News

A. J. Johnson Partners with Mid-Atlantic AHMA for December Training on Affordable Housing - December 2024

During December 2024, A. J. Johnson will partner with the MidAtlantic Affordable Housing Management Association for two live webinar training sessions for real estate professionals, particularly those in the affordable multifamily housing field. Following the webinars, AJ will review testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam. The following sessions will be presented: December 10: Intermediate LIHTC Compliance - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included, as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees, and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements for setting rents at a tax-credit property. This course contains some practice problems but is more discussion-oriented than the Basic course. A calculator is required for this course. December 11: Advanced LIHTC Compliance - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making concerning how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed-in-service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both training days will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, which will be administered on December 12. December 12: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). After two days of intensive and comprehensive LIHTC training, AJ will review program requirements and administer the HCCP exam in person. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA and is designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in any (or all) training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Impact of the Election on Affordable Rental Housing Production

While it is too early to predict with any certainty what the election of Donald Trump will mean for the affordable housing industry, we can make some assumptions based on the policy positions he has outlined so far. Trump s election will likely significantly influence the development of affordable rental housing in the United States. His administration s policies will likely focus on deregulation, immigration control, and using federal lands for housing development. Deregulation and Housing Development Trump has consistently advocated for reducing regulatory barriers to stimulate housing construction. He argues that excessive regulations increase construction costs and impede affordable housing development. By streamlining permitting procedures and relaxing zoning laws, the administration will encourage private developers to build more housing units, potentially increasing the supply of affordable rentals. Immigration Policies and Housing Demand The administration has linked housing affordability issues to immigration, suggesting that reducing the number of immigrants will decrease housing demand and, consequently, lower prices. This perspective claims that mass deportations could free up housing units, making them more accessible and affordable for American citizens. However, such measures may disrupt the construction industry, which relies heavily on immigrant labor, potentially exacerbating housing shortages and increasing costs. Utilization of Federal Lands Trump has proposed opening federal lands for large-scale housing construction, aiming to address housing shortages by increasing the availability of land for development. This initiative would create zones with reduced taxes and regulations to incentivize builders to develop affordable housing projects. While this approach could expand the housing supply, its effectiveness would depend on the implementation details and the willingness of developers to participate. Potential Challenges While the goal of these policies would be to increase the supply of affordable rental housing, they are likely to face several challenges: Labor Shortages: Immigration restrictions could lead to labor shortages in the construction industry, slowing housing development and increasing costs. Environmental and Community Concerns: Utilizing federal lands for housing will almost certainly encounter opposition due to environmental concerns and community resistance to large-scale developments. Market Dynamics: Deregulation alone may not ensure affordability. Developers may prioritize higher-end projects for greater profits, leaving a gap in affordable rental options. In summary, the incoming Trump administration s affordable rental housing development approach focuses on deregulation, immigration control, and leveraging federal lands. While these strategies aim to increase the housing supply and reduce costs, their success will depend on careful implementation and consideration of potential economic and social impacts.

USDA Proposes Mandatory Deed Recording Requirements for Section 538 Rural Rental Housing Program

The Rural Housing Service (RHS) of the U.S. Department of Agriculture has proposed a new rule requiring separate deed restrictions to be recorded for properties financed under the Guaranteed Rural Rental Housing Program (GRRHP). This proposed change aims to ensure affordable housing remains available for low and moderate-income households in rural areas even after mortgages are paid off. Key Changes The proposed rule would amend 7 CFR 3565.352(b) to require: A separate deed restriction must be recorded containing specific restrictive use language. The deed restriction must be recorded before other transaction documentation. The restriction must state that the housing will remain available for low- and moderate-income households for the original loan term. Background Section 538 GRRHP, administered under the Housing Act of 1949, provides loan guarantees for developing housing and related facilities in rural areas. While current regulations require properties to remain affordable for the original loan term, they don't specifically mandate recording a separate deed restriction. This has created a potential loophole: Restrictive use provisions could be released upon loan prepayment if only included in the mortgage or deed of trust. Significance The proposed change addresses a critical preservation issue. Without recorded deed restrictions: Affordable housing requirements could be terminated early through loan prepayment. RHS would have limited ability to enforce continued affordability. Rural communities could lose vital affordable housing resources. Implementation Details The rule would allow three exceptions to the deed restriction requirement if the RHS determines: There is no longer a need for low- and moderate-income housing in the market area; Housing opportunities for low-income households and minorities won't be reduced, or Additional federal assistance won't be needed. Public Comment Period Interested parties can submit comments on the proposed rule through January 6, 2025, via: Federal eRulemaking Portal (regulations.gov) Docket Number: RHS-24-MFH-0016 RIN: 0575-AD34 Contact Information For more information, contact: Tammy DanielsFinance and Loan AnalystMulti-Family Housing Production and Preservation DivisionRural Housing Service, USDAPhone: (202) 720-0021Email: tammy.daniels@usda.gov

IRS Announces Historic Increases for 2025 Tax Credit Multipliers and Small State Minimums

On October 22, 2024, in Revenue Procedure 2024-40, the Internal Revenue Service (IRS) revealed significant increases for key tax credit multipliers and minimum thresholds for 2025, setting historic highs in several areas. These changes impact the Low-Income Housing Tax Credit (LIHTC) and Private Activity Bonds (PABs), vital funding sources for affordable housing and community development projects. Critical Updates for 2025: 9% Tax Credit Multiplier Increase: The per capita multiplier for 9% tax credits will rise to $3.00 in 2025. This adjustment represents a notable increase, providing enhanced opportunities for affordable housing development. Private Activity Bonds Multiplier: The per capita multiplier for PABs will reach $130, a $5 increase from 2024. This marks the highest level recorded, further supporting the financing of essential infrastructure and housing initiatives. Historic Highs in Small State Minimums: Both the per capita multiplier for the 9% credit and PABs are at record levels. The small state minimums will also be unprecedented in 2025, with $3,455,000 set for the 9% credit and $388,780,000 for PABs. LIHTC Rehabilitation Minimum Increase: The minimum rehabilitation cost for the LIHTC will be $8,500 per low-income unit in 2025, reflecting a $200 rise over the previous year. This adjustment helps ensure that housing rehabilitation projects maintain adequate standards for quality and affordability. Effective Date: All updated minimums and multipliers will take effect starting January 1, 2025.

HUD Issues New Guidance on Solar and Rooftop Leases for Multifamily Housing

The U.S. Department of Housing and Urban Development (HUD) has released new guidance on solar, cell tower, and rooftop leases for HUD-assisted and HUD-insured multifamily housing projects. This guidance aims to streamline the process for property owners to enter into these commercial lease agreements while protecting HUD's interests. Key Points Applicability: The notice applies to owners of HUD-insured or HUD-subsidized multifamily projects subject to a HUD business agreement requiring approval for encumbrances, including commercial leases. Types of Leases Covered: Solar leases and Power Purchase Agreements (PPAs) Cell tower leases Other rooftop commercial leases Ground-mounted solar electric systems Required Documentation: Owners must submit a package to their HUD Account Executive, including: Unexecuted lease agreement Estimated annual lease payments Signed HUD Multifamily Rooftop Lease Owner Self-Certification Unsigned HUD Multifamily Solar, Cell Tower, and Rooftop Lease Rider Recent roof inspection records (for rooftop systems) Mortgagee approval (for FHA-insured properties) Estimated electricity cost savings (for solar systems) HUD Review Process: HUD will review the owner's standing and compliance Local HUD counsel will review the legal aspects of the lease The Multifamily Asset Management Division Director will grant approval Post-Approval Requirements: Execute and submit the HUD Multifamily Solar, Cell Tower, and Rooftop Lease Rider Ensure adequate property insurance coverage Increase Reserve Fund for Replacements deposits if necessary Perform utility consumption and emissions benchmarking (for solar on HUD-assisted projects) Adjust utility allowances if applicable (for solar on HUD-assisted projects) Key Considerations: Roof condition and remaining useful life The project's capacity to support rooftop equipment Financing plan for equipment removal/reinstallation during roof replacement Insurance coverage for potential damages Implications for Property Owners This guidance clearly outlines a pathway for multifamily housing owners to leverage their rooftop space for additional income or energy cost savings. By outlining specific requirements and processes, HUD aims to facilitate the adoption of solar energy and other rooftop uses while safeguarding the interests of the properties, tenants, and HUD's investments. Property owners should review the entire notice carefully and consult with their HUD Account Executives when considering entering these lease agreements. The potential benefits of reduced energy costs and additional income should be weighed against the responsibilities and requirements outlined in the guidance. Due to potential tax ramifications, owners of LIHTC properties that are layered with the relevant HUD programs should consult tax counsel before executing any agreements for the use of roof space. Conclusion HUD's new guidance represents a significant step in supporting the adoption of clean energy technologies and maximizing the utility of multifamily housing properties. By providing a clear framework for approval and implementation, HUD enables property owners to explore innovative ways to reduce costs and generate income, ultimately contributing to the sustainability and financial health of the multifamily housing sector.

A. J. Johnson to Participate in 29th Annual Mid-Atlantic AHMA Fall Conference

A. J. Johnson will participate in the Mid-Atlantic Affordable Housing Management Association (AHMA) 29th Annual Fall Conference, which will take place in Richmond, VA, from November 19-21, 2024. This year's conference promises to be invaluable for professionals in the affordable housing industry, offering a comprehensive program that addresses both current challenges and future trends.  Highlights of the Conference: 1. HOTMA Implementation and Beyond While the Housing Opportunity Through Modernization Act (HOTMA) remains a focal point, this year's conference expands its scope to cover many pressing issues in affordable housing management. Attendees will gain insights on HOTMA implementation and other critical topics that impact their daily operations. 2. Diverse Learning Tracks  The conference features multiple specialized tracks to cater to various roles and interests within the industry:  - General Interest Track  - LIHTC Track  - HUD Track  - Special Interest Track  - Maintenance Workshop Track  3. Expert-Led Sessions  Renowned industry experts, including A. J. Johnson, Jenny DeSilva, and Dr. Dori Bryan-Ployer, will lead sessions on topics such as conflict resolution, marketing strategies, cyber awareness, and the impact of HOTMA on different housing programs. 4. A. J. Johnson will lead a discussion on Hot Topics in Affordable Housing Sessions and will cover crucial subjects like:  - Assistance animals and medical marijuana policies  - Violence Against Women Act (VAWA) compliance  - Fair housing in the age of artificial intelligence  - Dealing with the Death of a Resident  - Preventing Sexual Harassment  - HOTMA Income and Asset Issues  - Management of Layered Projects  5. Other Topics Featuring Industry Leaders such as Jenny DeSilva and Angelique Napoleon will include: - EIV/TRACS and HOTMA  - Understanding Human Trafficking  6. Hands-On Maintenance Workshops  A dedicated track for maintenance professionals offers practical sessions on HVAC systems, motor operations, and effective preventative maintenance planning.  7. Networking Opportunities  The conference includes a vendor exhibition and reception, providing ample opportunities for attendees to connect with peers and industry suppliers.  8. Keynote Address  The event starts with a keynote address titled "Embrace Uncommon Sense: Boost Workplace Engagement and Wellbeing," which sets an inspiring tone for the conference.  Who Should Attend:  This conference is essential for property managers, compliance officers, maintenance supervisors, asset managers, and anyone involved in the affordable housing industry. Whether you're dealing with LIHTC, HUD programs, or mixed-finance properties, there's something valuable for every professional.  Take advantage of this opportunity to stay ahead in the ever-evolving world of affordable housing management. Join us for three days of learning, networking, and professional growth at the Mid-Atlantic AHMA 2024 Fall Conference.  Register now at mid-atlanticahma.org to secure your spot at this premier industry event!

Rural Development Issues Emergency Call System Guidance

The Rural Housing Service (RHS) has issued an Unnumbered Letter providing guidance to Multifamily Housing (MFH) staff and program participants regarding emergency call systems, also referred to as "pullcords" in MFH units. Installing and using emergency call systems in MFH units, commonly in bathrooms and bedrooms, have historically provided a means for tenants to alert others if they require assistance in the case of an emergency, such as a fall, fire, or medical issue. Many installed emergency call systems no longer function and provide a false sense of security, leading tenants to believe the system will directly alert emergency response services or property management. Additionally, the need for emergency call systems has diminished due to the availability and advancements in technology, such as cell phones and personal medical/life alert equipment. The purpose of the Unnumbered Letter is to inform RHS staff and property operators that RHS does not require emergency call systems in any MFH units. However, some MFH properties still have these systems. Rural Development requires the system to be operational if an emergency call system is in place in any unit. MFH properties that continue to utilize emergency call systems must ensure that the systems work as designed. The system must be regularly inspected per state and local laws. If a property previously used an emergency call system and it is no longer operational, the inoperable system must be removed. Owners and managers are responsible for ensuring that tenants understand how the emergency call system functions. It is recommended that owners provide written instructions and a demonstration of the system to tenants. Recommendations include: Step-by-step instructions on how to use the system. Guidance to tenants on what services are available in response to the system activation, including clarification that the system is not tied to and, therefore, not a substitute for 911 emergency services. Clearly marked features of the system in each unit. Steps on how to correct a false alarm if the system is accidentally activated or misused by residents or visitors. Steps on how to report problems with the emergency call system. In conclusion, while the Rural Housing Service (RHS) no longer mandates the installation of emergency call systems in Multifamily Housing (MFH) units, properties that choose to maintain these systems must ensure they are fully operational and regularly inspected. As advancements in personal alert technology provide reliable alternatives, MFH property owners and managers should prioritize educating tenants on the limitations and proper use of existing emergency call systems. This approach not only helps prevent misunderstandings about the system s capabilities but also enhances tenant safety by encouraging the use of more effective emergency response options.

2025 Social Security COLA Announced

The federal government announced on October 10, 2024, that the Social Security Cost of Living Adjustment (COLA) for 2025 will be 2.5%, slightly lower than the 3.2% increase for 2024. This increase will provide an additional $50 per month for the average retiree. Social Security recipients will receive a notice in the mail in early December showing their new benefit amount. Recipients will see an increase in their January 2025 payment. Those receiving SSI will see the increase on December 31, 2024. Owners and managers of properties required to determine residents' incomes should use the new COLA SS rate when projecting applicants' and residents' incomes. This also affects individuals receiving SSI, VA pensions, Civil Service pensions, and Railroad retirement.