Novogradac & Company Llp

Many solar energy developers do early stage work to get a property ready for construction, then they sell the property to a developer who takes control, raises equity to fund the development and begins construction. However, more early stage solar developers are considering the option of maintaining control of the property and handling the construction, including receiving funding through equity from investment tax credits. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Rob Bryant, CPA, discuss the options and considerations for such developers. They examine the typical life cycle for a solar property and then look at the issues that developers should address when considering a long-term hold of the property. After that, they look at typical financing options, as well as tax and equity structuring issues for a developer who maintains control of a solar property as well as tools developers should consider while making a decision.

The U.S. Department of Housing and Urban Development (HUD) last week posted income limits for fiscal year 2022 to determine eligibility for HUD-assisted programs as well as for low-income housing tax credit (LIHTC) and tax-exempt bond financed properties. The national median income was a 12.5% increase over 2021, but HUD set the cap on increases at 11.89%. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Thomas Stagg, CPA, discuss the income limits, including the major storylines. They also examine how inflation affects income limits and how it will impact future income limits, then provide insight into implementing new rent and income limits and also discuss how issues with the 2020 American Community Survey will affect income limits. They conclude with some suggestions for how HUD could approach those issues and what LIHTC stakeholders should be considering.

Unlike other community development incentives that typically have seasoned developers and investors, renewable energy transactions often have developers and/or investors who are new to tax incentives. It's critically important that investors and developers understand the book accounting or generally accepted accounting principles (GAAP) and implications of their proposed and existing investments. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Alvin Lee, CPA, discuss how an understanding of these issues can help a developer of a renewable energy project raise the optimum amount of cash for equity and help both the developer and investor avoid any unwanted accounting surprises.

The introduction of the Opportunity Zones Transparency, Extension and Improvement Act in both houses of Congress last week brought attention to the opportunity zones (OZ) incentive. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Brent Parker, CPA, discuss the legislation and preview next week's Novogradac 2022 Spring Opportunity Zones Conference in Long Beach, California. They discuss the provisions of the bill and share what experts will provide insight at the conference. They also discuss the preconference workshops and highlights of the agenda, as well as a look at the Novogradac opportunity zones investment report. The discussion also includes how businesses can benefit from being part of the conference and a crucial upcoming deadline for qualified opportunity funds.

Like with all of society, the COVID-19 pandemic had a dramatic effect on tenants and operations at low-income housing tax credit (LIHTC) properties. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Blair Kincer, MAI, CRE, discuss the various ways the pandemic and its economic repercussions affected LIHTC properties. They discuss the overall impact, then look at how occupancy levels were affected, as well as what happened to properties that came online during the pandemic. They then discuss the ability to achieve maximum rents as we emerge from the pandemic, how operating expenses changed during the pandemic, what changes are being made while underwriting proposed LIHTC developments and how underwriters are using the pandemic years to estimate future LIHTC expenditures. They wrap up with a comparison of the effects of the Great Recession to the financial issues coming out of the COVID-19 pandemic.

The United States is experiencing the highest rate of inflation since the low-income housing tax credit (LIHTC) became a permanent part of the tax code and rising costs have a combination of effects on operators and tenants of LIHTC properties. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Blair Kincer, MAI, CRE, discuss the ways inflation can affect LIHTC development costs, operating expenses, financing and operating revenue. They also discuss how utility expenses are affected and compare this scenario to the Great Recession.

Understanding the many requirements and nuances of the low-income housing tax credit (LIHTC) can mean the difference between delivering tax credits to investors on time or not. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Tonya Johnson, CPA, discuss common pitfalls and risk areas that first-time LIHTC developers should be aware of so they can avoid them. They discuss tax credit deadlines, tax credit construction-related issues and lease-up and stabilization issues.

Qualified opportunity funds (QOFs) tracked by Novogradac report an equity investment of $24.40 billion at the end of 2021, a jump of $6.88 billion in the final six months of the year, according to the Novogradac Opportunity Zones Investment Report: Data Through Dec. 31, 2021. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner John Sciarretti, CPA, discuss data from the report and the implications for the opportunity zones incentive. They begin with an overview of the information, then discuss the impact of the expiration of the five-year benefit on QOF investment, before looking at the types of investments being made and the top states and cities for planned investment. They wrap up with a look at the ranges of QOF sizes and an explanation of the services to help those involved in the OZ incentive.

The federal historic tax credit (HTC) has led to more than $181 billion in investment over its 40 years, including $7.3 billion in investment in 2020. However, using the incentive to help fund the renovation of historic properties can be difficult to understand. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner Gregory Clements, CPA, examine the basics of the HTC incentive. They discuss how the tax credit is used, what makes a building historic and how to determine whether a rehabilitation will be eligible for HTCs. They then explain details of working with state and federal governmental agencies, how the National Parks Service application system works, who should be on your HTC team and the different transaction structures. They wrap up with a look at services that assist those involved in HTC transactions.

The new markets tax credit (NMTC) is one of the most effective community development financing tools available. Learn how to get started using the NMTC in this week's episode of Tax Credit Tuesday, with Michael Novogradac, CPA, and Novogradac partner Rebecca Darling, CPA. They discuss the two central participants in NMTC financing: the qualified active low-income community business (QALICB) and the community development entity (CDE). Learn what kind of businesses qualify as a QALICB and what kind of investor/lender entities are good candidates to become CDEs.

Some people assume that IRS Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, automatically means credit loss or recapture of low-income housing tax credits (LIHTCs). This week's Tax Credit Tuesday podcast with Michael Novogradac, CPA, and Novogradac's director of multifamily property compliance, Stephanie Naquin, dispels some of the fears and misconceptions about Form 8823, and more importantly, shares information on how to avoid receiving a Form 8823. For buildings that do receive a Form 8823, this podcast discusses ways to avoid or minimize the loss of future credits or the recapture or previously claimed.

The Emerging Issues Task Force of the Financial Accounting Standards Board is considering changing the generally accepted accounting practices for tax credit investments beyond the low-income housing tax credit (LIHTC), a move that could alter the landscape for investors. Michael Novogradac, CPA, and partner Brad Elphick, CPA, discuss the state of play for potential changes to the proportional amortization method for tax credits other than the LIHTC. They discuss 2014 EITF guidance for the LIHTC and how it affected the affordable housing world, then they look at the current status of the efforts to broaden the use of the proportional amortization method to other tax credits. After that, they discuss the criteria needed to use proportional amortization in LIHTC properties, diving into specifics. They wrap up by discussing possible timelines for guidance and details of a Novogradac GAAP Accounting for Tax Credit Working Group.

The year 2022 could be transformational for public housing authorities (PHAs) in terms of development opportunities and challenges. Michael Novogradac, CPA, and Novogradac partner Rich Larsen, CPA, discuss hot topics for PHAs and strategies to help them address their operating needs, as well as their capital needs. They'll discuss the current status of federal funding for PHAs and why 2022 is a critical window for PHAS, in terms of affordable housing development and preservation. They discuss the Rental Assistance Demonstration (RAD) program, considerations for low-income housing tax credit (LIHTC) properties controlled by PHAs as they reach the end of their initial 15-year compliance period. They conclude with action items PHAs can take this year.

Sen. Joe Manchin, D-West Virginia, announced Sunday that he wouldn't vote for the Build Back Better Act'a crucial blow to the signature legislation of President Joe Biden's administration, a bill that included major green energy and affordable housing provisions. In today's podcast, Michael Novogradac, CPA, is joined by Novogradac director of public policy and government relations Peter Lawrence and Tony Grappone, a partner at Novogradac, to discuss what's next for Congress and the reaction of those in the clean energy world to Manchin's announcement. They discuss how Congress got to this point, what legislative vehicles could involve tax extenders, which community development tax incentives are expiring, how the green energy world is reacting and whether some tax incentives could be enhanced as well as expanded. They also discuss the role of the child tax credit in the BBBA and what provisions might be in future Build Back Better legislation.

Provisions in the Build Back Better Act (BBBA) could have a major impact on the affordable housing world. Michael Novogradac, CPA, is joined by Novogradac director of public policy and government relations Peter Lawrence and Dirk Wallace, CPA, a partner at Novogradac, to discuss the legislation and what developers and other affordable housing stakeholders should be doing to prepare for potential legislative changes. They discuss the provisions concerning the 9% and 4% low-income housing tax credit, the effect on tax credit equity pricing, how states will handle the changes and what developers should be doing to prepare. They also discuss the right of first refusal and qualified contract provisions in the BBBA, a provision to encourage solar power for affordable housing, the introduction of the neighborhood homes tax credit and a large increase in funding for the U.S. Department of Housing and Urban Development.

There's a "new normal" for low-income housing tax credit (LIHTC) compliance monitoring. Certain LIHTC compliance requirements in place today are different from requirements that were in place before the pandemic. Michael Novogradac, CPA, and Novogradac's director of compliance, Stephanie Naquin, discuss how the new compliance regime affects state allocating agencies, property owners and managers, as well as investors and syndicators. They cover tenant file reviews, physical inspections, implementation of a 15-day reasonable notice period and more.

Federal tax legislation in 2017 limited the deductibility of state and local taxes for individuals to $10,000 per year'but subsequent IRS guidance and changes in state laws have provide an opportunity for taxpayers to select an alternative tax regime for savings. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, Novogradac partner Tom Boman, CPA and Novogradac principal Reza Karim, CPA, discuss the options available to taxpayers. They present an overview of IRS Notice 2020-75, examine approaches by different states, show how those approaches work, explain how taxpayers qualify for options and look at other issues connected to state and local taxes.

Learn about the 2022 qualified census tract (QCT) and difficult development area (DDA) designations and what they mean for low-income housing tax credit developers and properties. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, Novogradac partner Jim Kroger, CPA, and Novogradac manager Sun-Ae Woo, CPA, discuss observations about the 2022 designations and how the COVID-19 pandemic may have affected those designations. They also discuss action items for developers depending on how the 2022 designation will affect their properties.

Operating expenses for low-income housing tax credit-financed properties faced significant changes due to the COVID-19 pandemic of 2020 and the Novogradac Multifamily Rental Housing Operating Expense Report examines those trends. Michael Novogradac, CPA, discusses the report and its implications with Blair Kincer, MAI, CRE (LEED). They discuss the overall trends in operating expenses for 2020, look at what expense categories were most affected by the pandemic and the look at how listeners can use the report for evaluating portfolios or individual properties.

Opportunity zones (OZ) rules are straightforward and manageable for those who understand them and who work with them regularly, but those who are inexperienced in OZs may be unaware of potential pitfalls from which it can be difficult or nearly impossible to recover. Michael Novogradac, CPA, and Novogradac's managing partner, discusses with Novogradac partner John Sciarretti, CPA, how newcomers can navigate basic OZ issues. They start with an overview of OZ financing, then discuss how to start a qualified opportunity fund and how to avoid compliance pitfalls.