NAHMA Presents: Key Federal Legislative and Regulatory Issues Impacting Affordable Multifamily Housing

NAHMA Presents: Key Federal Legislative and Regulatory Issues Impacting Affordable Multifamily Housing June 15-18, 2016 Moscone Convention Center San Francisco Kris Cook, CAE, Executive Director, NAHMA June 16, 2016

New Federal Budget Agreement On 10/30/15, Congress passed a two-year budget agreement for FYs 2016 and 2017 Provides an additional $80 billion in funding over the next 2 years ($50b for FY16 and $30b for FY17) Split evenly between discretionary and defense programs Suspends federal borrowing cap until 3/16/17 Provides relief from spending caps previously set by the Budget Control Act of 2011

FY 2016 Omnibus Passed 12/18/15 Consolidated Appropriations Act of 2016 was passed Omnibus bill combining the 12 must-pass appropriations bills into one Bipartisan Budget Act of 2015 (passed 10/30/15) gave appropriators flexibility to pass the omnibus

FY 2016 Omnibus HUD Omnibus contains $10.407 billion for PBS8 contract renewals Congress determined this will be sufficient to fund all contracts for a full 12-months beginning 1/1/16 It does not restore vouchers lost from sequestration 100% contract renewal is achieved by $17,681 B No cuts to HOME, Sec. 202 & 811, or CDBG

Footnote from FY 2015 Omnibus - HUD During FY15, all PBS8 contracts shifted to a calendar year funding model PBS8 funding was reduced as HUD aligned all contracts to be funded on 1/1/16 ($9.730 billion) This reduction was contingent on an increase in FY 2016 ($10.407 billion)

FY 2016 Omnibus RD Omnibus provides $1.389 billion for the Section 521 RA program $301 million above FY 2015 and $211 million above the Administration s request Addresses many of NAHMA s concerns for RA Controversial non-renewal language has been removed Increased funding expected to further help RD in compensating owners Also provides an increase for the Multifamily Revitalization Program and Rural Housing Vouchers

Budget Request FY 2017 On 2/9/16, the Obama Administration issued its FY 2017 budget request to Congress 8 th budget overall and Obama s last as president Budget requests do not become law and do not need Congressional approval Serve as a framework for Congress to compare and complete its own budget For HUD, the budget requests a $1.9 billion increase over the FY 2016 enacted level for a total of $48.9 billion

As of 5/25/16: FY 2017 Appropriations House T-HUD bill has passed its Appropriations Committee but not the entire chamber House Agriculture bill has passed its Appropriations Committee but not the entire chamber Senate T-HUD bill has been passed by the entire chamber and is ready for conference when the House passes its bill Senate Agriculture bill has passed its Appropriations Committee but not the entire chamber

FY 2017 Appropriations HUD (Figures in million) FY 2017 Senate Bill FY 2017 House Bill FY 2016 Enacted Tenant-Based Rental Assistance $20,431 $20,188 $19,628 Contract Renewals [18,335] [18,311] [17,682] Project-Based Rental Assistance $10,901 $10,901 $10,622 Contract Renewals [10,501] [10,501] [10,407] Contract Administrators [235] [235] [215] Housing for the Elderly (Sec. 202) $505 $505 $432 Service Coordinators [75] [75] [77] Supportive Housing for Persons with Disabilities (Sec. 811) $154 $154 $150 Community Development Grant $3,000 $3,060 $3,060 HOME $950 $950 $950

FY 2017 Appropriations - HUD Under the Senate bill, the number of units that can convert under the RAD program is increased from 185k to 250k Sunset date is removed Language is included to protect a tenants right to continue to live in their apartment unit after a RAD conversion Section 202 PRAC properties may convert to PBRA through RAD $4 million is provided in the bill to assist properties with this conversion

Amendments accepted: FY 2017 Appropriations HUD (Senate) Senators Bill Nelson (R-FL) and Marco Rubio (R-FL) introduced amendments regarding physical inspections of HUD-assisted properties, which would: Require HUD to take enforcement action on properties that receive insufficient UPCS scores Shorten the time given to a property owner to respond to a violation of a contract as well as the time to develop an enforcement plan Require HUD to prepare a report analyzing the effectiveness of Real Estate Assessment Center (REAC) physical inspections Dean Heller (R-NV) introduced an amendment to prohibit housing assistance to individuals convicted of certain criminal offenses, including murder, aggravated sexual assault, and child pornography

FY 2017 Appropriations HUD (Senate) Kelly Ayotte (R-NH) amendment would prohibit the Continuum of Care homeless assistance program unless HUD allows the program to be used for "zero-tolerance" recovery housing HUD currently allows Continuum of Care funding to be used for recovery housing The Senate T-HUD bill was passed on 5/20/16 with a recorded vote of 89-9 House Appropriations Committee passed its T-HUD bill on 5/24/16 Full chamber vote to happen in June NAHMA supports the funding increases that have been made to nearly all housing programs in T-HUD bills

FY 2017 Appropriations - RD On 4/12/16, the House Agriculture Appropriations Subcommittee passed its bill for FY 2017: Program ($ in millions) FY 2017 House Bill FY 2017 Senate Bill FY 2016 Enacted Section 521 Rental Assistance $1,405 $1,405 $1,389 Section 515 $35.0 $40.0 $28.4 Multifamily Revitalization $40 $40 $37 Rural Housing Vouchers [$18.0] [$18.0] [$15.0] Section 538 Loan Level $200 $230 $150

FY 2017 Appropriations - RD Nearly all of RD s affordable housing programs would receive an increase under House bill Does not contain non-renewal language Authority to recapture RA from properties that received too much was included NAHMA will advocate for these funding figures and other strategies that will preserve rural properties

Budget Request FY 2017 LIHTC LIHTC Administration s budget proposals would: Allow conversion of private activity bond volume cap into LIHTCs Encourage mixed-income occupancy by allowing LIHTC-supported projects to elect a criterion Employ a restriction on average income Add furthering fair housing and preservation of publicly assisted affordable housing to allocation criteria Remove the QCT population cap Implement a requirement that LIHTC-supported housing protect victims of domestic abuse

Housing Trust Fund 2016-2017 $174 million has been provided for FY16 and $136 million is estimated for FY17 Background: On 12/11/14, the FHFA directed the GSEs to begin allocating funds to the Housing Trust Fund (HTF), which was established in the Housing and Economic Recovery Act (HERA) of 2008 Grants will be directed to states for development and preservation of multifamily properties Contributions were suspended when the GSEs were placed into conservatorship in Sept. 2008 On 1/30/15, HUD issued an interim rule which establishes the regulations that govern HTF During 2015, states began developing their HTF Allocation Plans On May 4, HUD announced HTF allocations.

Housing Trust Fund 2016-2017 HUD recently issued guidance for HTF grantees on the submission requirements for allocation plans After HUD determines the HTF formula allocation amounts, it will announce the availability of the allocations to States in a Federal Register notice A State may choose to be the HTF grantee to receive and administer its grant or may designate a qualified instrumentality of the State, such as: a State housing finance agency; housing and community development entity; or tribally designated housing entity

Tax Extenders Bill for 2016 Attached to the FY 2016 Omnibus was a tax extenders bill, Protecting Americans from Tax Hikes Act of 2015 (PATH) Tax extender bills continue tax relief provisions that expired at the end of the previous fiscal year In a major victory for the LIHTC, the PATH Act makes permanent the 9% minimum credit rate for the 70% present value credit Eliminates floating rate of credits used for construction of new units Did not make permanent the minimum credit rate of 4% Typically used in rehabilitation of housing

Affordable Housing Credit Improvement Act Introduced by Sen. Maria Cantwell (D-WA) and Sen. Orrin Hatch (R-UT) in mid-may 2016. The bill would: Expand Housing Credit authority by 50 percent (ten percent per year for next five years), to expand development by up to 400,000 units over the next decade Provide for a minimum 4 percent Housing Credit rate Permit income averaging in Housing Credit properties

Tax Reform in the 114 th Congress On 1/15/15, the Senate Finance Committee detailed its plan to make progress on tax reform The Committee will launch 5 bipartisan Tax Working Groups to spur comprehensive tax reform in these topic areas: 1) Individual Income Tax; 2) Business Income Tax; 3) Savings & Investment; 4) International Tax; and 5) Community Development & Infrastructure

GAO Report on LIHTC On 7/23/15, the Government Accountability Office (GAO) issued a report on IRS oversight of LIHTC Critical of the IRS oversight of the 56 state housing finance agencies (HFA) The IRS has conducted only 7 audits of HFAs since 1986 The IRS has not set goals or assessed performance for the program; database is not complete and reliable for assessing compliance Recommended that HUD and the IRS share joint administrative oversight Two additional GAO reports will be released on state administration of the LIHTC and syndicators/ development costs

Transportation Bill Amendment The Fixing America s Surface Transportation Act (FAST) was signed into law on 12/4/15 Major transportation bill that includes an amendment with affordable housing initiatives The housing amendment included: H.R. 1047, the Housing Assistance Efficiency Act - allows a private nonprofit to administer permanent rental assistance through the Continuum of Care (COC) Program COC is designed to provide funding for efforts by nonprofit providers, and State and local governments to quickly rehouse homeless individuals

Transportation Bill Amendment H.R. 2997, the Private Investment in Housing Act - provides HUD the authority to establish a pay-for-success demonstration for performance-based agreements that result in the reduction in energy or water costs H.R. 233, the Tenant Income Verification Relief Act - allows tenants on a fixed income to have their income certified and/or verified once every three years rather than annually H.R. 2482, the Preservation Enhancement and Savings Opportunity Act - amends the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIPRHA) so owners (including nonprofits) may access remaining profits after paying all operating expenses and maintenance costs

Housing Opportunity through Modernization Act Introduced by Rep. Luetkemeyer (R-MO) on 10/7/15 The bill (H.R. 3700) combines numerous rental assistance bills However, some of the provisions proposed in H.R. 3700 were included in the FAST Act amendment Still, H.R. 3700 seeks to: Increase the maximum contract term for project-based vouchers from 15 to 20 years Streamline physical inspection protocols Authorize HUD to collect utility data Authorize USDA s Multifamily Housing Revitalization Program and provides authority for USDA to delegate guaranteed rural housing loan approval to preferred lenders

Housing Opportunity through Modernization Act On 2/2/16, the House passed H.R. 3700 with unprecedented bipartisan vote of 427-0 Major victory for affordable housing Amendments attached to H.R. 3700 include: Families would be permitted to deduct all reasonable childcare expenses Housing providers could report on-time rental payment data for their tenants to credit reporting agencies Annual report on interagency strategies to strengthen family economic empowerment would be required H.R. 3700 must now pass Senate Banking Committee

Rural Housing Preservation Act Introduced on 4/12/16 by Rep. Ann Kuster (D-NH) and Sen. Jeanne Shaheen (D-NH) Would require that a property financed with a Sec. 515 loan, whether outstanding or paid, must lease an available unit to a family or individual with a Rural Housing Voucher (RHV) Seeks to decouple the rental assistance from maturing mortgages -- agreement must be made no later than 24 months before maturation and subject to a term of 20 years Makes the Multifamily Housing Revitalization Program permanent Establishes uniform requirements for transfer of a 515 to any entity, including a nonprofit organization, that seek to acquire a property LIHTC

Ending Homelessness Act On 3/24/16, Rep. Maxine Waters (D-CA) introduced the Ending Homelessness Act of 2016 (H.R.4888) Would provide $13.27 billion in emergency funding over the next five years to combat homelessness $5 billion over five years for McKinney-Vento Homeless Assistance Grants $2.5 billion over five years for new Special Purpose Section 8 Housing Choice Vouchers estimated to provide an additional 295,000 to 300,000 housing vouchers, and would give preference to those who are homeless or at risk of becoming homeless $1.05 billion in mandatory annual appropriations for the National Housing Trust Fund H.R. 4888 will be referred to the House Financial Services Committee, of which Rep. Waters is the Ranking Member

The Fair Chance at Housing Act On 4/27/16, Rep. Waters introduced legislation which seeks to reform eviction and screening policies for criminal backgrounds Standards of evidence for eviction would be revised Would require an individualized review of the circumstances before denying an applicant HUD would be required to issue guidance for PHAs and owners regarding reviews Applicants may submit mitigating evidence, including consideration of the severity and frequency of the offense(s) Owners would be required to conduct an individualized review of all circumstances when considering the eviction of a tenant based on drug use Household must be given the option to remove the culpable member rather than subjecting the entire household to eviction

Preserving HUD s Multifamily Field Offices Act On 5/11/16, Rep. Waters and five CA Democrats introduced a bill to preserve asset management staff in each HUD Multifamily field office The bill would require HUD to backfill all asset management positions in every field office - appropriations would be provided to accomplish this Asset Managers may not be relocated to hub offices Waters successfully introduced an amendment to the FY 2015 HUD funding bill that required HUD to maintain asset management staff in all existing field offices This new bill is released in response to concerns that HUD is not replacing asset management staff vacancies in most field offices HUD is hiring new asset management staff in the new hub offices

Grassroots Advocacy How members can get involved: Contact your Congressional Representatives by: Calling or writing letters to your Representatives Visiting your Representatives in their local offices or their Washington, DC offices Inviting your Representatives and Senators to visit your properties Visit NAHMA Websites: NAHMA grassroots webpage (http://www.nahma.org/content/grassroots.html);

Grassroots Advocacy NAHMA provides members with an online Grassroots Advocacy Toolkit The toolkit delivers numerous documents that outline the legislative process and assist members in conducting grassroots advocacy There are toolkits items specifically designed for AHMA members and others tailored for executive members These toolkits are designed to help members capitalize on their strengths for a more effective grassroots advocacy campaign

The toolkits include: Grassroots Advocacy FAQs on grassroots advocacy Fact sheets on the legislative process Information on 501(c)3 organizations and lobbying Video testimonials from AHMA and executive NAHMA members on their advocacy experiences NAHMA Maps an online program (also accessible on mobile devices) that allows a user to search for the number and types of affordable housing properties in an entire state or district Search features also allow you to easily find your Congressional Representatives and their contact information

Thank You Kris Cook, CAE Executive Director, NAHMA Kris.Cook@nahma.org June 15-18, 2016 Moscone Convention Center San Francisco

HUD Multifamily Fiscal Year 16 Policy Priorities Tom Azumbrado Director HUD Multifamily West Region

MFH DAS 2016 Policy Priorities Building a stronger HUD Helping families and individuals secure quality housing Strengthening all communities in this Century of Cities Leveling the playing field for Americans from all walks of life Ending homelessness Addressing climate change and natural disasters The Way We Work Affordable Housing Finance Rental Assistance Preservation Supportive Housing / Opportunity Energy/Water Efficiency Multifamily for Tomorrow Troubled Asset Oversight Improvement Plan Delegations of Authority Continuous Improvement Asset Management Project System (AMPS) National Standard Work Stakeholder Liaison Model Multifamily Insurance Premiums (MIP) Multifamily Accelerated Processing (MAP) Guide Small Buildings Risk Share LIHTC Pilot Expansion Counterparty Ratings Delegation to Lenders: Transfer of Physical Assets 2530/Active Partners Performance System (APPS) Federal Financing Bank (FFB) for Housing Finance Agencies (HFAs) Rental Assistance Demonstration (RAD) Expansion PBCA Contracting Transfers of Project Based Rental Assistance Budget Authority 4350.1 Handbook Rent Comparability Study (RCS) Changes Section 8 Renewal Guide Enforcement on Failing Assets Family Self Sufficiency (FSS) for Project Based Rental Assistance (PBRA) Seniors and Services Demo Choice Neighborhoods Planning and Action NOFA VISTA Volunteer Expansion Broadband Final Rule and ConnectHome Demo Strengthening the Service Coordinator Program Equal Access Notice Homeless Preference Toolkit Energy Use Benchmarking Capital Needs Assessment (CNA) E-tool Property Assessed Clean Energy Pay for Success Better Buildings Challenge (BBC) Participation 35

MFT: Multifamily for Tomorrow Transformation

Multifamily Transformation (MFT) has four components Transform the way we work 1 2 3 Workload sharing Underwriter model and risk-based processing in Production Account Executive and Troubled Specialist model in Asset Management Streamline our structure 4 Streamlined organizational structures in HQ and field 37

MFH s historic field model had 17 hubs and 50+ offices 38

Through MFT, we are moving to 5 streamlined Regions 39

Each Region will have 1 Regional Center and 1 or 2 Satellite offices. Asset Management staff have the option to remain in existing locations Wave/ Region: 1 2 3 4 5 Southwest Midwest Southeast Northeast West Regional Center: Fort Worth Chicago Atlanta New York San Francisco Satellite Office(s): Kansas City Minneapolis Detroit Jacksonville Boston Baltimore Denver Asset Management: Albuquerque Des Moines Houston Little Rock New Orleans Oklahoma City Omaha San Antonio St. Louis Tulsa Cleveland Columbus Indianapolis Milwaukee Birmingham Columbia Greensboro Jackson Knoxville Louisville Miami Nashville San Juan Buffalo Charleston Hartford Manchester Newark New York Philadelphia Pittsburgh Providence Richmond Honolulu Las Vegas Los Angeles Phoenix Seattle Washington DONE DONE FALL 15 SPRING 16 SUMMER 16 40

Resources Online at: National MFT Website http://portal.hud.gov/hudportal/hud?src=/transforming_hud/m ultifamily_transformation 41

Overview of Rental Assistance Demonstration (RAD)

RAD Key Goals RAD allows selected Public Housing, and at-risk assisted Multifamily legacy programs to convert their form of assistance to long-term Section 8 Housing Assistance Payment (HAP) contracts Key RAD Goals Build on the proven Section 8 platform Leverage private capital to make needed repairs and preserve affordable housing units Offer residents greater choice and mobility 43

RAD Conversion Eligibility Public Housing Mod Rehab (including SRO) Rent Supp & RAP 1 st Component Competitive, 185,000 Unit Cap 2 nd Component Non-Competitive, No-Cap PBRA PBV PBRA PBV 44

PHAs Are Using RAD To Complete repairs ranging from moderate to substantial rehabilitation Demolish and Fully Replace distressed properties Thin densities and mix-incomes Move project-based assistance to opportunity neighborhoods Streamline administration of HUD programs 45

Status of RAD 1 st Component (Public Housing) 30,115 units have completed conversion $2.1 Billion new investment for rehabilitation/construction Initial awards made up to the 185,000 unit statutory cap Waiting list of 8,000 units has formed 2 nd Component (Rent Supp, RAP, Mod Rehab) 18,000 units preserved 9,500 units in process of conversion 46

RAD Waitlist and Prioritization The Bad News: RAD unit cap is limited to 185,000. (We are at the cap) HUD Waitlist at +8,000 units. Current waitlist is available at HUD.gov/RAD The Good News: President s Budget for FY 2017 asked Congress to lift the cap. HUD is making replacement awards as current CHAPs are withdrawn or revoked New applications are prioritized by level of investment Prioritization is described in Revision 2 of the RAD Notice (PIH Notice 2012-32 Rev 2)

Percentage of Current PH Units by HUD Region that have Applied for RAD 18% 7% 3% 15% 6% 7% 21% 16% 22% 21% 48 Note: This data reflects the percentage of PH units in each HUD region that have applied for RAD; note that units are considered public housing until the RAD closing is complete.

RAD Participant Profile Top 10 Applicants by PHA 1. Chicago, IL 10,935 units 2. El Paso, TX 6,100 units 3. Nashville, TN - 5,384 units 4. Birmingham, AL - 5,015 units 5. Baltimore, MD 4,583 units 6. San Francisco, CA 4,575 units 7. Philadelphia, PA - 3,850 units 8. Charlotte, NC - 3,424 units 9. Mobile, AL 3,410 units 10. Tampa, FL 3,065 units 49

Want to learn MORE? RAD Notice, application materials, case studies, and additional resources can be found at www.hud.gov/rad Email questions to rad@hud.gov 51

Resumption of Management and Occupancy Reviews (MORs) by PBCAs

PBCA Update: Resumption of MORs All PBCAs resuming authority to do MORs as of May 2016. Total number of MORs completed this year depends on budget and PBCA capacity. HUD has been reaching out to PBCA s to identify which properties to prioritize. 53

Notice H 2015-10: New Guidance on the Use of Arrest Records in Housing Decisions

Notice H 2015-10: Guidance for Public Housing Agencies (PHAs) and Owners of Federally-Assisted Housing on Excluding the Use of Arrest Records in Housing Decisions Arrest records may not be the basis for denying admission, terminating assistance or evicting residents. One Strike Policies HUD does not require Owners to deny admission to anyone with a criminal record or require automatic eviction for criminal activity; Owners can exercise discretion. Adverse Decisions Affecting Tenancy must be supported by a determination that the individual engaged in such activity; the fact that an individual was arrested is not evidence that he or she has engaged in criminal activity. See the notice for best practices and peer examples. Notice available at: https://portal.hud.gov/hudportal/documents/huddoc?id=15-10hsgn.pdf

Notice H 2013-21: Homeless Preference

Notice H 2013-21: Homeless Preference/ Opening Doors Part of Federal Opening Doors initiative to help communities end homelessness by offering homeless admissions preference. Owners encouraged to connect with local Continuum of Care to access additional resources for resident services. Toolkit recently released. https://www.hudexchange.info/resource/4810/opening-doorsthrough-multifamily-housing-toolkit-for-implementing-a-homelesspreference/ Notice: http://portal.hud.gov/hudportal/documents/huddoc?id=13-21hsgn.pdf 57

Utility Benchmarking

Notice H 2015-04: Utility Analysis Methodology Issued on June 22, 2015; Revised September 9 th, 2015. Provides instruction to owners/agents for completing the annual utility analysis Builds on the June 2011 memorandum titled Clarification Utility Allowance Regulations, issued by former DAS Carol Galante Streamlines the methodology for utility analyses as part of a larger effort to make energy and water conservation a priority at all Multifamily properties http://portal.hud.gov/hudportal/documents/huddoc?id=15-04hsgn.pdf 59

Energy Benchmarking with EPA s Energy Star Portfolio Manager HUD encourages all multifamily properties to undertake utility benchmarking In the near future, HUD expects to introduce benchmarking requirements for owners completing certain transactions with HUD. O/As are encouraged to use ENERGY STAR Portfolio Manager, a nocost, secure online resource to benchmark, track, manage energy and water consumption at the property and portfolio level. Owners and lenders may use the Portfolio Manager tool to prepare baselines, and identify ENERGY STAR 1-100 scores, Energy Use Intensity (EUI) values, and other metrics. Sign up at: https://portfoliomanager.energystar.gov/pm/signup and submit your account number to HUD! 60

Questions? 61

Thank You Tom Azumbrado Director, HUD Multifamily West Region Thomas.W.Azumbrado@hud.gov June 15-18, 2016 Moscone Convention Center San Francisco

NAHMA Presents: Key Federal Legislative and Regulatory Issues Impacting Affordable Multifamily Housing June 15-18, 2016 Moscone Convention Center San Francisco Greg Brown, Senior Vice President of Government Affairs, NAA June 16, 2016

June 15-18, 2016 Moscone Convention Center San Francisco In the Trenches State/Local Responses to Affordability Challenges

Outline I. Contrasting Perspectives: Federal, State and Local II. By the Numbers: Local Affordability Challenges III. The Toolbox: Leading Local Responses IV. For Our Part: The View from Owner/Operators V. Conclusion

Contrasting Perspectives Federal, State and Local

By the Numbers Local Affordability Challenges

The Toolbox Leading Local Responses

For Our Part The View from Owner/Operators

Conclusion

Thank You Greg Brown Senior Vice President of Government Affairs, NAA 703.797.0615 GBrown@naahq.org June 15-18, 2016 Moscone Convention Center San Francisco