The Roundup

Issue No. 24-001 | May 22, 2024

Welcome to The Roundup, a weekly newsletter of interesting news and developments in the areas of property tax, multifamily housing, and much more.  Prior to launching The Roundup, I posted short-form content on LinkedIn as posts and with this format can provide readers with a weekly digest of updates and occasional long-form content.  I welcome your feedback and hope you enjoy The Roundup.        

Property Tax

Property tax policy has been front of mind for state lawmakers this year. Legislation of particular interest for property tax practitioners and multifamily developers and operators include the following:

• Colorado lawmakers passed and Governor Polis signed SB 233, sweeping property tax reform legislation that creates a two-tier expenditure limit and assessment ratio scheme for local jurisdictions, reduces commercial assessment ratios, and reduces residential and multifamily assessment ratios. The legislation is an attempt by lawmakers to chill support for a property tax levy cap ballot proposal that qualified for the November ballot. The ballot proposal would cap the growth of statewide property tax revenues to 4% per year.
• Florida lawmakers amended the Live Local Act, a property tax abatement incentive for the creation of affordable housing, providing an opt out for counties that achieve a qualifying level of affordable housing. The opt out election must be renewed each year and only applies to the property tax abatement for housing priced at rent levels affordable to those earning greater than 80% but not exceeding 120% of AMI. The 100% abatement for housing priced at rent levels affordable to those earning 80% or below AMI remains available statewide. Pasco County has since opted out under the legislation.
• South Carolina lawmakers debated amending the state property tax exemption for affordable housing, ultimately leading to both chambers appointing conferees to a conference committee to resolve differences between the chambers. The bill would provide for a 100% property tax exemption for multifamily properties where 100% of the units are affordable to individuals earning 80% or less of AMI. Current law requires compliance with Revenue Procedure 96-32 that would permit allocating only 75% of units to this level of affordability. Conferees will likely meet in June resulting in either a compromise between the competing bills or the bill failing for this legislative session. I expect the bill to return next year if it fails this session as the utilization of this property tax exemption sparked controversy among local officials in South Carolina.

Multifamily Housing

According to a report released by Redfin, rents continue to fall across the Sunbelt, with rents rising in the Midwest and Northeast.

The steepest decline occurred outside of the Sunbelt in Seattle with median asking rents falling -7.3% year over year in April with Austin registering the biggest drop in the Sunbelt at -6.6% over the same period.

Asking rents outside of the Sunbelt are beginning to recover helping median U.S. asking rents register a 1.1% gain year over year in April. Median asking rent gains were strongest across the Midwest and Northeast with annual gains of 10.3% in Minneapolis, 9.9% in Cincinnati, 9.1% in Chicago, 8% in Indianapolis, and 4.9% in Detroit.

Other notable developments:

• UnitedHealth Group's investment in affordable housing exceeds $1B, with over 25,000 units created since 2011.
• Palm Beach County seeks to leverage its $200m housing bond to help create 20,000 units of housing by providing gap financing to developers of up to 15% of total development costs.
• Brookfield purchased a 7,300 unit portfolio from Starwood Capital for $1.55B.
• The Multifamily Market Survey showed a continued decline in the first quarter of 2024 with the index falling to 47, down three points year-over-year.

. . . and Much More

This section of The Roundup will feature content that I find interesting, including events, commentary from leading experts, podcast episodes, economic data, and more.        

• Jim Simons, founder of Renaissance Technologies, passed away on May 10th. Simons pioneered quantitative investing creating an unmatched track record of investment returns. If you're new to Simons and RenTech, I encourage you to watch this interview with Simons and read Greg Zuckerman's The Man Who Solved the Market, an in-depth look at the life and work of Simons.
• With a move toward renewable energy and increasing power demand from datacenters and artificial intelligence, Joe and Tracy of Bloomberg's Odd Lots podcast interview Jeff Currie of The Caryle Group on his outlook for investing in copper.