NMTCs Create Oases in Food Deserts

By Jennifer Dockery, Staff Writer, Novogradac & Company LLP

For many people, running out of milk on a Tuesday night is no big deal. They hop in their car or run down to the corner market for more. But, in many lower-income urban areas and smaller towns, there is no local grocery store. In these areas—sometimes referred to in the development community as food deserts—residents may have to take multiple buses or walk several miles to access fresh milk and produce. To reduce the number of such food deserts in the country, several community development entities (CDEs) are using their new markets tax credit (NMTC) allocations to fund grocery stores. This year, The Reinvestment Fund (TRF) closed on an NMTC transaction that brought two supermarkets to Philadelphia, Pa. while the Montana Community Development Corporation (MCDC) used an NMTC allocation to bring a supermarket to the small city of Bozeman, Mont.

“From each [allocation of NMTCs], we have funded the creation of a supermarket in underserved areas. It begins to sew the fabric back together,” said Donald Hinkle-Brown, TRF’s president of lending and community investments.

 

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Affordable Housing Property Leads Revitalization of Brooklyn Waterfront

By Jennifer Dockery, Staff Writer, Novogradac & Company LLP

Palmer’s Dock, an affordable housing development on Brooklyn’s Greenpoint-Williamsburg waterfront, can claim many firsts. It was the first affordable housing property developed in Williamsburg under New York City’s Inclusionary Housing Program (IHP). It was the first affordable housing development to receive a loan from the New York City Department of Housing Preservation and Development (HPD) City Council Mixed-Income Initiative. It was one of the first affordable housing developments in the area to welcome residents who found it increasingly difficult to find affordable rents in the waterfront area after New York City rezoned it for residential development.

All of those firsts helped Palmer’s Dock achieve another first. The affordable housing property was the winner of the first annual Novogradac Journal of Tax Credit Housing Developments of Distinction Award for a low-income housing tax credits (LIHTC) project that best exemplifies major community impact.

 

 

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Q&A	Issues to Consider When Using the Section 1603 Grant Program

By Dan Smith, CPA, Novogradac & Company LLP

Question: Can the cash grant in lieu of investment tax credit created under Section 1603 of the American Recovery and Reinvestment Act of 2009 (Recovery Act) be used in a transaction and still monetize the depreciation benefits with a tax investor?

Answer: Maybe. The Recovery Act included numerous significant incentives for financing renewable energy projects, including the ability of renewable projects that qualify for the production tax credit to elect out of the production tax credit and elect instead to claim the 30 percent investment tax credit. In addition, those projects opting to claim the investment tax credit can further elect to receive a cash grant in lieu of investment tax credit under Section 1603 of the Recovery Act. This cash grant program was intended to deal principally with the lack of liquidity in the tax equity markets.

 

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Possible Changes on the Horizon for HUD, Historic Tax Credits

By Michael J. Novogradac, CPA

Welcome to the inaugural issue of the Novogradac Journal of Tax Credits. As all of us who work in the low-income housing, new markets, historic and renewable energy tax credit industries step into 2010, we do so with great hope that the coming year will bring increased opportunity and success for the families and communities we serve.

It is with that same optimism that we at Novogradac & Company unveil our re-designed, re-named and expanded Novogradac Journal of Tax Credits, in which we will provide our readers with news, analysis and commentary on affordable housing, community development and renewable energy tax credits.

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The National Multi Housing Council (NMHC) and National Apartment Association (NAA) announced on November 18 that they will continue their joint legislative program, the NMHC/NAA Joint Legislative Program (JLP). The groups have agreed to extend their partnership for three years. The JLP’s legislative priorities include ensuring the industry’s continued access to capital as lawmakers reform and possibly restructure Fannie Mae and Freddie Mac; securing workable and cost-effective building energy efficient standards in energy and climate change legislation; opposing proposals to triple the taxation on a general partnership’s promote because such a change would have the unintended consequences of stifling the nascent economic recovery and exacerbating the nation’s affordable housing shortage; and opposing the Employee Free Choice Act, which would disproportionately increase the political power of unions at considerable cost to employees and businesses during a severe economic recession and sustained period of job loss.

 

The Ohio Housing Finance Agency (OHFA) announced on December 4 that it had revised its compliance forms. Property managers or owners must use the revised forms for certifications or verifications on or after January 1, 2010. Revisions include a new Student Status Verification (PC-E42), which is required by the IRS to ensure all tax credit households are complying with the tax credit student rule. Effective January 1, 2010, the Student Status Verification must be completed by each household on or up to 60 days before the household’s move-in or recertification date. Properties continuing to recertify residents using the OHFA Sworn Income and Asset Statement (PC-E01) are not required to use the Student Status Verification as student status is already addressed on the Sworn Income and Asset Statement. Properties may elect to use a version of the Student Status Verification provided all of the questions on the Student Status Verification are included on the owner’s certification form. The revised forms and Student Status Verification can be found on OHFA’s web site.

 

As part of the Obama Administration’s commitment to increase transparency through the Open Government Directive, the U.S. Department of Housing and Urban Development (HUD) announced on December 9 two measures that will make information more accessible to the general public. HUD will begin publishing online a full historical view of detailed information on the physical condition of public housing and multifamily units across the United States and will offer citizens the opportunity to contribute to the agency’s long-term strategic plan. HUD’s Real Estate Assessment Center routinely conducts physical property inspections of a sampling of the nation’s 1.2 million public housing units and 1.4 million multifamily assisted housing units. HUD will supplement its point-in-time property scores with a full historical view of the data. HUD has also offered the general public the opportunity to provide input in the development of its Six-Year Strategic Plan, by creating a virtual suggestion box that allows the public to make suggestions and vote on others’ suggestions. The site can be accessed at www.hud.gov/ideasinaction.

 

Citi announced on November 23 that it would provide $15 million in financing for the renovation of Bedford Stuyvesant Restoration Corporation’s (BSRC’s) Restoration Plaza in Brooklyn, N.Y. Citi’s financing consists of a $4 million new markets tax credit (NMTC) investment and an $11.4 million short-term bridge loan. Citi donated an additional $200,000 to the Centers for Financial Empowerment in partnership with BSRC. Restoration Plaza functions as a town square and destination for education, commerce and culture in Central Brooklyn. The renovation is a multiphase capital improvement to increase BSRC’s program capacity. Renovations are expected to stimulate economic growth in the Bedford-Stuyvesant community by modernizing the facility, allowing new and existing tenants to add jobs.

 

On November 19, Reps. Eric Cantor, R-Va., and Artur Davis, D-Ala., introduced H.R. 4133, a bill that would amend Internal Revenue Code Section 47 to exempt public school rehabilitation from the tax-exempt use exception to the historic rehabilitation tax credit (See Washington Wire, page 4). If enacted, the change would allow the historic tax credit to rehabilitate public schools. The idea was proposed in October in a New York Times op-ed written by Republican senator and former Virginia governor George Allen and former Virginia state Democratic party chairman Paul Goldman. Since then, the proposal has continued to gather bipartisan support and has been endorsed by former Democratic National Committee Chairman and gubernatorial candidate Terry McAuliffe and current Virginia governor Tim Kaine.

 

The Treasury Department and Internal Revenue Service (IRS) on November 24 released the 2009-2010 Priority Guidance Plan, which contains 315 projects that are scheduled for completion from July 2009 through June 2010. According to the plan, the IRS plans to publish: guidance concerning the credit for production from advanced nuclear power facilities under Section 45J; and guidance relating to the reimbursement of the costs of specified energy property under section 1603 of the American Recovery and Reinvestment Tax Act of 2009, including guidance regarding the interplay of section 1603 with sections 45 and 48 of the Internal Revenue Code.