Washington Report. Michael Novogradac Novogradac & Company Shannon Ross Housing Partnership Network

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2 Washington Report PANELISTS Michael Novogradac Novogradac & Company Michael Gaber WNC & Associates, Inc. Shannon Ross Housing Partnership Network Orlando Cabrera Arnall Golden Gregory

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

4 Impact of Tax Reform Private Activity Bonds retained Lower Corporate Rate Inflation factor changed to Chained CPI Interest Expense Deductibility Limit 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

5 TAX REFORM POSITIVES SO FAR: Opportunity Zones 12.5% Increase 12.5% Income Averaging HUD Funding Up HUD Income Numbers PAB Usage

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

8 Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus Rental Homes Jobs Business Income Federal, State and Local Taxes Prior Law 1,493,400 1,687,500 $142,005,642,600 $54,617,554,900 Tax Reform Bill Lower Corporate Rate of 21% Chained CPI Amount Lost Percentage Lost PostTax Reform Law 212,400 19, ,300 16% 1,261, ,000 22, ,500 16% 1,425,000 $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 FY18 Omnibus Temp. 12.5% allocation increase Percentage gained New Law + 28,400 2% + 32,100 2% + $2,700,522,500 2% + $ 1,038,662,500 2% 1,289,500 1,457,100 $122,617,032,400 $47,160,397,100

9 Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus Rental Homes Jobs Business Income Federal, State and Local Taxes Prior Law 1,493,400 1,687,500 $142,005,642,600 $54,617,554,900 Tax Reform Bill Lower Corporate Rate of 21% Chained CPI +19% Amount Lost Percentage Lost PostTax Reform Law 212,400 19, ,300 16% 1,261, ,000 22, ,500 16% 1,425,000 $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 FY18 Omnibus Temp. 12.5% allocation increase Percentage gained New Law + 28,400 2% + 32,100 2% + $2,700,522,500 2% + $ 1,038,662,500 2% 1,289,500 1,457,100 $122,617,032,400 $ $47,160,397,100

Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus Rental Homes Jobs Business Income Federal, State and Local Taxes Prior Law 1,493,400

10 Rental Homes, Jobs, Business Income and Tax Revenue Lost Nationally Under Final Tax Reform Bill and FY18 Omnibus Rental Homes Jobs Business Income Federal, State and Local Taxes Prior Law 1,493,400 1,687,500 $142,005,642,600 $54,617,554,900 Tax Reform Bill Lower Corporate Rate of 21% Chained CPI +19% Amount Lost Percentage Lost PostTax Reform Law 212,400 19, ,300 16% 1,261, ,000 22, ,500 16% 1,425,000 $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 FY18 Omnibus Temp. 12.5% allocation increase Percentage gained New Law + 28,400 2% + 32,100 2% + $2,700,522,500 2% + $ 1,038,662,500 2% 1,289,500 1,457,100 $122,617,032,400 $ $47,160,397,100

11 9 Percent LIHTC Allocations $12 $10 $ $ $ $1.95 HERA 2009 $ $ $2.35 FY18 Omnibus 2018 $ $ $2.85 Billions $6 Per capita credit set at $1.25 $4 $2 ACTUAL PROJECTED $0

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

13 Income Averaging Blog Post

14 More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/ Ds, 2Is, 10Rs 50 percent increase 95Ds, 81Rs CANTWELL HATCH Incomeaveraging + about 20 other provisions Minimum 4 percent rate NEAL CURBELO

More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/2018 28Ds, 2Is, 10Rs 50 percent increase

15 More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/ Ds, 2Is, 10Rs 50 percent increase 95Ds, 81Rs CANTWELL HATCH Incomeaveraging Minimum 4 percent rate + about 20 other provisions 55,300 homes NEAL CURBELO

16 More LIHTCs via Affordable Housing Credit Improvement Act 28Ds, 2Is, 10Rs 50 percent increase 95Ds, 81Rs CANTWELL HATCH Incomeaveraging + about 20 other provisions Minimum 4 percent rate NEAL CURBELO

81Rs CANTWELL HATCH Incomeaveraging + about 20 other

17 More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/ Ds, 2Is, 10Rs 50 percent increase 95Ds, 81Rs CANTWELL HATCH Incomeaveraging + about 20 other provisions 77,700 Minimum 4 percent rate 81,700 NEAL CURBELO

18 Possible Legislative AHCIA Vehicles 1 2 Tax Reform 2.0 (education tax reform and retirement tax reform) Yearend tax extenders legislation 3 4 Tax corrections FY 2019 omnibus legislation

19 A new community development tool: OPPORTUNITY ZONES

20 Taxpayers defer capital gains (& more) for making timely investments in Qualified Opportunity Funds (QOFs) which invest in Qualified Opportunity Zone Business/ Business Property

21 3 Tax Incentive Benefits Gain Deferral Partial forgiveness Forgiveness of additional gains

22 Opportunity Zone Resource Center

23 Gulf Area Opportunity Zones

24 New Orleans Opportunity Zones

25 Community Reinvestment Act

CRA 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

26 CRA 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 metricbased 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.

27 HUD Budget

28 HUD Budget* Note: amounts in millions FY17 Enacted FY18 Enacted President s FY19 Request House FY2019 Bill Senate FY2019 Bill % Change FY18 FY17 % Change FY19 Req. FY18 Housing Choice Vouchers $20,292 $22,015 $20,550 $22,476 $22, % 6.7% ProjectBased Section 8 $10,816 $11,515 $11,047 $11,747 $11, % 3.2% Public Housing Operating Fund $4,400 $4,550 $3,279 $4,550 $4, % 27.9% Public Housing Capital Fund $1,942 $2,750 $0 $2,750 $2, % 100% Section 202 $502 $678 $601 $678 $ % 11.4% Section 811 $146 $230 $140 $154 $ % 39.0% HOPWA $356 $375 $330 $393 $ % 12.0% CDBG $3,000 $3,235 $0 $3,300 $3, % 100% HOME $950 $1,362 $0 $1,200 $1, % 100% Homeless Assistance $2,383 $2,513 $2,383 $2,546 $2, % 5.2% Choice Neighborhood Initiative $138 $150 $137 $150 $ % 191.3% Overall (gross) $48,055 $52,748 $41,240 $53,188 $54, % 21.8% *Currently operating under a Continuing Resolution through December 7th

29 Housing Trust Fund and Capital Magnet Fund

30 Housing Trust Fund and Capital Magnet Fund Allocations $300,000,000 $250,000,000 $219,168,374 $266,775,403 Housing Trust Fund $200,000,000 $173,591,160 $150,000,000 $100,000,000 $91,472,163 $120,043,656 $142,000,000 Capital Magnet Fund $50,000,000 $ Was proposed to be rescinded, Senate rejected

31 Housing Trust Fund Update: Top 20 State Allocations of % Change % Change California New York Texas Florida Illinois Pennsylvania New Jersey Ohio Michigan North Carolina $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 $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, % +50% +39% +36% +37% +32% +38% +27% +24% +32% Massachusetts Georgia Washington Virginia Wisconsin Arizona Missouri Indiana Tennessee Oregon Louisiana $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 $3,000,000 $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 $3,068, % +29% +26% +22% +18% +21% +18% +17% +17% +16% +2.3%

32 Congressional Changes

33 Current House Ways and Means Committee Roster DEMOCRATS Richard Neal, MA, Ranking Member Sander Levin, MI Brian Higgins, NY John Lewis, GA Terri Sewell, AL Lloyd Doggett, TX Suzan DelBene, WA Mike Thompson, CA Judy Chu, CA John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA REPUBLICANS 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 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

34 Current House Ways and Means Committee Roster RETIRING DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Kevin Brady, TX, Chairman 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 Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA 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 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

35 Current House Ways and Means Committee Roster RUNNING FOR ANOTHER OFFICE DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Kevin Brady, TX, Chairman 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 Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA 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 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

36 Current House Ways and Means Committee Roster LOST PRIMARY DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Kevin Brady, TX, Chairman 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 Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA 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 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

37 Current House Ways and Means Committee Roster COMPETITIVE RACES DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Kevin Brady, TX, Chairman 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 Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA 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 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

38 Current House Ways and Means Committee Roster COSPONSORS OF H.R (CURBELO/NEAL BILL) DEMOCRATS REPUBLICANS Richard Neal, MA, Ranking Member Kevin Brady, TX, Chairman 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 Brian Higgins, NY Terri Sewell, AL Suzan DelBene, WA Judy Chu, CA 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 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

39 Current Senate Finance Committee Roster DEMOCRATS Ron Wyden, OR, Ranking Member Debbie Stabenow, MI Sherrod Brown, OH Maria Cantwell, WA Michael Bennet, CO Bill Nelson, FL Bob Casey, PA Bob Menendez, NJ Mark Warner, VA Tom Carper, DE Claire McCaskill, MO Ben Cardin, MD Sheldon Whitehouse, RI REPUBLICANS 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, SC Bill Cassidy, LA

40 Current Senate Finance Committee Roster RETIRING DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Orrin Hatch, UT, Chairman Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO Sheldon Whitehouse, RI 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, SC Bill Cassidy, LA

41 Current Senate Finance Committee Roster COMPETITIVE RACES DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Orrin Hatch, UT, Chairman Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO Sheldon Whitehouse, RI 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, SC Bill Cassidy, LA

42 Current Senate Finance Committee Roster UP FOR ELECTION DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Orrin Hatch, UT, Chairman Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL* Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO* Sheldon Whitehouse, RI 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, SC Bill Cassidy, LA

43 Current Senate Finance Committee Roster COSPONSORS OF S. 548 (CANTWELL/HATCH BILL) DEMOCRATS REPUBLICANS Ron Wyden, OR, Ranking Member Orrin Hatch, UT, Chairman Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL* Bob Menendez, NJ Tom Carper, DE Ben Cardin, MD Sherrod Brown, OH Michael Bennet, CO Bob Casey, PA Mark Warner, VA Claire McCaskill, MO* Sheldon Whitehouse, RI 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, SC Bill Cassidy, LA

44 Advocacy Resources

47 Washington Report PANELISTS Michael Novogradac Novogradac & Company Michael Gaber WNC & Associates, Inc. Shannon Ross Housing Partnership Network Orlando Cabrera Arnall Golden Gregory

WASHINGTON REPORT. Michael Novogradac Novogradac & Company Merrill Hoopengardner National Trust Community Investment Corp.

WASHINGTON REPORT. Michael Novogradac Novogradac & Company Merrill Hoopengardner National Trust Community Investment Corp. Washington Report PANELISTS National Trust Community Investment Corp. Akin Gump Strauss Hauer & Feld LLP Agenda Level of Suport for the NMTC? Tax Reform Impact? Reintroduce NMTC Bill? CDFI Fund How Affected