Asset management stirs pot at NCSHA conference
The hot-button topic at the National Council of State Housing Agency’s (NCSHA) Annual Tax Credit Conference held in Los Angeles, CA in June was asset management. Specifically, conversation swirled around the state housing agency’s asset management responsibilities for the two most recent arrivals on the affordable housing funding front: the Tax Credit Exchange Program and the Tax Credit Assistance Program (TCAP).
Both programs were created by the American Recovery and Reinvestment Tax Act (ARRTA), which was passed into law this year on Feb. 17. The Exchange Program is under the jurisdiction of the Department of Treasury and TCAP falls under HUD’s jurisdiction through its HOME Program. Both are administered by state housing agencies in much the same way as the Low-Income Housing Tax Credit Program. Reflecting the current economic crisis and shrinking investor pool, both programs provide greater flexibility in terms of funding for those who are developing LIHTC properties.
Until now, state agencies have functioned mostly as compliance monitors when it came to the LIHTC program. They would audit tax credit properties and report any findings to the IRS, which would ultimately decide whether any sanctions should be levied against non-compliant owners. With the addition of these two new programs, the state agencies will be playing a much different role. Not only will they identify and report on the problems at LIHTC properties, they’ll have an active hand in solving those problems.
Asset management is a much more inclusive approach to the viability of these properties than compliance monitoring and most states are viewing it as a major new challenge. Just as they do with their housing credit monitoring responsibilities, state housing agencies will have the option of having their asset management handled in-house or outsourcing it. Either way, the much-needed relief to the tax credit program puts another layer of regulatory obligation on owners and managers and another layer of regulatory administration on state agencies. It proves that once again the old adage, “you can’t get something for nothing,” holds true.
Stay tuned for more developments as these new programs are put into full implementation over the next couple of years.