Renewed Optimism Returns to Housing Credit Market
The headliner for NCSHA’s 2010 Housing Credit Conference and Marketplace was “Capitalizing on Renewed Optimism” and based on presenter remarks, the housing credit market does appear to be on the comeback. Most industry professionals conceded to being cautiously optimistic, however, citing the many statistics that still point toward a fledgling economy. Average pricing for tax credits has risen from approximately 63 cents on the dollar last year to the mid to low 70 cents on the dollar range at present, which is one indication of improvement. Along with this, more investor competition has been noted which corresponds with one insider’s observation that the industry has had a welcomed “breath of additional equity” that had all but disappeared over the last couple of years.
The Tax Credit Assistance Program (TCAP) and Tax Credit Exchange Program (aka Section 1602), both products of the American Recovery and Reinvestment Act of 2009 (ARRA) have been tremendously successful and have greatly contributed to the transitional comeback of LIHTC. They were designed to help close funding gaps where tax credit investment was lacking or stagnant. Administered by state housing agencies responsible for LIHTC allocations, these programs have helped to “jump-start” the market back to health. As beneficial as they have been, however, many in the industry still feel like these short-term fixes need to be followed up with renewed attention and action on long-term goals for LIHTC for full market recovery.
On the compliance front, the IRS reports that their audit division is currently very active. As volume increases, they are citing that most cases in need of audit involve issues with a property’s physical condition where units have been found not suitable for occupancy. In addition, issues over property disposition and inconsistencies with Part II of the IRS form 8609 were also included as frequent audit triggers. They are still in the process of the getting the updated 8823 Guidebook posted on the IRS website, but in the meantime it can be found on NCHM’s website homepage at www.nchm.org.
Other hot button topics discussed at the conference included rent restrictions, fair housing and Memorandum of Understanding (MOU) violations, annual recertification waivers for 100% LIHTC projects, the multiple-building election and MTSP income limits. Look for further discussions regarding all of these topics in future issues of HMU.