Fall 2008 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

projects will be. A number of other state housing agencies have indicated that they are taking, or planning to take, action to ensure the viability of the developments that have already been awarded tax credits. Despite the current challenges, there are things developers can and should be doing. For example, developers should seek out more soft funds, lock in permanent financing while interest rates remain low and, above all else, underwrite projects on very conservative terms. The latter is especially important in this market as many investors are underwriting with tougher deal terms. Availability for soft funds is scarce, and the competition for such funds is very fierce these days. These are a few of the trends we are seeing across the board with our LIHTC clients. Even with the current dark cloud over the LIHTC market, the program has 22 years of proven and positive history behind it, and industry experts are optimistic about seeing the market stabilize in 2009. Major Victory as President Bush signs into law H.R. 3221, the Housing and Economic Recovery Act of 2008 On July 30, 2008, President George W. Bush signed into law H.R. 3221, the Housing and Economic Recovery Act of 2008. H.R. 3221 is a package of housing legislation approved by Congress in late July that includes significant modifications and program enhancements to the low-income housing credit, rehabilitation tax credit and tax-exempt bond programs, as well as a temporary LIHTC cap increase and numerous other provisions designed to bolster the housing and financial markets. Major provisions in the bill include: • An $11 billion 2008 Housing Bond cap increase; • A 10 percent Housing Credit cap increase in 2008 and 2009; • Permanent AMT relief for Housing Bonds and Credits; • Temporary MRB refinancing authority; • Numerous Housing Bond and Credit modernization provisions; • GSE reformestablishingastate-administeredaffordable housing fund;

• Temporary authority for Treasury to lend money to and purchase equity in Fannie Mae and Freddie Mac; • A temporary consultative role for the Federal Reserve Board on GSE capital standards and other regulations; • FHA modernization; • A new FHA foreclosure prevention refinancing program; • $180 million for foreclosure mitigation and counseling and legal assistance; • $3.92 billion in neighborhood stabilization funding to help states and localities turn around foreclosed properties; and • A new first-time homebuyer credit worth up to $7,500 for purchases on or after April 9, 2008, and before July 1, 2009. With this great news, much work is still to be done as state housing agencies and industry partners will be busy putting these new resources to quick and effective use. Many thanks go to the National Council of State Housing Agencies. NCSHA has proposed many of the LIHTC program changes and pursued them for several years. NCSHA is a national, nonprofit organization created more than 30 years ago by the state Housing Finance Agencies to coordinate and leverage their federal advocacy efforts for affordable housing. Please contact us for further information and a detailed review on how we can assist you in making these program changes work for you.

Questions? Contact:

Bryan Keller, CPA Partner-in-Charge Real Estate Services Group 314.290.3341 bryan.keller@rubinbrown.com or David Herdlick, CPA Partner Real Estate Services Group 314.290.3383 dave.herdlick@rubinbrown.com

48 ◆ fall 2008 issue