Here are 10 quick takeaways from AHF Live: The Affordable Housing Developers Summit held Nov. 12-14 in Chicago.

Nearly 1,200 developers, finance executives, housing officials, and service providers gathered for the annual event, which featured informative workshops and high-level discussions of the industry's hot-button issues.

1. To-do List

The No. 1 priority for LIHTC advocates is to get a fixed 4% floor for low-income housing tax credits (LIHTCs) generated by tax-exempt private-activity bonds. Novogradac & Co. has estimated that more than 65,000 additional affordable homes could be financed from 2019 to 2028 if the rate were fixed.

The industry is looking to see where legislation for the 4% fix and other housing tax credit improvements could get attached during the lame-duck Congress.

“We’re going to push really hard. I’m optimistic that we can get something done, and we’re going to be pushing really hard for all of you to get that 4% fix,” said Bob Moss, principal and national director of governmental affairs at CohnReznick.

2. A New Class

The big story from the mid-term elections: Democrats retook the House and Republicans continued control of the Senate. In all, almost 100 new legislators will join the 116th Congress.

“For housing, it’s always a challenge because for us that means we’re losing people and a whole bunch of new people are coming in,” said David Gasson, executive director of the Housing Advisory Group and vice president at Boston Capital.

Peter Lawrence, director of public policy and government relations at Novogradac Consulting, added, “We lost our huge champion Sen. Orrin Hatch (R-Utah), who is retiring. That’s a tremendous loss, and we will have to identify a new champion on the Senate side in the coming weeks [for S. 548, the Affordable Housing Credit Improvement Act].”

On the House side, Carlos Curbelo (R-Fla.), the lead House Republican on H.R. 1661, lost re-election, and a new lead sponsor will have to be identified on the House version of the legislation.

In other changes, Sen. Chuck Grassley (R-Iowa) is set to replace Hatch as the head of the Senate Finance Committee. LIHTC champion Rep. Richard Neal (D-Mass.), who has been a co-sponsor of housing legislation over the past decade, is poised to be chair of the Ways and Means Committee. Rep. Maxine Waters (D-Calif.), who also has been supportive of affordable housing programs over the years, is expected to be chair of the House Financial Services Committee, and Rep. Nita Lowey (D-N.Y.) is set to become chair of the House Appropriations Committee. Pushing for more Department of Housing and Urban Development financing is expected to come out of their leadership, added Deborah VanAmerongen, strategic policy advisor at Nixon Peabody.

Gasson said there is an immediate need to educate the new members as well as those new to Ways and Means and the Senate Finance Committee on the LIHTC program by engaging with them on the Hill and getting the legislators and their staffs out to developments in their home districts.

3. Sleeper Issue to Watch

Gasson said his big fear going into 2019 is the appointment of a new Federal Housing Finance Agency (FHFA) director to replace Mel Watt, whose term expires. The FHFA can make a number of critical moves, including suspending the annual contributions made by Fannie Mae and Freddie Mac into the National Housing Trust Fund and Capital Magnet Fund.

4. Devil in the Details

The income-averaging option is generating a lot of buzz. The industry is finding it to be an interesting addition to the LIHTC program, but the details still need to be hashed out.

“We are excited about the possibilities, yet we are being cautious,” said Audra Hamernik, executive director of the Illinois Housing Development Authority.

According to Beth Stohr, director of new production, affordable housing tax credit investments, at U.S. Bancorp Community Development Corp.—which has done two income-averaging deals with more in the pipeline in California—it’s been a great gift on the acq-rehab side to allow for the additional basis on the over-income units to offset construction costs.

However, with states each putting their own spin on income averaging, she added that it would be helpful to bring best practices swiftly across all the states on some of the key points to get the investor community more engaged on this.

“From a social, policy (perspective), it makes so much sense, the real issue for us is the underwriting,” said Hal Keller, president of the Ohio Capital Corporation for Housing. “... The devil is in the details. We’re in favor it, but we’re very curious about the financial impact.”

5. LIHTC Market Watch

Activity in the LIHTC market was slow at the beginning of the year as investors worked out what their tax liability would be under the new tax reform legislation but has picked up significantly in the second half of 2018. “After people did figure out what their tax liability was they sort of came back into the market in a stronger way,” said Tony Bertoldi, executive vice president of CREA. However, there’s still a big separation between pricing expectations in terms of what investors are expecting and what developers need to make deals work, he said.

Despite the market changes, a number of investors and syndicators reported being on pace to have their best year, including Bank of America Merrill Lynch, CREA, and WNC.

The reason for this is the lion’s share of the investments continue to be driven by the need for banks to meet Community Reinvestment Act obligations. In addition, banks continue to be profitable and still have tax liability, which is contributing to the competitive market, said Scott Hoekman, president and CEO of Enterprise Housing Credit Investments. “The question is what happens next year,” he said, noting that some investors are expecting their yields to go up because interest rates are going up.

A few LIHTC investors retreated from the market after tax reform and have not come back, and the return of Fannie Mae and Freddie Mac have helped fill that hole, said Bertoldi.

“Fannie and Freddie coming back to the market from the tax credit syndicator’s perspective was perfect timing,” said Tony Alfieri, managing director at RBC Capital Markets–Tax Credit Equity Group. “It did have the effect on the market that their regulator wanted them to have.”

6. 2019 Outlook

Many in the industry are optimistic about financial conditions.

“I think the capital markets are going to continue to be very strong and competitive in 2019,” said Stohr. “But I think for both debt and equity, we will continue to grapple with budget gaps as interest rates rise.”

Bob Simpson, vice president of the affordable mission business, at Fannie Mae Multifamily,agreed, saying there is a tremendous amount of capital available for affordable housing on the debt and equity sides. “Show everyone your deal … you can get a good deal and the products are unique. Make sure you are looking at all the debt sources and all the equity sources that are out there—not just one or two,” he advised.

7. Where is the Opportunity?

While the industry is still digesting the recent proposed regulations for Opportunity Zones, with more guidance to come, leaders are hoping the investments will be distributive across the over 8,800 designated zones and have measurable impacts in those neighborhoods.

“If everyone is working in only 10% of markets, those adjacent to large metro areas and that already have shovel-ready deals, that could be a failure of the policy and a pretty bad use of taxpayer dollars,” said Shekar Narasimhan, managing partner of Beekman Advisors.

He added that just building a property also won’t make a measurable impact in the Opportunity Zone. “You’ll have to think about all the other things to make it happen. This is going to take a village to do. In order to do this, it’s complicated. My excitement about it is that it’s going to take a village, but my fear is that not everyone will build the village right.”

When it comes to measurement in Opportunity Zones, John Gahan III, a partner at the Sullivan & Worcester law firm, said he would like to see employment rates increase as well as the incomes of residents in the neighborhoods, decreased crime, and healthier outcomes. “It’s not just about the real estate. It’s about making a difference and making a measurement in a zone and not just an appreciation of an asset.”

While it remains unknown just how the Opportunity Zones will work, the affordable housing sector has a long history of working with complex financing programs.

“It’s this industry that needs to lead the way in making sure that Opportunity Zones benefit communities and the people in those communities,” said Hoekman, noting that critics will emerge quickly if the program fails to deliver or appears to be benefiting others rather than the intended neighborhoods.

8. On the Map

“The affordability crisis is not a red issue or a blue issue,” said Sen. Todd Young (R-Ind.) during the AHF
keynote. “This is something that impacts all Americans.”

With the affordability crisis reaching all corners of the United States, industry leaders are lauding the attention it’s getting at all levels.

New legislation is being proposed on the federal level from veteran housing champions as well as other lawmakers, and affordable housing is winning big on the ballots at the state and local levels.

“It has the attention of people in every income bracket, and it’s getting a lot more focus than it ever has,” said David Leopold, vice president of targeted affordable sales and investments at Freddie Mac.

9. Level Up

Matthew Rieger, president and CEO of Housing Trust Group in Coconut Grove, Fla., said there’s still a stigma about affordable housing and he still works to teach people about his firm’s work. “We level up,” he said, explaining that if he’s developing an affordable housing development, he’ll build to the level of workforce housing. If he’s building a market-rate development, he’ll build to luxury standards. Rieger said it means making a little less money, but he’s building for the long term and building a reputation to help overcome NIMBYism.

10. Making a Difference

Former Chicago public housing resident Michelle Murray shared how affordable housing has made an impact on her life. As a teen, she raised her siblings when her mother, who suffered from mental health illness, could not and helped her family through eviction and applied for a Chicago Housing Authority voucher.

“I had a vision for myself. I wasn’t going to allow obstacles to get in my way,” Murray told the crowd. “Affordable housing is there to lend you a helping hand and provide stability to move forward.”

Through her experience navigating the affordable housing and property management channels, Murray was offered a job at Tria Adelfi Property Management and Development Co. Working her way up, she is now co-owner of the firm with business partner Julia Foust and helping to provide others with needed affordable housing. Tria Adelfi recently partnered with St. Edmund’s Redevelopment Corp. to develop St. Edmund’s Oasis, a mixed-income community in Chicago’s Washington Park neighborhood.