News

Reminder - HUD to Enforce Carbon Monoxide Protections in HUD-Assisted Projects

In February of this year, I posted an article on the HUD Notice H-2022-10, which clarified federal requirements for carbon monoxide (CO) alarms and detectors. CO is a byproduct of fuel-fired combustion appliances such as furnaces and water heaters. If these appliances are not properly vented, the undetectable gas can be deadly. I am posting again to remind readers and clients that the deadline for having CO detectors in HUD housing is approaching. There have been at least 11 deaths in HUD-assisted housing from CO poisoning since 2003 and HUD has been under increasing pressure to require CO alarms and detectors in HUD-supported properties. In 2019, HUD issued a notice reminding owners of their legal obligation to install working CO detectors in those jurisdictions where such devices are required. However, in areas where CO detectors are not required, HUD only "encouraged" the installation of the devices - it was not a requirement. This HUD notice implements the requirements included in the Consolidated Appropriations Act of 2021, which requires sites to meet certain requirements within two years of the law s enactment, which was December 27, 2020. As a result of the law, public housing agencies (PHAs), and site owners that received federal rental assistance must comply with the International Fire Code (IFC) 2018 standards on the installation of CO alarms or detectors by December 27, 2022, meaning if you have not done so already, you have four months to install the required equipment. The new requirement applies to all Housing Choice Voucher units and all Public Housing, Project Based Voucher, Project Based Rental Assistance, Section 202, and Section 811 properties with a fire-fueled or fire-burning appliance or an attached garage. HUD is requiring that all affected sites have CO detectors installed in all dwelling units. The detectors must meet or exceed the standards of the IFC. The standards are outlined in Chapter 9, Fire Protection and Life Safety Systems, and Chapter 11, Construction Requirements for Existing Buildings of the IFC. It should be noted that if local codes are more stringent than the IFC, the local code must be followed. The IFC defines CO alarms and detectors as follows: Carbon Monoxide Alarm: A single or multiple station alarm intended to detect CO gas and alert occupants by a distinct audible signal. It incorporates a sensor, control components, and an alarm notification appliance in a single unit.Carbon Monoxide Detector: A device with an integral sensor to detect CO gas and transmit an alarm signal to a connected alarm control unit. Hard-Wire Requirements IFC-approved CO alarms must receive their primary power from the building s permanent wiring without a disconnecting switch other than that required for overcurrent protection, and when the primary power service is interrupted, serviced by a battery. UL Rating Requirements CO alarms must meet Underwriters Laboratories UL 2034 standard for sensitivity. Combination CO/smoke alarms are an acceptable alternative to CO alarms but must meet UL 2034 and UL 217 standards for sensitivity. Installation Locations CO detection must be installed in dwelling units that contain a fuel-burning appliance or fuel-burning fireplace.CO detection must be included in any dwelling units with attached private garages - even if the units do not have fuel-burning appliances or fireplaces.When required to be installed, the detectors must be installed outside each sleeping area and in the immediate vicinity of the bedroom. If a fuel-burning appliance is installed in the bedroom, a CO detector must be installed in the bedroom. The types of fuel-burning appliances likely to be present include gas/fuel-fired ranges, stoves, fireplaces, clothes dryers, furnaces, air handlers, boilers, and water heaters. Detectors are not required in dwelling units that do not have openings between the fuel-burning appliance or underground garage and the dwelling unit. This means that if you have a central heating or hot water system that does not distribute heat via forced air, CO detection is not specifically required in the units. Paying for the Required Installation According to the Notice, PHAs operating public housing units may use either operating funds or capital funds for the purchase, installation, and maintenance of CO alarms or detectors. For the HCV and project-based voucher programs, the property owner or landlord is responsible for the cost of the CO alarms or detectors. Owners of properties receiving assistance through the project-based rental assistance, Section 202 or 811 programs may use the property s reserve account, residual receipts, general operating reserves, owner contributions, or secondary financing to fund the purchase, installation, and maintenance of CO alarms and detectors. Such purchases are eligible project expenses. The price for approved detectors (not including the cost of installation) generally runs from $15 to $60 per detector, depending on the make and model. Owners who are required by this notice to install the alarms or detectors must do so by December 27, 2022. HUD MOR and REAC/INSPIRE inspections after this date will note the absence of required detectors. Now is the time for affected properties to begin pricing and planning for the required installation.

State & Local Fiscal Recovery Funds - A Source of Gap Funding for LIHTC Properties

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 pandemic. Under the program s final rule, "Development, repair, and operation of affordable housing and services or programs to increase long-term housing security" is a stated eligible use to respond to the negative economic impacts of the pandemic on households and communities. The Department of Treasury and the Department of Housing & Urban Development have prepared guidance on how to use these funds for affordable housing. The guidance, which can be found in the SLFRF Final Rule, clarifies and expands on various uses of the funds. SLFRF Affordable Housing Update Summary Treasury has updated its guidance to clarify two presumptively eligible ways to use SLFRF to fund affordable housing investments under the final rule: SLFRF funds used for affordable housing projects under the public health and negative economic impacts (PH-NEI) eligible use category are presumptively eligible if the project meets certain core requirements of the following expanded list of federal housing: >National Housing Trust Fund HOME Investment Partnerships Program (HOME) Low-Income Housing Credit (LIHTC) Public Housing Capital Fund Section 202 Supportive Housing for the Elderly Program Section 811 Supportive Housing for Persons with Disabilities Program Project-Based Rental Assistance Multifamily Preservation & Revitalization Program Affordable housing projects provided by a Tribal government if they would be eligible for funding under the Indian Housing Block Grant program, the Indian Community Development Block Grant program, or the Bureau of Indian Affairs Housing Improvement Program. There are four core requirements for use of the funds: Resident income restrictions;The affordability period and related covenant requirements for assisted units; Tenant protections; and Housing quality standards.SLFRF funds used for affordable rental housing under the PH-NEI eligible use category are presumptively eligible uses if the units funded serve households at or below 65% of AMI for a period of 20 years or greater. Loan Flexibilities SLFRF can now be used to fund the full principal amount of certain loans that finance long-term affordable housing investments. Among other requirements, the loans must have maturity and affordability covenants of 20 years or longer, including but not limited to loans that fund low-income housing tax credit (LIHTC) projects. Specifically, under the PH-NEI eligible use category, recipients may use SLFRF funds to make loans to finance affordable housing projects, funding the full principal amount of the loan, if the loan and project meet the following requirements: The loan has a term of not less than 20 years;The affordable housing project being financed has an affordability period of not less than 20 years after the project or assisted units are available for occupancy after having received the SLFRF investment; andTo protect affordability, the project owners of any properties receiving SLFRF loans that also receive LIHTC financing must agree to waive their right to request a qualified contract as defined in Section 42(h)(6)(F) of the Internal Revenue Code and repay any loaned funds if the property becomes non-compliant. Layering SLFRF with Other Funding Opportunities SLFRF may be combined with a wide range of other federal, state, local, and private resources to meet housing needs. SLFRF may help fill gaps and expedite the construction or rehabilitation of thousands of affordable housing projects around the nation that face funding gaps. Examples include: LIHTC projects: SLFRF may fill funding gaps to projects that received an allocation of 9 or 4 percent LIHTC, for new construction or preservation of affordable rental housing.Federal Housing Administration (FHA) multifamily mortgage insurance.HOME & Housing Trust Fund.HOME-American Rescue Plan.Project-Based Vouchers (PBVs).Recapitalization of Public Housing through HUD s Rental Assistance Demonstration (RAD).Community Development Block Grants (CDBG) and Section 108 Loan Guarantee Program. Rehabilitation & Adaptive Use Recipients may use SLFRF to acquire properties that will be transitioned into affordable housing for households that experienced the negative economic impacts of the pandemic. Predevelopment Recipients may use SLFRF to help fund pre-project development activities, which could include site work and land acquisition, that precede housing development or rehabilitation of affordable housing. This is an excellent potential source of funds for LIHTC projects with gaps to close. Please visit the State and Local Recovery Funds website (https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities), final rule, final rule overview, final rule FAQs, and Compliance and Reporting Guidance for comprehensive information.

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

During the month of September 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for three live webinar training sessions intended for real estate professionals, particularly those in the affordable multifamily housing field.  The following sessions will be presented: September 13: Basic LIHTC Compliance (live webinar) - This training is designed primarily for site managers and investment asset managers responsible for site-related asset management and is especially beneficial to those managers who are relatively inexperienced in the tax credit program. It covers all aspects of credit related to on-site management, including the applicant interview process, the determination of resident eligibility (income and student issues), handling recertification, setting rents - including a full review of utility allowance requirements - lease issues, and the importance of maintaining the property. The training includes problems and questions designed to ensure that students are fully comprehending the material. September 15: The Verification and Calculation of Income and Assets on Affordable Housing Properties (live webinar)- This five-hour live webinar (there will be a 1.5-hour lunch break) provides concentrated instruction on the required methodology for calculating and verifying income, and for determining the value of assets and income generated by those assets. The first section of the course involves a comprehensive discussion of employment income, along with military pay, pensions/social security, self-employment income, and child support. It concludes with workshop problems designed to test what the student has learned during the discussion phase of the training and serve to reinforce HUD-required techniques for the determination of income. The second component of the training focuses on a detailed discussion of requirements related to the determination of asset value and income and is applicable to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, HOME, and HOPE VI. Multiple types of assets are covered, both in terms of what constitutes an asset and how they are verified. This section also concludes with a series of problems, designed to test the student s understanding of the basic requirements relative to assets. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that 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) of these training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

A. J. Johnson to Host Live Webinar on End of Year LIHTC Compliance Requirements

A. J. Johnson will be conducting a webinar on September 8, 2022, on Ensuring Section 42 Compliance on December 31.  The Webinar will be held from 1:00 PM to 2:30 PM Eastern time. Experienced LIHTC managers and compliance professionals all know the importance of the last day of the tax year (normally December 31). This session will focus on all the issues to be aware of as the year draws to a close, with recommendations on how to ensure compliance at year-end and the ramifications of noncompliance. The discussion will center on the three primary compliance areas impacting the ability to claim credits - eligibility, affordability, and habitability. The training will stress the importance of year-round compliance relative to rent since excess rent at any point in the year can result in a credit loss. The session will close with a review of casualty loss issues and how these events may (or may not) impact the credits. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."

Freddie Mac Publishes Study of Risk of Affordable Housing Loss Due to Expiring LIHTC Extended Use

Freddie Mac (the Federal Home Loan Mortgage Corporation) has released a study titled "Risk and Impact of LIHTC Properties Exiting the Program: Examining the Risks of Expiring LIHTC Restrictions and the Outcomes of Properties that Exit." As market rents continue to rise, rental affordability is becoming increasingly important - especially in preserving existing affordable housing. Some in the industry are concerned that units supported by Low-Income Housing Tax Credits (LIHTC) may transition from having restricted, affordable rents to levels that are too expensive for low and even moderate-income households to afford. The goal of this Freddie Mac study is to provide an overview of the general risk that currently exists in the market and the potential for a high level of lost affordable units. A key finding from the research is that LIHTC properties that exit the program often remain more affordable than conventional market rate properties that were never subsidized, even if they are not resyndicated. Former LIHTC properties are often transitioning to workforce housing, remaining affordable to tenants that earn below the area median income (AMI). Here are some of the key findings outlined in the report: 86.8% of LIHTC properties are programmatic, meaning that they are still in the program and remain subject to rent restrictions. However, a growing number of properties will be able to exit the program in the coming years.High opportunity areas have a relatively high share of programmatic LIHTC properties, which, given the elevated rental costs, can be particularly beneficial for these areas.LIHTC properties that have left the program (referred to as non-programmatic) generally have higher rents compared with LIHTC-restricted units, but lower rents compared with conventional market-rate units.Some non-programmatic LIHTC properties increase rents substantially above 60% of the AMI affordable rents, but the majority are still affordable at this income level. The most common path for non-programmatic LIHTC properties is to remain affordable at 60% of AMI, which happens roughly 61% of the time. Explanation of Risk Housing researchers generally agree that the U.S. suffers from a lack of affordable housing. The National Low Income Housing Coalition (NLIHC) estimates that for every 100 renters earning 30% of AMI there are only 36 units available. The LIHTC program is the federal government s primary vehicle for providing affordable housing nationwide. The study found that based on the equity financing for LIHTC properties in 2021, most units (84.5%) are priced at 60% of AMI, with the remaining 15.5% targeting either 30%, 40%, or 50% of AMI. This validates what we in the industry have known anecdotally for years - most LIHTC properties operate under the 40/60 minimum set-aside. Identifying Types of Risk of Properties Exiting the LIHTC Program Between years 1-15 of the initial LIHTC compliance period, the risk of affordability loss is low since there is typically no legal way to raise rents above what is permitted at the time of LIHTC allocation. However, after year 15, several risks emerge that could lead to LIHTC properties leaving the program. The Qualified Contract (QC) Beginning as early as the end of year 14, LIHTC property owners typically may inform the applicable state Housing Finance Agency (HFA) of their intent to sell the property pursuant to the QC process.8 If a buyer is not found by the HFA within one year, the owner can convert the property to market rate rents after a three-year "decontrol" period. It should be noted that this option is very unpopular with the states and Congress is considering doing away with the option. Expiration of Affordability Restrictions Depending on the year a property is placed in service, affordability restrictions will generally lapse after 30 years. After this period, property owners can raise rents without the risk of credit recapture by the IRS or, in some cases, legal action by the HFA. Some states require a longer extended use period, and some property owners agree to more stringent restrictions in order to be more competitive in the allocation process. In this way, the 30-year rule is not universal. Foreclosure Historically, LIHTC properties have very low delinquency and default rates. However, a LIHTC property could still suffer from financial and operational problems that give a lender the right to foreclose. This can happen even before year 15. Upon foreclosure and transfer of ownership, the Land Use Restriction Agreement that includes rent restrictions typically will terminate, permitting the new owner to convert the property to market rent after a three-year decontrol period. The study notes that leaving the LIHTC program via foreclosure is very rare. If LIHTC properties leave the program, the degree of affordability loss can only truly be measured on a case-by-case basis since property owners will not necessarily raise rents, especially if property or local market conditions can t support the increase. Snapshot of Current Non-Programmatic LIHTC Properties The study identified 40,296 multifamily properties in the entire history of the LIHTC program. Of these, 34,975 are programmatic, which means they currently restrict rents based on local income in accordance with LIHTC requirements. The remaining 5,321 properties have exited the LIHTC program and are no longer believed to have LIHTC restricted rents. What Factors Increase or Decrease the Propensity of a Property to Exit the LIHTC Program? Ownership Type: LIHTC properties with nonprofit owners are less likely to leave the program.Year Placed-in-Service: Older LIHTC properties are substantially more likely to exit the program. Over 90% of properties placed in service prior to 1990 are believed to be non-programmatic. In 1990, the program length switched from 15 years to 30 years. However, beginning in 2020, the 30-year extended use period is expiring for a number of LIHTC properties, and this is a concern.Property Size: Smaller properties are more likely to have exited the program. The average property size of a non-programmatic property that was placed in service prior to 1990 is 43 units, compared with 73 units for programmatic properties. The trend changes for properties in service after 1990, where programmatic properties tend to be smaller than non-programmatic properties.Resyndication History: The rate for resyndicated programmatic properties is high 96.2% of properties that have resyndicated (i.e., obtained a new allocation of credits) remain programmatic.The State: Some states will mandate or incentivize extended use periods longer than the 15-year federal minimum. The study has identified 11 states for which this is true, with extended use periods ranging from 18 years to 99 years. These increased restrictions appear to decrease the rate of non-programmatic properties. Therefore, LIHTC properties in states with longer extended use periods will generally correlate with a lower risk of near-term exit. Following are the states the study identified with extended use periods longer than 15 years:Alabama - 20 yearsCalifornia - 40 yearsConnecticut - 25 yearsHawaii - 30 yearsKentucky - 18 yearsMaine - 30 years (was 75 years until 2013)New Hampshire- 45 years (was 84 years prior to 2020)Oregon - 45 yearsPennsylvania- 25 years (was 20 years prior to 2021)Utah - 35 years (was 84 years prior to 2013)Vermont - 84 yearsLocal Housing Market: There is the concern of an increased risk of losing LIHTC restricted properties that may be able to receive a premium due to local housing conditions. This is especially the case in highly sought-after neighborhoods. Interestingly, non-programmatic properties are in lower-income areas compared with programmatic properties. Given the elevated rental costs, high opportunity areas especially benefit from affordable housing, so it s encouraging that an outsized portion of LIHTC units are still in the program.Rent Level - Market vs. Max LIHTC: As market rate rents increased, fewer conventional market rate properties remain affordable at 60% of AMI and below, creating a gap between maximum restricted LIHTC rents and conventional rents. If market rent is substantially higher than maximum LIHTC rent, this could entice property owners to reposition a LIHTC property as market rate either at the expiration of affordability restrictions or before expiration via a QC. What Happens to LIHTC Properties that Become Market Rate? Once a LIHTC property exits the program, rents at the property are no longer subject to restrictions, provided the property does not receive other subsidies and is not subject to other restrictive covenants. The Study uses seven metro areas to determine the answer to what is happening to exiting LIHTC properties. These are Dallas, Indianapolis, Los Angeles, Orlando, Phoenix, Seattle, and Washington, D.C. These locations were chosen because they are geographically and culturally diverse and had relatively large non-programmatic populations. Non-programmatic properties with fewer than 50 units were not considered. Here are the major findings: Non-programmatic LIHTC properties are considerably older than other market-rate properties.Non-programmatic LIHTC properties generally have lower property ratings and lower location ratings compared with conventional market rate properties.Rents in non-programmatic LIHTC properties tend to be lower than market-rate units that were never in the LIHTC program. This is true for all seven metro areas studied. The largest rent gap was in Dallas, where non-programmatic LIHTC rents are 26.5% lower than market rate, while the smallest gap was in Phoenix, where non-programmatic rents are only 3.0% lower.The analysis shows that non-programmatic LIHTC rents are still materially below the rest of the market.In general, many non-programmatic LIHTC properties continue to provide affordable housing. Rent levels across these metro areas for non-programmatic properties are affordable, on average, to tenants making 61% of AMI. Opportunity for Workforce Housing Non-programmatic LIHTC represents a loss of the strictly affordable stock, which is the segment of the market with the most need, but it benefits another market segment: workforce housing. Workforce housing typically serves renters who make below the median income for the area but are not eligible for subsidies. Overall, programmatic LIHTC units are generally the most affordable and guarantee they will remain affordable, followed by non-programmatic LIHTC. Loss of Deeply Affordable Units The loss of affordable LIHTC units can still be very problematic. This is especially true for deeply affordable units at 30% AMI. There are no units in the non-programmatic dataset that are affordable at 30% AMI, while only 0.1% of conventional market-rate units are affordable at this level. Since market rents can almost never support rents at this level, the conversion of a LIHTC property to market rate typically means the loss of deeply affordable units at 30% AMI. Conclusion of the Study Rent and income restrictions for LIHTC properties generally persist for at least 30 years, but as the program ages and more properties near the end of their compliance periods, the risk of affordability loss increases. Certain factors are correlated with the risk of ending LIHTC rent restrictions such as ownership type, property characteristics, and local housing market. The decision to convert properties to market rate, however, ultimately lies with the property owner who is motivated by a variety of factors. Fortunately, the propensity for LIHTC properties to move to a rent level on par with market rate is low. Although rent for units among non-programmatic LIHTC properties is typically higher than programmatic LIHTC rents, they are still materially below conventional market-rate rent levels. In this way, LIHTC properties leaving the program play a role in a community s overall rental housing strategy by adding to the workforce housing stock, thus increasing affordable access to households that may not qualify for subsidized housing. However, several risks remain, particularly around the loss of deeply affordable units and the risk of rents increasing due to market conditions or rehabilitation of the property. Available public subsidies can best benefit those properties that provide deeply affordable housing as well as affordable housing in areas without a lot of access to similar-priced housing. Understanding the risks associated with the loss of affordable units from LIHTC properties can help inform what may happen as more properties exit the program and provide strategies to help preserve affordable housing to help those tenants most at risk of losing affordable housing.

Cooler Surfaces Create a Competitive Advantage

Multifamily housing developers - including those who build affordable housing - can reduce peak temperatures by replacing hot, dark surfaces - interior roads, rooftops, playgrounds, and parking lots - with cooler alternatives. With each summer seemingly getting hotter than the one before, apartment owners who can develop and market cooler properties will have an advantage over those who do not. While there has been some movement toward "cool roof" and "cool pavement" programs, truly meaningful results will only come from plans that involve all heat-trapping surfaces. Any surface that is dark and impervious should be replaced with surfaces that are green, porous, and reflective. The Smart Surfaces Coalition has partnered with the City of Baltimore as a demonstration of what can be done to cool the urban environment. The idea is to cover the city with reflective roofs and highways, solar panels, trees, porous pavements, and "urban meadows" - areas of the median where mown grass is replaced with unmanicured native grasses. These same ideas can be applied in a micro way at individual properties. "Cool roofs" are an immediate solution for properties undergoing renovation if roof replacement is part of the renovation plan. These building materials help mitigate the urban heat island effect, which can have important implications regarding the comfort of residents. In the past ten years, there has been a significant increase in the cool roof and urban heat island policies in U. S. cities. As of the start of the pandemic (March 2020), Austin, Chicago, Chula Vista (CA), Dallas, Denver, Houston, Los Angeles, Miami Beach, New York, Philadelphia, and Washington, DC had all implemented cool roof mandates. Many cities encourage cool roofs through voluntary green building programs, income-qualified programs, and financial incentives. Anaheim, CA, Austin, Chicago, Los Angeles, Louisville, Pasadena, and Orlando offer a cool roof rebate, while Baltimore, New York City, Philadelphia, and San Antonio use programs that install cool roofs on low-income homes. Affordable housing developers in these cities should investigate how they may use these local benefits. The adoption of cool roofs is also present at the state level. California has had a prescriptive cool roof requirement in its building code (Building Energy Efficiency Standards, Title 24, Part 6) since 2005. Alabama, Florida, Georgia, Hawaii, Nebraska, and Texas also have building codes with cool roof requirements. It is likely that as more states update their building codes, cool roof and other energy-efficient measures will be included. How Do Cool Coatings Work? During the day, a cool roof reflects solar radiation away from the building, and, at night, releases any heat that was absorbed by the roof. In addition to resisting urban warming, a cool roof also lowers the demand for air conditioning, decreases peak electrical demand, and increases resident comfort. When used collectively, cool roofs also improve outdoor air quality and assist with stabilizing electrical grids. Cool roof materials also complement green and solar roofs. Cool roofs are available in a variety of product types, including field-applied coatings and factory-coated metal. Historically, flat or low-sloped roofs have been transformed into cool roofs by coating them white. However, there are now "cool color" products on the market that use darker colored pigments that are highly reflective in the near-infrared (non-visible) portion of the solar spectrum. The "coolness" of a roof coating is determined by two basic properties: solar reflectance (sometimes called albedo) and thermal emittance. Solar reflectance is the fraction of solar radiation that is reflected away from the roof, while thermal emittance is the efficiency by which the roof can radiate any heat that was absorbed into the building. The values of both properties range from 0 - 1. In addition to these two metrics, the "coolness" of a roof can also be represented by its solar reflective index (SRI) value, a calculated metric that combines solar reflectance and thermal emittance into one value. SRI values are usually between 0 and 100, with very cool materials exceeding 100. It is this metric that is most easily understood by builders and developers. With numerous products available for installation on commercial and residential buildings, identifying roofing materials that meet the needs of a project can be difficult. The Cool Roof Rating Council (CRRC) has published a Rated Products Directory, which is an excellent resource for developers looking to receive LEED credits, comply with building codes, or qualify for rebates or loans. The CRRC also is looking at rating exterior wall products. Recent research by Lawrence Berkeley National Laboratory found that cool walls can save as much energy as a cool roof, and when combined, savings are multiplied. What About Cool Pavement? While not as thoroughly studied as cool roofs, cool pavement research is well underway. The City of Phoenix Street Transportation Department and Office of Sustainability have announced the results of the first year of its Cool Pavement Pilot Program. The program and analysis of the cool pavement process is being conducted in partnership with Arizona State University (ASU). Year one of the study done by scientists at ASU s Global Institute of Sustainability and Innovation, Healthy Urban Environments, and the Urban Climate Research Center shows that reflective pavement surface temperatures are considerably lower than traditional roadway pavement. Cool pavement coating reflects a higher portion of the sunlight that hits it, hence absorbing less heat. Because of this higher reflectivity, the coating has the potential to offset rising nighttime temperatures in the hottest regions of the country. Findings from the first year of the study include: Cool pavement revealed lower surface temperatures at all times of the day versus traditional asphalt.Cool pavement had an average surface temperature of 10.5 to 12 degrees Fahrenheit lower than traditional asphalt at noon and during the afternoon hours. Surface temperatures at sunrise averaged 2.4 degrees Fahrenheit lower.Sub-surface temperatures averaged 4.8 degrees lower in areas treated with cool pavement, which indicates a longer lifespan for the surface.Nighttime air temperature at six feet of height was on average 0.5 degrees lower over cool pavement than on non-treated surfaces. While the expense of the cool pavement technology may not be practical for any but the largest housing developments, cool roof technology offers immediate benefit for virtually any multifamily housing development. Builders and owners who are in a position to do so should strongly consider the use of cool roofs for their next new or renovated development.

HUD Issues Guidance on Solar Credits Impact on Resident Income and Project Utility Allowances

A growing number of states offer community solar programs. These programs give families who live in properties, including HUD-subsidized properties and private market rental units, access to renewable energy, even though the property itself may not be suitable for solar panels. Community solar arrays have multiple subscribers who receive benefits on utility bills that are directly attributable to the solar project s energy generation. There are no upfront costs to subscribers, and they can receive benefits typically in the form of an on-electricity bill credit. When there are ongoing costs or fees for low-income participants, it is typically mandated that any costs will not be more than 50% of the value participants get from their system. HUD has issued a Notice on "Treatment of Community Solar Credits on Tenant Utility Bills." The purpose of this notice is to provide guidance to HUD Multifamily Housing (MFH) field staff, owners, and management agents on the treatment of on-bill virtual net energy metering credits that commonly result from a resident s participation in a community solar program. The guidance only applies in cases where tenants are paying for electricity and does not apply to master-metered buildings. This notice applies to the following Office of Multifamily Housing Programs: 1. Project-based Section 8 2. Section 202/162 Project Assistance Contracts (PAC) 3. Section 202 Project Rental Assistance Contracts (PRAC) 4. Section 202 Senior Preservation Rental Assistance Contracts (SPRAC) 5. Section 811 PRACs 6. Section 811 Project Rental Assistance (PRA) 7. Section 236 Subsidized Mortgages The notice outlines a two-step process to be followed in determining (1) will the credit impact the project utility allowance; and (2) does the credit count as annual income for residents. Step One: Determine if community solar credits affect the utility allowance calculation. If the credit reduces the cost of energy consumption by lowering actual utility rates, then the owner is required to submit a new baseline analysis in accordance with Housing Notice 2015-04, regardless of when the last analysis was submitted to HUD/Contract Administrator for approval.Also, if the credit amount fluctuates from month to month, then the credit is tied to the cost of utility consumption, and a new baseline analysis is required.If the credit is a third-party payment (e.g., not from the utility provider) on behalf of the tenant and not a reduction in the cost of utilities, the owner is not required to submit a new utility allowance baseline analysis. Step Two: Determine if the solar credits should be considered annual income for rent calculation or eligibility determination. If the solar credit is tied to the cost of consumption (i.e., the utility allowance is affected), then the credit will not count toward income.If a community solar benefit appears on a household s electricity bill as an amount credited from the total cost of the bill, HUD has determined that the credit should be treated as a discount or coupon to achieve a lower energy bill (rather than a cash payment or cash-equivalent payment being made available to a resident).In this case, the credit will not be counted towards income as discounts on items purchased by a tenant are not viewed as "annual income" to the family.Generally, income is not generated when a family purchases something at a cheaper rate than it otherwise would.Note that if the credits are found to be third-party payments based on Step One, there may be instances when the credits are not mere discounts and must be treated as income.For instance, a recurring monthly utility payment made on behalf of the family by an individual outside of the household is not considered a discount but is considered annual income to the family. If you are evaluating the treatment of solar credits outside the program framework outlined above and require a state-specific determination and/or have general questions about this guidance, please email Lauren Ross, Senior Advisor for Housing and Sustainability at Lauren.Ross@hud.gov.

A. J. Johnson to Offer Live Webinar on File Management & Documentation for Affordable Housing

A. J. Johnson will be conducting a webinar on July 27, 2022, on File Management & Documentation for Affordable Housing Properties.  The Webinar will be held from 1:00 PM to 3:30 PM Eastern time. This 2.5-hour course covers the important, but often overlooked role that file management and documentation play in the success of affordable housing properties. A detailed discussion of how to organize a file, the documents required for each file, setting up the "property notebook," and acceptable forms of verification for all issues relating to eligibility are covered. The course is applicable to all affordable housing programs, including Section 8 and LIHTC, It includes a basic review of resident eligibility issues, with particular emphasis on the documentation of income. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."