Summary: October 2, 2018

Transcription

1 Summary: Octber 2, 2018 In this week s Tax Credit Tuesday Pdcast, Michael J. Nvgradac, CPA, talks abut a cntinuing reslutin signed last week and the latest n Tax Refrm 2.0 legislatin. He als ges ver what was discussed last week at the Nvgradac 2018 Histric Tax Credit Cnference in Nashville. He clses with sme significant updates n cspnsrs fr imprtant legislatin, as well as several federal bills intrduced last week. Summaries f each tpic: 1. General News (01:53-10:00) Pages 2 4 a. Cntinuing Reslutin (01:53-02:44) b. Tax Refrm 2.0 (02:45-04:06) c. Husing, OZ Legislatin (04:07-07:34) d. HTC Cnference (07:35-10:00) 2. Other News (10:01-12:00) Page 5 3. Related Resurces Page 6 Editrial material in this transcript is fr infrmatinal purpses nly and shuld nt be cnstrued therwise. Advice and interpretatin regarding tax credits r any ther material cvered in this transcript can nly be btained frm yur tax adviser. Nvgradac & Cmpany LLP, All rights reserved. Reprductin f this publicatin in whle r in part in any frm withut written permissin frm the publisher is prhibited by law. Fr reprint infrmatin, please send an t cpas@nvc.cm.

2 Summary: Octber 2, 2018 General News Cntinuing Reslutin Nw in general news, last week President Trump signed a spending package that included a cntinuing reslutin t fund the gvernment until Dec. 7. S what des this cntinuing reslutin t Dec. 7 mean? Well first ff, several departments and agencies wuld have experienced a shutdwn Oct. 1 which was Mnday if this hadn t happened. Nw I say several departments and agencies wuld have shutdwn, and I dn t say the gvernment wuld have shut dwn, because Cngress has apprved five spending bills that cver varius departments and agencies. Nw unfrtunately, the Department f Transprtatin and Department f Husing and the Department f Husing and Urban Develpment, their spending bills have nt yet passed, s funding fr thse tw departments is part f the cntinuing reslutin. The cntinuing reslutin means that the lame duck sessin f Cngress is ging t have t address spending in early December, r face a partial gvernment shutdwn. Tax Refrm 2.0 Als last week, the Huse f Representatives apprved three bills that make up what is being called Tax Refrm 2.0. Yu may recall this frm prir pdcasts. Nw the highest-prfile prvisins in the legislatin are a permanent extensin f the individual tax cuts that were made in last year s tax refrm legislatin. As yu prbably recall, the reductin in crprate rates, frm 35 percent t 21 percent, was permanent, r at least indefinite. But the individual rates were nly reduced thrugh the year The Tax Refrm 2.0 legislatin nw heads t the Senate, where it s very unlikely that the bills will pass at least nt befre the mid-term electins in Nvember. Nw versins f the educatin and retirement tax refrms cntained in Tax Refrm 2.0, thse culd cnceivably pass, at least in part, during a lame-duck sessin after Nvember s electin. Making the individual rate cuts permanent prbably, r highly likely, isn t amng thse that will pass. Furthermre, I d expect tax crrectins and pssible tax extenders legislatin t be seriusly cnsidered in the lame duck sessin, and such legislatin wuld prvide a vehicle fr tax credit legislatin. As yu ll nt be surprised, I ll keep yu updated n this as we get clser t a lame-duck sessin and f curse during a lame-duck sessin. Husing, OZ Legislatin S let s stay with Cngress fr a few mments lnger here, and talk abut tw significant bills that were intrduced last week. Nw they re mstly symblic, but they re significant because f what they symblize. The first is the American Husing and Ecnmic Mbility Act. This bill was intrduced by Sen. Elizabeth Warren f Massachusetts. Warren s legislatin wuld leverage federal funds t build as many as 3.2 millin new husing units fr lw-incme and middle-class families.

3 Summary: Octber 2, 2018 That ttal includes the requirement f an annual federal investment f $45 billin t the Husing Trust Fund fr 10 years. Nw the Husing Trust Fund, f curse, is fcused n prviding affrdable husing t peple in the lwest incme categries. Warren s bill als includes incentives t encurage lcal gvernments t eliminate land-use restrictins that drive up the csts f husing. Nw the bill wuld strengthen anti-discriminatin laws as well. And the legislatin als wuld expand the number f financial institutins that have t answer t Cmmunity Reinvestment Act regulatins, as well as strengthen penalties fr vilating thse regulatins. Nw this is imprtant legislatin because it shws the cntinuing natinal awareness f affrdable husing plicies. Nw it s als imprtant because f wh spnsred it. Sen. Warren is seen as a natinal leader amng Demcrats and a pssible challenger t President Trump in the 2020 Presidential Electin. Nw ther ptential White Huse aspirants, think Sen. Cry Bker and Sen. Kamala Harris, they ve als intrduced big-ticket, ambitius affrdable husing bills. Nw their leadership n ways t imprve affrdable husing shws that this is an imprtant issue fr Demcrats seeking the presidency. Nw the ther significant legislatin was intrduced by Rep. Mark Meadws, a Republican frm Nrth Carlina. Meadws bill wuld allw the designatin f pprtunity znes every 10 years. Which wuld mean that the pprtunity znes incentive wuld essentially be renewed every decade. Nw the legislatin that riginally created pprtunity znes calls fr the znes t be designated fr a 10-year perid. After 10 years, the znes wuld expire. S unless smething happens, the znes expire in But I d nte, the ability t invest in Opprtunity Funds actually expires earlier. That expires n Dec. 31, Nw this legislatin, the Meadws legislatin, wuld essentially make the incentive an indefinite part f the tax cde, such that every 10 years yu culd bring new designatins, r a state r pssessin culd simply re-nminate existing pprtunity znes if they still met the requirements. Nw this bill s nw ging t g t the Huse Ways and Means Cmmittee, which culd cnsider it in the lame-duck sessin f Cngress, ptentially. Nw the pprtunity znes incentive is new and we are waiting n guidance frm the IRS t help infrm hw it shuld be implemented, but the early reactin frm ptential investrs in cmmunities has been verwhelmingly psitive. And the fact that there is already legislatin t extend pprtunity znes is evidence f that. And as yu mst certainly knw, we at Nvgradac are very aware f the incentive s ptential, as this week s pprtunity znes cnference in New Orleans demnstrates. Our cnference this week has unprecedented interest and sld ut quickly.

4 Summary: Octber 2, 2018 Nw I will keep yu updated n Meadws legislatin in future pdcasts. I ll als prvide a link t bth the pprtunity znes legislatin and Sen. Warren s affrdable husing bill in tday s shw ntes. HTC Cnference Nw let s g t Nashville. Last week I was in Nashville at the Nvgradac 2018 Histric Tax Credit Cnference. I knw many f my listeners were there. It was great seeing yu. But fr thse f yu wh culdn t attend, I wanted t share sme highlights. Our keynte speaker was Sen. Bill Cassidy f Luisiana. Sen. Cassidy is a member f the Senate Finance Cmmittee, the tax writing cmmittee in the Senate, and he was instrumental in helping preserve the histric tax credit (HTC) as part f 2017 tax refrm. Sen. Cassidy, at ur cnference, emphasized the imprtance f advcacy fr the federal HTC. He did say, and I qute, Death and taxes are inevitable. Tax credits are nt. End qute. The senatr said the mst effective advcacy is frm cnstituents t their elected representatives. I shuld mentin that last week, last Friday, was Sen. Cassidy s birthday. We appreciate him spending his birthday mrning with us and sharing his insights n the HTC. Nw sme f the ther highlights frm the cnference include that last year was a recrd year fr HTC investment. Als, ur HTC equity panel discussed hw the investr marketplace cntinues t be rbust, even after the 2017 tax bill tk the HTC frm a ne-year credit t a 60-mnth ratable credit. Nw experts talked abut hw cmpetitin remains tight fr larger HTC transactins and their pricing is expected t creep up. That said, smaller investments, f abut $5 millin r less, will likely see depressed pricing. And that s because smaller deals are smetimes dne by less experienced develpers and cunsel, such that investrs need t build in a price t help underwrite the transactin, and a little but mre n the educatin side. We were hnred t have Brian Geken f the Natinal Park Service and Luis Jacksn f the Tennessee State Histric Preservatin Office n a Q&A panel. They emphasized the imprtance f speaking with yur state histric preservatin ffice early and they said t get expert insight befre attempting t d any wrk n a histric prperty. Nw we appreciate everyne wh attended the cnference in Nashville. And I wanted t nte that a highlight f the cnference fr me persnally, was t be able t present Jhn Leith Tetrault with a lifetime achievement award fr what he s dne fr the cause f histric preservatin. If yu knw Jhn, r even if yu dn t, I encurage yu t reach ut t him and express yur thanks and appreciatin as well.

5 Summary: Octber 2, 2018 Other News In ther news, we have updates n cspnsrs fr a cuple f imprtant federal bills. I want t start with the New Markets Tax Credit Extensin Act f Reps. Sanfrd Bishp f Gergia and Ann Kuster f New Hampshire each became cspnsrs last week. That lifted the ttal fr the Huse bill t 100. That s the mst cspnsrs ever fr NMTC extensin legislatin. There are 45 Republican cspnsrs, which is als the mst ever. Nw cmpanin legislatin in the Senate has 19 cspnsrs, with nine Republicans. Nw the ther legislatin that gained cspnsrs is the Affrdable Husing Credit Imprvement Act f There, fur new cspnsrs were added, bringing the ttal t 174. That s right, 174 members f the Huse. The Senate versin has 40 cspnsrs. Needless t say, that number f cspnsrs shws there s a lt f supprt fr the bill in bth chambers f Cngress. And turning t state credit news, Missuri Gv. Mike Parsn says that the state wn t issue state lw-incme husing tax credits (LIHTCs) until the state tax credit prgram is revamped. And I want t emphasize, he s talking abut the state lw-incme husing tax credit prgram. The federal tax credits will cntinue t be issued r awarded. But Parsn, wh named new members t the husing cmmissin bard, the bard that awards the state credits, said last week that he wn t have the state credits issued. Nw f curse, Missuri didn t award state credits last year when Gv. Eric Greitens said that the credits are inefficient. Greitens, after that, did resigned his psitin and Parsn became gvernr and has been seen as a supprter f the tax credits. But the new gvernr said he wn t have them awarded until the prgram is refrmed. Parsn did call n the state legislature t d just that. S we will keep an eye n this ging frward.

6 Summary: Octber 2, 2018 RELATED RESOURCES Bills Intrduced American Husing and Ecnmic Mbility Act Creating Advancement and Persnal Imprvement in Targeted American Lcalities (CAPITAL) Act f 2018 Upcming Cnferences Nvgradac 2018 Credit and Bnd Financing fr Affrdable Husing Cnference Nvgradac 2018 New Markets Tax Credit Fall Cnference