY18 Omnibus on Affordable Housing and Community Development LIHTC Legislation HUD Budget GSE Reform/Housing Trust Fund/Capital Magnet Fund Community Reinvestment Act (CRA): Regulatory Reform Congressional Changes

  3. Low-Income Housing Tax Credit Private activity bonds retained (over half of affordable housing production) MORE THAN HALF

  4. Low-Income Housing Tax Credit Lower Corporate Rate Inflation factor changed to Chained CPI Interest Expense Limitation • Most LIHTC partnerships expected to elect out and shift to Alternative Depreciation System (ADS) for rental housing 100% Expensing through 2022 for: • Site improvements, and • Furniture, Fixtures & Equipment Potential impact of the Base Erosion and Anti-abuse Tax (BEAT)

  5. 9 Percent Property Price per Credit $1.10 $1.10 $0.95 $1.00 $1.00 $0.87 $1.05 $1.05 $0.90 $0.95 $0.95 $0.82 35% 21% 4 Percent Tax Exempt Bond Property Price per Credit $1.05 $1.05 $0.89 $1.10 $1.10 $0.93 $0.95 $0.95 $0.81 $1.00 $1.00 $0.86 35% 21% Assumes 4.5% – 5.0% investor level yield in all scenarios Results may differ based on a change in underlying assumptions. Property not eligible for 30% basis bonus

  6. Effect of Tax Reform on LIHTC Equity Pricing Affordable housing community had already lost investment and production in 2017

  7. www.novoco.com/blog

  8. FY18 Omnibus • Grain-glitch • Increase 9% credit for years 2018-2021 • Income averaging

  9. Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus RentalHomes BusinessIncome Federal, Stateand Local Taxes Jobs Prior Law $142,005,642,600 $54,617,554,900 1,493,400 1,687,500 Tax Reform Bill - - $20,196,865,200 $1,892,267,500 $22,089,132,700 -16% $119,916,509,900 - - $7,768,025,100 $727,795,200 $8,495,820,300 -16% $46,121,734,600 Lower Corporate Rate of 21% Chained CPI Amount Lost Percentage Lost Post-Tax Reform Law - - 212,400 19,900 232,300 -16% 1,261,100 - - 240,000 22,500 262,500 -16% 1,425,000 FY18 Omnibus 12.5% allocation increase Percentage gained New Law $ 1,038,662,500 2% $47,160,397,100 + $2,700,522,500 2% $122,617,032,400 + + 28,400 2% 1,289,500 32,100 2% 1,457,100 +

  10. Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus RentalHomes BusinessIncome Federal, Stateand Local Taxes Jobs Prior Law $142,005,642,600 $54,617,554,900 1,493,400 1,687,500 Tax Reform Bill - - $20,196,865,200 $1,892,267,500 $22,089,132,700 -16% $119,916,509,900 - - $7,768,025,100 $727,795,200 $8,495,820,300 -16% $46,121,734,600 Lower Corporate Rate of 21% Chained CPI Amount Lost Percentage Lost Post-Tax Reform Law - - 212,400 19,900 232,300 -16% 1,261,100 - - 240,000 22,500 262,500 -16% 1,425,000 +18% FY18 Omnibus 12.5% allocation increase Percentage gained New Law $ 1,038,662,500 2% $ $47,160,397,100 + $2,700,522,500 2% $122,617,032,400 + + 28,400 2% 1,289,500 32,100 2% 1,457,100 +

  11. 9 Percent LIHTC Allocations FY18 Omnibus 2028$2.85 2018$2.70 HERA 2022$2.55 2009 $2.30 2017$2.35 2008 $2.20 2007 $1.95 2002 $1.75 2010 $2.10 Per capita credit set at $1.25 ACTUAL PROJECTED

  12. LIHTC Income Averaging Development types benefiting from this new option $ Preservation projects (e.g., RAD) with some “over-income” residents High housing cost areas Rural areas with very low incomes Low-income community revitalization projects promoting income diversity

  13. Income Averaging Blog Post www.novoco.com/blog

  14. More LIHTCs viaAffordable Housing Credit Improvement Act 27Ds, 2Is, 10Rs 78Ds, 70Rs + about 20 other provisions CANTWELL HATCH NEAL CURBELO

  15. More LIHTCs viaAffordable Housing Credit Improvement Act 27Ds, 2Is, 10Rs 78Ds, 70Rs + about 20 other provisions CANTWELL HATCH NEAL CURBELO

  16. More LIHTCs viaAffordable Housing Credit Improvement Act 27Ds, 2Is, 10Rs 78Ds, 70Rs + about 20 other provisions CANTWELL HATCH NEAL CURBELO

  17. More LIHTCs viaAffordable Housing Credit Improvement Act • Note these assumptions: • Assumed that states will increase their tax-exempt bond issuance for multifamily by 25% • Assumed the absolute amount of soft subsidies going to tax exempt bond properties would remain unchanged • To the extent that there is less deferred developer fee, that is offset with more taxable bond financing 27Ds, 2Is, 10Rs Approximately 131,000 more units over 10 years 78Ds, 70Rs + about 20 other provisions CANTWELL HATCH NEAL CURBELO

  18. Possible Legislative AHCIA Vehicles 1 Tax reform 2.0 Technical corrections bill 2 3 Continuing resolution through December 7th 4 Tax extenders 5 Infrastructure reform Debt ceiling - March 2019 6

  19. Other Legislation • Middle Income Tax Credit • Rent Relief Act of 2018 • Restoring Tax Credits Affordable Housing Act • Distressed Zone Tax Credit

  20. Colorado Legislation • Colorado Affordable Housing Tax Credit • extended through 2024 • Colorado Historic Preservation Tax Credit • extended 10 years through 2029

  21. Investing in Opportunity Act • Allows investors with capital gains from sale of assets to defer those gains • Similar in concept to Section 1031 “Like-Kind” exchanges • Creates new incentive to invest capital gains in low-income communities • Authorizes the designation of “opportunity zones” • All states have designated these zones • Encourages investors to pool resources and risks in “Opportunity Funds” (O Funds). Investors can temporarily defer capital gains recognition if they reinvest in these zones • Incentivizes long-term investment by stepping up gains and further gains exclusions • 10 percent step-up after 5-year hold, 15 percent step-up after 7-year hold • After 10 years, further gains are tax-free • Provides shallower subsidies per investment than the NMTC, but can be used on a greater scale

  22. Opportunity Zone Resource Center www.opportunityzoneresourcecenter.com

  23. HUD Budget

  24. HUD Budget Note: amounts in millions

  25. GSE’s and Housing Trust Fund and Capital Magnet Fund

  26. Government-Sponsored Enterprises Reform • Corker-Warner Bill • Winding down Fannie Mae and Freddie Mac?

  27. Housing Trust Fund and Capital Magnet Fund Allocations Housing Trust Fund Capital Magnet Fund

  28. Housing Trust Fund Update: Top 20 State Allocations of 2018 % Change 2017 2018 2017 2018 % Change $23,228,115 $14,790,240 $8,858,738 $7,658,948 $7,163,487 $5,863,425 $5,599,220 $5,511,230 $4,851,072 $4,433,361 California New York Texas Florida Illinois Pennsylvania New Jersey Ohio Michigan North Carolina $36,616,277 $22,171,681 $12,279,085 $10,442,914 $9,812,230 $7,759,948 $7,726,903 $6,971,712 $6,004,558 $5,874,191 Massachusetts Georgia Washington Virginia Wisconsin Arizona Missouri Indiana Tennessee Oregon $5,720,333 $5,705,499 $5,197,313 $4,672,562 $4,117,505 $3,997,777 $3,970,270 $3,937,462 $3,688,511 $3,654,189 +58% +50% +39% +36% +37% +32% +38% +27% +24% +32% $4,604,660 $4,427,950 $4,129,304 $3,821,341 $3,481,414 $3,317,255 $3,357,775 $3,367,317 $3,160,279 $3,143,231 +24% +29% +26% +22% +18% +21% +18% +17% +17% +16%

  29. Community Reinvestment Act

  30. Community Reinvestment Act: Reform Recommendations Treasury CRA Recommendations Memo to all three bank regulatory agencies: Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve • Assessment Areas: Expand CRA examination scope to LMI communities outside of traditional Assessment Areas—should improve LIHTC equity pricing in 2nd and 3rd tier markets • Examination Clarity & Consistency: Establish clearer CRA standards for credit, less subjective evaluation determinations, and greater consistency and predictability across all three regulators • Examination Process: Standardize CRA exam schedules among regulators and improve timeliness of evaluations and ratings • Other: Disparate treatment of debt and equity, impact of capital review on CRA investments, and treatment of nonbanks in CRA requirements

  31. Community Reinvestment Act • On August 28, the office of the Comptroller of the Currency released an Advanced Notice of proposed Rulemaking “seeking comment on the best ways to modernize the regulatory framework implementing the Community Reinvestment Act (CRA).” • The ANPR specifically asks for comment on a number of questions regarding improvements to the CRA regulations related to: • Increasing lending and services to people and in areas that need it most, including in LMI areas; • clarifying and expanding the types of activities eligible for CRA consideration; • revisiting how assessment areas are defined and used; • establishing metric-based thresholds for CRA ratings; • making bank CRA performance more transparent; • improving the timeliness of regulatory decisions related to CRA; and • reducing the cost and burden related to evaluating performance under the CRA • Comments are due November 19.

  32. Congressional Changes

  33. Turnover in the House 62 seats total (the most since 1992)

  34. Current Status of the House 193 236 6 DEMOCRATS REPUBLICANS VACANCIES Conyers (D) Tiberi(R) Slaughter (D) Farenthold(R) Bridenstine(R) Meehan (R)

  35. 2018 House Races DEMOCRATS REPUBLICANS 200 211 179 12 9 24 26 30 155 Safe Likely Lean Toss-up Map courtesy: 270towin.com

  36. 2018 Senate Races DEMOCRATS REPUBLICANS 40 49 18 23, no 2018 election 11 6 42, no 2018 election TESTER D-MT HEITKAMP D-ND MCCASKILL D-MO BALDWIN D-WI DONNELLY D-IN BROWN D-OH MANCHIN D-WV Safe Toss-up HELLERR-NV 2016 Presidential Election Results Retiring Sen. Flake NELSON D-FL Retiring Sen. Corker Map courtesy: 270towin.com

  37. Democrat or Republican Majority? Current Partisan Makeup R R

  38. Democrat or Republican Majority? D 71% chance R 71% chance

  39. If Democrats take the House… REP. PELOSI Speaker of the House D-Calif. REP. PRICE THUD Subcommittee REP. WATERS Chair of Financial Services REP. NEAL Chair of Ways & Means REP. LOWEY Chair of Appropriations

  40. Changes in the Senate RETIRING SEN. CRAPO Chair of Banking SEN. HATCH Chair of Senate Finance SEN. SHELBY Chair of Appropriations SEN. GRASSLEY Chair of Judicary Remains SEN. TOOMEY

  41. Current Senate Finance Committee Roster DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Orrin Hatch, UT, Chairman Chuck Grassley, IA Mike Crapo, ID Pat Roberts, KS Mike Enzi, WY John Cornyn, TX John Thune, SD Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Pat Toomey, PA Dean Heller, NV Tim Scott, NC Bill Cassidy, LA Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO Sheldon Whitehouse, RI

  42. Current Senate Finance Committee Roster RETIRING DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Orrin Hatch, UT, Chairman Chuck Grassley, IA Mike Crapo, ID Pat Roberts, KS Mike Enzi, WY John Cornyn, TX John Thune, SD Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Pat Toomey, PA Dean Heller, NV Tim Scott, NC Bill Cassidy, LA Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO Sheldon Whitehouse, RI

  43. Current Senate Finance Committee Roster UP FOR ELECTION DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL* Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Orrin Hatch, UT, Chairman Chuck Grassley, IA Mike Crapo, ID Pat Roberts, KS Mike Enzi, WY John Cornyn, TX John Thune, SD Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Pat Toomey, PA Dean Heller, NV Tim Scott, NC Bill Cassidy, LA Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO* Sheldon Whitehouse, RI

  44. Current Senate Finance Committee Roster COSPONSORS OF S. 548 (CANTWELL/HATCH BILL) DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Orrin Hatch, UT, Chairman Chuck Grassley, IA Mike Crapo, ID Pat Roberts, KS Mike Enzi, WY John Cornyn, TX John Thune, SD Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Pat Toomey, PA Dean Heller, NV Tim Scott, NC Bill Cassidy, LA Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO Sheldon Whitehouse, RI

  45. Current House Ways and Means Committee Roster DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Darin LaHood, IL Brad Wenstrup, OH Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA

  46. Current House Ways and Means Committee Roster RETIRING DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Darin LaHood, IL Brad Wenstrup, OH Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA

  47. Current House Ways and Means Committee Roster RUNNING FOR ANOTHER OFFICE DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Darin LaHood, IL Brad Wenstrup, OH Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA

  48. Current House Ways and Means Committee Roster LOST PRIMARY DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Darin LaHood, IL Brad Wenstrup, OH Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA

  49. Current House Ways and Means Committee Roster COMPETITIVE RACES DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Darin LaHood, IL Brad Wenstrup, OH Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA LIHTC Champion

  50. Current House Ways and Means Committee Roster COSPONSORS OF H.R. 1661 (CURBELO/NEAL BILL) DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Sander Levin, MI John Lewis, GA Lloyd Doggett, TX Mike Thompson, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA Mike Kelly, PA Jim Renacci, OH Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC David Schweikert, AZ Jackie Walorski, IN Carlos Curbelo, FL Mike Bishop, MI Kevin Brady, TX, Chairman Sam Johnson, TX Devin Nunes, CA Dave Reichert, WA Peter Roskam, IL Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN Kenny Marchant, TX Diane Black, TN Tom Reed, NY Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA Darrin LaHood, IL

More Related