WASHINGTON December 15th, 2022 – 124 bipartisan US lawmakers have pledged support for the Neighborhood Homes Investment Act (NHIA), which would offer a tax incentive to developers to minimize their risk when building or rehabilitating existing housing. If passed, the legislation could lead to the development of 500,000 starter homes in struggling communities over the next decade in addition to $29.3 billion in federal, state and local tax revenues and fees, $42.9 billion in wages and salaries, and over 780,000 jobs in construction and construction-related industries.

WASHINGTON, May 16 2022 – The United States Government announced a Housing Supply Action Plan to ease the burden of housing costs over time by boosting the supply of quality housing in every community. The plan includes both legislative and administrative actions to help close the nation’s housing supply shortfall in five years. Among other provisions, the plan includes: test

  • Financing over 800,000 affordable rental units by expanding and strengthening LIHTC through enactment of provisions included in the House-passed reconciliation bill. The bill would increase tax credit allocations, provide additional capacity for private activity bonds to finance affordable housing, target tax credits for housing that serves extremely low-income Americans, and make it easier to produce and preserve affordable housing with tax credits in Indian Country.
  • Providing an additional subsidy through the LIHTC to developments that add net new supply and that would otherwise not be financially feasible. This proposal was included in the FY 2023 budget.
  • Strengthening Government-Sponsored Enterprise (GSE) financing for multifamily development and rehabilitation.
  • Leveraging American Recue Plan funds for investments in affordable housing.
  • Finalizing the LIHTC Income Averaging proposed guidance by the end of September 2022.
  • Advancing HOME as a key tool for the production and preservation of affordable rental and homeownership housing.
  • Providing tax credits to build and rehabilitate homes for low- and moderate-income homebuyers. This proposed legislation, the Neighborhood Homes Investment Act (NHIA), is included in the House-passed reconciliation bill.
  • Improving the alignment of federal funds to reduce transaction costs and duplications and accelerate development.
  • Supporting the construction of more than 8,000 rural multifamily housing units.
  • Supporting new and existing affordable housing in Indian Country.
  • Providing incentives for land use and zoning reforms and reducing regulatory barriers.
  • Addressing supply chain disruptions for building materials.

Columbia, SC – 29 Jan 2022

South Carolina saw massive demand for its 4% LIHTC Credit and announced at it has limited the ability of certain developments to access the state’s 4% low-income housing tax credit (LIHTC) incentive. The stop is temporary and halts the allocation of credits until the state enacts new legislation or July 1st of this year, whichever comes first. Minutes of the meeting state the pause is because “the volume of interest in the low-income housing tax credit program and the substantial impact on the state’s general fund were both unexpected.” According to the South Carolina Revenue and Fiscal Affairs Office’s Tax Expenditure Report issued earlier this month, the state LIHTC allocated more than $25 million in fiscal year 2021-22 and was estimated for more than $84.3 million this year.

New Tax Credit Programs Introduced: MIHTC & NHTC

Aug. 19, 2021 (WASHINGTON) – Sweeping housing legislation announced today in the U.S. Senate would enhance the low-income housing tax credit (LIHTC) and introduced the middle-income housing tax credit (MIHTC) and neighborhood homes tax credit (NHTC).

The “DASH Act” aka Decent, Affordable, Safe Housing for All would provide an expansion of 9% LIHTC annual allocation, provide a 50% basis boost for properties for extremely low-income renters; reduce for four years the 50% financed-by test for tax-exempt-bond-financed properties, provide a potential 30% difficult development area basis boost for rural and Indian properties.  

The bill, introduced by Senate Finance Committee Ronald Wyden (D-Oregon) would also create a 5% and 2% MIHTC for rental properties serving tenants with incomes between 60% and 100% of the area median income (AMI), create an NHTC worth up to 35% of the qualified development cost or 80% of the national median sale price for new homes, whichever is less; create a renter’s tax credit for affordable housing operators who provide housing to tenants with monthly incomes below 30% of the AMI; and create a first-time homebuyer refundable credit for 20% of the purchase price of a home up to $15,000.   Senator Wyden said “Housing is a human right. Yet, millions of Americans pay more than half of their monthly take-home pay to keep a roof over their head. And more than half a million Americans don’t have housing at all,” Wyden said. “America is amidst a serious crisis of housing affordability, and it’s a big challenge that demands big, bold solutions. As housing prices skyrocket, a generation of young people are increasingly locked out of homeownership. It’s time America’s lawmakers get with the program and enact 21st century housing policies that adequately address 21st century challenges.”

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.

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We are an underwriting surety agency specializing in P&P and other bonds for LIHTC (4% & 9% and state-based programs), Market Rate developers [HUD 221 (d) (4), etc.,] and GCs. We effortlessly guide our clients through the otherwise difficult approval maze with an innate understanding of how the surety companies think, and exactly what is needed for bond approval. Headquartered in Charleston, South Carolina, we are licensed in 50 states and represent clients nationwide. LIHTC Bonds Ltd Co is an affiliate of Carolina Indemnity Group.

 

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