WASHINGTON November 3rd, 2021 –  Today the U.S. House of Representatives released an amended version of the “Build Back Better Act” that would boost LIHTC. Several proposals were originally part of the Affordable Housing Credit Improvement Act that many affordable housing advocates have worked hard on for the last several years: Here’s a synopsis:

  • Lowering the 50% test bond financing threshold to 25 percent for five years, from 2022 – 2026;
  • A Housing Credit allocation increase of 10% plus inflation for each of the three years from 2022 – 2024; and
  • A permanent 50% basis boost for properties serving extremely low-income tenants, and an 8% minimum set-aside for ELI properties. 

More detailed analysis coming!

Congress passed measures strengthening the creation of affordable housing. Highlights of the bill are as follows:

Permanent 4% Housing Credit rate: This is a big victory for housing credit advocates, who have made setting a minimum 4% rate a top priority. The 4% rate will apply to allocations of 4% credits made after December 31st 2020.

Disaster Housing Credit Allocation: This is the first time Congress has allocated disaster housing credits since the GO Zone allocation after Hurricane Katrina. Dozens of Gulf Coast counties have been subjected to disaster declarations in 2020, so they will receive additional credits. 

$25 Billion in Rental Assistance: States long the Gulf Coast are expected to receive another $1B for rental assistance. Renters and tenants will be eligible to apply for funding.

Extended Eviction Moratorium: The current eviction moratorium has been extended through January 31, 2021.

We applaud Congress for passing Housing Credit provisions that will lead to the development of hundreds of thousands of additional affordable homes and the members and advocates who have worked to communicate the need for these provisions to Congress.

The U.S. Department of Housing and Urban Development (HUD) published in last week’s Federal Register a notice of fiscal year 2021 (FY 21) fair market rents (FMRs) for the Housing Choice Voucher program, Moderate Rehabilitation SRO program and other HUD programs. The notice states that the trend factors used to determine FY 21 FMRs include updated economic assumptions to reflect the economic impact of the COVID-19 pandemic. The notice also enumerates how public housing authorities and other parties can request reevaluations of their FMRs. Comments on the notice are due Sept. 30 and the FMRs will be effective Oct. 1.

South Carolina has joined seventeen other states by enacting a state based affordable housing program that mirrors the federal LIHTC. The goal is to add critically needed affordable housing to workforce and income restricted seniors.

Calling it the “Workforce and Senior Affordable Housing Act” and signed into law on May 14, 2020, the program will be administered with the intention of being as robust as other successful state based LIHTC plans.    

Until the Act was passed, Georgia stood alone as having the only state-based low income tax credit plan in the Southeast.

More news to come as the office in Columbia is staffed up.

The most recent update provides additional guidance regarding the closings of FHA-insured transactions, loan application processing and projects already under construction:

Status of Closings

Potential Closing Delays. HUD may temporarily pause initial endorsement of new construction and substantial rehab loans that involve tenant-in-place rehab work or tenant relocation, or in areas that have shelter-in-place orders. For projects that have time-sensitive restrictions or contractual obligations that will expire if closing is delayed, HUD may proceed with closing but will require evidence that mitigants are in place to offset construction delays.

Electronic/Mail Closings. HUD closing attorneys will rely on electronic transmission of closing documents in lieu of hard copies in performing their closing review. Closings will be conducted either by mail or through the use of electronic transmission of documents, however, there are various logistical challenges which the parties should build in extra time to address, such as notarization. While some jurisdictions have authorized remote notarization, many have not, and even in those jurisdictions where remote notarization is permissible there are frequently issues involving title companies and recording offices.

Loan Application Processing

No Processing Delays. HUD staff are equipped to perform underwriting functions and all other duties remotely and HUD does not anticipate issues or delays in processing loans.

Electronic Submissions. HUD will permit applications and related documents to be submitted electronically. Plans and specifications should be sent directly to the processing construction analyst identified at the concept meeting to be reviewed remotely.

Relaxed Requirements for Third-Party Inspections.

  • If a third-party capital needs inspector cannot physically inspect the required units due to COVID-19 concerns, HUD may waive the sampling requirements in favor of inspecting only vacant and model units for recently built insured properties (within 10 years) or non-insured properties built within five years. In other cases, to the extent that the contracted appraiser cannot physically inspect the site, the appraiser should contract with a local appraiser.
  • In situations where interior access to a project is limited and the asbestos, lead-based paint and/or radon testing cannot be completed prior to application submittal, HUD will allow the submission of applications without these reports, although they will be required before issuing a Firm Commitment.
  • For Phase I ESAs where the preparer is unable to access the interior of the building due to COVID-19 concerns, HUD will accept the ESA without a visit to the site for projects already in HUD’s portfolio or new to HUD’s portfolio with up to Level 3 repairs. For all new construction and substantial rehabilitation projects and certain 223(f) projects that do not meet the low risk criteria the ESA preparer must conduct an in-person site visit; however, HUD will accept a draft ESA report that includes all information except the physical site visit for purposes of submitting the pre-application or application.

Construction Issues

No Relief from Contractual Obligations. HUD confirmed that there is no impact on the enforceability of contracts among parties to an insured loan except insofar as any provisions in the contracts provide for (e.g., force majeure).

Construction Impediments. All construction parties should stay engaged and provide regular updates to the lender and HUD to the extent possible. If a job site is shut down, the general contractor (or in the absence of the general contractor, the owner) must ensure that the site is properly secured and that all completed work and stored materials are protected. If limited work continues, workplace safety procedures and CDC advisories for “social distancing” should be observed.

P&P Bonds and Builder’s Risk Coverage. The parties should proactively ensure that surety bonds and Builder’s Risk insurance policies will remain in place and will not be impaired by any job slow-down or work stoppage.

Required Monthly Progress Updates. General contractors, owners and supervising architects should report construction work status on a monthly basis in connection with their monthly requests for reimbursement of costs and associated inspection trip report. Monthly reports and requests for reimbursements should continue for soft costs even if little or no work has been completed.

Relief for Repair Escrows for Section 223(f) and Section 223(a)(7) Projects. HUD will consider amending the Escrow Agreement for Non-Critical Repairs, which typically has a 12-month completion deadline for non-critical repairs, in those cases where owners and lenders have documented COVID-19 related delays.

Virtual Inspections.  Reimbursement requests for completed work will be approved even if the supervising architect and/or the HUD Inspector are unable to conduct an onsite inspection based on the supervising architect’s verification of the work completed based on a recorded virtual inspection and virtual site meeting. 

This article was reproduced by permission by Nixon Peabody. Original blogpost by Nixon Peabody published on April 6th, 2020. Original can be found via this URL. 

On Friday March 27th the U.S. Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security Act) the $2 trillion aid package, and sent it to President Trump.  He signed it late Friday.   

The bill provides more than $12 billion in funding to HUD for housing and homelessness programs.

Key Components include:

  • $4B for Emergency Solutions Grants (ESG) for homelessness assistance
  • $5B in CDBG
  • $1.25B for HCV Program
  • $1B for project-based Rental Assistance
  • $685MM for Public Housing
  • $300MM for tribal nations
  • $65MM for Housing for Persons with AIDS (HOPWA)
  • $50MM for Section 202 Housing for the Elderly
  • $15MM for Section 811 Housing for Persons with Disabilities\

The bill also institutes a moratorium on foreclosures for all federally backed mortgages, including those covered by HUD, USDA, FHA, VA, Fannie Mae, and Freddie Mac, for 60 days beginning on March 18, 2020. Under the bill, a borrower with a federally backed mortgage experiencing financial hardship due to coronavirus may also request a forbearance for up to 180 days, which may be extended for another 180 days at the request of the borrower.

The law allows multifamily housing owners with a federally-backed mortgage to request a forbearance for up to 30 days, which can be extended by another 60 days at the request of the borrower, on the condition that they agree not to evict tenants or charge tenants’ late fees.

The bill also institutes a moratorium on filings for evictions for renters in homes covered by a federally backed mortgage for 120 days of enactment.

The bill provides a temporary moratorium on evictions for most residents of federally subsidized apartments, including those supported by HUD, USDA or Treasury (Low Income Housing Tax Credit developments). The bill also institutes a moratorium on filings for evictions for renters in homes covered by federally backed mortgages for 120 days of enactment.

The U.S. Department of Housing and Urban Development (HUD) announced on 10/9 that Brian Montgomery has been nominated to serve as Deputy Secretary of HUD.

Montgomery, who is also the Assistant Secretary for Housing and Federal Housing Commissioner, would manage the day-to-day operations of the agency and assist the Secretary in leading HUD’s 8,000 employees.

“Once again, I am tremendously honored to be called upon by President Trump and Secretary Carson to serve this Department and the American people,” said Montgomery. “Service to our fellow Americans is the cornerstone of our Department and I look forward to continuing to help fulfill HUD’s critical role.”

A HUD News Release says Montgomery was nominated for these roles in September 2017 and he is the first man to serve as the head of the Federal Housing Administration twice and under three different Administrations.

“Brian brings tremendous experience to our team and has been a strong voice in the effort to reform the Nation’s housing finance system,” said HUD Secretary Dr. Ben Carson. “As Federal Housing Commissioner, Brian made certain FHA remains a stable and reliable resource for first-time and minority homebuyers, and other underserved borrowers while protecting the interests of taxpayers. Brian is a key member of our team and I look forward to having him confirmed as our Deputy Secretary.”

 As Federal Housing Commissioner, Montgomery is responsible for the management of FHA’s more than $1.4 trillion mortgage insurance portfolio. He also heads HUD’s project-based Section 8 rental assistance housing program, the Officer of Housing Counseling, and HUD’s Manufactured Housing Program.

“The Manufactured Housing Institute applauds the nomination of Brian Montgomery for Deputy Secretary of HUD. His leadership and vision during two tours at HUD demonstrates his commitment to solving our nation’s affordable housing supply challenges through solutions that support innovative housing methods,” said Lesli Gooch, Vice President, Government Affairs for the Manufactured Housing Institute.

John Smaby, President of the National Association of Realtors, said Montgomery has demonstrated “consistent support for American consumers,” while capitalizing on the role the FHA plays in addressing affordability and facilitating homeownership in the U.S.

“His vision of modernizing the critical infrastructure of the FHA is essential to successfully serving all Americans with affordable and responsible mortgage financing while protecting both borrowers and taxpayers from avoidable risk,” said David M. Dworkin, President and CEO of National Housing Conference. “He will be a valuable voice within the administration and in the housing community as a whole.”

Montgomery served in the Executive Office of the President as the Assistant Deputy to President Bush and Cabinet Secretary from January 2003 until April 2005. He led the White House’s internal working group to monitor all facets of the Space Shuttle Columbia accident investigation, for which he was awarded the NASA Exceptional Service Medal.

He served as Deputy Assistant to the President and Director of Advance from January 2001 until January 2003.

President Donald J. Trump is Tearing Down Red Tape in Order to Build More Affordable Housing

We’re lifting up forgotten communities, creating exciting new opportunities, and helping every American find their path to the American Dream. President Donald J. Trump

President Donald J. Trump

BREAKING GROUND ON AFFORDABLE HOUSING: President Donald J. Trump is working to eliminate barriers that are holding back affordable housing development.

  • President Trump is signing an executive order to establish a White House Council on Eliminating Barriers to Affordable Housing Development.
    • The council will consist of members from across 8 Federal agencies and will be chaired by Secretary of Housing and Urban Development (HUD) Ben Carson.
  • This new council will engage with State, local, and tribal leaders to identify and remove obstacles that impede the development of new affordable housing.
  • The Council will look at the affect Federal, State, and local regulations are having on the costs of developing affordable housing and the economy.
    • At the President’s direction, the Council will take action to reduce Federal regulatory barriersto affordable housing development.
    • The Council will support State and local efforts to reduce regulatory barriers.
    • The Council will recommend ways to reduce statutory, regulatory, and administrative burdens at all levels of government that hinder affordable housing development.
  • Creating this Council will streamline interagency processes and deliver results even faster.

CUTTING EXCESSIVE COSTS TO SPUR CONSTRUCTION: Regulations are creating excessive costs that are holding back the development of needed affordable housing.

  • Many of the markets with the most severe shortages in affordable housing have the most restrictive State and local regulatory barriers to development.
  • More than 25% of the cost of a new home is the direct result of Federal, State, and local regulations, with the price tag even reaching up to 42% for some new multifamily construction.
  • Costly regulations have contributed to a shortage of affordable homes.
    • Census Bureau data shows that from 2010 to 2016, only seven homes were built for every 10 households formed.
  • High housing prices are a primary determinant of homelessness, and research has directly linked more stringent housing market regulation to higher homelessness rates

HELPING AMERICANS FIND A HOME: President Trump is building on efforts his Administration has taken to lift up all Americans and make it easier for them to find a home.

  • Earlier this year, President Trump signed a memorandum to initiate needed reforms to our housing finance system.
    • President Trump is working to improve Americans’ access to sustainable home mortgages.
    • The Trump Administration is committed to enabling Americans to access Federal housing programs that help them finance the purchase of their first home.
  • In 2018, HUD launched a campaign to encourage more landlords to participate in the Housing Voucher Program, the country’s largest rental subsidy program.

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