I was in Washington, D.C., this week to attend the National Council of State Housing Agencies’ 2013 HFA Institute. The conference is divided into four different modules, and I attended sessions dedicated to Low Income Housing Tax Credits (LIHTCs).
I met with and listened to representatives from allocating agencies, the U.S. Department of Housing and Urban Development, investors and other industry professionals who discussed the outlook for LIHTCs in 2013, equity market news, and legal and accounting topics.
Here are three key takeaways that I noted:
- One of the primary topics this week is tax reform and the potential impact on the LIHTC program. We’ve heard that the preservation of the LIHTC program is not going to be resolved by lobbyists or in D.C.; it is up to us industry professionals to highlight the benefits and tell the stories about how successful LIHTC projects are around the country. Job-creation is being touted as a benefit of many other federal and state programs, and we need to discuss the other social benefits that LIHTC projects often provide in order to stand out.
For example, when low income families move into safe, affordable housing, they no longer have to live in a car, homeless shelter or in unsafe or overcrowded conditions. Their lives become more stable and healthier — mentally, emotionally and physically. Once families have reliable shelter, they are then able to invest more time into activities like education, jobs or trades and even exercising more and eating healthier. All of these changes lessen the need for government assistance programs, which saves taxpayers’ money.
Action items: Travois will be working our clients and their local Congressional representatives to arrange visits to their LIHTC projects and will provide project summary information to tout the benefits of projects to local communities.
How you can help: Get in touch with your representatives. Tell them what LIHTCs have meant to your community. Invite them to visit your projects, especially if you are planning a groundbreaking or grand opening, and introduce them to the families who live in your LIHTC homes, tribal members and your elected officials.
- I attended a housing development session that focused on the expectations of state housing agencies and investors and whether or not underwriting criteria for investors and states are aligned. I was pleased to hear that many of the states’ and investors’ issues with projects are not issues for us because of the way our projects are structured. For example:
- Investors continue to state that they want simpler financing in their deals. Our projects routinely have only two sources of financing — investor equity and tribal funds provided on soft terms. They can’t get any simpler!
- State agencies are taking a closer look at projects to see how the financing will work over the long-term. Again, our projects have advantages because of our projects’ debt structure and operating guarantees.
Action items: Travois will continue to work with current and potential investors to help them understand the benefits of tribal projects.
- I later attended a legal and accounting session that clarified the extension of the 9-percent tax credit rate that became law after Congress passed legislation to avert the fiscal cliff. The 9-percent rate is fixed for projects receiving binding allocations before Jan. 1, 2014, and it is for 2013 credits only. This rate will not be fixed for projects where 2014 credits are forward allocated in 2013.
Action items: As we meet with congressional representatives about LIHTC projects, Travois will continue to emphasize the need to permanently extend the 9-percent rate.
If you have any questions, please email me at bschuler@travois.com or comment on this blog.