Jonathan Penna

This article is reprinted with the permission of Nixon Peabody LLP

10/17/2011 – This Affordable Housing Alert addresses the recently enacted New York state law that allows municipalities to adopt local laws providing real property tax exemption to certain affordable housing projects including mixed use projects.

The newly enacted New York Real Property Tax Law (“RPTL”) Section 421-m allows municipalities outside of New York City and Nassau, Rockland, and Westchester Counties to adopt a new tax exemption. The real property tax exemption can be for the construction or substantial rehabilitation of multiple dwellings where at least twenty percent (20%) of the units are occupied by individuals or families whose incomes do not exceed 90% of AMI. If adopted locally, the exemption will apply to general municipal taxes, special ad valorem levies, and school taxes (if the applicable school district also opts to grant the exemption), but not to special assessments.

The exemption begins at 100% of the applicable taxes and phases out over a term of 20 years as follows:

During construction/rehabilitation period (maximum of 3 years)—100% exemption

Beginning the year after construction is completed:

Years 1—12 100% exemption

Years 13—14 80% exemption

Years 15—16 60% exemption

Years 17—18 40% exemption

Years 19—20 20% exemption

However, note that RPTL Section 421-m imposes a minimum tax for each taxable year in an amount equal to the taxes paid on the subject property in the year prior to the beginning of the exemption, and the subject property cannot receive the 421-m exemption if it benefits from any other real property tax exemption.

For the exemption to apply, the project must be located in a benefit area designated by the municipality, and the construction or substantial rehabilitation of the subject property must be financed, at least in part, with grants, loans, or subsidies from a federal, state, or local agency. Also, for mixed use projects, at least 50% of the project’s square footage must be used for residential rental purposes. Construction work must commence after the local law providing for the exemption is enacted and before June 15, 2015.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

Housing Think Newsletter

by admin on Jun 1, 2011

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ANNAPOLIS, MD (May 9, 2011) – Governor Martin O’Malley and Lt. Governor Anthony G. Brown today joined members of the Administration, community leaders and local elected officials at the home of Prince George’s County resident Fanny Melvin to encourage homeowners at risk of losing their homes to take advantage of foreclosure prevention programs in Maryland, including the Emergency Mortgage Assistance Program (EMA), the MDHOPE Network and available counseling services throughout the state.

“There is no more powerful place in our State than a family’s home,” said Governor O’Malley. “In Maryland, we’ve undertaken an array of reforms and actions to prevent foreclosures. I am pleased that our federal partners, through initiatives like the Emergency Mortgage Assistance program, and our local leaders have joined together to preserve homeownership, the cornerstone of a strong and growing upwardly mobile middle class.”

In April, the O’Malley-Brown Administration announced the launch of the Emergency Mortgage Assistance Program, a $40 million program to assist homeowners in addressing back mortgage payments. The funding comes from the U.S. Department of Housing and Urban Development with the goal of helping homeowners who are facing foreclosure due to job loss or a decrease in wages, including those who lost income due to illness.

Today, the Governor also announced that Maryland is the first state in the nation to close an EMA loan. Fanny Melvin has been approved and Lisa Barnes of Montgomery County is the first homeowner in Maryland approved for a loan through this initiative.

“Under Governor O’Malley’s leadership, Maryland has taken significant steps to help struggling homeowners because hard-working Marylanders like Fanny Melvin shouldn’t have to worry about losing their homes due to circumstances beyond their control,” said Lt. Governor Brown. “I hope hearing Fanny’s story will encourage others to take advantage of our Emergency Mortgage Assistance program and all the resources that Maryland has to offer for those at risk of losing their homes.”

The Governor and Lt. Governor have been traveling the state today to highlight housing programs and services available to Marylanders.

Congresswoman Donna Edwards said, “Our economic recovery depends on helping people like Fanny Melvin increase their skills, take care of their families, and stay in their homes. At the federal, state, and local levels we are working to combat the foreclosure rate in Prince George’s County, and I commend Governor O’Malley for his tireless efforts. However, we must to continue to focus like a laser beam on helping families stay in their homes while making critical investments to educate our young people and grow our economy.”

“I have long said that America will survive this storm, but the question is who will have your job, and who will be in your home,” Congressman Elijah Cummings said. “We have seen the constant and devastating toll that foreclosures can have on our neighbors and on our neighborhoods. I commend Governor O’Malley for the State’s innovative programs to keep Maryland families in their homes. It is critical that we continue to do anything we can to help our fellow Americans avoid the pain and devastation created by foreclosures.”

Prince George’s County has been hard hit by the foreclosure crisis, and the Administration has taken action to fight on behalf of residents in the County and across the state. To date, over 57,000 homeowners statewide have received foreclosure prevention counseling through the MDHope Network since the crisis began.

“I want to thank Governor O’Malley and Lieutenant Governor Brown for this proactive initiative to address one of the most pressing problems in Prince George’s County – foreclosures,” said Prince George’s County Executive Rushern L. Baker, III. “It is imperative that those who need mortgage assistance seek help and assistance now and not wait until it’s too late.”

“These are difficult times, but, Maryland has new options which will bring new hope to our Maryland homeowners for our foreclosure prevention resources,” said Maryland Department of Housing and Community Development Secretary Raymond Skinner. “I applaud the dedicated housing counselors, underwriters, pro bono attorneys and program coordinators who have provided homeowners with a seamless process to apply for an EMA loan. As a result, today, we are pleased to hear from two very ecstatic homeowners.”

Maryland has passed what the Washington Post called some of the most “sweeping” legislation in the country, giving distressed homeowners more time to work out alternatives to foreclosure. In 2010, the Administration successfully fought for legislation to create the Foreclosure Mediation Program to bring mortgage giants to the table with homeowners and give every Maryland family facing foreclosure the legal right to request mediation with foreclosure seeking lenders. Through Chief Judge Robert Bell’s pro-bono project, the State’s foreclosure mitigation strategies have recruited and trained over 1,100 pro-bono attorneys to help Maryland homeowners and assisted nearly 1,000 homeowners. Since 2007, through the Department of Labor, Licensing and Regulation, the Administration has recovered over $9 million from financial institutions for consumers who were charged fees that were unlawful or improperly imposed.

Homeowners can get more details on the Administration’s foreclosure prevention initiatives and Maryland’s Emergency Mortgage Assistance Program by visiting the HOPE website or by calling the HOPE hotline (877) 462-7555 to find a housing counselor in their area for free counseling and assistance.



Weinberg Foundation to invest $1 million over two years – independent living is focus of grant

CROWNSVILLE, MD (May 9, 2011) – Flanked by Weinberg Foundation Chairman Donn Weinberg, Governor Martin O’Malley today announced the “Affordable Rental Housing Opportunities for Persons with Disabilities” initiative which includes Weinberg Foundation funding of $1 million. The joint venture with the Weinberg Foundation was facilitated by the Maryland Department of Disabilities (MDOD) and includes the Maryland Departments of Housing and Community Development (DHCD) and Health and Mental Hygiene (DHMH). Under a Memorandum of Understanding, the Weinberg Foundation and the state departments will work together to finance affordable, quality, independent, integrated housing opportunities for very low income persons with disabilities who meet certain eligibility criteria.

“The most vulnerable in our society are the hardest hit during challenging economic times such as this one. As you can imagine, there is great demand for affordable housing for people with disabilities,” said Governor Martin O’Malley. “The public-private partnership that we celebrate today moves us closer to our goal of increasing independent affordable rental housing opportunities for our friends and neighbors who live with a disability.”

“This grant permits the State of Maryland to begin to fill a gap in the coverage of housing programs designed to benefit low income individuals, by helping some ‘very’ low income disabled individuals,” said Donn Weinberg, Weinberg Foundation Chairman of the Board. “Although this grant will help only a small percentage of this community, it is a much-needed beginning – a down-payment, if you will, on what we hope can become a trend in our state and our nation. The Foundation is proud to be seen as a national leader in housing for people with disabilities.”

The Weinberg Foundation will provide $1 million over two years to be used as grant funds to cover capital costs in developments otherwise receiving DHCD financing. DHCD will refer interested nonprofit owners of projects receiving DHCD funding awards to the Weinberg Foundation for consideration. The Foundation, in coordination with DHCD, will determine the number of “Weinberg Apartments” within the development, which is expected to be five to ten percent of the total units. Once the Foundation approves a property, it will transfer its funding to DHCD and the department will be responsible for closing the financing, disbursing the funds for construction, and monitoring the project for compliance with the long-term Weinberg unit requirements. The first Weinberg units are expected to be available for occupancy in late 2012.

Weinberg units will house nonelderly disabled households at 15-30% AMI who pay 30% of their income for rent. The Maryland Department of Health and Mental Hygiene will qualify eligible disabled households and refer tenants to the units on lease-up and turnover. The Department of Housing and Community Development will work with DHMH and MDOD on a referral process similar to that of the Bridge Subsidy Demonstration Program to ensure that the units are made available to very-low income persons with a range of disabilities who are prepared and ready to be successful living independently. The Bridge Subsidy Demonstration Program assisted persons with disabilities to live independently by providing short–term rental assistance while the person awaited permanent housing assistance, generally a federal housing choice voucher. State-funded at $2.1 million, the Bridge Program assisted 110 persons with disabilities.

“Our history with the Weinberg Foundation has been a productive one as evidenced by our work together on the Weinberg Manor and Village projects as well as Dayspring,” said DHCD Secretary Raymond A. Skinner. “We applaud their commitment to the concept of independent living for people with disabilities and, also, anticipate that this partnership will position Maryland to be competitive for the U.S. Department of Housing and Urban Development’s new Section 811 program funding in 2012.”

“A solid home environment can be the foundation for a better life,” says Dr. Joshua M. Sharfstein, Secretary of DHMH. “These affordable housing opportunities will change lives and communities for the better.”

# # #

The Maryland Department of Housing and Community Development works with partners to finance housing opportunities and revitalize great places for Maryland citizens to live, work and prosper. To learn more about DHCD programs, log on to

News updates also are available by following DHCD on Twitter ( and Facebook (



Most underwriters evaluate proposed affordable housing development projects for factors such as visibility, access, topography, environmental characteristics, and proximity to local amenities. Yet many underwriters overlook crime when evaluating development proposals. Certainly, an underwriter would be remiss to overlook the existence of a scrap yard, an active rail line, or an environmental hazard near the subject property. But why overlook crime? The existence of sexual predators, child molesters, rapists, and murderers in proximity to a proposed $10 million project housing families with small children is certainly as important of a consideration as the distance to the nearest grocery store, bank or pharmacy.

Because of this, the evaluation of crime is identified as a best practice for National Council for Affordable Housing Market Analysts (NCAHMA) members. Indeed, it is a required element for all NCAHMA members issuing reports for tax credit allocation purposes. NCAHMA is a membership organization that sets industry standards for real estate market research. The Council has created and refined guidelines to ensure that market studies are sufficiently thorough to assure a comprehensive evaluation as required by Section 42 of the IRS Code. Many state agencies have adopted NCAHMA guidelines as part of their market study requirements.

North Carolina

Although the state of North Carolina commissions market analysts to look at each application, the State has not adopted NCAHMA guidelines. Instead, site evaluations are conducted by the housing finance agency itself. Each applicant is awarded a site score with a maximum of 100 points. Over the past three years, no application with a score below 58 has received a tax credit allocation.

According to Scott Farmer (NCHFA Director of Rental Investment), site scores are awarded on the basis of the following criteria(taken from the 2011 QAP, p10-11):


• Trend and direction of real estate development and area economic health.
• Physical condition of buildings and improvements in the immediate vicinity.
• Concentration of affordable housing, including HUD, Rural Development, and tax credit projects as well as unsubsidized, below-market housing.


• Land use pattern is residential in character (single and multifamily housing).
• Effect of industrial, large-scale institutional or other incompatible uses, including but not limited to: wastewater treatment facilities, high traffic corridors, junkyards, prisons, landfills, large swamps, distribution facilities, frequently used railroad tracks, power transmission lines and towers, factories or similar operations, sources of excessive noise, and sites with environmental concerns (such as odors or pollution).
• Extent that the location is isolated.

(iii) AMENITIES (MAXIMUM 40 POINTS) Availability, quality and proximity of the following: grocery store(s); basic shopping / general merchandise; pharmacy; community/senior center; public park or library; access to public transportation; other beneficial services or amenities.


• Adequate traffic safety controls (i.e. stop lights, speed limits, turn lanes, lane width).
• Degree of negative features, design challenges or physical barriers that will impede project construction or adversely affect future tenants; for example: power transmission lines and towers, flood hazards, steep slopes, large boulders, ravines, year-round streams, wetlands, and other similar features (for adaptive reuse projects- suitability for residential use and difficulties posed by the building(s), such as limited parking, environmental problems or the need for excessive demolition).
• The project would not be visible to potential tenants using normal travel patterns.

The site score is the first of several threshold tests that each application must meet in order to be considered for an award of tax credits. You will note, that the criteria for awarding site scores contains no mention of crime. In addition, the NCHFA Market Study guidelines contain no mention of crime.

Our Investigation

Given the fact that NCHFA does not look at crime when scoring potential development sites, we conducted our own investigation to account for crime in the vicinity of the proposed properties in the 2011 LIHTC application cycle. Specifically, we looked to see whether there were any registered sex offenders living within 1000 feet of any proposed development with a site score of 58 or more.

The Four Properties

Our investigation identified four applications that met these criteria:

Property Name: Winslow Pointe
 901 Hooker Road, 
Greenville, NC 27834
Sex Offender Distance: 276 ft
Offenses Committed: Indecent Liberty Minor
Site Score: 72
Total Units: 84
Project Type: Family
Tax Credits Requested: $1,077,000
Total Development Cost: $10,774,429

Property Name: Sunset Place Apartments
 726 Sunset Avenue, Asheboro, NC 27203
Sex Offender Distance (2 offenders): 402 ft, 688 ft
Offenses Committed: Sex Exploit Minor 3RD Degree (X3), Attempted Rape or Attempted Sex Offense (1ST,2ND DEGREE) (X2)
Site Score: 72
Total Units: 84
Project Type: Family
Tax Credits Requested: $648,261
Total Development Cost: $5,893,698

Property Name: Orchard Ridge
 2177 Russ Avenue, Waynesville, NC 28786
Sex Offender Distance: 590 ft
Offenses Committed: Sexual Offense with Certain Victims (X5)
Site Score: 60
Total Units: 40
Project Type: Family
Tax Credits Requested: $ 588,162
Total Development Cost: $5,289,441

Property Name: Freeman Place Apartments
 100 and 200 Manchester Street SE ,Wilson, NC 27893
Sex Offender Distance (2 offenders): 393 ft, 722 ft
Offenses Committed: Indecent Liberty Minor, Rape 2nd Degree (X2)
Site Score: 58
Total Units: 60
Project Type: Family
Tax Credits Requested: $647,360
Total Development Cost: $6,996,328

The existence of sexual predators, child molesters or rapists, in proximity to a proposed $5-10 million affordable housing project with small children is a problem.  In our opinion, NCHFA is negligent in not accounting for this in their site scoring. We recommend that they begin to look at crime – especially sex crimes – on or near proposed developments in the 2012 application cycle. We also recommend that they adopt NCAHMA guidelines as part of their market study requirements. In doing so, the State can be assured that they have a clear picture of potential crime risk on proposed developments.

Article Image courtesy of Flickr user alancleaver_2000



The collapse of the housing market has forced non-profits to reconcile the opposing forces of increased need with increased competition for resources. The Blackbaud Index of Charitable Giving reported a 2.1% decrease in giving to human services organizations for the three months ending December 2010 compared to the same period in 2009.

However, at least two affordable housing organizations have maintained or expanded through the crisis. Habitat for Humanity International is widely recognized as a leader in the field. It has seen its contributions remain relatively flat during a time when many similar organizations faced major challenges, a fact that Habitat contributes to its past successes.

“Habitat’s track record of performance has mostly shielded it from the valleys of the economy,” said Derrick Morris, Capital Campaigns Manager at HFHI. “With fewer dollars to go around, donors are more intent on making their donations count.” Habitat’s reputation has also helped it gain financial support from the federal government’s Neighborhood Stabilization Program (NSP), funds that have largely gone to help more families in urban areas.

“We have seen a greater need in urban areas which hasn’t been an area of strength for us. NSP has allowed us to undertake bigger block projects to revitalize entire neighborhoods,” said Morris. “With any sort of government funding we have to make sure that the conditions of the grant allow us to maintain the integrity of programmatic impacts.”

A newer organization has found success by utilizing fundraising strategies more typical of for-profits. Builders of Hope was founded in 2006 by Nancy Murray, a former ad executive, to bring innovation to the field. Finding the donor pool skeptical of newcomers, Murray approached a segment largely ignored by non-profits: investors.

“One of our most reliable funding sources is giving circles”, said Murray. “We take a loan out from individuals to fund our projects and they in turn receive interest on the loan. Everybody wins from the investor to the homeowners.” The organization has paired this novel approach with an environmental focus by rehabbing existing homes with mostly donated materials.

“The average home produces about 35,000 pounds of debris when it is demolished,” explained Murray. “When we renovate, we keep about 70% of the house intact and rebuild with materials that would have otherwise gone into a landfill. You would be surprised at what some people throw out.” This process is how Builders of Hope has managed to keep its costs low for its homeowners and investors. None of its 220 homes have been sold for over $200,000.

While the housing crash and continued economic instability promise to pose on-going challenges for the non-profit sector, Habitat and Builders of Hope give the industry reason to believe that progress can still be made under difficult conditions.

About the author: Justin Lucas is currently serving as an AmeriCorps member with Our Towns Habitat for Humanity in Cornelius, North Carolina. Prior to moving to North Carolina, he worked for Habitat for Humanity of Northern Fox Valley where he started A Brush with Kindness, an exterior home repair program for low-income families in the northwest suburbs of Chicago. As an active participant in the non-profit community, Justin brings first-hand knowledge of the issues currently facing families in need of affordable housing.


by Stephen Smith, on December 28th, 2010 | Re-Posted from Market Urbanism

The views and opinions expressed in this piece reflect the author’s point of view and not necessarily those of Housing Think

Inclusionary zoning is a hot item among urban planners today, and is often seen as a solution to residential segregation and high housing costs. Exact implementations vary, but the general idea is that developers of multiunit housing projects are encouraged to set aside a certain percentage of their units, generally raging from 10-30%, but sometimes even more, as “affordable housing” units. In other words, some proportion of the units are under rent controls to the point where they must be rented (or sold) at a loss by the developer. Sometimes the schemes are voluntary and give developers density bonuses, sometimes developers can pay a fee instead of setting aside units. The exact proportion of units that must be set aside and loss developers take on each unit also varies. As you can imagine, I’m not in favor of this system, but it’s a complicated issue, so this is going to be a long article.

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Re-posted from the December, 3rd Appraisal Buzz Newsletter

By Peter Wallison and Edward Pinto

The administration has quietly shifted most federal high-risk mortgage initiatives to the government’s original subprime lender.

It is hard to believe, but it looks like the government will soon use the taxpayers’ checkbook again to create a vast market for mortgages with low or no down payments and for overstretched borrowers with blemished credit. As in the period leading to the 2008 financial crisis, these loans will again contribute to a housing bubble, which will feed on government funding and grow to enormous size. When it collapses, housing prices will drop and a financial crisis will ensue. And, once again, the taxpayers will have to bear the costs.

In doing this, Congress is repeating the same policy mistake it made in 1992. Back then, it mandated that Fannie Mae and Freddie Mac compete with the Federal Housing Administration (FHA) for high-risk loans. Unhappily for both their shareholders and the taxpayers, Fannie and Freddie won that battle.

Now the Dodd-Frank Act, which imposed far-reaching new regulation on the financial system after the meltdown, allows the administration to substitute the FHA for Fannie and Freddie as the principal and essentially unlimited buyer of low-quality home mortgages. There is little doubt what will happen then.

Since the federal takeover of Fannie and Freddie in 2008, the government-sponsored enterprises’ (GSEs’) regulator has limited their purchases to higher-quality mortgages. Affordable housing requirements Congress adopted in 1992 and the Department of Housing and Urban Development (HUD) administered until 2008 have been relaxed. These had required Fannie and Freddie to buy the low-quality mortgages that ultimately drove them into insolvency and will cause enormous losses for the taxpayers.

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