Affordable Housing Category Archives

Economic and Fixed Income Insights – April 18, 2018

Economic and Fixed Income Insights

U.S. new home construction rose by more than forecast in March on a rebound in multifamily starts, according to Bloomberg. Residential starts rose 1.9% to 1.32 million annualized rate (estimate 1.27 million) while building permits, a proxy for future construction of all types of homes, rose 2.5% to 1.35 million (estimate 1.32 million). While demand remains solid, a shortage of workers, rising costs for materials and a scarcity of ready-to-build lots are limiting gains in building activity. Turning to the bond market, the treasury yield curve continues to flatten as the spread between the short and long ends trends toward decade lows, according to Bloomberg.  For the week, the benchmark 10-year UST finished 5 basis points higher at 2.83%, and the 30-year UST was down one basis point to 3.02%.   Tax-exempt yields also continued to trend downward. The 10-year MMD finished 6 basis points lower to yield 2.40%, and the 30-year MMD finished 3 basis points lower to 2.96%

Interest Rate Observations

Benchmark Current Previous

Week

(+/-) Change Previous

Year

(+/-) Change
10-Year UST 2.83% 2.78% 5 2.22% 61
30-Year UST 3.02% 3.03% (1) 2.87% 15
10-Year MMD 2.40% 2.46% (6) 2.03% 37
30-Year MMD 2.96% 2.99% (3) 2.86% 10
Federal Funds Rate 1.75% 1.75% 0 1.00% 75
1-month LIBOR 1.90% 1.88% 2 0.99% 91
SIFMA 1.72% 1.60% 12 0.92% 80
10-year LIBOR Swap 2.86% 2.79% 7 2.17% 69

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of April 17, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

President Signs Omnibus Legislation into Law, 10% Increase for HUD, LIHTC Improvements

On March 23, President Trump signed into law the 2018 omnibus spending bill (HR 1625). Bill language was released late Wednesday night and the House of Representatives and Senate subsequently passed the bill on Thursday. The news of passage comes shortly after President Trump threatened via Twitter to veto the bill on Friday morning. The bill will fund the Federal Government for the remainder of the 2018 fiscal year and comes after several stopgap funding measures.

What’s In the Bill:

Low Income Housing Tax Credit
The LIHTC received some improvements adopted from the Cantwell-Hatch Affordable Housing Credit Improvement Act:

  • Allocation Increase: A 12.5 percent increase in Housing Credit allocation for four years (2018-2021)
  • Income Averaging: The income averaging option allows projects to accept tenants with higher average median incomes as long as the overall average of tenants in the project does not exceed 60% AMI. This will allow for LIHTC projects to serve a greater range of incomes.

Unfortunately, a provision creating a fixed 4% floor for tax-exempt bond financed projects was not included.

HUD
At $42.7 billion, HUD sees a 10% funding increase over Fiscal Year 2017. That’s in stark contrast to President Trump’s proposed 19% cut to the Department and exceeds proposals from both the House and Senate sub-committee markups (a 4% increase in the Senate and a 1% cut in the House). The increased numbers stem from last month’s bipartisan budget agreement.

The Rental Assistance Demonstration (RAD) program sees an increased cap from 225,000 units to 455,000 units as well as extended authority to cover PRAC. Detailed funding numbers for specific HUD programs can be found in the chart below.

HUD / RD PROGRAMS Enacted Funding FY 2017 (in Millions) Omnibus Proposed FY 2018 (in Millions) Difference Between 2017 Enacted and 2018 Omnibus
Project-Based Rental Assistance  $     10,816.00  $     11,515.00  $          699.00
Tenant-Based Rental Assistance  $     20,292.00  $     22,015.00  $       1,723.00
Public Housing Capital Fund  $       1,941.50  $       2,750.00  $          808.50
Homeless Assistance Grants  $       2,383.00  $       2,513.00  $          130.00
Choice Neighborhoods Initiative  $          138.00  $           150.00  $            12.00
Housing for the Elderly Program  $          502.40  $           678.00  $          175.60
HOME Investment Partnerships  $          950.00  $       1,362.00  $          412.00
Community Development Block Grants  $       3,060.00  $       3,300.00  $          240.00
Public Housing Operating Fund  $       4,400.00  $       4,550.00  $          150.00
Housing for Persons with Disabilities Program  $          146.20  $           229.60  $            83.40
Section 515 Rental Housing  $             35.00  $             10.52  $           (24.48)
Section 521 Rental Assistance  $       1,405.00  $       1,345.29  $           (59.71)
RD Multi-Family Housing Revitalization  $             41.00  $             47.00  $               6.00
Family Self-Sufficiency Program (FSS)  $             75.00  $             75.00  $                   –
Native American Housing Block Grant  $          654.00  $           655.00  $               1.00
RAD  $                   –  $                    –  $                   –
Native Hawaiian Housing Block Grants  $               2.00  $               2.00  $                   –
HOPWA  $          356.00  $           375.00  $            19.00
FHA MMI Fund Account  $          130.00  $           130.00  $                   –
FHA — General and Special Risk Insurance Fund  $                   –  $                   –
Fair Housing Programs  $             65.90  $             65.30  $             (0.60)

Economic and Fixed Income Insights – April 11, 2018

Economic and Fixed Income Insights

The consumer price index (CPI) fell 0.1% in March, the first monthly decline in 10 months, and following a 0.2% increase the month prior. Year-over-year however, headline consumer prices rose 2.4% in March as expected, according to Bloomberg. This provides some support for those at the Fed looking for meaningful rise in prices. However, this trend in prices will need to be maintained in order to justify additional rate hikes in the future. Markets remain volatile on easing trade rhetoric between the world’s two largest economies and fresh tension in the Middle East. Bond yields ended the week slightly lower along most of the curve. The 10-year UST finished 2 basis points higher at 2.80%, and the 30-year UST was down one basis point to 3.02%.   Tax-exempt yields continued to trend downward, with both the 10-year and 30-year MMD 3 basis points lower for the week, following a decline of 5 basis points the week prior.

Interest Rate Observations

Benchmark Current Previous

Week

(+/-) Change Previous

Year

(+/-) Change
10-Year UST 2.80% 2.78% 2 2.24% 56
30-Year UST 3.02% 3.03% (1) 2.89% 14
10-Year MMD 2.43% 2.46% (3) 2.12% 31
30-Year MMD 2.96% 2.99% (3) 2.94% 2
Federal Funds Rate 1.75% 1.75% 0 1.00% 75
1-month LIBOR 1.89% 1.88% 1 0.99% 90
SIFMA 1.60% 1.58% 2 0.89% 71
10-year LIBOR Swap 2.83% 2.79% 4 2.20% 63

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of April 10, 2018

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic and Fixed Income Insights – April 4, 2018

The spring housing market is in full swing, but the recent spike in interest rates and volatile stock market may be keeping some potential home buyers at bay. Total mortgage application volume fell 3.30% last week from the previous week, according to Bloomberg. While new listings have come on for the spring market, inventory is still down from a year ago, and home price gains continue to accelerate. Bond yields trended lower as equity markets assessed dual threats from tech and trade.  For the week, the 10-year UST was 5 basis points lower to yield 2.73%, while the 30-year UST finished 7 basis points lower to yield 2.96%.  In the tax-exempt market, both the 10-year and 30-year MMD were 5 basis points lower for the week yielding 2.41% and 2.94%, respectively.

Interest Rate Observations

Benchmark Current Previous

Week

(+/-) Change Previous

Year

(+/-) Change
10-Year UST 2.73% 2.78% (5) 2.34% 39
30-Year UST 2.96% 3.03% (7) 2.99% (3)
10-Year MMD 2.41% 2.46% (5) 2.20% 21
30-Year MMD 2.94% 2.99% (5) 3.00% (6)
Federal Funds Rate 1.75% 1.75% 0 1.00% 75
1-month LIBOR 1.88% 1.88% 0 0.99% 89
SIFMA 1.58% 1.36% 22 0.88% 70
10-year LIBOR Swap 2.76% 2.79% (3) 2.32% 44

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of April 3, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

 

Economic and Fixed Income Insights – March 28, 2018

Presented by Stifel, Nicolaus & Company, Incorporated

Economic and Fixed Income Insights

U.S. pending home sales rose in February for the first time in three months, highlighting uneven progress in the housing sector. According to Bloomberg, the pending home sales index increased to a reading of 107.5, up 3.1% from the prior month. In other news, Q4 GDP expanded at a 2.9% annual rate in the final three months of 2017, up from the previously reported 2.5%. The biggest gain in consumer spending in three years partially offset the drag from a surge in imports. The upward revision to the fourth-quarter growth estimate also reflected less inventory reduction than previously reported.  Bonds have rallied as the tech rout has spurred demand for haven assets.  For the week, the 10-year UST was 12 basis points lower to yield 2.78%, while the 30-year UST finished 10 basis points lower to yield 3.03%.  Tax-exempt yields fell in tandem with treasuries.  Both the 10-year and 30-year MMD were 5 basis points lower for the week yielding 2.46% and 2.99% respectively.

Interest Rate Observations

Benchmark Current Previous

Week

(+/-) Change Previous

Year

(+/-) Change
10-Year UST 2.78% 2.90% (12) 2.38% 40
30-Year UST 3.03% 3.13% (10) 2.99% 4
10-Year MMD 2.46% 2.51% (5) 2.23% 23
30-Year MMD 2.99% 3.04% (5) 3.01% (2)
Federal Funds Rate 1.75% 1.50% 25 1.00% 75
1-month LIBOR 1.88% 1.85% 3 0.98% 89
SIFMA 1.36% 1.22% 14 0.91% 45
10-year LIBOR Swap 2.79% 2.93% (14) 2.36% 43

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of March 27, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

 

Stifel, Nicolaus & Company, Incorporated is a broker-dealer registered with the United States Securities and Exchange Commission and is a member FINRA, NYSE & SIPC. © 2018

HUD Launches New Section 8(bb) Preservation Tool

If a PBRA HAP contract is terminated or expires and is not renewed, HUD is authorized to transfer any remaining budget authority to either a new or an existing PBRA HAP contract to provide assistance to eligible families. HUD provides a list of potential properties which are eligible for an 8(bb) transfer, which will be useful to owners who are interested in transferring their PBRA budget authority.

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House Tax Reform Bill Eliminates HTC, NMTC; Eliminates Private Activity Bonds

The House Ways and Means Committee has released the full text of its Tax Cuts and Jobs Act. The Committee plans to begin markup on the proposed legislation on November 6, with plans for a House floor vote sometime in mid-November. Several changes within the code would drastically change the landscape of affordable housing and community development.

Read More

California Schedules Workshop for Affordable Energy Efficiency Financing Pilot

California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) is hosting a public workshop on the Affordable Multifamily Energy Efficiency Financing Pilot under the California Hub for Energy Efficiency Financing (CHEEF) on Tuesday, November 7, 2017.  CAEATFA, in its partnership with the CPUC, will provide a credit enhancement to private capital lenders to expand access to financing for energy efficiency retrofits on affordable multifamily properties. The purpose of this workshop is to solicit stakeholder input on the proposed pilot design. TCAC would like its stakeholders to be aware of the following opportunity and encourages participation in this workshop.

The workshop will be held on Tuesday, November 7, 2017 from 1:00-4:00pm PST at the PG&E Pacific Energy Center: 851 Howard Street, San Francisco, CA 94103. Participants may attend in person or by webinar.

Presentation slides will be made available prior to the workshop. For additional information and to RSVP, please visit the Affordable Multifamily Financing Pilot webpage.

Rep. DelBene Introduce Legislation Expanding LIHTC by 50 Percent

According to a press release issued on October 31, 2017 Congresswoman Suzan DelBene (WA-01) today led members of the Washington state delegation representing King County in introducing the Access to Affordable Housing Act to increase the Low Income Housing Tax Credit (LIHTC) by 50 percent.  At press time bill text was not yet available.

“Making sure that every American has a safe and affordable place to call home is a moral imperative that we must address,” DelBene said. “To help lift families out of poverty and expand access to affordable housing, we need to increase the Low Income Housing Tax Credit. Washington has seen it firsthand, housing options are not keeping pace with demand and my legislation would help ensure more families can find stable, affordable housing.”

Reps. Adam Smith (WA-09) and Pramila Jayapal (WA-07) are original cosponsors of DelBene’s bill – all of whom represent King County, where housing demand and costs have sky rocketed in recent years. In Washington state, nearly 400,000 households pay half their income in rent.

“A growing number of our community members are experiencing housing insecurity. We need to do more to address our affordable housing crisis,” said Smith. “Housing is critical component of economic mobility. I am proud to join my colleagues in introducing this legislation to strengthen and expand the Low Income Housing Tax Credit. This is a necessary step in building an equitable future and ensuring that families in Washington state and across the country have access to homes they can afford.”

“Seattle is facing a housing crisis and we need to employ every tool in our toolbox to expand our low-income housing stock. I am so proud to join my colleagues in Washington state as we introduce the Access to Affordable Housing Act and tackle the housing crisis head-on,” said Jayapal. “All of our neighbors, and everyone across the country, deserves access to a safe, affordable home and a greater sense of stability. By raising the Low Income Housing Tax Credit, we are not only increasing our state’s ability to build low income housing, we are opening doors to opportunity for people across our communities.”

The Access to Affordable Housing Act would increase the Low Income Housing Tax Credit (LIHTC) by 50 percent, which could result in as many as 400,000 more affordable housing units developed over 10 years.

DelBene serves on the House Ways and Means Committee, which has jurisdiction over tax issues. DelBene is also a cosponsor of the bipartisan Affordable Housing Credit Improvement Act, a comprehensive bill to strengthen the LIHTC by providing states flexibility and encouraging development in rural communities.

Lincoln Institute of Land Policy Publishes New Report on Inclusionary Zoning Programs

The Lincoln Institute of Land Policy unveiled the largest study to date of inclusionary housing – the policy where developers reserve a portion of new development as affordable.  The study, authored by Emily Thaden and Rouniu (Vince) Wang surveys inclusionary zoning policies in 886 jurisdictions in 25 states.  The paper documents nearly 200,000 affordable housing units that have been created and nearly $2 billion in fees paid by developers in lieu of building affordable units – likely underestimates because of missing data.  Click here to learn more.