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Nevada urged to use tax credits to rehab abandoned homes for renters

Five years ago, with low-income housing scarce and apartments being converted by the hundreds into condominiums, the poor and elderly in Southern Nevada struggled to find places to rent. It made sense for the federal government, partnering with the state, to encourage construction of rental housing.

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Steve Marcus Homes for sale are shown in the Villas at Black Mountain development near Horizon Ridge Parkway and Gibson Road in Henderson Wednesday, June 1, 2011 By David McGrath Schwartz Tuesday, Nov22, 2011 | 2 a.m Related stories Seniors get options for affordable housing (3-25-2009) Housing affordability seen as long-term problem (7-22-2008) Build homes in the desert, and the poor will come (2-19-2009) Arizona group pitches affordable housing project for northwest LV (7-8-2005) BLM’s affordable housing program still unpopular with municipalities (11-26-2004) Sun Topics Real Estate in Crisis Five years ago, with low-income housing scarce and apartments being converted by the hundreds into condominiums, the poor and elderly in Southern Nevada struggled to find places to rentIt made sense for the federal government, partnering with the state, to encourage construction of rental housingYet since the Las Vegas housing bubble burst, leaving many neighborhoods half empty, the state has continued to use federal tax credits to encourage developers to build apartmentsMore than 1,000 units have been built in Las Vegas over the past three years using federal tax credits awarded by the Nevada Division of Housing, according to state recordsThe housing division has in recent years awarded about $3 million a year in federal tax creditsThe developers who receive the tax credits resell them for as much as 10 times their value, to corporate investors who use them to write down their taxesThe developers then use money from the sale of the credits to finance the housing developmentsThe Low Income Housing Tax Credit is a national program passed in 1986 to encourage the construction of low-income housingOne developer says the program made sense during the boom, but now the Nevada housing division must switch its focus away from encouraging new building and instead help developers acquire and rehabilitate some of the thousands of empty single-family homes in the Las Vegas Valley and convert them into rentals“There’s an opportunity here for the housing division to step in and be a leader,” said John Foley, a Nebraska developer and owner of Central States Development, who has tried for three years to get the housing division to change how it awards tax creditsThe way the housing division allocates tax credits is merely contributing to the housing glut“The Las Vegas market is in a crisis,” he saidFoley, of course, has an idea that he said would require tax credits: Take vacant homes going through foreclosure and fix them upUse money raised from the sale of the tax credits to write down the mortgages, and allow low-income people to rent themAnd in 15 years — projects funded with the credits must remain rentals for that length of time — allow the tenants to purchase the homes at a discounted priceThe housing division has changed its approach since the real estate market’s collapse, if not fast enough for FoleyLast year, it put “acquisitions and rehabilitations” in its top tier of preferred projects, giving it more points in the scoring exercise that decides which projects get tax credits“This is a balancing act, and I think we’ve reached that,” said Charles Horsey, administrator of the housing divisionThe housing division recognizes acquisition and rehabilitation is a sound idea, but it also doesn’t want to so narrowly focus the criteria to unfairly benefit one developer, Horsey said at an advisory board meeting this monthPlus, while the general housing market may be oversaturated, that’s not necessarily the case for the apartment market“While there’s some housing, it’s not all financially in reach of the population that we serve,” said Hilary Lopez, chief of federal programs for the housing division“Affordable, senior housing was, and still is, in demand.” Indeed, the Las Vegas housing market has plenty of stock, and experts would discourage new construction of single-family homes, said Nasser Daneshvary, professor of economics at UNLV and director of the university’s Lied Institute for Real Estate StudiesBut apartments are more in demand because Nevadans can’t qualify for mortgages or aren’t looking to buy, he said“Single-family homes are overbuilt,” he said“There continues to be high demand for multifamily homes.” Each year, the state adjusts its rules for how it awards the tax creditsWhile Clark County has not had any rehabilitation and acquisitions over the past three years, rural counties, including Lovelock and Winnemucca, have had such projects“We have always allowed acquisition rehab,” Lopez saidLast year, the division made acquisitions a “priority.” This year, the division decided to award additional points to projects that utilize foreclosed or abandoned buildingsBut Foley said the state should go furtherIn particular, he bristled at the extra points developers are awarded if they are in-stateAt the housing meeting earlier this month, Foley said the penalty went against GovBrian Sandoval’s desire to attract businesses to NevadaFrank Hawkins, a developer who has been awarded tax credits in recent years to build apartments, defended the in-state advantage“This is the way we do it in Nevada,” he told Foley“If you don’t like the way we do it in Nevada, go back to Nebraska.” Lopez said the rules for this year’s projects are expected to be approved next week 12 Comments $(document).ready(function(){ var addthis_config = { data_ga_property: 'UA-2329840-1', data_track_clickback: true, data_ga_social : true }; var addthis_share = { url: '', title: 'Nevada urged to use tax credits to rehab abandoned homes for renters ', description: 'Five years ago, with low-income housing scarce and apartments being converted by the hundreds into condominiums, the poor and elderly in Southern Nevada struggled to find places to rentIt made sense for the federal government, partnering with the state, to encourage construction of rental housing.', templates: { twitter: 'Nevada urged to use tax credits to rehab abandoned homes 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"0"+n : n); }, M : function () { // A short textual representation of a month, three letters return monthsShort[date.getMonth()]; }, n : function () { // Numeric representation of a month, without leading zeros return date.getMonth()+1; }, N : function () { // ISO-8601 numeric representation of the day of the week var w = this.w(); return (w == 0 ? 7 : w); }, O : function () { // Difference to Greenwich time (GMT) in hours var os = Math.abs(date.getTimezoneOffset()); var h = String(Math.floor(os/60)); var m = String(os%60); h.length == 1? h = "0"+h:1; m.length == 1? m = "0"+m:1; return date.getTimezoneOffset() = 5) { return new Date (this.Y () - 1, 11, 31).formatDate ("W"); } var nyDoW = new Date (this.Y (), 0, 1).getDay (); nyDoW = nyDoW != 0 ? nyDoW - 1 : 6; if (nyDoW if it // is, we just use thatppks code is nice, but wont // work with dates outside 1900-2038, or something like that if (date.getFullYear) { var newDate = new Date("January 1 2001 00:00:00 +0000"); var x = newDate .getFullYear(); if (x == 2001) { // i trust the method now return date.getFullYear(); } } // else, do this: // codes thanks to ppk: // var x = date.getYear(); var y = x % 100; y += (y 0) { var wrapperdiv; var ul = document.createElement('ul'); // Use "count" to make sure only 10 approved links appear. var count = 0; var i; for (i=0; i Join the Discussion: Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an accountFull comments policy (function () { var articleId = fyre.conv.load.makeArticleId('1-1-S1578934'); fyre.conv.load({}, [{ el: 'livefyre-comments', network: "", siteId: "330947", articleId: articleId, signed: false, collectionMeta: { articleId: articleId, title: 'Nevada urged to use tax credits to rehab abandoned homes for renters ', url: fyre.conv.load.makeCollectionUrl('') } }], function() {}); }()); Previous Discussion: 6 comments so far… Comments are moderated by Las Vegas Sun editorsOur goal is not to limit the discussion, but rather to elevate itComments should be relevant and contain no abusive languageComments that are off-topic, vulgar, profane or include personal attacks will be removedFull comments policyAdditionally, we now display comments from trusted commenters by defaultThose wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun accountFor more on this change, read our story about how it works and why we did itOnly trusted comments are displayed on this pageUntrusted comments have expired from this story By markp Nov22, 2011 2:44 a.m Flag This won't work Why would anyone want a nation of investment properties with renters, this is not a good economy a good stable economy offers a good mix of privately owned properties with a smaller mix of investment properties all with stable priceswhat needs to be done is encourage business to expand or offer employment British businesses are looking to expand into USA in a big way and employ 10'000s of people but guess what is getting in their way immigration dept is acting in a protectionist way and making it harder for foreign companies to enter the USA and offer employment By Bob635 Nov22, 2011 5:38 a.m Flag Tax credits sold to rich people so they can avoid paying taxesBoy, Isn't that just rich! Well, I mean for the rich, by the rich, rich for the richThis is just another reason for the national debtRich people not paying their fair share of taxesYou can bet that the average american NEVER had a chance to buy these tax creditsEven though it could have saved them taxesOnly the good old greedy rich boys get to play in this gameRemember, congress is made up of the rich and greedy 1%, so what do we expect from these people? Do do the right thing? They didn't get rich by doing the rich thinglike paying taxes By lvfacts101 (Jerry Fink) Nov22, 2011 6:48 a.m Flag Yeah, that's the answer - throw good money after badAfter trillions being spent on ending poverty, poverty is more prevalent than ever and after having spent trillions on "adequate" housing, what have we accomplished? We created whole new slum areas and gang-infested neighborhoods; some so bad that they had to be razedNow the "progressives" are coming up with a new scheme to waste resourcesTime to end the "nanny-state" solutionsTime to quit the buying of votes with taxpayer dollarsTime to look inward and use self-reliance to attain the things we want By Warrior Nov22, 2011 8:07 a.m Flag Why are we giving developers tax credits, mortgage banks & PMI insurance companies bailouts and a house still standing needing repair? This country really is stuck on stupid By Longtimevegan Nov22, 2011 8:13 a.m Flag John Foley: "Take vacant homes going through foreclosure and fix them upUse money raised from the sale of the tax credits to write down the mortgages, and allow low-income people to rent themAnd in 15 years -- projects funded with the credits must remain rentals for that length of time -- allow the tenants to purchase the homes at a discounted price" Who is going to monitor this action? We have experienced the actions of outside developers ruining the Las Vegas housing market, along with overly aggressive realestate agents and bokersDoes John Foley have a track record of doing exactly what he is proposing? If not, we do not need another experiment in our housing marketEspecially from developers who have no long term interest for Nevadans By Aaronboy (Roy Keith) Nov22, 2011 9:17 a.m Flag I've got it! Take my money, put low income renters in a home that is empty close to me or down the street, then watch my property value drop moreYelp that sounds like a government plan for sureAll these do gooders....wanting to do their good deed, while someone else footing the bill By azsk8fan Nov22, 2011 9:33 a.m Flag I'd like to know how many of these homes are being rented out in the investors own neighborhood? Nah, didn't think so By jafo Nov22, 2011 10:10 a.m Flag Just unbelievableMy neighborhood (built in the 50s) has turned into a street of real estate investors and renters which has driven down my house value down 2/3rdsHUD sold a home two doors down for 30K, they are rehabing the house and will be renting it, just like the house next door and across the street from meI bought a house from HUD a couple of weeks ago as an owner-occupant but last week had to back out because they wouldn't give permission to turn the water on do an inspection and appraisalThe lender I had said there wasn't any possible way I could get a loan to buy the houseI don't know if that is true or not but HUD was no helpThey just insisted I pay cash on a house I couldn't have inspectedNow, they'll just sell it to an investor for cashHUD and the nevada housing division all suck! They just sway with the political winds which often have nothing to do with helping the community By stopthebs Nov22, 2011 12:08 p.m Flag just another example why the federal government should be limited to doing ONLY those things the private sector can'tThey are constantly fooling around with social engineering, tax credits, loans, subsidies, etcand all they really end up doing is making a huge messOf course if they think they can buy just one extra vote they will continue with their nonsense By davidschwartz (David Schwartz) Nov22, 2011 8:12 p.m Flag Interesting that so many commenters are worried about low income rentals in their neighborhoodsIt was an aspect I thought of, but didn't get to in this storyI will make sure to address it if we do future stories on the topic By staralioflundnv (Star Ali Mistriel-Kogan) Nov23, 2011 7:41 a.m Flag Tax credits would be great, IF, they are available to the little guy citizen! All too often, these "credits" are created and tailored as perks for the more affluent/well funded individuals, who could easily do these projects without the AID/creditsIt leads me to believe that the inner circle folks are simply receiving yet another windfall courtesy the taxpayers! And yes, high density housing has had a negative impact in otherwise wonderful neighborhoods, and the Clark County Planning Commissioners should be held LIABLE for ruining nice areas with their type of governance! Blessings and Peace,Star By downtownsteve (Downtown Steve Franklin) Nov29, 2011 9:09 a.m Flag Sounds crazy to meHome prices are already at firehouse sale pricesThe numbers already pencil out for developers to swoop in and buy these homes, rent them and turn a hefty profit of several hundred dollars a monthAs a REALTOR I see them doing just that all the timeDo they really need additional tax incentives? It has been proven over and over that areas with a high percentage of rentals are not as well kept as neighborhoods where most of the homes are owner occupiedThis is just another path down the wrong directionIf the government is going to dole out money (which I don't think they should), how about money to the average Joe who would like to buy a house, but can't due to a recent foreclosure or short sale in their lifeWouldn't some kind of

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