Affordable housing developers will have plenty of issues to watch in the new year.
Below is an unranked list of six potential game-changing stories to monitor in 2014 selected by AFFORDABLE HOUSING FINANCE, with assistance from several industry leaders.
Contributing their picks on what the industry needs to track in 2014 were R. Lee Harris, president and CEO, Cohen-Esrey Real Estate Services; Bill Kelly Jr., president, Stewards of Affordable Housing for the Future (SAHF); Bob Moss, principal and national director of governmental affairs, CohnReznick; Michael Novogradac, managing partner, Novogradac & Co.; Stephen Wallace, partner and head of the affordable housing practice, Nixon Peabody; and Charles Werhane, president and CEO, Enterprise Community Investment.
Tax reform continues to be the big issue hanging over the industry. Because a tax code rewrite has the potential to eliminate or alter the critical low-income housing tax credit (LIHTC) program, much effort is being paid to educate lawmakers about the housing credit’s value. House Ways and Means Chair Dave Camp (R-Mich.) could release a tax reform mark-up in January. He has been working on the issue with Senate Finance Chair Max Baucus (D-Mont.), but Baucus has been pegged to be the next ambassador to China, which could deliver a blow to tax reform efforts, says CohnReznick’s Moss. Still, a mark-up may be coming soon.
In addition, the industry will need to keep tabs on who takes over leadership of the key committees, including Senate Finance and House Ways and Means.
Community Reinvestment Act Reform
Community Reinvestment Act (CRA) reform is on the horizon. “What effect, if any, will updated CRA guidance have on banks’ desire to invest in non-core CRA assessment areas?” asks Novogradac.
LIHTC Flat Rate
The industry is eager for an extension of the 9 percent fixed rate for LIHTCs and an expansion to a flat 4 percent rate as well. This issue failed to be resolved in 2013, so it’s back on the table for the new year.
HOME, public housing, and other federal programs have taken drastic cuts in recent years. Implementation of a budget agreement and its impact on Department of Housing and Urban Development programs will be big in 2014, says Nixon Peabody’s Wallace.
The demand for affordable housing will continue to be a major issue in 2014. Cohen-Esrey’s Harris specifically points to the workforce housing crisis in rural America. “This story involves housing for citizens in the 61 to 120 percent area median income spectrum,” he says.
Fannie, Freddie, and Mel
Rep. Mel Watt (D-N.C.) will take over the Federal Housing Finance Agency, the body that oversees Fannie Mae and Freddie Mac. What direction will he set for the government-sponsored enterprises, and how will he cope with the housing crisis? The New York Times recently called on Watt to require Fannie and Freddie to pay into the National Housing Trust Fund.
Read a list of the Top 10 stories from 2013.