Washington Report PANELISTS Michael Novogradac Novogradac & Company LLP @Novogradac Michael Gaber WNC & Associates, Inc. Shannon Ross Housing Partnership Network Orlando Cabrera Arnall Golden Gregory
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
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
TAX REFORM POSITIVES SO FAR: Opportunity Zones 12.5% Increase 12.5% Income Averaging HUD Funding Up HUD Income Numbers PAB Usage
Effect of Tax Reform on LIHTC Equity Pricing Affordable housing community had already lost investment and production in 2017
www.novoco.com/blog
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 19,900 232,300 16% 1,261,100 240,000 22,500 262,500 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 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 19,900 232,300 16% 1,261,100 240,000 22,500 262,500 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 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 19,900 232,300 16% 1,261,100 240,000 22,500 262,500 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 Percent LIHTC Allocations $12 $10 $8 2002 $1.75 2008 $2.20 2007 $1.95 HERA 2009 $2.30 2010 $2.10 2017 $2.35 FY18 Omnibus 2018 $2.70 2022 $2.55 2028 $2.85 Billions $6 Per capita credit set at $1.25 $4 $2 ACTUAL PROJECTED $0
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
Income Averaging Blog Post www.novoco.com/blog
More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/2018 28Ds, 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 95Ds, 81Rs CANTWELL HATCH Incomeaveraging Minimum 4 percent rate + about 20 other provisions 55,300 homes NEAL CURBELO
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
More LIHTCs via Affordable Housing Credit Improvement Act As of 10/4/2018 28Ds, 2Is, 10Rs 50 percent increase 95Ds, 81Rs CANTWELL HATCH Incomeaveraging + about 20 other provisions 77,700 Minimum 4 percent rate 81,700 NEAL CURBELO
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
A new community development tool: OPPORTUNITY ZONES
Taxpayers defer capital gains (& more) for making timely investments in Qualified Opportunity Funds (QOFs) which invest in Qualified Opportunity Zone Business/ Business Property
3 Tax Incentive Benefits 1. 2. 3. Gain Deferral Partial forgiveness Forgiveness of additional gains
Opportunity Zone Resource Center www.opportunityzonesresourcecenter.com
Gulf Area Opportunity Zones www.novoco.com/ozmap
New Orleans Opportunity Zones www.novoco.com/ozmap
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 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.
HUD Budget
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 $22,781 8.5% 6.7% ProjectBased Section 8 $10,816 $11,515 $11,047 $11,747 $11,747 6.5% 3.2% Public Housing Operating Fund $4,400 $4,550 $3,279 $4,550 $4,756 3.4% 27.9% Public Housing Capital Fund $1,942 $2,750 $0 $2,750 $2,775 41.6% 100% Section 202 $502 $678 $601 $678 $678 35.0% 11.4% Section 811 $146 $230 $140 $154 $154 57.0% 39.0% HOPWA $356 $375 $330 $393 $375 5.3% 12.0% CDBG $3,000 $3,235 $0 $3,300 $3,300 7.8% 100% HOME $950 $1,362 $0 $1,200 $1,362 43.4% 100% Homeless Assistance $2,383 $2,513 $2,383 $2,546 $2,612 5.5% 5.2% Choice Neighborhood Initiative $138 $150 $137 $150 $100 9.1% 191.3% Overall (gross) $48,055 $52,748 $41,240 $53,188 $54,049 9.8% 21.8% *Currently operating under a Continuing Resolution through December 7th
Housing Trust Fund and Capital Magnet Fund
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 $0 2016 2017 2018 Was proposed to be rescinded, Senate rejected
Housing Trust Fund Update: Top 20 State Allocations of 2018 2017 2018 % Change 2017 2018 % 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 $5,874,191 +58% +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 $3,068,829 +24% +29% +26% +22% +18% +21% +18% +17% +17% +16% +2.3%
Congressional Changes
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
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
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
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
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
Current House Ways and Means Committee Roster COSPONSORS OF H.R. 1661 (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
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
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
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
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
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
Advocacy Resources
www.taxcredithousing.com
Washington Report PANELISTS Michael Novogradac Novogradac & Company LLP @Novogradac Michael Gaber WNC & Associates, Inc. Shannon Ross Housing Partnership Network Orlando Cabrera Arnall Golden Gregory