THE BUZZ > > NEWS
IRS Proposes Utility
Allowance Options
AFFORDABLE HOUSING FINANCE • SEPTEMBER 2007
Owners of low-income housing tax credit (LIHTC) properties
would have new options for estimating tenant utility
costs under a set of proposed regulations being weighed by the
Internal Revenue Service (IRS).
The long-awaited proposal comes after the IRS received
comments from organizations representing owners, developers,
tenants, nonprofit housing groups, housing credit agencies,
and others, stating that the existing methods often result
in flawed information being used for rent adjustments.
If utilities are paid by a tenant, a utility allowance must be
built into the rent, meaning that an owner must deduct the
estimated utility costs when establishing the rent that is
charged to a tenant. The methods used for calculating the figures,
however, tend to overestimate them. This could mean
reduced rents to owners, which could ultimately hurt the
financial feasibility of a project, said industry groups.
Owners say that the public housing authority (PHA) utility
schedules that are often used do not reflect the proper
usage of utilities for LIHTC units. This is because the PHA
schedules are designed for Sec. 8 properties, which are older
buildings with higher utility costs. LIHTC properties tend to
be newer. Also, property owners are often unable to obtain
local utility estimates due to a lack of data or an unwillingness
on the part of the utility companies to provide information.
The IRS proposal would give property owners new
options in estimating utility costs, including using estimates
from LIHTC allocating agencies. Owners could also calculate
utility allowances using the Department of Housing and
Urban Development’s new utility modeling program.
HANO Settles Lawsuit
The Greater New Orleans Fair Housing Action Center
and tenant Dasha Corner settled a lawsuit in July that claimed
that the Housing Authority of New Orleans (HANO) and HRI
Properties allowed HANO employees and other unqualified
people to live in 63 units for about a year after Hurricane
Katrina at a rate designed solely for low-income residents.
Corner claimed she was approved for a two-bedroom
unit at River Garden Apartments, a HOPE VI development.
The property formerly was the site of the St. Thomas housing
complex, which was demolished in 2000 and redeveloped as
River Garden Apartments.
U.S. District Court Judge Peter Beer ordered that HANO
and HRI Properties give preference to former St. Thomas residents
at River Garden Apartments and detailed a rigorous
application process. HANO and HRI deny any wrongdoing.
At press time, HRI was seeking to force HANO to pay court
costs.
Foreclosure Prevention
Campaign Launched
Neighborworks America and the Ad Council joined forces to
launch a public awareness campaign
aimed at preventing home foreclosures.
Television and radio public service
announcements began airing in July,
with print and Internet spots following.
The campaign urges homeowners
in financial trouble to call (888) 995-
HOPE. The Homeowner’s HOPE hotline,
a counseling service provided by
the Homeownership Preservation
Foundation, is the cornerstone of a
foreclosure prevention effort involving
many of the country’s largest mortgage
companies.
The foundation recently reported
receiving about 750 calls a day.
“Homeowners are facing foreclosure at
record rates,” said Colleen Hernandez,
foundation president and executive
director. “This issue reaches into every
social and economic demographic out
there, and homeowners facing delinquency
need to remember that they’re
not alone.”
The hotline received 30,000 calls
in the second quarter of 2007, double
the amount of calls received in the first
quarter.
Employers Feel the Lack of Affordable Housing
A Shortage of affordable housing often means
that workers have to commute longer distances to get to work.
This is a concern for the business community, especially larger
employers, according to survey results released by the Urban
Land Institute.
The survey was taken to gauge perceptions
by employers and commuters
regarding the impact of long distances
between housing and jobs on business
operations and workers’ quality of life.
More than 300 firms from across the
nation responded. The survey polled
employers from three groups: those with
fewer than 50 employees, those with 50 to
100 employees, and those with more than
100 employees. The largest companies
consistently reported the greatest awareness
of problems resulting from long commutes
and the lack of affordable housing, including high
turnover.
The survey found that:
55 percent of the firms with 100-plus employees reported
a lack of affordable housing near their location.
67 percent of the larger companies that acknowledged a
lack of affordable housing believe that it is
having a negative impact on their ability to
retain qualified entry- and mid-level
employees.
58 percent of the larger companies
reported having lost employees at least in
part due to long commutes.
69 percent of the larger companies
believe a long commute time increases
employee stress; 63 percent believe it triggers
negative emotions; 48 percent said it
causes more absenteeism; and 46 percent
said it contributes to employee turnover.
36 percent of the larger companies
believe it is important to be actively involved in providing
employee access to affordable housing.
McKinney Act
Turns 20
Advocates for the homeless marked
the 20th anniversary of the Stewart B.
McKinney Homeless Assistance Act in
July.
The act, which was later renamed the
McKinney-Vento Homeless Assistance
Act in honor of the late Rep. Bruce Vento
(D-Minn.), was intended to be the first
step in addressing homelessness. Twenty
years later, it remains the only major coordinated
federal response to the problem,
according to the National Law Center on
Homelessness & Poverty.
Advocates passed out bittersweet
chocolate bars to members of Congress to
mark the anniversary as well as call for
continued support. The House of
Representatives passed a resolution recognizing
the act in July.
The Department of Housing and
Urban Development reported that
McKinney-Vento programs administered
by the department this year will award
about $1.5 billion to support local housing
and service programs. |
