Washington Hotline - April 17, 2009


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Resourceful Relationships Open Doors for Financing Affordable Projects

Close public and private partnerships are instrumental in expanding opportunities in financing. Almaden Apartments in San Jose, Calif., Pillars Finalist for the Most Creative Financing of an Affordable Apartment Community, stepped outside of conventional financing tactics to develop a 100% affordable apartment community in one of the nation's most expensive housing markets.


Developed by  MacFarlane Costa Housing Partners, this 226-unit family apartment community provides high quality affordable housing to working households with income at 50%-60% of area median. The community includes one-, two-, and three-bedroom apartments with monthly rents ranging from $952 to $1,586. This is compared to market-rate rents averaging from $2,400 to more than $2,700.

The success of the project was based on close public and private partnerships, between the city, the development firm, and nonprofit partners. The effort from each investor thwarted delays and obstacles stemming from financing challenges and changing market conditions. The development team bided time while waiting for land values and market conditions to improve until construction was feasible. The strategically layered financing plan consisted of:

Invested Amount   

Source

$27.6 Million

Predevelopment Loan (provided by the developer)

$8 Million 

Bridge Loan

$6.3 Million

Land Loan (all of the above carried for 6 years from initial land acquisition in  2001)

$31.3 Million  

Tax Exempt Bonds (exemption from project bonding limit required)

$20 Million

4% Tax Credit Equity

$ 13.8 Million 

City of San Jose

$2.3 Million 

Developer Note

$4.9 Million 

Developer Loan to Partnership


The community contributes to a larger redevelopment effort on the part of the city, as it was built on five acres of land that required extensive environmental remediation due to its former industrial and commercial uses. The city of San Jose was a major investor, and was sold on the proposal for a 100% affordable project that would maintain condo design objectives. Almaden Apartments represents one of the fastest lease-ups in market history — 100% of the units were leased in two months time.

Providing a sense of place and community to blighted areas is a key component to target investors with such goals. Land was donated to the city from this project for a neighborhood park directly adjoining the property. The community features a clubhouse, computer learning center with free on-site computer classes, fitness and business centers, pool and spa, laundry rooms, and ample parking. Public transit and a light rail station are in close proximity, as well as schools and recreational facilities. The project was designed to exceed market rate standards, featuring classic contemporary garden-style architecture, with below-podium secured parking, while still appearing to  be built on grade from all exterior views. 

Planning, partnerships, and patience allow for successful developments in even the most expensive housing markets.

For more financing tips, tune in to this months Multifamily Webinar, FHA – A Viable Alternative In Today’s Multifamily Lending Market on April 22. Register today!

Carried Interest Bill Introduced in House

Congressman Sander Levin (D-MI) recently reintroduced his legislation (H.R. 1935) to tax a carried interest at ordinary income tax rates (35%) instead of the present-law capital gains rates (15%).  As in the case of previous versions of the bill, its provisions would apply to real estate as the test is “the form of compensation, not the type of assets the firm is managing, its investment strategy, or the amount of compensation involved.” 

To date, similar legislation has not been introduced in the Senate and, in fact, both Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA) have publically stated their concern about the proposal and questioned the timeliness of its consideration now.

Regardless, NAHB along with a number of real estate industry partners continues to press the case for real estate and carried interest with members of the House and Senate. It appears unlikely that the legislation will be taken up on its own, but will be added to other moving legislative vehicles as a revenue offset.

NAHB needs your help in fighting back against this carried interest proposal. We need examples of actual transactions (with all property identification information removed) where a carried interest is used and what the impacts would be without the benefit of a carry. Further, we need all members to reach out to their members of Congress in regards to the carried interest issue.  Thank you for your support and contribution towards this effort.

View the Bill, H.R. 1935 here.
View the press release here.
View Carried Interest talking points here.

For more information, contact Greg Brown or call him at 800-368-5242 x8421.

NAHB on Fannie Mae and Freddie Mac Fees and Requirements

NAHB drafted a letter to the Federal Housing Finance Agency (FHFA) on behalf of the membership to address concerns with the government sponsored enterprises (GSE's) increase in delivery fees and the new condo presale requirement issued by Fannie Mae. NAHB believes that these actions will reverse the steps taken by the FHFA, the Obama Administration and the Federal Reserve to correct the housing crisis.

View the letter to the FHFA here.

For more information, contact Bill Renner or call him at 800-368-5242 x8597.

Latest HUD Appointees

Review the latest HUD appointees below.

  • Dr. Howard Koh, Nominee for Assistant Secretary for Health, Department of Health and Human Services — Dr. Howard Koh is the Harvey V. Fineberg Professor of the Practice of Public Health, Associate Dean for Public Health Practice, and Director of the Division of Public Health Practice at the Harvard School of Public Health (HSPH). At HSPH, he has served as the Principal Investigator of multiple research grants related to community-based participatory research, cancer prevention, health disparities, tobacco control, and emergency preparedness.

  • Helen R. Kanovsky, Nominee for General Counsel, Department of Housing and Urban Development—Helen R. Kanovsky is currently the chief Operating Officer of the AFL-CIO Housing Investment Trust. She has been with the Trust nearly 13 years. The Trust is a $3.4 billion registered investment company which invests in housing securities for its institutional investors, who are union and public pension plans. The AFL-CIO Housing Investment Trust has provided over $5.25 billion to finance 86,000 units of multifamily housing creating over 58,000 union jobs in the construction industry.

    Read the full press release here.

Fair Housing Act: Statute of Limitations by Geographic Region

The Fair Housing Act (“FHA”), prohibits discrimination in the sale or rental of housing on the basis of an individual’s race, color, religion, sex or national origin. In 1988, Congress amended the FHA to further prohibit discrimination against persons with disabilities.To ensure that developers, architects, engineers and other professionals constructing multifamily dwellings to be accessible to persons with disabilities, the FHA contains certain “design and construction” requirements. These requirements include accessible building entrances, common and public use areas, kitchens and bathrooms.

Failure to incorporate FHA accessible “design and construction” features in multifamily dwellings amounts to discrimination on the basis of handicap. This is a violation of federal law. The FHA offers three methods of enforcement, each with its own statute of limitations period.

Unfortunately, the federal courts are not all in agreement. Some courts have held that the statute of limitations begins to run after the non-compliant building is completed; others say it begins to run when the last non-compliant unit in a development has been sold; still others use a theory called the “continuing violation doctrine” to hold that the statute of limitations begins anew every day so long as the non-compliant unit remains in existence.  

View the statute of limitations map and chart for each geographic area to see what the statute of limitations are in your region.

Fo more information, contact Jeff Augello or call him at 800-368-5242 x8490.

New Action Plan on AD&C Lending

NAHB  is expanding our efforts on the AD&C lending crisis with a new game plan that’s focused squarely on our members. The centerpiece of this effort calls for developing solid and specific examples of the ongoing AD&C problems that builders and developers are experiencing. We will use these examples to create case studies that will bolster our arguments with federal regulators, legislators and others and illustrate the degree of the crisis at hand. As such, NAHB is soliciting input from individual members who have compelling AD&C experiences to share -- especially those members who are operating in relatively stable markets, since these can best put a spotlight on inappropriate regulatory actions.

Share your AD&C experiences by filling out the online template located at: www.nahb.org/adccasestudy

Please forward this to your groups with a request for them to help us contact members in their areas with compelling stories. 

Please contact John Dimitri or call him at 800-368-5242 x8529 if you have questions or would like additional information.  Thanks for your contribution towards this effort.

Pool and Spa Safety Act Reminder

The rules concerning pool drain covers have changed.

After December 19, 2008, each public pool and spa in the United States with a single main drain other than an unblockable drain shall be equipped, at a minimum, with 1 or more of the following devices or systems designed to prevent entrapment by pool or spa drains:

1. SAFETY VACUUM RELEASE SYSTEM.—A safety the pump, reverses the circulation flow, or otherwise provides a vacuum release at a suction outlet when a blockage is detected, that has been tested by an independent third party and found to conform to ASME/ANSI standard A112.19.17 or ASTM standard F2387.

2. SUCTION-LIMITING VENT SYSTEM.—A suction-limiting vent system with a tamper-resistant atmospheric opening.

3. GRAVITY DRAINAGE SYSTEM.—A gravity drainage system that utilizes a collector tank.

4. AUTOMATIC PUMP SHUT-OFF SYSTEM.—An automatic pump shut-off  system.

5. DRAIN DISABLEMENT.—A device or system that disables the drain.

6. OTHER SYSTEMS.—Any other system determined by the Consumer Product Safety Commission (CPSC) to be equally effective as, or better than, the systems at preventing or eliminating the risk of injury or death associated with pool drainage systems.

In addition, each swimming pool or spa drain cover manufactured, distributed, or entered into commerce in the United States shall conform to the entrapment protection standards of the ASME/ANSI A112.19.8 performance standard, or any success or standard regulating such swimming pool or drain cover.

The regulations are enforced by the Consumer Product Safety Commission under the Consumer Product Safety Act. View the agency's recent press release, its staff's interpretation of the law, and guidance for compliance concering this issue.

If you are a multifamily builder, developer, or property manager with a swimming pool or spa that is open to the residents of your development or complex, you should consult with a contractor specializing in pool and spa installation or construction to insure that your facility is properly equipped. Be advised, these new anti-entrapment devices must be installed prior to opening the pool or spa for use by the residents this season.

View the Pool and Spa Safety Act FAQs
View the ‘‘Virginia Graeme Baker Pool and Spa Safety Act’

For more information, e-mail Larry Brown at NAHB.

Resources: 2009 HOME Limits Published, New HOME and NSP Courses

The U.S. Department of Housing and Urban Development’s Office of Affordable Housing in conjunction with the Office of Block Grant Assistance is pleased to announce HOME and NSP training courses for 2009.  HOME and NSP: Creating Affordable Housing, Revitalizing Neighborhoods  is a foundation course on the essentials of using HOME and NSP program funds for homebuyer and rental housing projects.

HOME and NSP  focuses on key program topics such as: NSP eligible activities; ways that HOME can be invested in NSP homebuyer and rental projects; meeting low income targeting rules for both HOME and NSP; and key program implementation issues such as administrative costs, program income, and affordability periods.   In addition, the course will provide answers to common HOME and NSP questions and will highlight HUD interpretation of key policy issues. 

Ten HOME and NSP classes will be available between May through June 2009.   The class is open to HOME PJs nationwide who receive NSP funds from HUD or from a state or who are investing HOME funds in NSP projects.  Other public and nonprofit agencies will be wait listed and registered if space permits.  We expect these classes to be very popular so please register ASAP on-line at:  http://www.cpdtraininginstitute.com/.

 

Calendar: Conferences and Events

April 2009 

" Top Trends in Impact Fees" Web Seminar
April 21, 2009

2:00 PM EST
REGISTER HERE! 

Fee: Free

Speakers: 
Thais Austin, Infrastructure and Public Finance Specialist,
NAHB; Carter Froelich, Managing Principal, DPFG Consultants
Moderator: J. Michael Noonan, Division President, Rottlund Homes, 

Come learn the latest trends in impact fees and get the tools you need to shift the conversation to other financing mechanisms. In this free first-in-a-series webinar brought to you by NAHB’s Land Development Committee with support from NAHB Multifamily, attendees will:

  • Learn what impact fees are and how they affect companies and local jurisdictions
  • Understand how to avoid common administration and implementation problems in impact fee ordinances
  • Find out the common errors made when computing impact fees
  • Learn strategies used to argue for impact fee rollbacks
  • Discover the resources available from NAHB to deal with impact fees.

FHA – A Viable Alternative In Today’s Multifamily Lending Market
April 22, 2009
2:00 PM EST
REGISTER HERE! 

NAHB Multifamily Council Member Fee: Free
NAHB Member Fee: $100

Speakers:
Catherine Pharis, Director-Head, FHA, for Deutsche Bank Berkshire Mortgage, Inc.; Margaret Allen, CEO, AGM Financial Services, Inc. 

Moderator: Stillman Knight Jr., President, The Knight Company 

NAHB Multifamily invites you to join our panel of experts as they provide an in-depth overview of both the FHA Section 221 (d)(4)and the Section 223(f) programs.This will help you decide if FHA financing is for you.

 
2009 Spring NAHB Construction Forecast
April 23, 2009
Washington, D.C
REGISTER NOW!

Registration is now open online for the 2009 Spring NAHB Construction Forecast Conference. NAHB's CFC is the most comprehensive housing forecast from the voice of the housing industry. Speakers from a range of vantage points will provide you with the highest-level insight and analysis of the challenging climate for new residential construction. If unable to attend this important event in person, you can participate via Webcast, during which you can still ask these renowned experts questions.

Attend the Forecast Conference and get answers to these critical questions:

  • How will the American Recovery and Reinvestment Act of 2009 stimulate the economy and spur new residential construction?
  • How will the mortgage markets change?
  • Will some regions see an earlier recovery?
  • When will the housing market reach bottom?

The CFC's panel of expert speakers, including NAHB's new Chief Economist David Crowe, will look at the national and regional markets, the state of the mortgage finance industry and housing prices.

In response to today's economy, NAHB is lowering registration fees by $75 See the new agenda and more detailed information at www.nahb.org/CFC.

Building for Boomers & Beyond: 50+ Housing Symposium™

April 27-29, 2009
Philadelphia, PA
Philadelphia Marriott Downtown

Registration rates have been reduced for the 2009 NAHB Building for Boomers & Beyond: 50+ Housing Symposium™ . This is the premier event for 50+ housing professionals—you can’t afford to miss it! :  The deadline has been extended until April 10, Register TODAY!

Get fresh ideas that will lead to concrete solutions and help you revolutionize your business:

  • Develop a winning strategy – hear the latest economic forecast, get a look at the capital markets, emerging design trends, green building for the boomer market, hot amenities and more;
  • Plug into the future – see the latest product and technology for the 50 and up crowd;
  • Learn from the experts – hear from seasoned professionals who have been through several market cycles;
  • Get a blueprint for success – tour award-winning condos, single-family homes, clubhouses and more;
  • Develop and cultivate business relationships – network to grow your circle of contacts.


May 2009

National Green Building Conference
May 8-10
Dallas

A new business management track at the National Green Building Conference will help you learn to green your business. The educational sessions will address green business practices, legal issues, government programs and more.

The conference offers more than 30 educational sessions in green business management, building science, design and sales, and marketing. Author Joel Makower, the co-founder and executive editor of Greener World Media as well as a senior strategist at GreenOrder, a sustainability consultancy, will be the keynote speaker. The conference also will feature a tour of green homes in the Dallas area, a dinner honoring the winners of the NAHB National Green Building Awards and an exhibit hall featuring the latest green products and materials.

In addition, the 2009 class of Certified Green Professionals (CGP) will be honored at a pre-conference reception on Thursday, May 7. To date, more than 2,000 builders, remodelers and other home building industry professionals have earned the CGP designation.

To register for the conference, visit www.nahb.org/GreenBuildingConference.



Attend NAHB's Spring Board of Directors Meeting
May 25-31
Washington, D.C
Register Now!

The 2009 Spring Board of Directors Meeting will be held at the Marriott Wardman Park Hotel located at 2660 Woodley Road, NW, Washington, DC on
May 25 - 31.

Just a reminder that this year's Legislative Conference took place in conjunction with the March Executive Board Meeting, March 22-25, 2009.   If you would like more information concerning the issues that NAHB discussed on the Hill, click here. 



July 2009

Are you ready to be recognized as one of the best in the country?

You design and build great projects — why not get the recognition you deserve?

Enter the 2009 Best in American Living Award, the nation’s most prestigious residential design competition, and show customers why your product is head and shoulders above the rest.

Enter at www.probuilder.com/bala. Forms and fees are due by July 15, 2009.

For more information, e-mail Judy Brociek or call her at 630-288-8184.