Washington Wire. for the 2015 CHFA Housing Credit Summit. Michael Novogradac Partner Novogradac & Company

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2 Washington Wire for the 1 Michael Novogradac Partner Novogradac & Company 1

3 Overview Tax Reform Tax Extenders ACTION Agenda HTF Update 2 2

4 Overview Tax Reform Tax Extenders ACTION Agenda HTF Update 3 3

5 The Players 4 Sen. Orrin Hatch (R-UT) Sen. Ron Wyden (D-OR) Rep. Paul Ryan (R-WI) Rep. Sander Levin (D-MI) 4

6 Tax Reform Lessons Hearing Bipartisanship Strong support from the White House Former Senate Finance Committee Chairman Bob Packwood Former Committee Member Bill Bradley Budget reconciliation process? 5 5

7 Will we have tax reform? 6 6

8 Senate Finance Committee Working Groups 7 7

9 Senate Finance Committee Working Groups Reports expected to be submitted by the end of June. Bipartisan recommendations on reform? 8 8

10 Will we have tax reform? 9 9

11 Keep up to ht 10 10

12 Keep up to ht 11 11

13 12 12

14 Overview Tax Reform Tax Extenders ACTION Agenda HTF Update 13 13

15 TAX EXTENDERS 14 14

16 9 Percent LIHTC Extension - HOUSE - 15 Rep. Pat Tiberi R Ohio Rep. Richard Neal D Mass. 15

17 9 Percent LIHTC Extension - HOUSE - 16 Rep. Pat Tiberi R Ohio Rep. Richard Neal D Mass. 16

18 9 Percent LIHTC Extension - SENATE - 17 Sen. Maria Cantwell D Wash. Sen. Pat Roberts R Kan. 17

19 Key Supporters 18 Rep. Pat Tiberi R Ohio Rep. Richard Neal D Massachusetts Sen. Maria Cantwell D Washington Sen. Pat Roberts R Kansas 18

20 Overview Tax Reform Tax Extenders ACTION Agenda HTF Update 19 19

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22 Protect Current Resources 21 Preserve 9 and 4 Percent LIHTC in Tax Code Preserve Multifamily Housing Private Activity Bonds Tax Exemption Retain 27.5 Year Depreciation for LIHTC Properties Compensating Proposal for Loss of LIHTC Equity if Corporate Tax Rate is Reduced 21

23 Proactive Proposals Increase LIHTC Resources Per Capita Allocation Cap Increase 22 Bond Conversion Bonds LIHTCs 22

24 Proactive Proposals Make minimum 9 percent rate permanent Establish permanent minimum 4 percent rate for acquisition LIHTC Establish permanent minimum 4 percent rate for bond financed projects 23 23

25 Proactive Proposals Income mixing 40 percent of units at an average of 60 percent of AMI Maximum of 80 percent AMI on initial income certification Applied to entire property, not building Would help: 1. High housing cost areas, where rents of residents earning percent AMI cross-subsidize rents of residents earning below 40 percent AMI. 2. Low-income neighborhood revitalization, and 3. Rural areas where sparse populations and very low AMI s make it difficult to finance properties or maintain an appropriate income mix 24 24

26 Proactive Proposals Income mixing 40 percent of units at an average of 60 percent of AMI Maximum of 80 percent AMI on initial income certification Applied to entire property, not building Would help: 1. High housing cost areas, where Lower rents Cost of residents earning percent Small AMI cross-subsidize Ball rents of residents earning below 40 percent AMI. Technical Proposals 2. Low-income neighborhood revitalization, Proposalsand 3. Rural areas where sparse populations and very low AMI s make it difficult to finance properties or maintain an appropriate income mix 25 25

27 Key Senate Finance Committee Members Site Visits 26 Mike Enzi R-Wyoming Johnny Isakson R-Georgia Michael Bennet D-Colorado Dean Heller R-Nevada 26

28 Previous Site Visits 27 27

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32 Overview Tax Reform Tax Extenders ACTION Agenda HTF Update 31 31

33 Housing Trust Fund Mel Watt Federal Housing Finance Agency Director Julian Castro HUD Secretary In calendar year 2015, contributions will be set aside by Fannie Mae & Freddie Mac Watt December 11, 2014 letters to Fannie Mae, Freddie Mac Grants to be for affordable rental housing that targets extremely low income-income individuals and households HUD released interim rule on January

34 Housing Trust Fund How much should we expect for 2015? Housing Trust Fund $325M Capital Magnet Fund $120M $65M $175M $156M $84M 33 As low as As high as But we estimate

35 Washington Wire for the 34 Michael Novogradac Partner Novogradac & Company 34