Annual | Monthly | |
Short-Term | 5.06% | 4.95% |
Mid-Term | 4.49% | 4.40% |
Long-Term | 4.61% | 4.52% |
Annual | Monthly | |
Short-Term | 4.95% | 4.84% |
Mid-Term | 4.34% | 4.25% |
Long-Term | 4.52% | 4.43% |
Annual | Monthly | |
Short-Term | 4.57% | 4.48% |
Mid-Term | 4.02% | 3.95% |
Long-Term | 4.37% | 4.28% |
Annual | Monthly | |
Short-Term | 4.21% | 4.13% |
Mid-Term | 3.70% | 3.64% |
Long-Term | 4.10% | 4.03% |
By Jeff DeGree
MHFA
~ Carryover Application: 11/1/2024
~ Final CPA Certification: 5/1/2024
~ Low Income Housing 9% – 2024 Multifamily Consolidated RFP/2025 Round 1 Tax Credit Allocation Applications: 7/11/2024
CPED/St. Paul PED
~ Carryover Application: 11/1/2024
~ Minneapolis Affordable Housing Trust Fund funding proposals: Before 4pm on 7/25/2024
~ Minneapolis Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/25/2024
Dakota County CDA
~ Carryover Application: 10/15/2024
~ Final CPA Certification: 9/30/2024
~ Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/11/2024
Washington County CDA
~ Carryover Application: 10/1/2024
~ Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/11/2024
Other
~ Partnership Tax Return Due Date with Extension- 9/16/2024
~ Individual and C Corp Tax Return Due Date with Extension- 10/15/2024
** If you have not submitted your 8609 packages, please do so as soon as possible to ensure receipt of Form 8609 by the 9/16/24 tax return due date if claiming credits in 2023 tax year.
By Nathan Plack
The following are a few state and federal legislative updates with potential impact to real estate developers and management companies.
MINNESOTA UPDATES
Prevailing wage requirements for LIHTC developments
Minnesota is now the first state in the nation to add prevailing wage requirements to LIHTC-funded affordable housing projects. The requirement is effective for applications for funding submitted after August 1, 2024. Contractors and subcontractor noncompliance with prevailing wage requirements would require your project sponsor/developer to create a “wage theft prevention plan”, subject to agency approval, to be required for all future funding applications. Once a wage theft prevention plan is in force, further violations, e.g. wage underpayments of $50,000 or more, could result in project sponsors being disqualified for funding for 3 years. Further details can be read in the language of the bill included HERE.
Tenant protections
Proposed Legislation, in Committee
Electric vehicle charging and parking requirement for all new projects?
Bill HF3439 was introduced in the Minnesota House in February 2024. Under the proposed statue, the Minnesota building code would require a minimum number of electric vehicle ready spaces, electric vehicle capable spaces, and electric vehicle charging stations either within or adjacent to new commercial and multifamily structures and all new residential buildings that provide on-site parking facilities. You can keep up to date by following the Minnesota House of Representatives session notes.
FEDERAL UPDATES
2025 TCJA Provisions Sunset, What’s Next?
The US House of Representatives Ways and Means Committee has formed the “Tax Teams”, groups of representatives tasked with drafting 2025 legislation to address the sunset of many impactful tax breaks included in the Tax Cuts and Jobs Act (TCJA). There are 10 Tax Teams, including one focused on Community Development. Potential impact areas include Historic Tax Credits and Opportunity Zones. Stakeholders are encouraged to submit comments via a newly created comment portal, read more about it HERE.
LIHTCs and Private-Activity Bonds – Proposed 50-year Affordability Period
Legislation has been introduced in the US House of Representatives to create an optional 50-year affordability period for low-income housing tax credit (LIHTC) developments. If a project sponsor elects an affordability period of 50 years, in exchange they would have access to private activity bonds after 15 years without reducing the volume cap of bonds at the time of recapitalization. The goal is to provide greater access to capital and incentivize keeping housing affordable. Open recapitalization at the 15-year mark, sponsors would have the choice to re-up the 50-year period (with year 15 access to cap-free PAB’s) or agree to a traditional 30-year affordability period without access to further credits under this election. Read more about the Keep Housing Affordable Act, as introduced, HERE.
The most common structure used in development projects funded with New Markets Tax Credits (NMTC) is called the leveraged loan structure. This structure usually involves five main players: a Source Lender, a Tax Credit Investor, a Qualified Active Low-income Business (QALICB/Project Owner), a Community Development Entity (CDE), and a Sponsor.
How It Works:
After 7 Years:
Tax Implications:
Example:
Businesses are eligible for several clean energy tax incentives under the Inflation Reduction Act of 2022 (IRA). For energy investments in manufacturing, cars, alternative fuels, and carbon capture, the IRA established new business credits. Energy credits that already existed were modified, including new options to monetize energy tax credits under Internal Revenue Code (IRC) Sections 6417 and 6418.
IRC Section 6417 permits “applicable entities” to elect a direct-pay option, which provides a cash refund of the tax credit, for specific credits that encourage investment in clean energy. Applicable entities are tax-exempt entities, state and local governments, the Tennessee Valley Authority, Indian tribal governments, or an Alaska Native Corporation.
IRC Section 6418 permits taxpayers other than “applicable entities” to elect to sell all or a portion of an eligible credit to a separate taxpayer in exchange for cash. For a variety of reasons, taxpayers may find the option to sell a clean-energy credit for cash appealing. The sale may enable passthrough entities to retain the benefit at the entity level rather than allocating credits to its owners, accelerate the economic benefit of the credit, and prevent carryforward of unused credits.
In order to make Section 6417 or 6418 elections, the taxpayer must pre-register with the IRS and obtain a distinct registration number for each eligible credit property before any credits can be transferred or refunded. This entails providing information about the eligible credit project, the targeted eligible credits, and the taxpayer.
The IRA and CHIPS Act of 2022 Pre-Filing Registration Tool User Guide and Instructions (IRS Publication 5884) advises users to register through the prefiling registration portal at least 120 days prior to the eligible taxpayer’s intended filing date of their tax return.
Mahoney Development Services, LLC (MDS), an affiliate of Mahoney assists Real Estate Developers and Investors with consulting and advisory services to manage the busy development projects in their Real Estate portfolio. See below for what’s going on at MDS.
MDS staff wrapped up a busy application season, with applications submitted to Minnesota Housing and affiliated funders for variety of projects included metro and greater Minnesota, new construction and preservation and supportive housing projects. MDS staff are working towards several planned closings for upcoming projects.
To learn more about Mahoney Development Services visit our MDS page.
The Real Estate Solutions Team at Mahoney has been out and about attending various firm events and affordable housing events in our community. Please take a look and see where we have been recently.
Hi! My name is Nathan Plack. I began my journey with Mahoney in May 2024, having just completed my 15th “busy season” in the audit world. My experience has been largely focused in the real estate and non-profit sectors, working with LITHC, market rate, and HUD project owners and managers throughout my time in the profession. My prior firm experience has been with large regional firms of 120-450 team members. When not focused on client “billable” work, I love to be engaged in team/firm development.
I grew up in Minnesota, and as a preacher’s kid, I moved around quite a bit before landing in the southern Indiana/Louisville, KY market at the start of my sophomore year of high school. I graduated from the University of Louisville in 2008 as a Finance major – which was poor timing! I went back to get my Accounting degree and became eligible for the CPA exam. Public accounting was my “bail-out” at the time, but I’ve truly enjoyed the profession and the many opportunities its afforded ever since.
I moved back to Minnesota in 2022 after 20 years in the Hoosier state. I am married to Loni, celebrating 14 years in September, and we have two beautiful girls.
Outside the office you will probably find me doing one of a few things… sitting somewhere drinking coffee, playing cribbage or euchre, making sauce and meatballs, listening to an audiobook, fishing, out to eat with the girls, or on a family trip. Our family takes 2 annual trips to Pigeon Forge, Tennessee, where we frequent Dollywood and live the Smoky Mountain life. Seriously considering retirement in that area! I’ve also introduced my wife and girls to the Minnesota north shore, which was my annual vacay spot as a kid. As you might guess, it has become another special place for us!
Find me on LinkedIn, or better yet, Teams! I am always down for a conversation and will help any way I can. Excited to be a part of this team!
*Photo credit in this section to Nathan Plack
Hello, my name is Teddy Ferret. Shortly after I graduated from the University of St. Thomas, I began working for Mahoney as an intern for the Real Estate Solutions Team in January 2024 and became an Associate the following summer. My work has primarily been focused on audits and tax returns. I enjoy getting to work with my peers from other teams in the firm, and I take pride in knowing that the work I do has a positive impact.
I grew up primarily in Blaine and White Bear Lake and have lived in Minnesota my entire life thus far. When I am not working or busy, I spend as much of my time with my family and friends as possible. Some of my hobbies include indoor bouldering, clothes shopping, hiking, reading books focused on eastern philosophy, and engaging in conventional rigorous exercise.
The most interesting thing about me is that I have been studying and training a wide variety of martial arts since I was four years old. My formal training was centered primarily on combat sports and more mainstream styles, and my personal training was geared more towards traditional and meditative styles. I have won a few medals in small Judo competitions and am considering competing further.
*Photo credit for the Egyptian Goddess, Isis (cat shown above), to Teddy Ferret
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