Novogradac & Company Llp

As the new markets tax credit (NMTC) community concludes a busy period between the award of one round and the applications for another, some community development entities (CDEs) will turn their sights toward NMTC compliance reporting. In this week's podcast, Michael Novogradac, CPA, and Austin Power, CPA, provide an overview of NMTC compliance reporting, why it's valuable to the Community Development Financial Institutions (CDFI) Fund as well as what can happen to CDEs that fall out of compliance. Later, they discuss Power's four pieces of advice for CDEs to set themselves up for compliance reporting success, including being mindful of timeliness and taking advantage of interim certification.

Qualified opportunity funds being tracked by Novogradac reported nearly $10 billion in equity investment during 2022 and we recently began another session of Congress with a possibility of legislation to extend and enhance the opportunity zones (OZ) incentive. In this week's podcast, Michael Novogradac, CPA, and John Sciarretti, CPA, discuss the state of incentive and the chances for changes either by legislation or regulation. They also discuss the role the Novogradac Opportunity Zones Working Group is playing and what might be in an "Opportunity Zones 2.0" bill. They then examine highlights of the recent Novogradac QOF equity-raising report.

The fiscal year (FY) 2023 round of the Capital Magnet Fund is now open and the deadline to apply is March 21. The Community Development Financial Institutions (CDFI) Fund plans to award up to $320.6 million to CDFIs and qualified nonprofit housing organizations through the FY 2023 round. Michael Novogradac, CPA, and Novogradac partners Amanda Read, CPA, and Brent Parker, CPA, discuss Capital Magnet Fund basics, an overview of what is new with the FY 2023 application, tips on getting a competitive edge on applications, key deadlines and more.

There are two overarching ways to structure a historic tax credit transaction: the direct investment structure and the pass-through lease structure. How do the structures differ and how can you choose the right structure for your project? Michael Novogradac, CPA, and Novogradac partner John DeJovine, CPA, discuss the pros and cons of each structure for developers and investors, as well as other considerations when choosing a structure.

The affordable housing industry continues to work through the challenges of the COVID-19 pandemic, including for some public housing authorities (PHAs) a return to the office and an opportunity to re-evaluate internal controls. In this week's podcast, Michael Novogradac, CPA, and Rich Larsen, CPA, discuss four ways PHAs can protect against fraud, with special attention on rent collections, building materials, physical assets and cyber fraud.

Form 8609 is the IRS document that credit allocating agencies give to property owners as evidence that the owner is eligible to claim low-income housing tax credits (LIHTCs). Developers should understand how to complete Form 8609 and its various elections because an improperly completed form can result in the loss of credits on a building-by-building basis. Michael Novogradac, CPA, and Craig Staswick, CPA, provide an overview of Form 8609 and discuss the nuances of particular questions to help developers avoid potentially costly mistakes. As part of the "So You Want to be a LIHTC Developer" series, this episode is a must-listen for all new and experienced LIHTC developers.

The coming year is set up to be a significant one for regulatory guidance and community development tax incentives. In this week's podcast, Michael Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government relations, discuss the coming year and look at the key issues for Novogradac's seven tax incentive working groups. They look at the key emphasis for each group and discuss the value of being part of the working groups. They wrap up with a look at some crosscutting provisions that affect multiple community development tax incentives.

The U.S. Department of Housing and Urban Development (HUD) recently announced it would use 2021 American Community Survey data to determine fiscal year (FY) 2023 income limits, which are used to determine who can live in properties financed with low-income housing tax credits (LIHTCs). In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Thomas Stagg, CPA, parse several types of information following the announcement: What stakeholders working in LIHTCs and community development know at this stage in the annual process of determining income limits, what they know they don't know and also how to best prepare for unknown challenges on the horizon.

The Community Development Financial Institutions (CDFI) Fund is authorized to award up to $5 billion in new markets tax credit (NMTC) allocation authority under the calendar year 2022 round. Michael Novogradac, CPA, and Nicolo Pinoli, CPA, discuss five ways community development entities can strengthen their allocation applications in preparation for the Jan. 26, 2023, deadline for the calendar year 2022 round. They discuss how the NMTC application is structured, scored and reviewed. They also review tips on which application sections to prioritize in terms of scoring and how to avoid common errors.

In this week's installment of the "So You Want to Be a LIHTC Developer" series, Michael Novogradac, CPA, is joined by Novogradac partner Christina Apostolidis, CPA to discuss keys to successfully meeting tax, audit and investor deadlines for low-income housing tax credit (LIHTC) properties. They discuss the tax and audit requirements, then look at the importance of hiring an experienced tax credit accountant, establishing the timeline and communication protocol, being ready for surprises and how to recap after busy season.

In this installment of the "So You Want to be a LIHTC Developer" series, Michael Novogradac, CPA, is joined by Novogradac partner Blair Kincer and Novogradac principal Kelly Gorman to discuss the annual Novogradac LIHTC operating expenses and income report. They discuss overall impressions from the report, which includes a survey of nearly 125,000 units financed by the low-income housing tax credit (LIHTC), then they look at factors for income in 2021, followed by a look at the increase in property insurance and repairs and maintenance expenses and the drop in payroll expenses in 2021.

In this installment of the "So You Want to Be a LIHTC Developer" series, Michael Novogradac, CPA, and guests Warren Sebra, CPA, discuss final cost certifications, one of the necessary benchmarks for receiving low-income housing tax credit (LIHTC) equity. They discuss cost certification basics, examples of eligible costs, ways to enhance eligible basis and tips and recommended practices for LIHTC developers.

An expected red-wave election for Republicans in the Senate and the House of Representatives ended up being closer than expected, with the Democratic Party retaining control of the Senate and the House of Representatives undecided (although trending toward Republican control). In this week's podcast, Michael Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government policy, discuss the results and the repercussions for community development tax incentives. They begin with an overview of the election, the look at potential leadership for each party in each chamber of Congress, including the key tax-writing committees. Then they discuss the effect the election results will have on the lame-duck session of Congress as well as the next two years, before looking at the 2024 election and 2025 expiration date for many tax incentives. Finally, they discuss the Novogradac working groups and how listeners can benefit from being a part of them.

The CDFI Fund late last month announced the calendar year 2021 (CY 2021) new markets tax credit (NMTC) allocation awards, allocating $5 billion in NMTC authority to 107 community development entities (CDEs). In this week's podcast, Michael Novogradac, CPA, is joined by Brad Elphick, CPA, and Rebecca Darling, CPA, to discuss what we learned from the awards announcement, as well as what CDEs should be doing now that the awards have been announced. After that, they examine what qualified businesses should be doing as they seek below-market-rate financing through the NMTC and wrap up with a look at what to expect for the CY 2022 application round.

Novogradac Tax Credit Tuesday is launching its "So You Want to Be a LIHTC Developer" series, which is meant to be a useful guide to executing a successful low-income housing tax credit development. In this week's episode, Michael Novogradac, CPA, and guests Jeff Nishita, CPA, and Melissa Chung, CPA, discuss assessing the financial feasibility of a proposed LIHTC development or redevelopment, including location and market considerations. They discuss the benefit of properties in qualified census tracts and difficult development areas, gross rents and utility allowances, as well as LIHTC market studies.

The Inflation Reduction Act has $369 billion in clean energy and renewable energy provisions, including the allowance of certain energy tax credits to be separately transferred, the allowance of qualified tax-exempt entities to elect to get a refund of certain tax credits in lieu of syndicating them and the extension of certain tax credits. The Novogradac Renewable Energy Tax Credit Working Group is working with stakeholder members to submit comments to Treasury and the Internal Revenue Service with respect to the Inflation Reduction Act. Michael Novogradac, CPA, and Novogradac partner Tony Grappone, CPA, discuss key provisions of the Inflation Reduction Act that are drawing the most attention from the renewable energy community and how to provide input on the Novogradac Renewable Energy Tax Credit Working Group's comment letter.

Over the past decade, public housing authorities (PHAs) have converted 1,558 projects, including 206,181 housing units, under the U.S. Department of Housing and Urban Development's Rental Assistance Demonstration (RAD) program, representing more than $14.9 billion of in affordable housing. Michael Novogradac, CPA, and Novogradac partner Rich Larsen, CPA, discuss what PHAs and their RAD consultants need to know about RAD accounting issues, compliance issues, financial reporting and other hot topics.

The Internal Revenue Service on Oct. 7 issued final and temporary regulations for the low-income housing tax credit (LIHTC) average-income set-aside test. Michael Novogradac, CPA, and Novogradac's director of multifamily compliance, Stephanie Naquin, discuss unit designations and the cliff test under the new regulations. They also compare the final regulations with the previously proposed regulations, additional questions raised and applicability dates.

The U.S. Census Bureau recently released 2021 American Community Survey (ACS) data, a key ingredient in determining rent and income limits for affordable housing properties. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner Thomas Stagg, discuss the data release and its effect on 2023 and 2024 rent and income limits. They begin by clarifying difficulties with 2023 income limits, then examine why most counties will see increases beyond the national median figure before turning to the 2021 ACS data and what it means for 2024. After that, they discuss the recent fair market rent figures released by the U.S. Department of Housing and Urban Development (HUD) and how they'll affect rent and income limits, before turning to the impact of inflation and what to be watching between now and April 2023, when the next rent and income limits are released by HUD.

Year 15 for low-income housing tax credit properties'the end of the initial compliance period and when the investor partner often has received substantially all its tax benefits'is a crucial period for affordable housing properties. In today's podcast, Michael Novogradac, CPA, and Novogradac partner Kevin Wilson, CPA, discuss the issues that arise and considerations for LIHTC properties at Year 15. They discuss when to start addressing such issues and what to review, then look at the goals of the partners, needs and desires of tenants, physical condition and fiscal condition of the property and the rights of various partners. They wrap up by looking at the options for various partners at Year 15.