Articles Posted in Affordable Housing

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This update follows an earlier post discussing Proposition 10’s potential impacts and pre-election prospects, available here.

What happened on Election Day
Despite California’s sky-high rents, voters just rejected a ballot measure that would have allowed cities to expand rent control. With 100% of precincts reporting, 61.7% of voters opposed Prop 10, while 38.3% voted to approve the measure. The ballot measure only achieved a majority in one of California’s fifty-eight counties, San Francisco. In Los Angeles County, 47.2% of voters supported the proposition. However, the ballot measure fared substantially worse in Sacramento, San Diego, Fresno and Orange counties. These results highlight the measure’s widespread unpopularity.

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In less than two weeks, California voters will decide whether to pass Proposition 10, which would allow cities and counties across the state to expand rent control.

Supporters of the measure say it will protect tenants during a time of unprecedented housing affordability problems in California. Opponents argue that the measure will stall housing construction—the levels are already low—and further increase costs.

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Today, our colleagues Tom Morton and Emily Bias published their Client Alert titled Impacts of the Omnibus Spending Plan on the Affordable Housing Industry, Trump’s Omnibus Spending Plan adopts two key provisions from the proposed Affordable Housing Credit Improvement Act that will strengthen and expand low-income housing creditTakeaways include

  • 2018 spending plan increases housing credit ceiling by 12.5% for next 4 years and incorporates a new “Average Income Test” to qualify for low-income housing tax credits; and
  • The Average  Income Test offers potential benefits to taxpayers, but open issues include whether States will adopt this option, the mechanics of application, and difficulties in monitoring compliance.

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iStock-482487681-maijuana-tax-300x200As noted in a prior post, the affordable housing industry is struggling to make ends meet after equity pricing took a dive in response to the decreased corporate tax rate under President Trump’s tax reform plan. While some reprieve was granted by the increases in tax credit allocations and appropriations for affordable housing programs under the 2018 federal spending plan, developers are still struggling to fill funding gaps. One city is proposing a creative way to funnel more money toward affordable housing: On April 16, Denver Mayor Michael Hancock proposed a 2% increase in the special tax on recreational marijuana, with the additional revenue generated to be earmarked for the City’s affordable housing fund.

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affordable housingOn March 23, President Trump signed into law the Consolidated Appropriations Act, 2018, a $1.3 trillion spending package that includes a 12.5% increase in low-income housing tax credit allocations over the next four years, along with funding increases for several affordable housing programs. This is welcome news to affordable housing developers who have been facing funding gaps as a result of reductions in the corporate tax rate under the Tax Cuts and Jobs Act enacted in late 2017, which led to reduced pricing from equity investors.

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