Industry News

Many certification programs are available that add value to multifamily communities.
By Carl Seville

Almost everyone involved in building or rehabilitating apartment buildings is aware, at some level, of the various green building certification programs available. But many may not be aware of just how important certification is and the value it can add to a multifamily property.

Understanding Certification and Its Benefits
Although green certification programs define green building in slightly different ways, all include the following as either requirements or recommendations: energy efficiency, durability, indoor environmental quality, water efficiency, efficient use of materials and resources, waste reduction, sustainable site development, and walkable communities.

Energy Star, LEED, the National Green Building Standard, and other local and regional programs offer apartment owners many good reasons to certify their properties. For one, green certification provides very tangible benefits for both owners and residents. Owners can save money on construction costs and utilities, as well as maintenance and repairs over the life of the building, while tenants benefit from lower energy and water bills, quieter units, improved comfort, cleaner air, and a healthier indoor environment. Lower utility costs, in turn, can lead to easier tenant acquisition and better retention.
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The Department of Housing and Urban Development (HUD) needs to undergo a major restructuring of its multifamily division in the next two years, according to agency leaders.

This effort includes reducing field offices across the country and introducing a new risk-based processing system that aims to increase consistency and improve efficiency.

“These two elements really complement each other,” says Carol Galante, Federal Housing Administration (FHA) commissioner and assistant secretary for housing. “Theoretically, they could be done separately, but they are stronger together and make the platform ultimately better by doing them at the same time.”
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Office of Multifamily Housing Programs to consolidate into ten sites; 16 small HUD offices to be closed

The U.S. Department of Housing and Urban Development today announced a series of restructuring and systemic changes within its Office of Multifamily Housing Programs and the Office of Field Policy and Management (FPM). The changes, which include consolidating Multifamily hubs nationwide and closing 16 smaller offices, affect approximately 900 of the Departments’ 9,000 employees.

While implementation will begin this fall, completion of the entire restructuring process is expected to take approximately two and a half years. Throughout implementation, HUD leadership will work on an ongoing basis to ensure employees are fully informed, and that all notification requirements for both union and non-union workers are satisfied. Every affected employee will be offered the opportunity to continue working for HUD, though in some cases in a new location or role.

“The current organizational model for HUD is not sustainable from a financial and a service delivery point of view,” said Maurice Jones, HUD’s Deputy Secretary. “We are reviewing every aspect of our operation to determine if we have the right people in the right places and we’re determining where we can be even more efficient, to get the most value out of our limited resources. We’re in a different budget environment and we’re at a point where we must make some extremely tough choices. That being said, we certainly understand that this type of change can be challenging for the agency’s employees and we are committed to moving forward on the plan in a way that is sensitive to the needs and concerns of HUD’s staff.”
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What in the world is going on? With all of the talk about sequestration, the debt ceiling, GSE reform and general market turmoil, you would think that any company doing business with the federal government is in dire straits. Certainly, a lot of what is happening on Capitol Hill has a ripple effect on our FHA business. But let’s be clear about something: Ripples aren’t waves.

While these changes will affect a few of our friends at HUD, it will not have any impact on our ability to do business with HUD. Congress has passed a continuing resolution to keep the government open for business. In addition, HUD has been allocated the full commitment authority it was granted for fiscal year 2013. This means business as usual for the foreseeable future.
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What’s at Stake for the Affordable Housing Industry in the 2012 Election
BY DONNA KIMURA AND CHRISTINE SERLIN

1. TAX REFORM: Two words that strike fear in the low-income housing tax credit (LIHTC) industry. The LIHTC has been the nation’s most successful affordable housing development tool, spurring the creation of about 2.4 million rental homes since 1987. It has enjoyed strong bipartisan support over the years, but with a big federal deficit and a rancorous Congress, everything is on the table, including the possible elimination or reduction of the LIHTC program. There are no sacred cows.

The elimination of tax expenditures was floated by the co-chairs of the National Commission on Fiscal Responsibility and Reform, better known as the Deficit Commission, two years ago. Their draft plan did not specifically name LIHTCs or bonds, but addressed all tax programs in general. This proposal by Erskine Bowles, chief of staff to President Clinton, and Alan Simpson, former Republican senator from Wyoming, did not go anywhere at the time, but the possibility of the LIHTC getting lumped in with larger tax reform efforts still looms.

During a real estate policy forum at the recent Republican National Convention, Sen. Johnny Isakson (R-Ga.) said he thought the best approach to tax reform would be to put the entire tax code on the table to look at all the enhancements, credits, deductions, and expenditures and see if they are justified.

“I fully understand the value of the low- and moderate income housing tax credit,” he said. “That is a tremendous program that attracted capital to a place capital wasn’t flowing. Good projects were built, and that has a good public purpose. The mortgage interest deduction on the first mortgage on a single-family loan is critical, but we have to make sure that we examine everybody and everything, and the most important thing we can do is simplify our code, raise aspirations and expectations, and get people investing and spending money again.”
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By Conor Dougherty
Wall Street Journal

DENVER – Virtually every leg of the real-estate sector will show some improvement in the coming year, but a still-slow economic recovery marked by tepid job and income growth will continue to weigh on the sector, according to the Urban Land Institute’s 2013 forecast released today at the group’s fall meeting here.

“What drives real estate is jobs. Our global economy has been recovering slowly,” said Stephen Blank, a senior fellow at the Urban Land Institute, a nonprofit concerned with land development issues. “We’re going to grind it out.”

The Urban Land Institute’s Emerging Trends forecast — a survey of some 900 of the group’s 30,000 members — is prepared with PwC and has been released annually for 34 years. The report, which covers a broad swath of the real estate market including the housing, office and industrial sectors, makes predictions about what will happen with real estate in the coming year. Among them:

• With the supply of commercial real estate tight, vacancies will drift downward in the office, industrial and retail sectors.
• Demand for rental housing will stay strong despite increased construction of multifamily buildings.
• The housing market will continue to improve, even in battered markets like Las Vegas and Southern California.

Continue reading on the Wall Street Journal

Multifamily will drive growth nationwide, as it already is doing in California, the school’s economists predict.
By John Caulfield

Forecasting a 112% increase for housing starts between 2011 and 2014 sounds pretty aggressive. But it’s not really, say David Shulman and Jerry Nickelburg, senior economists with UCLA’s Anderson School of Management, which recently released its latest projections for the economies in the U.S. and California over the next few years.

Shulman estimates that national starts will increase by nearly 25% in 2012 to 763,000, and then grow by more than 70% over the next two years to exceed 1.3 million in 2014, of which more than 400,000 starts will be multifamily.

The economists note, though, that their estimates for 2014 are relatively conservative, given that conventional wisdom has long been that the U.S. needs to build 1.5 million housing units annually to keep pace with population growth and replacements. What Anderson is actually predicting, says Shulman, is movement from “depression level” starts in 2011 (612,000 units) and “recession level” starts this year, to “what’s been the 20-year normal” in 2014.
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Experts: development ‘far behind’ demand for rentals in Central Austin

The housing market in Central Austin is seeing an upswing in multifamily and mixed-use multifamily projects as developers respond to a demand for more centrally located units suited for younger tenants and families.

Charles Heimsath of Capital Market Research—a firm that specializes in real estate research, land development economics and market analysis—said the commercial zoning lining the main roads into downtown Austin has allowed for the height necessary to build the projects, and high occupancy rates have encouraged new project development. Commercial zoning allows for building up to 60 feet in height, more than sufficient for a mid-rise apartment building, Heimsath said.

“With that zoning in place already and some positive demographic growth within the area and proximity to downtown, which has higher rental rates, the corridors that are leading in and out of downtown are becoming increasingly desirable for multifamily development,” he said.

Continue reading on the Community Impact

Excerpt from “Area corridors budding with multifamily growth” published on September 27th, 2012 on the Community Impact

AHF sits down with Marie Head to look at how far the FHA has come, and where it’s going.
by Derek Means

Three and a half years ago, a new administration took the helm at the Federal Housing Administration (FHA), with the goal of refocusing its efforts on affordable housing.

And the agency made many strides toward that end, streamlining its processes and simplifying its requirements for deals that use low-income housing tax credits (LIHTCs). You could even say this administration put LIHTCs on the map: There’s now an entire section on tax credits in the updated MAP Guide—the document that governs FHA lender activity—for the first time.

The proof is in the pudding. In 2011, the agency’s tax credit volume was nearly 150 percent higher than in 2009.
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“Homes for All” is a one-hour documentary about modern affordable housing in Minnesota and debuting in early 2012 on Twin Cities Public Television. (Visit tpt.org for broadcast dates and times.) This excerpt introduces several of the personalities and perspectives showcased in the full program.

With the provoking feedback following last month’s coverage of the FHA’s proposed increase of mortgage insurance premiums  in mind, Multifamily Executive decided to reach out to the FHA’s deputy assistant secretary of multifamily housing, Marie Head, to have her provide an update on what’s been going on at the FHA and what the multifamily industry can expect for the rest of 2012. The full version can be found in next month’s issue of Apartment Finance Today, but here’s a preview:

MFE: What sort of multifamily volume do you expect to get done this year compared to the number from last year?

Head: Right now we are tracking to meet the same volume that we did last year. A lot of that is due to the fact that some of the loans that were leftover from last year we are getting through the process now. So, I think we are going to be on track to do the same amount of business we did last year.
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Affordable senior housing will be part of the social safety net going forward and could even help solve federal budget woes, says a nonprofit organization that’s utilizing government programs and grants in a concerted effort to meet the upcoming “tremendous need” for affordable housing as the nation’s senior population expands.  

National Church Residences, based in Columbus, Ohio, is the largest sponsor of the Department of Housing and Urban Development’s Supportive Housing for the Elderly (Section 202) program, with a growth strategy that includes participating in tax credit programs along with other federal housing programs and local housing grants.

Their efforts are similar to those of California-based GHC Housing Partners, a private company that’s buying up Section 8 housing (government-subsidized rental apartments for low-income people, including seniors) to “reshape the face of affordable housing” and fill a widening gap between the amount of available affordable senior housing and the growing number of seniors who will potentially need it.

A new model under development places housing and community services under the same roof, and NCR is “very actively” involved in trying to situate adult day care either in or close by senior housing, says Tom Slemmer, president and CEO of NCR, naming an Ohio project where 100 units of senior housing are being co-located with an adult day care center.

“We’re really engaged in community-based services, trying to develop the intersection of housing and services while solving some of the federal budget problems,” he says. “A lot of it is driven by demographic problems with the costs of healthcare escalating.”
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The Apartments.com Blog just put out some great social media tips for apartment owners, developers and managers. Here are just a few we thought you might find helpful:

1. Create a Pinterest board of apartment-friendly decorating ideas for your residents.
2. Partner with a popular neighborhood restaurant to provide your residents with a Facebook exclusive offer.  Post a status update with coupon code to redeem 20% off.  It will make your fans feel really special.
3. Tweet street cleaning schedules to make sure your residents don’t get tickets.
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One of AvalonBay’s new AVA property’s goals is to “activate that social mindset” of the Gen Y renter that it’s courting. Doing that requires leasing agents.

“At AVA, the folks who are working there are energized by the neighborhood,” says Deborah A. Coombs, senior vice president of property operations at AvalonBay. “They want a little bit different work experience. It’s a little more casual and a little more relaxed. There’s a social connection that is both the thing they used the tech whether it’s Facebook or Twitter.”
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