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news TM

A Publication of

the Council for Affordable

and Rural Housing

JUNE 2015

Dear Members,

All agreed thatthe CARH 2015AnnualMeeting and LegislativeConference held onJune 14-16 was one ofthe most successfulever! We enjoyed

excellent attendance and outstanding speakers.We also developed consensus on key issuesmoving forward. You will read all about the

meeting in articles within this issue. Thank youto all who participated and helped to make thisa memorable meeting!

Have a great summer!

Sincerely,

Colleen M. FisherExecutive Director, CARH

In this issue:

Up to the moment tax credit percentages always available at www.carh.org

Tax Credit Percentages

4%Credit

9%Credit

July 3.22 7.52

June 3.20 7.47

May 3.19 7.44

April 3.21 7.48

Mar 3.18 7.42

Feb 3.20 7.47

CARH Annual Meeting FeaturesLatest Housing InnovationsSEE PAGE 2

CARH 2020 ResultsSEE PAGE 8

June Board of Directors MeetingSEE PAGE 11

CARH Scholarship FoundationAwardsSEE PAGE 14

RD Awards Site ManagersSEE PAGE 16

A New Life for Rental AssistanceSEE PAGE 20

COUNSEL’S CORNER:Dual Signatures and the ReserveAccountSEE PAGE 22

ADVISORY TRUSTEE PROFILE:Gill GroupSEE PAGE 26

STATE AFFILIATED ASSOCIATION:RRHA of TexasSEE PAGE 26

Home Ownership and AffordableHousingSEE PAGE 28

Message from the Executive Director

2015

Annual Meeting One of the Best!By Colleen Fisher, Executive Director, CARH

The CARH 2015 Annual Meeting &Legislative Conference held on June 14-16,2015, at The Ritz-Carlton Pentagon City inArlington, Virginia was one of the best! Strongattendance, outstanding speakers, substantivemeetings, and key networking opportunities all

combined to create a valuable experience foreveryone who attended.

CARH is known for hosting the OpeningReception at a special landmark in theWashington area and this year was noexception. CARH chose the Army and NavyClub on Farragut Square for this year’sreception. The Army and Navy Club has themost illustrious names in America's militaryhistory as its members. Generals, politicalleaders, one of the first men to land on themoon, the first person to fly solo across theAtlantic, and participants in the first around-the-world flight belong to this historic club. Theday of the reception, June 14, was also FlagDay, which commemorates the adoption of theUnited States flag. The United States Army alsocelebrated the Army Birthday on this date.

The Congressional Luncheon on Monday, June15, featuring Senator Shelley Moore Capito (R-WV), Representative Barbara Comstock (R-VA),and Mark Epley, General Counsel and OversightStaff Director for the House Ways & MeansCommittee gave meeting attendees a betterunderstanding of some of the issues facingCongress this year. Both Senator Capito andRepresentative Comstock are freshman class

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CARH President Lowell Ray Barron II, Past PresidentBob Yoder and Nathan Yoder of Warrior RunDevelopment

CARH Members: Kevan Biggs, Paul Henley, Bruce Baird

http://www.carh.org

2 CARH NEWS

members within their respective bodies ofCongress. But they are both veterans ofthe Hill and elected office, with theSenator having served in the House ofRepresentatives for 14 years and theCongresswoman as a staffer on the Hilland then an elected state delegate fromthe Virginia General Assembly.

The presentation of the scholarships andSite Managers of the Year Awards cappedoff a memorable meeting!

Click here for 2015 Annual MeetingMaterials and Downloads.

—continued from page 1

additional points in the MPR selection process. In a third option, ownerscan notify RD they intend to prepay, and tenants will be offered an RDrental voucher. An RD budget proposal would extend voucher protection tomortgages that reach full maturity.

During a session on portfolio management, RD staff could foresee noobstacle to owners who apply for a Re-am Lite or MPR debt deferral fromalso applying for incentives to avoid mortgage prepayment. Hooper saidthe 2015 Notice of Funding Availability (NOFA) for MPR, soon to be issued,will provide a quicker process for debt deferrals. Under the NOFA, ownerswith maturing mortgages will be able to get priority for fundingrehabilitation, including energy conservation improvements.

Hooper said the new preliminary assessment tool (PAT), which wasdeveloped with CARH and other stakeholder assistance, has been rolledout for use in the transfer of properties. The tool has new underwritingguidance that will be included in revisions to Handbook-3-3560, as part ofa business improvement process. An unnumbered letter providing moredetails on the new underwriting guidance will also be released shortly. Thelatest version of PAT is on the CARH and RD websites and is ready for usein developing transfer and MPR applications and for initial feasibilitydiscussions with RD field staff. CARH held a workshop on PAT at theannual meeting, and RD plans to have future training sessions for staff andthe industry.

Performance-Based FeeA new performance-based management fee remains under developmentas RD also works on incorporating it into its information technologysystem, according to Hooper. “We will continue to take feedback from youas you have ideas and continue to refine the management fee proposal,”he said. The RD-modified formula has these factors: the current base fee,plus performance incentives multiplied by the HUD operating costadjustment factor (OCAF), plus currently allowed add-ons. RDAdministrator Tony Hernandez has accepted the modified proposal. RDannounced after the meeting there will be an OCAF increase in fees forFiscal Year (FY) 2016.

The RD-modified fee formula would not provide a full OCAF for allproperty categories, as the industry proposed, but would allow a full OCAFfor all A and B properties, one-half OCAF for C properties and no OCAF forthe D category. There would be an add-on of $1.50 per unit-month for Aproperties that sustain their A status for two years but no performanceadd-ons for other categories. (The industry had proposed $2 for A and $1

CARH Annual Meeting FeaturesLatest Housing InnovationsBy Joseph P. Poduska, Poduska and Associates

The 2015 CARH Annual Meeting and LegislativeConference focused on the latest innovations inpreserving and building new affordable housingin rural communities, ways to efficiently use scarceresources, and the continued need for adequatefederal funding to leverage private sector investment.Managers and owners learned about the new,performance-based management fee Rural

Development (RD) has planned. Ginnie Mae securitization can now bemore widely used with Section 538 guaranteed loans. Technology ismanaging rural housing more effectively as shown by RD’s preliminaryassessment e-tool now available online.

The maturing of Section 515 rural housing loans is one of the biggestissues for RD, according to Bryan Hooper, Deputy Administrator forMultifamily Housing. “It’s not a huge issue right now, but we certainlyneed to get ahead of it,” he said. In an April Unnumbered Letter (UL), RDprovided details about how these properties can be preserved and retainedas housing for low income tenants. “One goal is to keep our 515properties in the program and continue to provide Rental Assistance,”Hooper added.

RD estimates that 60 properties have loans maturing this year, 120properties will be affected in each of the next two years, and there will be1,200 properties with maturing loans in 2019. After 2019, the annualnumbers get even larger. The April UL applies only to loans maturingbefore 2019 to give RD time to work out longer-term strategies forpreservation, according to Hooper.

Preservation OptionsRD is notifying owners with 25 or fewer months until their loan maturitydate of their options under the April UL. One option is a re-amortizationfor up to 20 years beyond the date of the original promissory note, in astreamlined process RD calls “Re-am Lite.” An appraisal and new initialbudget are not required for owners who choose this option. This mayresult in lower rents in a subsequent budget. Owners who decline a re-amortization can apply for debt deferral under the Multi-FamilyPreservation Restructuring program (MPR). These projects will earn

2016 Midyear MeetingJanuary 25-27, 2016

Westin Riverwalk Hotel, San Antonio, Texas

S A V E T H E D A T E !

—continued on page 4

Representative Barbara Comstock (R-VA)

http://www.westinriverwalksanantonio.com/http://www.carh.org/?p=2312http://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants

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Todd Fentress and Jeff Eckland Diane Cale, Rodney Corley, Mike Zatelli, and Scholarship Winner Whitney Cale

Rep. Barbara Comstock, Ari Severe, and Bob Margolis Pete Peterson and Norine Lewis Mike Zatelli, Scholarship WinnerMelvin Vicente, Sofia Vicente Lopez

Mike Holoman and Chris Potterpin Bob Rice Tom Flynn, Kevin Flynn, Michael Bishop, and Keith Gloeckl

Peter Talbot and Robert Vocci Mark Epley, Tom Reynolds and Sen. Shelley Moore Capito

4 CARH NEWS

—continued from page 2

for B properties.) All properties with layered financing would receive a newadd-on of 50 cents per unit-month. The current add-ons of $2 per unitmonth would apply for properties with 15 units or less, noncontiguoussites, remote sites, and troubled properties with a workout plan under newmanagement.

The letter grade for each property will be a weighted average score of theprior eight months to be posted in the Management Interactive NetworkConnection (MINC) system. RD staff is advising owners and managers towork with their field office asset managers to clean up old findings in MINCto get the best letter classification before the new system is put into effect.

Following up on another discussion with CARH, RD is implementing achange in how Section 521 Rental Assistance (RA) is calculated at theproperty level. This is to be implemented for FY 2016, which beginsOctober 1, according to Hooper. RA has historically been based on astatewide average. The new method will base the fee on each property’shistoric use of RA. Hooper said this should result in increased accuracy foreach property’s RA funding. The e-tool developed by RD staff examines thelast 12 months’ usage of RA and any anticipated rent increases plus aninflation factor.

Rental Assistance DemonstrationBen Metcalf, HUD Deputy Assistant Secretary for Multifamily Housing, toldCARH members that the Rental Assistance Demonstration (RAD), is amongthe highest priorities at HUD. RAD offers the ability to convert publichousing rental assistance and contracts for older assisted housing to long-term Section 8 HAP contracts. Metcalf added that the program deals withthe political reality that public housing has a backlog of at least $25 billionin capital needs that aren’t being met by dwindling appropriations. TheSection 8 program has received continued support on Capitol Hill. RADoffers rental contracts for terms up to 20 years with increases for inflation,along with a steady funding stream to support debt service.

Small PHA’s in rural areas often lack the financial know-how to puttogether housing tax credit financing deals. Metcalf explained, “Now withRAD, you have that. You have a community of developers, investors andconsultants that have really emerged and are beating the bushes forbusiness with RAD and are ready to have a conversation. You canreposition your assets.”

Metcalf said RAD is really about “mainstreaming” public housing so it isfinanced like any other real estate in a way that the private sectorunderstands. The Georgia Department of Community Affairs recentlylaunched a strategy that Metcalf likes, the RAD Multi-Site Bond programthat qualifies developers to explore partnerships with small PHA’s. Thisinvolves developers working with two or three PHAs to bundle publichousing projects into bond deals with accompanying 4 percent tax credits.Metcalf said one RAD innovation for a low-occupancy project is to split theSection 8 contract and put half of the assisted units in a location thatmakes sense as a viable rental project.

CARH offered a separate RAD workshop at the meeting to exploreavailable preservation options in the program, led by William Lavy, SeniorAdvisor with the HUD Multifamily Office of Recapitalization. Key RAD goalsare to build on a proven Section 8 platform to those in the affordablehousing industry, leverage private capital to preserve assets, and offerresidents greater choice and mobility. For RAD Component One, which isnow exclusively for public housing, initial rents are not based on the usuallender underwriting standards. Instead, they are set at the project’s currentfunding levels under the public housing program. In one recent change toComponent Two, owners of older HUD-assisted properties can choosebetween project-based rental assistance or project-based vouchers.

Small ProjectsWidening the availability of financing for small rental projects is anotherHUD priority, according to Metcalf. These are small projects consisting ofunder 50 units, not assisted by HUD, that provide housing for low-incomehouseholds. HUD will roll out a new FHA initiative that invites lenders thathave been successful in lending to small building owners to partner withthe department, offering FHA risk sharing for half of the loan. HUD isrequiring owners to agree to an affordability covenant requiring that 40percent of rental units be occupied by households at or below 50 percentof area median income. HUD is asking Congress to abolish thisrequirement because a covenant of this type is a nonstarter for manyowners. The reality is that these projects house this income group withouta covenant. The underwritten rents for these properties are clearlyaffordable,” he said.

A second piece of the small buildings initiative is to securitize small buildingloans through Ginnie Mae, according to Metcalf. HUD has asked Congressto give Ginnie Mae this authority. Housing finance agencies would havethe flexibility to provide risk sharing for these loans, with HUD taking partof the risk, and a Ginnie Mae execution. A Treasury Department program isproviding liquidity for HFAs to do this currently, but HUD wants a longerterm plan. This would provide further liquidity for this market, speed upfinancing, and reduce the price of financing, he said.

Capitol HillGuest speakers at the Congressional luncheon were Senator Shelley MooreCapito, (R-WV), who is the first female U.S. Senator in West Virginiahistory, and Representative Barbara Comstock, (R-VA), who was elected tothe House in November 2014. Both lawmakers have a background inhousing. Capito served as ranking member on House Financial ServicesCommittee while Comstock chaired the Housing Subcommittee in theVirginia House of Delegates. Capito advised CARH members of the need toeducate members of Congress about rural housing needs, especially duringa time of limited funding. Comstock discussed the need to be a pragmaticproblem solver in working on housing and other issues. Mark Epley,General Counsel and Oversight Staff Director for the House Ways & MeansCommittee also spoke on a variety of issues including the OversightSubcommittee.

Participating in a separate session about the latest news from Capitol Hill,were Senior Counsel Clinton Jones of the House Financial ServicesCommittee and Travis Norton, Senior Counsel on the HousingSubcommittee of the Senate Banking Committee and an advisor toSenator Tim Scott (R-SC) on tax issues. (Senator Scott is the chair of theHousing Subcommittee).

HUD is celebrating its 50th anniversary this year. There has been a realeffort by Financial Services Chairman, Jeb Hensarling (R-TX), to examinethe future of housing in America and the results of an estimated $1.6trillion spent on housing during that time, said Jones. Hensarling has heldhearings on HUD at which HUD Secretary Julián Castro participated, andthere was a separate hearing about rural housing at which RDAdministrator, Tony Hernandez, and the Government Accounting Officeparticipated. “We are looking at the issues and challenges facinghousing,” said Jones. Jones also said there has been some work on four orfive bills having to do with housing reforms that have bipartisan support.Another more controversial issue may include a bill to expand the Moving-to-Work program.

As far as appropriations, Norton said that Congress is trying to pass moreof the 12 funding bills under regular order. But he noted that it takes 60votes in the Senate to pass a bill, making it difficult to pass separatefunding bills since majority Republicans hold just 54 seats. This also makes

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it likely some or all appropriations bills may be wrapped up in one omnibusmeasure. Jones said the long-term budget picture, with $5 trillion in debtand an emphasis by Republicans on eliminating the budget deficit, meansthere will be less money for housing.

Jones observed that HUD’s RAD program is one way to preserve housingwithout additional spending, although it doesn’t help all distressedprojects. “What we need is a RAD program for rural housing,” he said.Both staffers said the focus in Congress will be on how to make programsmore efficient and use private financing.

Travis Norton said a major tax reform bill doesn’t appear to havemomentum this year. There are prospects of enacting tax legislationdealing with international tax reform and with infrastructure, namely theHighway Trust Fund. Legislation to extend 52 items that provide credits orother tax benefits—the tax extenders bill—may be acted on earlier ratherthan later this year to help business owners plan ahead, Norton explained.An extender bill would include the 9 percent minimum tax credit, whichwasn’t approved last year until late in December.

Housing Tax CreditAt a session on the housing tax credit, Garth Rieman, Director of HousingAdvocacy for the National Council of State Housing Agencies, said a broadcoalition of stakeholders including CARH, continues to ask Congress tomake improvements in the program. The latest goal is enactment oflegislation to permanently authorize the 9 percent minimum credit, ratherthan use a floating rate, and a minimum 4 percent credit. Legislation toaccomplish this (S. 1193, H.R. 1142) has been introduced in both theSenate and House.

Also at the meeting, a tax credit panel said investor demand for housingcredits remains strong, much of it from banking institutions motivated bythe Community Reinvestment Act (CRA). Values as high as $1.05 per taxcredit were reported. An attraction for banks after the financial crisis, is thata tax credit project is an asset that actually exists, and for CRA credit, showsa benefit for low income tenants. Experts said banks increasingly view theproperty itself as an investment that will generate a return on sale.Tim Smith, an audit partner with Bernard Robinson & Company, said thatthe Financial Accounting Standards Board (FASB) Update 2014-01 issuedjust over a year ago, eventually will encourage further tax credit investment,but that it will take a few more years before it has a significant impact. TheFASB standard accounts for a housing credit investment entirely as anincome tax expense so that losses do not depress operating income.

The preservation of year 15 projects continues apace. Katherine Alitz ofBoston Capital said her group has facilitated the transfer of partnershipinterests of about 1,500 tax credit properties that reached the end of the15-year compliance period in the past few years. About 1,000 wereSection 515 rural housing projects. Boston Capital recently redeemed thepartnership interests in an institutional fund so some problem properties inthe portfolio could be more easily repositioned by the general partner.

Jian H. Grant, who works in the Chief Counsel’s Office of the IRS, said theagency is revising the compliance monitoring regulations of the low-income housing tax credit. One objective of the rewrite is to renewauthority for the physical inspection pilot program that HUD, USDA andTreasury have worked on as part of the rental alignment initiative. The pilotrelies on the HUD Real Estate Assessment Center inspection protocol forprojects that have multiple sources of housing assistance. Started five yearsago in just six states, the pilot has expanded to 31 states. Grant said theIRS is studying comments it received on compliance monitoring and, even ifa new compliance regulation is not proposed this year, the IRS plans to atleast issue guidance on the inspection protocol.

Partnership InterestsTodd Fentress and Chadd Weisert of Clark Schaeffer Hacket, discussed thebuying and selling of older, tax credit partnerships and the consequencesof the Tax Code. They explained that the Tax Code can take precedenceover provisions in the partnership agreement concerning distributions ofgain, loss and tax benefits. Section 704(b) of the Tax Code has a safeharbor test for whether partnerships meet Tax Code requirements.Maintaining capital accounts at a proper balance is important, and ideallythey should be at zero when a partnership is liquidated.

Projections are made at the start of a partnership that describe income andlosses partners expect to get. With high tax credit prices over $1 per credit,in year 9 or 10 the partners can have capital account balances that arehigher than originally planned, according to Fentress. “This is an area youneed to be diligent about. At least check the balance in five, seven and 10years down the road so you can manage the tax situation at the backend,” he said. Otherwise the 80-20 or 50-50 percent ratios originallyplanned for the shares between limited partners and general partner maynot turn out. Fentress said that, when tracking this information, make sureyou refer to balances for the tax capital accounts, not the capital accountsfor business accounting.

Fentress said that often a negative capital account is easier to deal withthan a positive account at liquidation because banks that invest in creditsoften can absorb the tax consequences.

Special Thanks to the Sponsors of The CARH 2015 Annual Meeting

& Legislative Conference

Affordable Housing Association of IndianaBonneville Multifamily Capital

Boston CapitalEckland & Blando

Fyffe Construction Company, Inc.Greystone Affordable Housing Initiatives

Grind-All ConcreteHallmark Companies

HD SupplyMACO Management Company, Inc.

The Miller CompaniesNixon Peabody, LLP

Ohio Capital Corporation for HousingONLINE Rental ExchangeThe Provident Companies

The Sherwin-Williams CompanyThe Summit Group

Wells Fargo Insurance Services

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mailto:jessica.virgin@staples.comhttp://www.stapleslink.com

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Project ManagementAt a session on management issues, Stephanie White, Director of RD’sMultifamily Housing Program Portfolio Management Division, said the FY2015 Appropriations Act has a limitation on a second renewal of RentalAssistance contracts within 12 months after the first renewal. This affectscontracts with initial renewal on or after December 11, 2014, for about 40properties in 20 states. (The FY 2016 budget proposed by theAdministration has requested Congress to again enact this re-renewallanguage. CARH has continued to oppose this re-renewal language.) RD isoffering debt deferral, use of reserve funds, or deferred reserve fundpayments to mitigate any budget problem that results from this prohibition.

White explained that RD is returning to a three-year cycle for supervisoryvisits starting in October. The change is being made over concerns that RDis missing important inspection or other items using the current five-yearcycle. RD will also start using computer tablets for the supervisory visits andphysical inspections in 12 states. Property information can be downloadedto the tablet, and photos taken, and results from the visit can be uploadedto RD and made available to owners soon after.

In other news, Janet Stouder, RD’s Deputy Director of the MultifamilyHousing Program Portfolio Management Division, said that the annualImproper Payments audit were at 1.41 percent, the lowest rate in 10 years.The errors are generally administrative, involving unsigned or undateddocuments and calculation errors.

Debt Finance StrategiesMike Steininger, Director of the RD Guaranteed Loan Division MultifamilyHousing, speaking at a workshop panel on debt financing strategies, saidRD will come very close to reaching its goal of using all of the $150 millionin Section 538 guaranteed loan commitment authority it has for FY 2015,which ends September 30. As of mid-June, $45 million had been used,but July-August-September are when most of the obligations come in. Outof the loans obligated so far, 40 percent are new construction and about55 percent preservation.

Moderator David Lacki, Managing Director of Lancaster Pollard, applaudedRD and Ginnie Mae for raising the loan-to-cost (LTC) ratio of Section 538loans that it will accept for Ginnie Mae-guaranteed multifamily mortgage-backed securities from 50 percent to 70 percent. Ginnie Mae announcedthe change in April, and lenders said it will have the effect of expandingthe kinds of deals that can get a Ginnie Mae “wrap,” including 4 percenthousing tax credit deals with tax-exempt bonds.

Lacki said that Section 538 Option Three loans—the single, continuousguarantee for construction and permanent loans—does not qualify for the70 percent LTC Ginnie Mae wrap. Option Three loans are required bystatute to have a low LTC which RD has defined as 50 percent in a FederalRegister notice. Doing this effectively disqualifies Option Three loans fromthe higher Ginnie Mae LTC. Some lenders are offering a forward rate lock

for these loans which have been popular at a time when developers andinvestors are concerned about the future direction of interest rates.

Steininger said that raising the low LTC for Option Three is not planned atthis point but RD is considering the idea. If a transaction that comes in usesan Option Three guarantee and is not securitized by Ginnie Mae, then theagency feels more comfortable with the lower risk level at 50 percent LTC,he said. Steininger left open the potential of having a bifurcated low LTCrequirement: 40 percent LTC for non-Ginnie Mae loans and a 70 percentLTC for a Ginnie Mae wrap.

Another panelist, Craig Hackett of Bonneville Multifamily Capital, said thattoday’s Section 538 market for permanent loans indicates the handicapOption Three loans have because of the 50 percent low LTC requirement.Contacting two lenders before the CARH meeting, Hackett found a 2percent to 2.5 percent spread between Section 538 Ginnie Mae loansversus those without a Ginnie Mae wrap. In mid-June, one Section 538lender was offering 6.5 percent for a 30-year term with 30-yearamortization for an Option One perm loan without a Ginnie Mae creditenhancement, while a Ginnie Mae lender quoted 4 percent for an OptionOne permanent loan with the same terms.

Section 538 financing can be used for loans as small as $400,000, but PetePotterpin, President of PK Housing & Management, said that communitybanks are looking for business and offer what can be an alternative toSection 538 or FHA financing. Community banks are offering small loans,typically from $250,000 to $5 million and, occasionally, smaller amountsfor gap financing. Their loans have shorter terms than Section 538. Onebank recently offered a 20-year term, 20 year amortization at 5.5 percent.Another community bank offered a five-year term with 15-yearamortization at 4.5 percent. Both had nonrecourse financing and amaximum loan-to-value ratio of 80 percent.

Underserved MarketsCARH also hosted a public forum lead by Fannie Mae staff and chaired byClarissa Pagitsas, Director of the Fannie Mae Multifamily Green Initiative.The forum was an informal discussion about Fannie’s statutory “duty toserve” underserved markets, especially rural areas. Topics included thedifficulty of Fannie Mae providing small project loans below $1 million, thelack of economies of scale in rural markets, and the difficulty thatdevelopers face putting together gap financing for housing tax creditdeals. The “duty to serve” requirement extends to manufactured housingand affordable housing preservation as well. The goal is to increase theliquidity of mortgage financing and improve the distribution of investmentcapital for affordable housing in these markets.

Joseph P. Poduska is President of Poduska and Associates. He may be reached atjoep@aol.com.

Get the latest news that affects your business atwww.carh.org. We gather breaking news from theWashington Post, The Hill News, the Wall StreetJournal, the New York Times and more, and deliver itto you on our home page each day.

News Links

Affordable Housing HeadlinesRemember to visit www.carh.org where you’ll find the“Resources” and “Members Only” sections “Helpful Links”and “Forms and Other Best Practices.” These sections of thewebsite contain valuable information that CARH providesexclusively for members!

CARH MEMBERS:

—continued from page 5

mailto:joep@aol.comhttp://www.carh.orghttp://www.carh.org

CARH 2020 Results AnnouncedBy Tamara Schultz, Membership Manager, CARH

At the 2015 Annual Meeting and Legislative Conference, theinaugural CARH 2020 results were announced during the OpeningReception. CARH 2020 ranks the top 20 affordable rural housingproperty managers, developers and owners based on portfolio unit size asof the end of 2014, and the number of units placed in service in 2014. Thisis the first year that CARH has conducted a survey in order to recognize, ona national scale, the leaders in the affordable rural housing industry.

The results can be found at www.CARH2020.com, and are also listed on thenext page. If you are not on the list and think you should be, make sure tocomplete the survey next year. If you just missed the cutoff to be in the top20, you know how many deals you need to close this year to make the cut!

• HD Supply• The Gill Group• Propp Christensen Caniglia• Grind-All Concrete

New Documentary HighlightsTransformation of AffordableHousing In Rural Areas of The U.S.

Acritical affordable housing preservation process supported by USDA’sRural Development division is highlighted in a new documentaryproduced by Greystone. In the film, residents of affordable housingcommunities in some of the most rural areas of the U.S. see a completetransformation of their residences thanks to innovative financing andredevelopment arranged by Greystone. In one recent transaction, Greystoneassembled $117 million in financing from various sources to enableproperty owners to refurbish 1,362 apartments in 44 separate communities

CARH wishes to thank CARH staff, the Board of Directors, all thecompanies that took the time to complete the survey and especially ourgenerous sponsor who made this project possible. Those sponsors are:

• TM Associates Management• ApartmentSmart.com• Clark Schaeffer Hacket• MetroPlains Management

A special thanks also to David Layfield, CARH Board Member, andPresident and Owner of ApartmentSmart.com and Green Street Housing,for introducing the concept for CARH 2020 and volunteering his time andexpertise to make it happen.

across rural Georgia. This process, along with residents’ reactions uponreturning to their renovated homes, is highlighted in the film.

“Executing a preservation effort on this scale is akin to directing asymphony orchestra,” said Tanya Eastwood, head of Greystone’s affordablehousing preservation group. “With so many different private and municipalplayers involved in these complex transactions – not to mention that all ofthe properties are almost fully occupied the entire time – this undertakingis no easy feat. However, we thrive on seeing the process come togetherand ultimately making a positive impact on residents’ lives. Our role inspearheading the financing and development for affordable housingpreservation is critical to ensuring these communities receive a second life.”

To view the documentary on the affordable housing preservation process inrural America, click here.

https://media.greyco.com/Affordablehousingpreservation/default.htmlhttp://www.liveinpa.comhttp://www.CARH2020.com

TM 2020

TOP 20 MANAGERS Company City/State Properties Units*

SPECIAL THANK YOU TO THE SPONSORS OF CARH 2020.

The affordable housing industry’s first ranking of rural housing professionals!

1 Boyd Management Columbia, SC 268 9,5112 MACO Management Clarkton, MO 423 9,4893 HallmarkCompanies Atlanta, GA 213 8,3474 J & A Inc. Corinth, MS 241 7,7575 Partnership Property Management Greensboro, NC 188 7,3446 Professional Property Management Rockford, IL 187 7,2967 TM Associates Management Rockville, MD 186 6,7278 GEM Management Charlotte, NC 191 6,1669 Huff Management Company Opelika, AL 135 5,78110 RLJ Management Columbus, OH 132 5,15611 The Woda Group Westerville, OH 110 4,21912 Landura Management Associates Winston-Salem, NC 94 4,17813 Hamilton Valley Management Burnet, TX 90 3,65114 MAC Real Estate Metairie, LA 114 3,61315 Morrow Realty Tuscalossa, AL 69 3,34116 Franklin Asset Management Louisville, KY 99 3,24017 Winterwood Lexington, KY 122 3,22418 Guardian Portland, OR 90 3,10619 The Michaels Organization Marlton, NJ 64 3,08320 AWI Management Auburn, CA 74 3,042

TOP 20 OWNERS Company City/State Properties Units*

1 MACO Management Clarkton, MO 379 8,5232 HallmarkCompanies Atlanta, GA 211 8,2453 J & A Inc. Corinth, MS 226 7,2604 Huff Management Opelika, AL 125 5,3785 TM Associates Management Rockville, MD 128 5,2446 Weaver Investment Company Greensboro, NC 119 4,9087 The Woda Group Westerville, OH 111 4,3318 MAC Real Estate Metairie, LA 114 3,6139 Landura Management Associates Winston-Salem, NC 60 3,01510 Hamilton Valley Management Burnet, TX 80 2,86711 CBM Group Auburn , CA 76 2,78012 Buckeye Community Hope Foundation Columbus, OH 68 2,77113 Provident Management Mansfield, OH 73 2,72514 The Michaels Organization Marlton, NJ 48 2,27715 CMS Management Corinth, MS 60 2,08616 PK Housing & Management Okemos, MI 49 1,71517 Flynn Management Clearwater, FL 43 1,70818 WNC CPP Irvine, CA 31 1,47719 Medlock SW Management Lubbock, TX 32 1,27720 Chrisman Development Enterprise, OR 39 1,275

TOP 20 DEVELOPERS Company City/State Properties Units*

1 Greystone Affordable Housing Initiatives Raleigh, NC 32 1,1332 The Michaels Organization Marlton, NJ 8 4803 The Woda Group Westerville, OH 8 3884 WNC CPP Irvine, CA 6 2845 Flynn Management Clearwater, FL 4 2496 TM Associates Management Rockville, MD 7 2347 Medlock SW Management Lubbock, TX 3 2088 Hall Housing Investments Dothan, AL 3 1929 Chrisman Development Enterprise, OR 6 19010 Pax-Edwards Development Bel Air, MD 2 16411 Hamilton Valley Management Burnet, TX 3 13612 PK Housing & Management Okemos, MI 2 12013 Huff Management Opelika, AL 2 10214 T J Development/Watermark Management Lansing, MI 3 10015 Buckeye Community Hope Foundation Columbus, OH 3 9716 Provident Management Mansfield, OH 2 8017 The Werth Companies Alpena, MI 1 7218 Weststates Property Management Elko, NV 1 6019 Green Street Housing Salisbury, MD 1 6020 CMS Management Corinth, MS 2 54

JOIN CARH TODAY!

Join CARH today and get the latest newsand information affecting the affordablehousing industry, access to excellenttraining and educational programs,discounts on valuable goods and servicesand become part of the industry voice onCapitol Hill! Visit www.carh.org andJoin Now!

Rental housing development is much dif-ferent in rural areas. From a separateFederal program to smaller project sizesto sparser access to capital, developingaffordable housing in rural America canbe a challenge. A unique breed of housing professional has emerged overthe years to tackle these challenges.CARH 2020 is happy to recognize the2015 top companies in rural rental hous-ing. For more on CARH 2020 and how to participate, visit www.CARH2020.com.

Companies in bold are CARH Members. * Number of units/properties as of 12/31/14 based on survey responses and industry estimates

http://www.CARH2020.comhttp://www.carh.org

mailto:sales@apartmentsmart.comhttp://www.apartmentsmart.com

11

June Board of Directors Meeting Priority is Voice on Capitol HillBy Tamara Schultz, Membership Manager, CARH

The CARH Board of Directors met on June14th during the Annual Meeting & LegislativeConference. The Board’s ongoing priority isto ensure that CARH continues to have astrong and active legislative voice on CapitolHill, that lawmakers invite CARH to be part ofthe conversation and that CARH has animpact on their final decision-making. CARHalso aims to continue to provide suggestionsand advice to the federal agencies that issueregulations covering all aspects of the ruralhousing industry.

The Board met at the end of a full day of meetings by the CARH standingcommittees. Recommendations from those committees were reviewed,discussed and adopted by the Board. The recommendations include:

Best Practices/Education Joint Committee• Developing a Preliminary Transfer Assessment Template (PAT) “guide” for

use by CARH members. This guide would focus on tips and bestpractices for PAT and be added to the members’ only section of theCARH website.

Development/Owners Joint Committee• Improve the CRCU process so that RD looks at the regulations when

determining what CRCU is and not just the appraisal. • Ensure that St. Louis processes the transfers in an expedited manner in

the system as soon as the transfer closes. This has been an issue.• Form a subgroup/subcommittee to understand the magnitude of the

maturing mortgage issue and prepare recommendations and list ofoptions outside of just bifurcating the rental assistance and themortgage.

Management Committee• In reference to continuing discussions between RD and CARH, NAHMA,

IREM and others, the Committee recommends that CARH pursue an

OCAF (Operating Cost Adjustment Factor) increase in management feesfor operating year 2016. The concern being that the full managementfee proposal would not be implemented before budgets are due.

• Also, in reference to these discussions, the Committee has the followingconcerns:

o A fair and consistent method of round should be adopted for theOCAF adjustments.

o Establish a mechanism or process to identify non-responsive RDservicers in reference to removing negative findings that affect aproperty’s score.

o Establish a way for the industry to easily monitor their property(ies)grading status.

o Increase or enhance rewards for management of “A” properties.o Settle timing of start dates to avoid potential punitive effect of

detrimental management reviews, or looking at the big picture, theimplementation of a new fee policy.

The Board addressed other business including a report from CARH’sNational Office, General Counsel, and the Scholarship Foundation. TheBoard will meet again in September 2015 for their Fall meeting.

For more information on the CARH Board of Directors, who represent allCARH members nationwide, please click here.

Lowell Ray Barron II, Garth Reiman, and Jian Grant

Affordable Housing Advisors, LLC196 Maplebrook Dr. North, Westerville, OH 43082

614-746-5727Contact: Paul Henley

paul@affordablehousingadvisors-llc.com

CFG Multifamily, LLC1422 Clarkview Rd., Suite 2830, Baltimore, MD 21209

443-655-9494www.capfundinc.com

Contact: Michael McCulloughmmccullough@cfgmultifamily.com

The Fortress Group (Ram-Lock)PO Box 980, Madison, MS 39130

601-853-7780www.ram-lock.com

Contact: Michael Van VelkinburghMichaelv@ram-lock.com

Welcome New CARH Members! Thanks to Our Preferred Buyer VendorsHD Supply

ONLINE Rental ExchangeStaples Business Advantage

The Sherwin-Williams CompanyWells Fargo Insurance Services USA, Inc.

If you have questions, comments, suggestions, or submissionsfor the CARH News, please contact Tamara Schultz,Membership Manager, at tschultz@carh.org or 703-837-9001.

http://www.carh.org/about-carh/board-of-directors/mailto:paul@affordablehousingadvisors-llc.comhttp://www.capfundinc.commailto:mmccullough@cfgmultifamily.comhttp://www.ram-lock.commailto:Michaelv@ram-lock.commailto:tschultz@carh.org

12 CARH NEWS

Executive Officers and BoardMembers Elected at AnnualMeeting

Executive Officers and Members of the Board of Directors for the 2015-2016 term were elected at the CARH Annual Meeting and LegislativeConference in June. The Chairman of the Board and the PastPresident are former CARH Presidents, and are automatically members ofthe board under the CARH bylaws.

The new Executive Officers and Board Members are as follows:

2015-2016 Executive Officers

Lowell Ray Barron IIPresidentThe Vantage Group, LLC

Benjamin FarmerVice PresidentF&H Construction Company

Tanya EastwoodSecretaryGreystone Affordable Housing Initiatives

2015-2016 Board of Directors

Don BeatyThe Summit Group

Tammy BurtnessMetroplains Management, LLC

Rodney DudleyDudley Development, LLC

Cash GillGill Group

Craig HackettBonneville Multifamily Capital

John HuffHuff Management Company, Inc.

Anand KannanWNC & Associates, Inc.

Dana Knopp KruszKnopp Enterprises, Inc.

Four new members were elected to the board. CARH is grateful to thesededicated individuals who are willing to share their skills and expertise byserving on the CARH board.

The new board members are David Lacki, Ian Maute, Mel Nagata, andChris Potterpin. We are delighted to introduce you to them in thefollowing profiles:

DAVID LACKI, Managing Director, Lancaster Pollard, Columbus, OH

David Lacki is the Managing Director ofAffordable Housing with LancasterPollard, a financial services firm based inColumbus, Ohio. Lancaster Pollardspecializes in providing capital fundingto the health-care, senior-living andaffordable-housing sectors. In additionto underwriting tax-exempt and taxablebond offerings, the company providesorganizations a complete range offunding options through its FannieMae/FHA/GNMA/USDA-approvedmortgage lender subsidiary. Mr. Lacki

leads the national effort to expand the firm’s investment banking andmortgage banking finance activities for income restricted and subsidizedrental properties.

Mr. Lacki has served as the investment banker, mortgage banker orfinancial advisor to virtually every type of tax-exempt issuer in the housingmarket, including state housing finance agencies, public-housingauthorities and developers. In the past 10 years, Mr. Lacki has structuredand negotiated in excess of $1.4 billion of multifamily financings in 120transactions using bond structures and enhancements, relying uponvirtually all current bond structures and enhancements, including totalreturn swaps, FHA/HUD, Fannie Mae, Freddie Mac, Federal Home LoanBank, Standard & Poor’s and Moody’s Affordable Housing Programs,senior/subordinated issues, pooled financings and institutional privateplacements, among others.

Mr. Lacki holds a Bachelor of Science degree in computer science fromDaemen College in Amherst, N.Y., and a MBA from California StateUniversity, Hayward. Mr. Lacki also has registered securities representative(Series 7 and Series 63) licenses.

IAN MAUTE, Buckeye Community Hope Foundation, Columbus, OH

Ian Maute joined Buckeye CommunityHope Foundation (BCHF) in 2013 andserves as Vice President ofDevelopment. Mr. Maute has beeninvolved in the development of housingusing the LIHTC, and USDA RuralDevelopment and HUD fundingprograms since 2005. In addition tonew construction projects Mr. Mautespecializes in the acquisition andrehabilitation of existing affordablehousing properties.

Prior to joining BCHF, Mr. Maute was employed as Vice President at TheWoda Group, Inc. Mr. Maute also worked for the Central Ohio Chapterof NAOIP, the Commercial Real Estate Association. As Vice President ofDevelopment for BCHF, Mr. Maute helps oversee development activities inOhio, Indiana, Kentucky, and Pennsylvania.

Mitch CopmanTreasurerStreamroll, LLC

Kevin FlynnChairman of the Board*Flynn Management Corporation

Katherine AlitzPast President*Boston Capital

David LackiLancaster Pollard

David LayfieldApartmentSmart.comGreen Street Housing

Ian MauteBuckeye Community HopeFoundation

Mel NagataJack Hall Hawaii Housing Corporation

Chris PotterpinPK Housing & Management

Cameo TownzenCBM Group, Inc.

Natalie WellsHoosier Uplands, EDC

—continued on page 14

http://www.swgreenspecs.com

14 CARH NEWS

Mr. Maute received his B.S. (cum laude) in Business Administration fromThe Ohio State University in 2005, and his MBA from Ohio State’s FisherCollege of Business in 2012.

Mel Nagata, Jack Hall Hawaii Housing Corporation, Honolulu, HI

Melvin Nagata is presently employed byJack Hall Hawaii Housing Corporation.Jack Hall Hawaii is a private non-profitcorporation organized under Section501(c)3 of the IRS. Jack Hall Hawaii,through its affiliates, owns and operatesapproximately 330 units of affordableand rural housing units in the State ofHawaii.

Since 1974, Mr. Nagata has held variouspositions in affordable housing

management, development and finance with the State of Hawaii (HawaiiHousing Authority), the Honolulu HUD Office and various for and non-profit entities. Mr. Nagata has a BA from the University of Hawaii.

Chris Potterpin, PK Housing & Management, Okemos, MI

Chris Potterpin is responsible for findingnew properties and portfolios foracquisition, putting together financingpackages for properties newly acquiredand/or to be rehabilitated and closingtransactions. He oversees the duediligence staff as they work towardsclosing with syndicators and lenders. Mr.Potterpin also works with theirconstruction company from the owner’sperspective to make sure scope, qualityand timelines are met appropriately, and

works with their management company through stabilization to make sureeach project achieves its underwriting standards.

PK Housing & Management communities are located throughout Texas andMichigan, including the upper peninsula, and are uniquely designed to fitthe lifestyle and budget of its customer. In addition to housing, the PKFamily of companies includes PK Construction, LLC and PK Development,LLC. Through these companies, they provide a varied scope of serviceswithin the building and development community, including constructionand rehabilitation of single and multifamily housing, as well asdevelopment services for the partners and their own portfolio.

CARH Foundation Awards FiveCollege Scholarships By Robert R. Rice, Jr., President, CARH Scholarship Foundation

The CARH Scholarship Foundation, presented college scholarships tofive outstanding students on June 16th at an awards breakfast duringthe CARH Annual Meeting and Legislative Conference. A number ofstudents throughout the United States submitted applications, includingessays describing their unique personal life experiences that have led themto believe that affordable housing should be a vital component ofcommunities throughout the country. Five recipients were then selected bythe CARH Scholarship Selection Committee, for their academic excellenceand potential for achievement. The recipients of the scholarships areexceptional and deserving students who live in rural affordable housing

properties, owned or managed by CARH members. Each scholarshipprovides $1,000 per semester for up to four years of college.

The 10th Annual James L. Poehlman Scholarship was presented toWhitney Cale of Bay Minette, Alabama. Whitney was a member of the2015 graduating class of Baldwin County High School, where shegraduated with an Advanced Academic Endorsement and a 4.32 GPA.She was a member of the National Society of High School Scholars, PeerHelper Program, National Honor Society, Mu Alpha Theta, and aClassroom Representative. Whitney is a member of her church leadershipteam, drama team and media team. She has volunteered for Speed theLight, Baldwin County Christmas Outreach projects, Prodisee Food Pantryand at the local junior college. She has won awards in state competitionsfor her writing and artistic talents. Whitney lives in Bayside Apartments,which is managed by CARH member Morrow Realty Company. Whitneywill attend Troy University and major in Social Work.

Victoria Graham of Staunton, Virginia, received the 10th Annual GordonL. Blackwell Scholarship. Victoria is a 2014 graduate of Robert E. Lee HighSchool where she was part of the Shenandoah Valley Governor’s Schooland maintained a 3.93 GPA. She is currently attending Randolph-MaconCollege with a 3.53 GPA. She is a member of the Commons ActivitiesBoard, a Leadership Fellow, a Service Fellow and the Alpha Gamma DeltaSorority. She was recently selected as a Resident Assistant. She has workedpart-time as a lifeguard at the Staunton-Augusta YMCA. Victoria plans todouble major in Psychology and Behavioral Neuroscience with a minor inBiology. Her goal is to attend medical school to become either aneuropsychological researcher or a neuropsychiatrist specializing intreating children with autism. She is a resident of Briarwood Apartmentsin Staunton, Virginia, a property managed by CARH member, KnoppEnterprises.

The 5th Annual Jack Godin, Jr., Scholarship was presented toMikaylaMurphree of Russellville, Alabama. Mikayla graduated this year fromTharptown High School where she maintained a 4.0 GPA and earned an

—continued from page 12

Tony Hernandez, RHS Administrator; Victoria Graham; Shelby Foreman; MikaylaMurphree; Whitney Cale; Melvin Vicente; and Lowell Ray Barron, II, CARHPresident)

15

Advanced Diploma. She was President of the National Honor Society andStudent Council, Class President, and a member of and/or participated inJunior and Senior Civitan, Students Against Destructive Decisions, FutureBusiness Leaders of America, Yearbook Staff, Fellowship of ChristianAthletes, Math Team, and Homecoming committee. She has volunteeredfor LifeSouth blood drives, Christmas gift drives, food drives, veteran’s carepackage drive, breast cancer fundraiser and St. Jude’s tab drive. Mikaylaalso worked part-time at Captain D’s and the Russellville Animal Clinic.Mikayla lives at Stonecrest Apartments, a property managed by CARHmember, Irby Management. She plans to attend Mississippi State Universityand major in Biology, then attend MSU College of Veterinary Medicine.

The 3rd Annual CRHD Founders Scholarship was presented toMelvinVicente of Indiantown, Florida. Melvin was a member of the 2015graduating class of South Fork High School, where he held a 3.7 GPA andwas dual enrolled at Indian River State College with a 3.6 GPA. He wasvarsity captain and starting defender for his school’s soccer team and amember of the FC Florida Soccer Club. Melvin is an active volunteer in hischurch and a member of the Disciples of Christ youth group. Melvin lives inNew Hope Community I, a property managed by CARH members,Southwind Management Services, Inc. and Indiantown Nonprofit Housing.He will attend Indian River State College for his Associates Degree, thenplans to transfer to the University of Central Florida to continue his studiesworking toward a degree in Civil Engineering.

The inaugural CARH Scholarship Foundation Scholarship was presented toShelby Foreman of Callahan, Florida. Shelby is currently enrolled atFlorida State College of Jacksonville. She is the mother of a youngdaughter and is a Patient Care Associate at UF Health Jacksonville. Shelby

recently started the nursing program at Florida State College of Jacksonvilleand plans on becoming a registered nurse. She is a resident of Pine TerraceApartments, a property managed by CARH member, HallmarkManagement.

CARH created the Scholarship Foundation in 2005 to promote educationand expand opportunities for residents of CARH member properties. CARHcurrently awards five scholarships annually, three of which are named inmemory of past CARH members who served CARH and the affordablehousing industry with distinction; one scholarship is named for thefounders of the original CARH, the Council for Rural HousingDevelopment; and the fifth scholarship is named in honor of theScholarship Foundation.

The Awards Breakfast was sponsored by Fyffe Construction Company,Greystone Affordable Housing Initiatives, HD Supply and the ProvidentCompanies. On behalf of the Scholarship Foundation, my heartfeltcongratulations are extended to this year’s scholarship recipients.

CARH Scholarship Foundation 2015 Scholarship Selection Committee

Rodney Corley – ARD, Inc.Pete Potterpin – PK Housing & ManagementAdam Knezevich – Yardi SystemsShawna Higgins – The Summit GroupRobert Rice, Jr. – CARH Scholarship Foundation

Subscribe to CARH’s Electronic AN Express TodayExclusively for CARH Members

The Electronic AN Express contains key excerpts from theFederal Register, RD Administrative and Procedural Notices,Unnumbered Letters, HUD Housing Notices and otherregulatory notices relevant to the affordable housing industry.The Electronic AN Express is emailed directly to our subscribersthe same day they are released. Instead of having to gothrough pages and pages of reports, you get just theinformation you need as soon as it is available.

The Federal Register, known as the daily newspaper of theFederal government, is a legal newspaper published every dayby the National Archives and Records Administration (NARA).It contains:

• Federal Agency Regulations• Proposed Rules and Public Notices

CARH members exclusively may subscribe to the Electronic AN Express for an annual fee of $255.00. To order yoursubscription today, just email carh@carh.org or call 703-837-9001. Don’t miss crucial information which mayimpact your business!

• Executive Orders• Proclamations

mailto:dbeaty@smtgrp.commailto:dkim@smtgrp.commailto:carh@carh.org

16 CARH NEWS

RD Awards Site Managers andMaintenance Person of the YearBy Portfolio Management Division Staff, Rural Development

The US Department of Agriculture (USDA) Rural Development (RD)presented awards for the 2015 National Site Managers of the Year,and the inaugural award for Maintenance Person of the Year, at theCARH Annual Meeting & Legislative Conference. The recipients wereselected by a panel of housing professionals, including staff from bothCARH and RD.

A site manager of the year is expected to set a standard of excellence intenant satisfaction, curb appeal of the project, accurate and completerecord keeping, and performance above and beyond normal expectations.

In presenting the awards, Tony Hernandez, Administrator for the RuralHousing Service said, “Site managers and maintenance personnelguarantee the success of our multi-family housing properties. They makesure that day-to-day operations go smoothly, and they often invest a greatdeal of their own free time and resources to provide tenants with a safe,friendly community to call home.”

The awards were presented to:

MEDA MCQUEEN2015 Elderly Housing Laurel Village Apartments

Brevard, NCManaged by Partnership Property Management, Inc.

MICAELA DOSAL2015 Farm Labor Housing

Esperanza PlaceImmokalee, FLManaged by Southwind Management Services, Inc.

JOHN HENRY2015 Maintenance Person of the Year

Village of Brownstown IIBrownstown, IL

Managed by Village Management Company

Tony Hernandez, RHS Administrator; Micaela Dosal; Vicky Brooks; and PamBorton, Southwind Management Services

Partnership Property Management: Jeff Holoman, Sandy Lucas, Meda McQueen,Mike Holoman and Rob Vocci

Tony Hernandez, RHS Administrator; Micaela Dosal; Vicky Brooks; MedaMcQueen; John Henry; and Lowell Ray Barron II, CARH President

VICKY BROOKS2015 Family HousingPelican Bay Apartments

Crystal River, FL

Special Thanks to Our Advisory Trustee Members

Bernard Robinson & Company, LLPClark Schaefer Hackett

E&A Team, Inc.Gill Group

Greystone Affordable Housing InitiativesLancaster Pollard Mortgage Company

The Summit GroupWarrior Run Development Corp.

Yardi Systems, Inc.

Obama Administration ReleasesJune Housing ScorecardEach month, the U.S. Department of Housing and Urban Development(HUD) and the U.S. Department of the Treasury produce a monthlyscorecard on the health of the nation's housing market. The scorecardincorporates key housing market indicators and highlights the impact ofthe Administration's unprecedented housing recovery efforts, includingassistance to homeowners through the Federal Housing Administration(FHA) and the Home Affordable Modification Program (HAMP). For thecomplete report, click here.

http://portal.hud.gov/hudportal/documents/huddoc?id=Scorecard062015.pdf

Habitational Risk

Helping protect your low income housing tax credit If you have a property that qualifies for the Low Income Housing Tax Credit (LIHTC), you may be eligible for significant tax benefits. However, without the right kind of insurance, unexpected property damage could put your entire tax credit at risk.

Wells Fargo Insurance can help. Whether you’re a developer, owner, or property manager of low-income housing — or an investor who buys LIHTCs to oset other tax liabilities — we provide access to a unique property insurance product that can help protect your tax credit.

Your obligations under the LIHTC programThe LIHTC program was created through IRS Section 42 to provide financial incentives for the development of aordable housing. The tax credit is taken over a 10-year period, and is calculated according to the eligible basis of the property, which includes the cost of acquisition, construction, and rehabilitation.

However, if an LIHTC property becomes unrentable due to fire, flooding, or other damage, the IRS mandates that you repair it and make it rentable within the same calendar year that the damage occurred. If not, you could forfeit the entire tax credit for that year. Depending on the size and type of your property, noncompliance with this mandate could cost the owner, general partner, or management company hundreds of thousands of dollars.

Even more, there are no exceptions or time limitations to the rule. This means that even if your low-income housing is severely damaged in the middle of December, it must be repaired and made rentable by December 31 — which may be an impossible task.

Protecting your tax creditTo protect against this unique financial risk, Wells Fargo Insurance worked with several leading insurance carriers to create a special endorsement for your property insurance policy. Similar to lost-rental-income coverage, the LIHTC endorsement covers the full value of tax credits for properties that can’t be rent-ready by December 31 of the same loss year. This protection is not included as part of standard property coverage, and must be purchased separately.

As one of the first insurance firms to oer access to this type of endorsement, we negotiated relationships with knowledgeable carriers who understand your unique risks related to tax credits. We also leveraged our strong relationships with them to oer aordable rates and fast service.

How can we help? For more information, contact your local Wells Fargo Insurance sales executive.

 

Products and services are o�ered through Wells Fargo Insurance Services USA, Inc., and Wells Fargo Insurance Services of West Virginia, Inc., non-bank insurance agency a�liates of Wells Fargo & Company.

Products and services are underwritten by una�liated insurance companies except crop and �ood insurance, which may be underwritten by an a�liate, Rural Community Insurance Company. Some services require additional fees and may be o�ered directly through third-party providers. Banking and insurance decisions are made independently and do not in�uence each other.

©2013 Wells Fargo Insurance Services USA, Inc. All rights reserved. WFI-HAB-1004

mailto:ed.goesel@wellsfargo.com

http://www.hdsupplysolutions.com

http://www.cshco.com

20 CARH NEWS

issued the following guidelines that will be used to determine if a project isphysically obsolete:

• A Real Estate Assessment Center (REAC) score of 30 or lower.• Two or more consecutive REAC scores of 60 or lower.• Condemnation or other such notice by local or state government that

the project is uninhabitable.• Loss of the property through eminent domain.• Evidence that needed capital repairs cannot be made without the

property losing financial viability.• Other proof of physical obsolescence provided by the owner and

approved by HUD.

In regard to whether a property is no longer viable economically, HUD hasissued the following criteria:

• A market analysis that states the inability of the property to meet currentHUD-imposed affordability restrictions.

• A market analysis indicating little to no market for the unit type.• An average vacancy of 25% or more over the past two years.• Other proof of economic non-viability provided by the owner and

approved by HUD.

Many of the provisions set forth in this recent HUD notice make it clearthat HUD is placing emphasis on protecting the tenants. For example, thetransferring owner must give the tenants written notice of the proposedtransfer and allow for a minimum 30-day comment period. In addition, thetenants of the transferring project will be able to remain in their units untilthe new units are available for occupancy. If tenants must move as a resultof a transfer, HUD will ensure protections are in place and that no residentis forced to pay relocation costs.

With these new criteria firmly established, affordable housing providersshould find it easier to transfer vital rental subsidies from a property indespair to one that has a bright future. The result is better operatingproperties for developers, a better portfolio for HUD, and most importantly,better housing for tenants.

Click here to find the full notice.

David Lacki is the Managing Director of Lancaster Pollard’s affordable housinggroup. He may be reached at dlacki@lancasterpollard.com.

A New Life for Rental Assistance: How HUD is Helping DevelopersTransfer SubsidiesBy David Lacki, Lancaster Pollard

If a property is beyond repair and a developer decidesthe best option is to demolish it, does that mean anyrental assistance agreements associated with theproperty must perish as well? Not necessarily.

Since 2006, the U.S. Department of Housing andUrban Development (HUD) has issued appropriationsacts with a provision that allows for the approval of

requests from project owners for the transfer of certain rental assistance,debt, and income-based use restrictions between HUD-assisted projects.The approval is subject to the conditions described in the appropriationsact for the given fiscal year. Generally, those conditions have beenconsistent from one appropriations act to the next. The most recent notice,released in March of this year, details exactly what HUD is looking for inorder to approve such requests, giving affordable housing developers aclear set of criteria to address if they seek to transfer rental assistance fromone housing project to another. HUD is hoping that publishing the criteriawill help project owners determine whether a transfer is feasible given thespecific circumstances of their multifamily projects and, if so, help facilitatea timely and efficient transfer process.

The criteria for Fiscal Years (FY) 2014 through 2016 are detailed as:

• The transferring project must be either physically obsolete oreconomically nonviable.

• The receiving project or projects shall meet or exceed applicable physicalstandards.

• The owner or mortgagor of the transferring project shall notify andconsult with the tenants residing in the transferring project and providea certification of approval by all appropriate local governmental officials.

• The tenants of the transferring project who remain eligible for assistanceto be provided by the receiving project or projects shall not be requiredto vacate their units in the transferring project or projects until new unitsin the receiving project are available for occupancy.

• HUD must agree that the transfer is in the best interest of the tenants.• The transfer does not increase the cost of any FHA-insured mortgage.• Number of bedrooms and size of units:

o For occupied units in the transferring project: The number of low-income and very low-income units and the configuration (i.e.bedroom size) provided by the transferring project shall be no lessthan when transferred to the receiving project or projects and thenet dollar amount of federal assistance provided to the transferringproject shall remain the same in the receiving project or projects.

o For unoccupied units in the transferring project: HUD mayauthorize a reduction in the number of dwelling units in thereceiving project or projects to allow for a reconfiguration ofbedroom sizes to meet current market demands, as determined byHUD and provided there is no increase in the project-basedassistance budget authority.

Some of the criteria, such as the requirement that the transfer not increasethe cost of any FHA-insured mortgage, are rigid and not open tointerpretation. Other leave more room for interpretation and will beevaluated by HUD on a case-by-case basis. HUD must agree that a projectis no longer economically viable or is physically obsolete, both of whichcould possibly be debatable in some circumstances. To clarify, HUD has

Terwilliger Foundation Publishes Paper on Silent Housing Crisis

The newly launched J. Ronald Terwilliger Foundation for HousingAmerica’s Families recently released a white paper, The Silent HousingCrisis: A Snapshot of Current and Future Conditions. The paperdescribes the state of housing affordability in the U.S., the drop inhomeownership opportunities and the demographic forcesexacerbating these problems. In a blog post, Chris Herbert of theHarvard Joint Center for Housing Studies (JCHS) writes that thefoundation correctly identifies housing affordability as a national crisis.The crisis particularly affects renters – more than half of whom arespending more than 30 percent of their income on housing. Accordingto Ron Terwilliger, “Millions of families are confronted by a rentalmarket they can no longer afford and a homeownership market forwhich they do not qualify.” The mission of the new foundation is tofoster engagement with this issue among political leaders from bothparties to elevate the policy debate and identify practical suggestions toreform federal housing policy. To read the white paper click here.

Re-printed from The Capitol Express.

https://www.federalregister.gov/articles/2015/03/31/2015-06776/hud-approval-of-requests-for-transfers-of-multifamily-housing-project-based-rental-assistancehttp://jrthousing.org/research/http://www.enterprisecommunity.com/news-and-events-newsletters-capitol-express-june-29-2015#terwilligermailto:dlacki@lancasterpollard.com

http://www.lancasterpollard.com

22 CARH NEWS

Dual Signatures and the ReserveAccountBy Richard Michael Price, Esq., Nixon Peabody LLP

Just got off the phone with my own bank, the bankmanager informed me even though I have doublesignatures required on all checks that are over$100.00 it does not matter. The bank computer thatchecks signatures only reads the first signature and itdoes not matter it the check is signed by two people orone, the check will still be cashed. When I questionedthe bank further on this policy, the bank manager

politely informed me that the bank did not want the legal liability forchecking both signatures on a check. In short it’s your responsibility tomonitor your own checking account. I called several other banks in my areaand found that this is an universal policy. Rex Leseuer,blog.bancorpinsurance.com (2011 post)

Rural Development multi-family housing owners and managers have foryears complained that it is becoming almost impossible to find a bank thatwill accept or process the dual signature checks required by RD. Under RDregulations since at least 1996, RD has required that reserve accounts beheld in banks under a dual signature check system. One signature is theauthorized manager or owner representative. The other signature is thelocal RD asset manager. At first this seemed like a good solution to theconcern that some owners weren’t keeping funds in the reserve accounts.At the same time, RD does not have a facility to hold cash directly. Thedual signature practice almost immediately ran into difficulty as banksrequired the social security numbers and identifying information of bothsignatories. Many RD staff were understandably reticent to share theirpersonal information. For one reason or another, that issue seems to havesettled down, but it does pop up from time to time.

The bigger issue, increasingly, is that the preferred branch or bank will notprocess dual checks. That has left owners and managers in a scramble tofind a financial institution that will accept the practice. Even then, wehave heard that some banks reverse themselves if they are taken over byanother bank with a different view or if there is a change in bank

administration. In state after state we are increasingly left with only a fewlocal banks or financial institutions, often very inconvenient to theproperty, that will follow this practice.

It is too early to guess if all banks will eventually adopt the policies of somelarger banks. If the entire banking industry prohibits dual signatureaccounts, it would be unfortunate for businesses in general. In themeantime, if you are opening a business bank account and you haveconcerns about an employee or associate taking some or all of the funds inone fell swoop, it might be a good idea to consider requiring two signatureson certain withdrawals. Newland and Associates (2003 post)http://www.unclefed.com/AuthorsRow/Newland/twosignatures.html

Clearly, the dual signature check is the minority view of proper checkingpractice in the banking community.

RD has taken the first step in ameliorating this issue with its new final rulefor Section 538 Guaranteed properties with Section 515 RD Direct Loans.The new rule, published on June 17, 2014, at 80 Federal Regulation34531, amends 7 CFR Section 360.306 by adding a new subsection (e)(2).The new 3560(e)(2) provides that Section 515 reserve accounts must stillbe in supervised accounts that require Agency countersignature. However,Direct Multifamily borrowers with Section 538 loans are allowed to insteadhave the 538 lender hold the reserve funds. Still, the 538 lender must getprior RD approval before disbursing reserve funds. The Section 538program, at 7 CFR 3565.402(a) already provides for lender held reserves.This change brings RD part of the way into modern banking practices andmakes RD partly consistent with every other agency and lender regardingthe handling of controlled funds. Moreover, it brings RD in line withGinnie Mae requirements that reserve accounts must be in the lender’scontrol as the reserve funds are pledge collateral for the 538 loans. GinnieMae provides secondary market liquidity on many 538 loans.

This new rule also provides that reserve funds cannot be used to pay feesassociated with the 538 loan.

Richard Michael Price is an attorney with Nixon Peabody LLP, who specializesin affordable housing, low-income housing tax credits, tax credit finance andsyndication, real estate and community development, governmental relationsand public policy and government contracts. He can be reached at 202-585-8716 or rprice@nixonpeabody.com.

Matrix Monthly Reports RentGrowth Acceleration in JuneAverage rents rose 6.3% in June, hitting arecord level of year-over-year growth

The June 2015 edition of Matrix Monthly, a report on U.S. apartmentmarket trends from Yardi®, documents a robust 6.3% year-over-yearincrease in average rents across the country. Rents rose by 1.3%month-over-month in June, the largest increase since the last recession, andare now at an all-time high of $1,150.

Continued rent escalation in San Francisco, Denver, Jacksonville, Fla., andPortland, Ore., accounted for much of the average rent increase in June.Demand for higher-end product also contributed to this trend.

Matrix Monthly is a monthly survey of apartment owners in the 100 U.S.markets covered by Yardi’s Pierce-Eislen business unit. Brokers, sponsors,

banks and equity sources that underwrite multifamily investmenttransactions use the report as a business development tool.

To see the full June report, click here. Email matrix@yardi.com or call 408-663-1149 with questions or comments.

About Yardi Now in its fourth decade, Yardi® is committed to the design, developmentand support of software for real estate investment management andproperty management. With the Yardi Commercial Suite™, the YardiMultifamily Suite™, Yardi Investment Suite™ and Yardi Orion™ BusinessIntelligence, the Yardi Voyager® platform is a complete real estatemanagement solution. It includes operations, accounting and ancillaryprocesses and services with portfolio-wide business intelligence andplatform-wide mobility. Yardi is based in Santa Barbara, Calif., and servesclients worldwide from offices in North America, Asia, Australia, Europeand the Middle East. Yardi is a long-time CARH Advisory Trustee member.

Re-printed from a press release provide by Yardi. For more information,visit www.yardi.com.

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Gill GroupCompiled by Betsy Valentine, Marketing Consultant, CARH

The CARH News is pleased to feature Advisory Trustee Member, the GillGroup. Principles, Samuel Gill and Cash Gill, are long-time activemembers of National CARH. Cash Gill is a member of the 2015-2016CARH Board of Directors. Chad Gill is a former CARH board member. TheGill Group works with many of the largest developers, managementcompanies, syndicators and lenders nationwide to streamline theacquisition, development, rehabilitation and sale of multifamily properties,hotels, assisted and independent living facilities, skilled nursing centers andshopping centers for the past several decades. Its core services areappraisals, market feasibility studies and rent comparability studies. The firmalso offers property condition assessments, physical/capital needsassessments and Phase I environmental assessments.

The Gill Group is at the forefront of advancement in real estate duediligence strategies, having been built on a commitment to deadlines andinnovation. The firm has the ability to perform services throughout the

entire United States, by overseeing its nationwide network of appraisersand consultants.

The Gill Group has been working hand in hand with the Office ofAffordable Housing Preservation (OAHP), housing authorities, lenders,developers and state housing finance agencies to ensure that public housingunits are converted in the best way possible. The firm has been instrumentalin the conversion of thousands of units in states all across the country.

The Gill Group is the largest provider of compliance reviews for StateHousing Agencies and Contract Administrators for State Housing Agenciesin the following eleven states; Oregon, North Carolina, South Carolina,Hawaii, Indiana, Utah, Nebraska, Washington, New Mexico, Kansas andLouisiana. Six of these states have designated Gill Group as the soleprovider for these reviews. The firm is also a contract reviewer for theQuality Control program concerning closed MAP loans. All analysts,appraisers and inspectors are state certified. The company places anemphasis on continuing education.

For more information about the Gill Group, please visit www.gillgroup.com.

Rural Rental Housing Associationof TexasCompiled by Betsy Valentine, Marketing Consultant, CARH

The Rural Rental Housing Association of Texas (RRHA) is a non-profitorganization established in 1977, and is dedicated to the improvement ofthe lifestyle of rural citizens. In providing safe and affordable housing, bothborrowers and lenders have committed themselves to safeguarding theborrower’s investment and maintaining adequate security for the lender.RRHA is headquartered in Temple, Texas, and is dedicated to the

enhancement of rural multi-family housingthrough promotion of professionalism ofapartment management.

RRHA became an affiliate of National CARH in2012 and has been an active member since then.Administrative Director, Royce Ann Wiggins, iscurrently busy preparing for the AnnualConvention and Trade Show, to be held July 21-23, 2015 at the Worthington Renaissance Hotel in Fort Worth, Texas.

For more information about the RRHA of Texas, please visit www.rrhatx.com.

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28 CARH NEWS

Homeownership Rates Drop toHistoric Lows; Middle Class Feelsthe Strain of Rising RentsHarvard Research Center Releases The Stateof the Nation’s Housing 2015

The fledgling U.S. housing recovery lost momentum last year ashomeownership rates continued to fall, single-family constructionremained near historic lows, and existing home sales cooled,concludes The State of the Nation’s Housing report released recently by theJoint Center for Housing Studies of Harvard University. In contrast, rentalmarkets continued to grow, fueled by another large increase in the numberof renter households.

Homeownership and AffordableHousing, a Key Part of UpwardMobility, But Hard to Come ByBy Jennifer Molinsky, The Harvard Joint Center for Housing Studies

Recently the MacArthur Foundation released the results of its thirdannual How Housing Matters survey. Conducted by Hart Research,the survey of 1,401 adults identifies a strong belief in the importanceof stable, affordable housing to achieving a middle class lifestyle. Butaffordability challenges that respondents have experienced in their ownlives, and see in their communities, contribute to a sense of pessimismabout Americans’ chances of social mobility, and a majority still feels thatthe country is in the midst of the housing crisis that began 8 years ago.

Several findings resonate with our recent work at the Joint Center. As theState of the Nation’s Housing report shows, the persistent problem ofhousing affordability continues to cause households to make difficulttrade-offs. Over half of survey respondents reported making sacrifices inthe past three years in order to pay for housing. The most common was totake on a second job or work more hours. Worryingly, a number of othertrade-offs bode ill for peoples’ futures: many respondents reported thatthey have stopped saving for retirement, are accumulating consumer debt,and are cutting back on food and healthcare in order to meet housingcosts. These stop-gap measures, necessary to ensure the rent or mortgageis paid, may add to financial and health strains later on. Renters, cost-burdened/distressed owners, younger adults, minorities, lower-incomerespondents, and city-dwellers are most likely to have made at least onetrade-off in the past three years.

The survey also explored beliefs about upward mobility and found that,particularly for those with lower incomes, stable, affordable housing orowning a home is seen as one of the most important factors in achievinga middle class lifestyle (Figure 1). But a majority think that finding quality,affordable housing in their own community to rent or buy is challenging.And across age, race, and income levels, respondents expressed significantpessimism about the chances of rising from a lower economic class to themiddle class, and believe it is harder for younger people today to save forretirement, own a home, find stable, decent-paying employment, andhave a stable, affordable housing situation. Fully 79 percent think thatmiddle class people fall into a lower economic class more frequently thanthe other way around.

One of the least optimistic groups of respondents were those aged 54-64,85 percent of whom thought that downward economic mobility is morelikely in today’s world than upward mobility. This group was the mostlikely age cohort to see housing affordability as a serious problem in thenation. As our own research points out, those aged 50-64 were hitparticularly hard in the housing crisis; as a whole, the age cohort’shomeownership rate declined by 5 percentage points from its 2005 peak,many saw a loss of wealth and have been living with stagnating wages,and the group has higher levels of housing and consumer debt than in thepast. Members of this group who are housing cost burdened (paying morethan 30 percent of their income on housing) make difficult trade-offsincluding forgoing retirement savings – again setting up the potential forgreater difficulties in the future.

Though the 50-64 year olds are most likely to view housing affordability asa serious problem, their worries are shared with the other age cohortssurveyed in How Housing Matters. Sixty percent of all respondents thinkthat affordable housing is a serious problem in the nation today, and 61percent believe we are still in the midst of a housing crisis – with one infive thinking the worst is still to come.

As we head into a presidential election season, skepticism about the abilityof Washington to intervene effectively, as well as ideological beliefs about

Figure 1. Source: How Housing Matters, 2015, Hart Research &MacArthur Foundation

The State of the Nation’s Housing,released annually by the Joint Centerfor Housing Studies, provides a periodicassessment of the nation’s housingoutlook and summarizes importanttrends in the economics anddemographics of housing. The reportcontinues to earn national recognitionas an authoritative source ofinformation regularly utilize