Tax Credit Advisor Article Archives

The Norris Homes project in Philadelphia has a little bit of everything. It is a Department of Housing and Urban Development Rental Assistance Demonstration (RAD) project. It is a Choice Neighborhoods Initiative. It uses Low Income Housing Tax Credits. It is a transit-oriented development (TOD). It is a green project. It even has a lender that provided both debt and equity for the financing.

Since its launch in 2011, the Rental Assistance Demonstration program (RAD) has put hundreds of  thousands of public housing units under private management, across 44 states plus DC. All this activity was spurred by HUD’s change in incentives – after decades of defunding public housing, HUD decided to allocate money for RAD, showing that privatization is the agency’s preferred future model. But RAD has also shot off because it’s being blended with other HUD tools that better enable public housing repair and conversion. Two of these tools are Section 18 and Rent Bundling. 

Many of today’s affordable housing policies, from inclusionary zoning to strengthened tenant protections, are—whether you agree with them or not—growing out of coastal urban America. But one relatively new HUD program, Rental Assistance Demonstration (RAD), has become a Southern thing.

Motivation is a basic actors’ tool – and it’s also the driving force behind the Actors Fund’s tireless effort to create the Hollywood Arts Collective: a new multi-use affordable housing development for all entertainment industry professionals being developed in Los Angeles.

When Rental Assistance Demonstration (RAD) was launched eight years ago, the public housing world was encased in its own hard shell: HUD officials speaking at NAHRO or CLPHA conferences to explain and cheerlead for the program were greeted with skepticism and suspicion only a skosh short of hostility.

When the Opportunity Zones program was added to the bipartisan Tax Cuts and Jobs Act of 2017, it was presented as a triple bottom line win: helping underserved communities achieve economic growth and build wealth for residents and businesses; bringing a new source of investment dollars into those communities; and offering the new investors an attractive way to defer and even offset capital gains taxes.

Tax Credit Advisor sat down with Bernstein to get his thoughts on the role Opportunity Zones can play to help address the crisis, as well as other policy initiatives that Congress might focus on in 2020 to help generate more affordable housing.

Ever since the Opportunity Zone program was announced two years ago, developers, investors and community development organizations have been trying to determine which other tax benefit programs, if any, fit comfortably within the same requirements and parameters.

The idea behind Opportunity Zones has been to encourage development in poor areas. Inspired by the Enterprise Zone concept championed in the 1980s by congressman Jack Kemp, the Trump Administration law is, according to the IRS website, “Designed to spur economic development and job creation in distressed communities…by providing tax benefits to investors who invest eligible capital into these communities.”

Two years into the era of Opportunity Zones, its impact on our industry has been minimal: whatever benefit the OZone may provide other types of real estate, it’s not boosting Low Income Housing Tax Credit (LIHTC) production.

When asked about the December 19, 2019 final Opportunity Zone regulations, Jerome Breed, principal with Miles and Stockbridge P.C., said, “The IRS and Treasury did an excellent job with the final regulations. Of course, if I drafted the rules, I’d be happy with all of them.” John Gahan, partner with Sullivan and Worcester LLP, echoed the sentiment, “We as lawyers would never be completely happy with any set of rules.

The enactment of the 2017 Tax Cuts and Jobs Act and the creation of the Qualified Opportunity Zone Incentive (QOZI) has generated a great deal of activity by investors deploying capital in disinvested neighborhoods.