HUD/Treasury Budget Materials-Several Preservation Items.

HUD has now published their summary of the FY 2012 proposed budget HERE. 

The Treasury summary of FY 2012 revenue proposals is HERE. (LIHTC provisions begin on PDF page 30).

Some excerpts and my comments on several housing preservation related proposals. 

...the budget includes $200 million for a demonstration and rigorous process evaluation of the conversion of up to 255,000 public housing units to long-term project-based rental assistance contracts. Public housing authorities will then be able to leverage private capital to make repairs. Through similar conversions, the demonstration will preserve 7,600 privately-owned, HUD-assisted units at risk of leaving the affordable housing stock [Comment: Unless the FY 2011 proposal has changed significantly in FY 2012, conversion of public housing units would provide priority to housing authorities who ONLY have public housing units--this excludes virtually ALL Oregon housing authorities.  A better alternative for Oregon would be to put this money back into CDBG or HOME program. )

The Department’s overall preservation agenda is complemented in the Department of Treasury’s budget for fiscal year 2012, which proposes two reforms to the Low Income Housing Tax Credit (LIHTC) that will:
• Replace the current cap on household income at 60 percent of area median income with the option that properties serve households whose average income is no greater than 60 percent of AMI and with no individual household above 80 percent of AMI. These changes to the Code’s low-income occupancy threshold requirements will accomplish three things: (i) allow greater income-mixing at the project level, creating opportunities for workforce housing; (ii) help align LIHTC with HUD’s and USDA’s affordable housing programs (which define low-income at 80 percent of area median income); and (iii) lead to the creation of more units targeted to the lowest income households. It’s important to note that this income averaging proposal increase our ability to preserve
HUD-assisted properties. 69,224 households living in public housing and 23,271 households in multifamily housing have incomes above 60% of AMI. This proposal allows these units to be counted in basis, increasing the equity flowing to these projects for preservation. [ Comment: This does NOT directly benefit worst case housing needs that are concentrated with the lowest income rental households].
•Make the 4% credit a more viable source of funding for the preservation of the federal affordable housing stock by giving qualifying properties a 30% basis boost in the context of preserving, recapitalizing, and rehabilitating existing affordable housing, particularly public housing targeted by TRA (as well as Multifamily Housing, 236s, BMIRs, RAP,
Rent Sup, 202, 811, HOME, McKinney and CDBG funded units, USDA-RD (515s)). This means that a greater amount of equity could be raised per credit even at the higher yields required by investors for 4% investments, which in turn will generate more interest in LIHTC preservation deals within the investor and developer community. [Comment: This makes sense as long as affordable housing targeted IS limited to low income units].

Originally created and posted on the Oregon Housing Blog.