Bipartisan Group of Senators Introduces Bill to Expand Opportunity Zones

On November 15, Sens. Richard Burr (R-NC), Dianne Feinstein (D-CA), Lindsay Graham (R-SC), Kamala Harris (D-CA), Bill Nelson (D-FL), Marco Rubio (R-FL), and Thom Tillis (R-NC) introduced the “Hurricanes Florence and Michael and California Wildfire Tax Relief Act” (S. 3648). The bill, in addition to providing tax relief for victims of the natural disasters like an employment credit and tax-favored withdrawals from retirement plans, would designate all of the applicable disaster zones as an Opportunity Zones.

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Treasury Releases Priority Guidance Plan

The U.S. Department of the Treasury released its 2018-2019 Priority Guidance Plan.  Part one covers implementation of the Tax Cuts and Jobs Act of 2017. Notably, the first item in this section is issuing regulations for LIHTC income averaging. The plan also includes issuing regulations for utility allowances under the LIHTC, clarification and revision of certain NMTC rules and a revenue procedure concerning the use of the HTC in disaster relief.

Shutdown Countdown

Funding for the federal government was scheduled to run out on Friday, Dec. 7. On Thursday, Dec. 6 Congress passed a short term continuing resolution that funds the remaining seven appropriations subcommittee bills through Dec. 21. President Trump signed the bill on Friday, Dec. 7.

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Lame Duck Session Update: Tax Bill and Appropriations

Congress returns this week after its Thanksgiving break with a full agenda.  Priorities include extending funding for most federal agencies for FY 2019, which expires on Dec. 7, and a potential tax package. Chairman of the House Ways and Means Committee Kevin Brady (R-TX) released a tax bill that Congressional Republicans hope to pass during the lame-duck. The bill makes corrections to the Tax Cuts and Jobs Act of 2017, extends several expiring tax measures, includes disaster tax relief and makes changes to retirement and savings tax provisions. 

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FHFA releases final rule on AHP; Schedules Webinar

The Federal Housing Finance Agency (FHFA) published a final rule amending the Federal Home Loan Banks’ (FHLBanks) Affordable Housing Program (AHP) regulations. FHLBanks are required to allocate 10 percent of prior year’s income to fund the AHP, which helps subsidize the purchase, construction and rehabilitation of affordable rental and owner-occupied housing for moderate-, low- and very low-income households.

The rule authorizes the FHLBanks to establish competitive funds that target specific affordable housing needs, with demonstrated need, in their districts. The rule also removes the requirement for retention agreements for owner-occupied units where the AHP subsidy is used solely for rehabilitation.

The owner-occupied retention agreement requirements must be implemented by Jan. 1, 2020 and all other changes must be implemented by Jan. 1, 2021. FHFA will host a webinar at 2 p.m. EST on Dec. 13, 2018, to describe the final rule and answer questions.  Questions may be submitted in advance to  Register here for the webinar.

Economic and Fixed Income Insights, November 14, 2018

Housing remains a soft spot in the economy as mortgage applications continue to drop with rising rates and slumping stocks deterring potential homebuyers. According the Mortgage Bankers Association, volume is down 22% from the year prior. Tech and crude oil prices are weighing on equity markets and driving haven demand, even while the overall tone of the economy remains upbeat. The stock selloff saw debt yields retreat, and the benchmark 10-year UST sits at 3.14%, down 9 basis points from the week prior.  Municipal bonds also trended lower and were down 3-6 basis points along the curve.

Interest Rate Observations

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of November 13, 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

2018 Elections: Housing Ballot Measure Highlights

Housing was on the ballot in many communities last week.  Below are links to some notable highlights from around the country:

  • San Francisco voters approved a tax on big business to fund permanent housing, emergency shelters and mental health services for the city’s homeless people. Economists said it would raise $250 million to $300 million. 
  • Portland-area voters on Tuesday approved a $652.8 million bond measure to build thousands of homes affordable for low-income residents.
  • Charlotte voters approved  a $50 million affordable housing bond.
  • Austin voters approved a $250 million affordable housing bond.
  • California voters defeat ballot measure that would have expanded rent control.