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How this Tax Plan Affects Affordable Housing

The irony between actions and words in DC is staggering. This week I was at AHF Live in Chicago, where the dominant topic of discussion was the President’s tax reform. And yet a day after the House passes the Tax Cuts and Jobs Act (TCJA) an article is published in which HUD Secretary Carson reminds us that "11 million households in America are severely burdened". To add on a layer of absurdity, Dr. Carson champions RAD as an example of how his Department plans to address the affordable housing crisis yet, no one in this Administration seems to comprehend that the House version of the tax cuts eliminates the Private Activity Bond market, which directly kills the historic, new market and 4% tax credit markets!

The link between the success of RAD and the private activity bond market is strong, as it is estimated that greater than 50% of RAD conversions will require tax credits to address needed repairs and deferred maintenance. The Finger Lake Times described the devastating effect this legislation would have, and how conversions like those planned in New York City would never come to fruition. I have faith that those in the Senate will understand the mechanisms necessary to solve the housing crisis and will not eliminate the 4% bond market.  

RAD Evaluation Interim Report

(RAD Project, Orcutt Townhomes, pictured above)  

Dominion Due Diligence Group (D3G) has been a proponent of the Rental Assistance Demonstration (RAD) program since inception in 2012. During this time, RAD has gotten mixed reviews from different groups in and out of the affordable housing industry, much of which has been pessimistic.  Everything from tenant protesting RAD to articles smearing RAD as a negative program out to destroy public housing.   But, as the program matures, we have seen most of those views turn positive.   RAD is rising above the noise and proving to skeptics that the program is successful.  

 

On September 21, HUD released a RAD Evaluation Interim Report prepared by Econometrica. My read of the report is RAD gets an A+ in the mission and effectiveness of leveraging private capital with public funds - for the benefit of the most-worthy affordable housing in this country.  The interim report concludes that for every $1 of public housing funds, RAD is leveraging $9 from sources such as LIHTC, private mortgage debt, accrued land equity, grants and other funding.   On average, the closed projects studied for the report are undergoing an average of $60,877 per unit in construction costs.  More on the report here.

 

I was pleased to see that D3G has been involved in approximately 38% of the RAD projects studied for the Econometrica report.  Let us put our 3rd party affordable housing due diligence experience to work for you in your next RAD project.  

Update: Midwest Lenders' LIHTC Workshop

I am currently attending the Midwest Lenders' LIHTC Workshop in Chicago. The conference has been very informative so far and I have taken part in many interesting discussions. Lots of good knowledge and best practices being shared... But I'm not sure which is more lively, the conversations or the carpeting!

 

Assisted Living Conversion Program

Assisted Living Conversion Program

On August 11th, HUD released a Multifamily memorandum regarding HUD Financing of Assisted Living Conversion Program (ALCP) Properties.  

Since 2000, the department has allowed over 80 senior facilities to receive grants to accommodate renovations for aging in place residents. 

But until now, these properties could not receive FHA mortgage insurance.   The Ft. Worth program office has been given the responsibility to allow Section 236, 202, and 202/8 Direct Loan senior properties with ALCP grants to use the Section 223(f) and Section 223(d4) program.   This is wonderful news for seniors and the housing industry!

D3G's Accessibility Toolkit mentioned at HUD's FHA Housing Tax Credit Pilot Program Training

For those that attended HUD’s FHA Housing Tax Credit Pilot Program Training at HUD Headquarters on September 22nd and 23rd, you may have heard about our Fair Housing Act Accessibility Guideline Toolkit. 

This resource well illustrates common Fair Housing Act accessibility issues in housing, and can assist in making sure industry participants are educated on the important subject.

View our Accessibility Toolkit with the link below:

Accessibility-Toolkit-FHA-Design-Manual-Re-Issued.pdf

 
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