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Slide1

Post-Election Update

for the HAND Tax Exempt Bond Seminar

January 31, 2017

www.novoco.com

1

Peter Lawrence

Novogradac & Company LLP

@novocopolicySlide2

Agenda

Tax ReformLIHTC

legislation & GAO LIHTC reportsHUD BudgetBetter Way Poverty Agenda

Housing Trust Fund/Capital Magnet FundAdvocacy

January 31, 2017

www.novoco.com

2Slide3

January 31, 2017

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3

Infrastructure

Military Spending

$$

PRESIDENT ELECT DONALD TRUMP

Tax Reform Slide4

January 31, 2017

www.novoco.com

4

CHAIRMAN KEVIN BRADY

SPEAKER

PAUL RYAN

Repeal & Replace

Comprehensive

Tax ReformSlide5

DEC

Sep. 30

Fiscal year end

2016

2017

Jan.

31

Today

JAN

FEB

MAR

APR

MAY

JUNE

JULY

AUG

NOV

OCT

SEP

Apr. 28

CR expires

Mar. 15

Debt ceiling suspension expires

Pushed to Aug/Sep

Debt ceiling suspension

expires

Apr. 15

FY 18 budget resolution “due”

Tax reform reconciliation instructions?

Treasury to employ measures to avoid breaching the limit

February

Report ACA Repeal reconciliation bill to budget committee

April 30

100th Day

June 18

150th

Day

January 31, 2017

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5

August 8

200th

DaySlide6

House GOP Tax Reform Task Force

Calls for top 20% corporate tax rate

No deduction for net interest expense, but immediate depreciation of new investments (excluding land

)

Top 33% individual tax rate, with 50%

exclusion for capital gains and investment

income

Silent on LIHTC, NMTC, HTC and tax-exempt bonds

Document does say that tax reform as proposed

“generally will eliminate special-interest deductions and credits in favor of providing lower tax rates.”

Tax Reform Task Force describes the blueprint as

“the beginning of our conversation about how to fix our broken tax code.”

Legislative language by the first quarter of

2017

W&M Republican tax reform retreat informal “vote” on retaining LIHTC in tax reform blueprint legislation

January 31, 2017

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6Slide7

January 31, 2017

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www.novoco.com/blogSlide8

January 31, 2017

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8

COMPREHENSIVE

(business &

indiv

.)

Infrastructure &

International

Business

tax reform

OBSTACLES TO TAX REFORMSlide9

Obstacles to Tax Reform

Many tax preferences in the Code have substantial Congressional support and key defenders, and well organized and funded advocacy effortsLast substantial tax reform proposals from former Chairman Camp went nowhere as Members and Congressional leadership ran away

Border adjustability provisionThe process will be lengthyQuestions as to process—Budget Reconciliation or regular order

January 31, 2017

www.novoco.com9Slide10

Affordable Housing Credit Improvement Act of 2016

January 31, 2017

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10

Sen. Cantwell

D-Washington

Sen. Hatch

R-UtahSlide11

Affordable Housing Improvement Act of 2016

January 31, 2017

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11

S. 3237

Sen. Cantwell

D-Washington

Additional Resources

Increases Housing Credit authority by 50 percentSlide12

Affordable Housing Improvement Act of 2016

January 31, 2017

www.novoco.com

12

S. 3237

Sen. Cantwell

D-Washington

Strengthening the 4 Percent Credit/

Tax Exempt Bonds

Establishes the minimum 4 percent rate

Establishes a state-determined 30 percent basis boost for bond-financed properties

Increased Resources:

Increases Housing Credit authority by 50 percentSlide13

Affordable Housing Improvement Act of 2016

January 31, 2017

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13

S. 3237

Sen. Cantwell

D-Washington

Preservation of Existing Affordable Housing

Provides flexibility around existing tenant income eligibility when Credit is used to preserve affordable housing

Replaces the right of first refusal with a purchase option

Modifies the 10-Year rule

Allows states to include relocation expenses in Credit-eligible expendituresSlide14

Affordable Housing Improvement Act of 2016

January 31, 2017

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14

S. 3237

Sen. Cantwell

D-Washington

Facilitates Development for Hard-to-Reach Populations and in Challenging Markets

Gives states the flexibility to provide up to 50 percent basis boost for ELI households

Permits income-averaging within Housing Credit properties

Encourages development in Native American communities

Standardizes income eligibility for rural properties

Repeals the QCT population capSlide15

Affordable Housing Improvement Act of 2016

January 31, 2017

www.novoco.com

15

S. 3237

Sen. Cantwell

D-Washington

New Flexibility and Streamlining Program Requirements

Simplifies the Housing Credit student rule

Gives states the flexibility to determine a reasonable replacement period after a casualty loss

Specifies that states have the authority to define “concerted community revitalization plans”Slide16

Affordable Housing Improvement Act of 2016

January 31, 2017

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16

S. 3237

Sen. Cantwell

D-Washington

Other Policy Changes

Addresses Fair Housing concerns

Renames the program

Conserves affordable housing resources (Section 8 overhang)

Promotes energy efficiencySlide17

Government Accountability Office (GAO) Housing Credit Reports

January 31, 2017

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17

#1

#2

#3

#4

Late Feb./Early March

Investors & Syndicators

First Quarter 2018?

CostSlide18

FY 2015 Enacted

FY 2016 Enacted

President’s FY 2017 Proposed

Senate FY 2017 THUD Bill

House FY 2017 THUD Bill

Housing Choice Voucher

$19,304

$19,628

$20,854

$20,431

$20,189

Project Based Section 8

$9,730

$10,620

$10,816

$10,901

$10,901

Public Housing Operating Fund

$4,440

$4,500

$4,569

$4,675

$4,500

Public Housing Capital Fund

$1,875

$1,900

$1,865

$1,925

$1,900

Section 202

$420

$433

$505

$505

$505

Section 811

$134

$150

$154

$154

$154

HOPWA

$

330

$335

$335

$335

$335

CDBG

$3,000

$3,000

$2,800

$3,000

$3,000

HOME

$900

$

950

$950

$950

$950

Homeless Assistance

$2,135

$2,250

$2,664

$2,330

$2,487

Choice Neighborhood Initiative

$80

$125

$200

$80

$100

Overall

$45,372

$46,978

$48,911

$48,434

$47,955

Note: amounts in Millions

HUD Budget

January 31, 2017

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18Slide19

Outlook of Federal Funding for HUD

Trump expected to release budget in MayBipartisan Budget Act of 2015 set to expire this year – sequestration returnsHUD’s project-based & tenant-based rental assistance program – 3-4% increase per year

Parity as a policySet to change – caps to be lifted for spending on defense programsCutting non-defense spending by additional 1% each year over the next 10 years

We need to educate Members of Congress about the potentially devastating impacts of cutting domestic programs & urge them to raise the spending caps & maintain parity between defense & non-defense

programsWe need to urge Congress not to short-fund PBRA, and to oppose cuts to vouchers, HOME & CDBG

FY 2018

January 31, 2017

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19Slide20

Potential Impact of the Ryan Poverty Plan on Housing

Calls for aligning federal housing programs with Temporary Assistance for Needy Families (TANF)Additionally, time limits and work requirementsOur immediate concerns:

56% of residents are elderly or disabledOnly 25% of eligible Americans are currently being served – risks for further cuts in assistance

January 31, 2017

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20Slide21

2016

2016 State Housing Trust Fund Allocations

Coincidentally, the absolute minimum needed for statutory allocations

California

$10,128,143

New York

$7,013,963

Texas

$4,778,364

Florida

$4,598,821

Illinois

$4,302,012

Pennsylvania

$3,862,285

Ohio

$3,740,578

New Jersey

$3,733,566

Michigan

$3,522,622

Massachusetts

$3,419,569

Top 10 State HTF Allocations

$174M

$93M

January 31, 2017

www.novoco.comSlide22

2017

Preliminary 2017 estimate using

1

st

, 2

nd and 3

rd quarter of 2016 10-Q filings from Fannie/Freddie

Coincidentally, the absolute minimum needed for statutory allocations

California

$11,166,661

New York

$7,939,376

Texas

$5,264,187

Florida

$5,060,640

Illinois

$4,779,210

Pennsylvania

$4,282,574

Ohio

$4,163,824

New Jersey

$4,067,448

Michigan

$3,877,193

Massachusetts

$3,789,231

T

op

10

State

HTF

Allocation

E

stimates

$183M

$98M

With Diversion

January 31, 2017

www.novoco.comSlide23

2018

Coincidentally, the absolute minimum needed for statutory allocations

Watt announced his intention to remain FHFA Director until end of his term (Jan. 2019)

Unless, of course, Congress reforms FHFA to be a commission structure rather than single director

If Watt leaves, status of HTC and CMF would be uncertain

New appointee could decide to suspend GSE contributions

Mel Watt

Federal Housing

Finance Agency

Director

January 31, 2017

www.novoco.comSlide24

January 31, 2017

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24Slide25

January 31, 2017

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www.taxcredithousing.comSlide26

January 31, 2017

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26Slide27

January 31, 2017

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www.novoco.com/productsSlide28

January 31, 2017

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www.novoco.com/productsSlide29

January 31, 2017

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29Slide30

Post-Election Update

for the HAND Tax Exempt Bond Seminar

January 31, 2017

www.novoco.com

30

Peter Lawrence

Novogradac & Company LLP

@novocopolicy

By: celsa-spraggs
Views: 10
Type: Public

Post-Election Update for the HAND Tax Exempt Bond Seminar - Description


January 31 2017 wwwnovococom 1 Peter Lawrence Novogradac amp Company LLP novocopolicy Agenda Tax Reform LIHTC legislation amp GAO LIHTC reports HUD Budget Better Way Poverty Agenda ID: 681469 Download Presentation

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