the washington report - novogradac & company llp washington report . moderator panelists ....

The Washington Report

MODERATOR PANELISTS

Michael Novogradac Novogradac & Company LLP

@Novogradac

David Gasson Boston Capital

@DSGasson

Richard Goldstein Nixon Peabody LLP

@GoldsteinRick

Peter Lawrence Novogradac & Company LLP

@NovocoPolicy

Agenda

Election Results

Looking Ahead – 2017

Potential for (and Challenges of) Tax Reform

Affordable Housing Improvement Act

Advocacy

HUD/GSEs

November 2016

D O N A L D

TRUMP 306

ELECTORAL VOTES

Has not stated a position However, his father developed a substantial amount of unsubsidized affordable rental housing in NYC

Trump & Affordable Housing

D O N A L D

TRUMP

A Look at the Senate Races

114th Congress

2I 44 Democrats 54 Republicans


Contested 2016

34, no 2016 election 30, no 2016 election 9 safe D

17 safe R

8


Results

46 Democrats 51 Republicans

La. Undetermined Runoff between John Kennedy and Foster Campbell Kennedy leads | Run-off is Dec. 10

2I

Key Senate Race Results State Democratic Candidate Republican Candidate Result Florida Illinois Indiana Missouri Nevada New Hampshire North Carolina Ohio Pennsylvania Wisconsin

Rep. Patrick Murphy Rep. Tammy Duckworth Former Sen. Evan Bayh Jason Kander Catherine Cortez Masto Gov. Maggie Hassan Deborah Ross Former Gov. Ted Strickland Kate McGinty Former Sen. Russ Feingold

Sen. Marco Rubio (incumbent) Sen. Mark Kirk (incumbent) Rep. Todd Young Sen. Roy Blunt (incumbent) Rep. Joe Heck Sen. Kelly Ayotte (incumbent) Sen. Richard Burr (incumbent) Sen. Rob Portman (incumbent) Sen. Pat Toomey (incumbent) Sen. Ron Johnson (incumbent)




SENATE FINANCE COMMITTEE MEMBERS




LEAD NMTC BILL SPONSOR

HOUSING CREDIT SUPPORTER




Rubio Duckworth Young Blunt Masto Hassan Burr Portman Toomey Johnson

Senate Finance Committee Current Roster

Republicans Democrats

Orrin Hatch, UT Chuck Grassley, IA Mike Crapo, ID Pat Roberts, KS Michael Enzi, WY John Cornyn, TX John Thune, SD

Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Patrick Toomey, PA Dan Coats, IN Dean Heller, NV Tim Scott, SC

Ron Wyden, OR Charles Schumer, NY Debbie Stabenow, MI Maria Cantwell, WA Bill Nelson, FL Robert Menendez, NJ

Thomas Carper, DE Benjamin Cardin, MD Sherrod Brown, OH Michael Bennet, CO Robert Casey, Jr., PA Mark Warner, VA

Members reelected







Retired







Retired

Possible replacements:

Jeff Flake R-AZ

Roger Wicker R-MS

Deb Fischer R-NE




Richard Burr, NC Johnny Isakson, GA Rob Portman, OH Patrick Toomey, PA Dean Heller, NV Tim Scott, SC



Up for election in 2018

A Look at the House Races

194 D EMO CRAT S

240 REP U BL I CA NS

1 U ND ET ERMINED

La. 4th District Undetermined Mike Johnson (R) favored over Marshall Jones (D) in Dec. 10 runoff

House Ways and Means Committee Current Roster

Republicans Democrats Kevin Brady, TX Sam Johnson, TX Devin Nunes, CA Pat Tiberi, OH Dave Reichert, WA Charles Boustany, LA Tom Price, GA Vern Buchanan, FL Adrian Smith, NE Robert Dold, IL Lynn Jenkins, KS Erik Paulsen, MN

Kenny Marchant, TX Diane Black, TN Tom Reed, NY Todd Young, IN Mike Kelly, PN Jim Renacci, OH Pat Meehan, PA Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC

Sander Levin, MI Charles Rangel, NY Jim McDermott, WA John Lewis, GA Richard Neal, MA Xavier Becerra, CA Lloyd Doggett, TX Mike Thompson, CA

John B. Larson, CT Earl Blumenauer, OR Ron Kind, WI Bill Pascrell, NJ Joseph Crowley, NY Danny K. Davis, IL Linda Sánchez, CA

Ways and Means Leadership

Kevin Brady R-TX

Sander Levin D-MI

Sander Levin D-MI

Will not seek re-election to ranking member position






Ways and Means Leadership

Kevin Brady R-TX

Richard Neal D-MA

OR

Xavier Becerra D-CA






Ran for Senate, did not advance to run-off


Republicans Democrats Kevin Brady, TX Sam Johnson, TX Devin Nunes, CA Pat Tiberi, OH Dave Reichert, WA Tom Price, GA Vern Buchanan, FL Adrian Smith, NE Robert Dold, IL Lynn Jenkins, KS Erik Paulsen, MN




Elected to Senate



Kenny Marchant, TX Diane Black, TN Tom Reed, NY Mike Kelly, PN Jim Renacci, OH Pat Meehan, PA Kristi Noem, SD George Holding, NC Jason T. Smith, MO Tom Rice, SC



Retired




Sander Levin, MI John Lewis, GA Richard Neal, MA Xavier Becerra, CA Lloyd Doggett, TX Mike Thompson, CA


Lost reelection


Republicans Democrats Kevin Brady, TX Sam Johnson, TX Devin Nunes, CA Pat Tiberi, OH Dave Reichert, WA Tom Price, GA Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN




Chosen as HHS Secretary Nominee


Republicans Democrats Kevin Brady, TX Sam Johnson, TX Devin Nunes, CA Pat Tiberi, OH Dave Reichert, WA Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN




Running for Governor in 2018






Running for Governor in 2018

Possibly…






Possible Republican Candidates:

David Schweikert R-AZ

Jackie Walorski R-IN

Mike Bishop R-MI

Carlos Curbelo R-FL

Barbara Comstock R-VA


Republicans Democrats Kevin Brady, TX Sam Johnson, TX Devin Nunes, CA Pat Tiberi, OH Dave Reichert, WA Charles Boustany, LA Vern Buchanan, FL Adrian Smith, NE Lynn Jenkins, KS Erik Paulsen, MN




Possible Democratic Candidates:

Brian Higgins D-NY

Marcia Fudge D-OH

Terri Sewell D-AL

Current House and Senate Leadership

REP. RYAN Speaker Wis. - 1

REP. PELOSI Minority Leader

Calif. - 12

SEN. MCCONNELL Majority Leader

Kentucky

SEN. REID Minority Leader

Nevada

HOUSE SENATE

Current House and Senate Leadership

REP. PELOSI Minority Leader

Calif. - 12

SEN. MCCONNELL Majority Leader

Kentucky

SEN. REID Minority Leader

Nevada

HOUSE SENATE

Future

SEN. SCHUMER Minority Leader

New York

REP. RYAN Speaker Wis. - 1

Want more analysis?

1. Check out Notes from Novogradac at www.novoco.com/blog for a quick-take post

2. Tune into the Tax Credit Tuesday podcast posted Tuesday, November 15th - found at www.novoco.com/podcast

3. Look for our most in-depth analysis in the Washington Wire and Policy Points sections of the December issue of the Journal of Tax Credits – www.novoco.com/journal

http://www.novoco.com/blog

http://www.novoco.com/podcast

http://www.novoco.com/journal

DEC

Sep. 30 Fiscal year end Jan. 20

Presidential inauguration

2016 2017

Dec. 31 Various extenders expire, including ITC for certain technologies, 45L, 179D

Dec. 1 Today

JAN FEB MAR APR MAY JUNE JULY AUG NOV OCT SEP

Mar. 31 CR expires

Mar. 15 Debt ceiling suspension expires

Pushed to Aug/Sep Debt ceiling suspension expires

Apr. 15 FY 18 budget resolution “due” Tax reform reconciliation instructions?

Dec. 9 CR expires

Treasury to employ measures to avoid breaching the limit

Feb/Mar FY 17 budget resolution ACA repeal reconciliation instructions?

April 30 100th Day

June 18 150th Day

Proposed by the House

Infrastructure

Military Spending $$

PRESIDENT ELECT DONALD TRUMP

Tax Reform

CHAIRMAN KEVIN BRADY

SPEAKER PAUL RYAN

Repeal & Replace

Comprehensive Tax Reform

House GOP Tax Reform Task Force • Calls for top 20% corporate tax rate

– No deduction for net interest expense, but immediate depreciation of new investments (excluding land)

• Top 33% individual tax rate, with 50% scalar for all investment income

• Silent on LIHTC, NMTC, HTC and tax-exempt bonds • Document does say that tax reform as proposed

“generally will eliminate special-interest deductions and credits in favor of providing lower tax rates.”

• Tax Reform Task Force describes the blueprint as “the beginning of our conversation about how to fix our broken tax code.”

• Legislative language by the first quarter of 2017

Transition Rules

SENATOR ORRIN HATCH

Corporate Integration

ACA Repeal

Comp. Tax Reform

Infra- structure

Corp. Integ.

FY 17 Budget

Reconciliation

FY 18 Budget

Reconciliation

Tax Reform?

COMPREHENSIVE (business & indiv.)

BUDGET RECONCILIATION

Affordable Housing

S. 2962 Affordable Housing Improvement Act of 2016

Sen. Cantwell D-Washington

Sen. Hatch R-Utah

Sen. Wyden D-Ore.

Sen. Schumer D-N.Y.

Announced May 19, 2016

Affordable Housing Improvement Act of 2016, Part 2


Sen. Hatch R-Utah

S. 3237


New, expanded bill includes provisions in first LIHTC bill, S. 2962: • 50 percent increase • Income-averaging • Minimum 4 percent rate


S. 3237


Additional Resources • Give states discretion to provide 30% basis boost for bond-

financed projects • Repeal QCT population cap • Relocation costs included in eligible basis • No basis reduction for certain energy tax incentives • Indian areas generally treated as DDAs


S. 3237


Financial Feasibility • 50% basis boost for ELI units • Modify student occupancy rules • Codify increased tenant income guidance • Modify 10-year rule • Limits apply to acquisition basis • Adopt uniform income eligibility for rural projects Sen. Cantwell

D-Washington

S. 3237


Other • Simplify the LIHTC student rule • Clarify the ability to claim LIHTCs after casualty losses • Replace the ROFR with a purchase option • Add Native American projects as QAP selection criterion


S. 3237


Other • Modify the rent-setting rule • Clarify the community revitalization plan • Prohibit local approval or contribution requirements • Change the official name of the LIHTC to Affordable Housing Tax

Credit Sen. Cantwell

D-Washington

S. 3237


Largest impact on equity for bond deals: • Minimum 4 percent • State discretionary boost of up to 30%

in areas outside of DDAs/QCTs • Repealing population cap on QCTs • Automatic DDA for Indian areas


S. 3237

www.taxcredithousing.com

www.novoco.com/products

GSEs

• 2008 Agreement with Treasury - GSE bailout • Capital Reserve

– Quarterly Dividend • Net Worth over Capital Reserve

– Fannie Mae and Freddie Mac will have no Capital Reserve by 1/1/2018

• Wind down Investment Portfolio – $250 billion by 12/31/2018

Capital Requirement and Investment Portfolio

Mel Watt Federal Housing Finance Agency

Director

Housing Trust Fund

• In calendar year 2015, contributions were set aside by Fannie Mae & Freddie Mac

• Watt December 11, 2014 letters to Fannie Mae, Freddie Mac

• Grants for affordable rental housing that targets extremely low-income individuals and households

• HUD released interim rule on January 30, 2015 • HUD announced HTF state allocations on May 5 • Once state HTF allocation plans are approved, states can

award HTF grants to developments

2014 2016

59

2015


Director

Housing Trust Fund

2016

2016 State Housing Trust Fund Allocations

California $10,128,143 New York $7,013,963 Texas $4,778,364 Florida $4,598,821 Illinois $4,302,012 Pennsylvania $3,862,285 Ohio $3,740,578 New Jersey $3,733,566 Michigan $3,522,622 Massachusetts $3,419,569

Top 10 State HTF Allocations

60

HUD/Treasury Reported Amounts

Housing Trust FundCapital Magnet Fund

$174M

$93M

Housing Trust Fund

2017

Preliminary 2017 estimate using 1st, 2nd and 3rd quarter of 2016 10-Q filings from Fannie/Freddie

California $28,058,595 New York $18,155,987 Texas $9,947,433 Florida $9,322,871 Illinois $8,459,331 Pennsylvania $6,935,453 Ohio $6,571,079 New Jersey $6,275,360 Michigan $5,691,580 Massachusetts $5,421,678

Top 10 State HTF Allocation Estimates

61

Preliminary Estimate

Housing Trust FundCapital Magnet Fund

$229M

$123M

Housing Trust Fund

2018 62


Director

• Possible Watt will resign • Trump would assign new FHFA director who may halt

contributions for future years ?

FY 2015 Enacted

FY 2016 Enacted

President’s FY 2017 Proposed

Senate FY 2017 THUD Bill

House FY 2017 THUD Bill

Housing Choice Voucher $19,304 $19,628 $20,854 $20,431 $20,189

Project Based Section 8 $9,730 $10,620 $10,816 $10,901 $10,901

Public Housing Operating Fund $4,440 $4,500 $4,569 $4,675 $4,500

Public Housing Capital Fund $1,875 $1,900 $1,865 $1,925 $1,900

Section 202 $420 $433 $505 $505 $505

Section 811 $134 $150 $154 $154 $154

HOPWA $330 $335 $335 $335 $335

CDBG $3,000 $3,000 $2,800 $3,000 $3,000

HOME $900 $950 $950 $950 $950

Homeless Assistance $2,135 $2,250 $2,664 $2,330 $2,487

Choice Neighborhood Initiative $80 $125 $200 $80 $100

Overall $45,372 $46,978 $48,911 $48,434 $47,955

Note: amounts in Millions HUD Budget

The 2017-2018 HUD Budget

President

Senate

House

§8

$18.45B

$18.35B

$18.12B

PB§8

$10.8B

$10.9B

$10.9B

CDBG

$2.8B

$3.06B

$3.06B

HOME

$950M

$950M

$950M

PHCF

$1.87B

$1.93B

$1.9B

PHOF

$4.57B

$4.68B

$4.5B

Incoming HUD & Treasury Secretaries

Dr. Ben Carson

HUD Treasury

Steven Mnuchin President Elect Trump’s Campaign

Finance Chairman & Wall Street Insider Former GOP Presidential Candidate &

Retired Neurosurgeon

The Washington Report

MODERATOR PANELISTS

Michael Novogradac Novogradac & Company LLP

@Novogradac

David Gasson Boston Capital

@DSGasson

Richard Goldstein Nixon Peabody LLP

@GoldsteinRick

Peter Lawrence Novogradac & Company LLP

@NovocoPolicy

the washington report - novogradac & company llp washington report . moderator panelists ....

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