NORWALK, CONN. – Dec. 11, 2013
The Financial Accounting Standards Board (FASB) today ratified the generally accepted accounting principles (GAAP) amendments for low-income housing tax credit (LIHTC) investments that were approved by FASB’s Emerging Issues Task Force (EITF) at its Nov. 14 meeting. The EITF proposed, and FASB today agreed, that LIHTCs should be classified as investments and not deferred tax assets and that the primary source of economic benefit should determine the pattern of amortization. The guidance will not be applied to other types of tax credit investments at this time. The Accounting Standards Update (ASU) is expected to be issued by early January 2014.
Register for Novogradac & Company’s webinar on Wednesday, Dec. 18, for an in-depth discussion of the amendments and how they could affect different LIHTC investments.
WASHINGTON – Dec. 10, 2013
The Senate today voted to confirm Rep. Mel Watt, D-N.C., to serve as director of the Federal Housing Finance Agency (FHFA). Rep. Watt was elected to the House of Representatives in 1992. He is a member of the House Financial Services Committee and serves on the subcommittees on Capital Markets and Government Sponsored Enterprises and Financial Institutions and Consumer Credit.
WASHINGTON – Dec. 10, 2013
Regulators today released a final draft of the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act commonly referred to as the Volcker Rule. The Federal Deposit Insurance Corporation (FDIC) and Federal Reserve Board today unanimously approved the rule. The so-called Volcker Rule places certain prohibitions and restrictions on the ability of a banking entity and non-bank financial company to make certain kinds of equity investments, and thus could have significant implications for the tax credit equity market.
To hear about the rule’s significance to the low-income housing tax credit (LIHTC), new markets tax credit (NMTC) and renewable energy tax credits, tune in to the Dec. 17 Tax Credit Tuesday podcast.
CAMBRIDGE, MASS. and WASHINGTON – Dec. 9, 2013
The low-income housing tax credit (LIHTC) has been the primary funding source for affordable housing since 1986, supporting the construction of 1.2 million units and the rehabilitation of 749,000 homes between 1987 and 2011, according to America’s Rental Housing: Evolving Markets and Needs, a report released today by the Harvard Joint Center for Housing Studies. The report also notes that demand for affordable units far outpaces supply, with 11.8 million extremely low-income renters competing for only 6.9 million affordable rental units in 2011, and that 20.6 million renters are cost-burdened, including 11.3 million who spend more than half of their incomes on rent. Additionally, the report cites the LIHTC’s low foreclosure rates as evidence of its success, noting that only 1 to 2 percent of LIHTC properties have experienced foreclosure.
Tune into the Dec. 17 Tax Credit Tuesday podcast to hear more about the report’s findings.
WASHINGTON – Dec. 3, 2013
Fifty multifamily housing partners, representing roughly 200,000 units, have committed to cutting their energy use by 20 percent in 10 years. The U.S. Department of Housing and Urban Development (HUD) and the Department of Energy (DOE) are partnering with owners and public housing agencies through President Barack Obama’s Better Buildings Challenge. The partners, which include owners of market rate multifamily housing, public housing authorities, low-income housing tax credit (LIHTC) properties, and HUD-assisted multifamily properties, will boost energy efficiency with lighting improvements, heating and cooling system upgrades, rooftop solar installations and new financing for energy retrofits and green construction.
Tune in to Tax Credit Tuesday on Dec. 10 to learn more about the program.
WASHINGTON – Nov. 21, 2013
Senate Finance Committee Chairman Max Baucus, D-Mont., today released the third in a series of tax reform proposals. The staff discussion draft released today focuses on reforms to cost recovery and tax accounting rules. Among other things, Sen. Baucus proposes extending the depreciation period for residential rental property from 27.5 years to 43 years. Novogradac and Company is reviewing the effect of Sen. Baucus’ pooling approach and overall pool depreciation percentages.
These proposed changes are similar to those considered in Novogradac & Company’s report, “Affordable Rental Housing After Tax Reform: Calculating Corporate Tax Reform's Possible Effects on Equity Raised from Low-Income Housing Tax Credits.” That report found that extended depreciation, when combined with lower top corporate tax rates, would lower LIHTC yields and create downward pressure on LIHTC investor equity pricing, which could result in an annual loss of as much as $1 billion or more in LIHTC equity.
WASHINGTON – Nov. 18, 2013
The Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency on Nov. 15 released the final revisions to "Interagency Questions and Answers Regarding Community Reinvestment," which the agencies use to provide additional guidance on Community Reinvestment Act (CRA) regulations. The agencies updated five existing questions and added two new questions. The questions address statewide and regional impact, nationwide investments, community development services, proportional investments and lending performance.
Tune into the Nov. 19 Tax Credit Tuesday podcast to hear more about the guidance.
WASHINGTON – Nov. 15, 2013
The U.S. Department of Housing and Urban Development (HUD) today designated difficult development areas (DDAs) for 2014 for purposes of the low-income housing tax credit (LIHTC). LIHTC developments in DDAs or qualified census tracts (QCTs) are eligible for as much as 30 percent more LIHTC subsidy. HUD also announced that it will implement change in the designation methodology for metropolitan DDAs, beginning with 2016 designations. The new methodology will use small area fair market rents (SAFMRs) instead of metropolitan-area fair market rents (FMRs) to designate metropolitan DDAs. HUD also said that designations of QCTs that were published on April 20, 2012 remain in effect.
Tune into the Nov. 19 Tax Credit Tuesday podcast to hear more about the 2014 DDAs.
Discuss the latest news in LIHTC development financing at the Novogradac Tax Credit Housing Finance Conference in Las Vegas on Dec. 5-6.
NORWALK, CONN. – Nov. 14, 2013
The Financial Accounting Standards Board’s Emerging Issues Task Force (EITF) today approved GAAP amendments for low-income housing tax credit (LIHTC) investments. The EITF agreed that LIHTCs should not be classified in deferred taxes. It also agreed to permit using the primary source of economic benefit for determining the pattern of amortization. The EITF also decided not to issue a revised exposure draft for LIHTCs.
For a more detailed discussion of the meeting, check out the Nov. 19 Tax Credit Tuesday podcast.
WASHINGTON – Oct. 31, 2013
The Internal Revenue Service (IRS) today announced in Revenue Procedure 2013-35 the inflation-adjusted low-income housing tax credit (LIHTC) and private activity bond caps for 2014. For calendar year 2014, the amount used under §42(h)(3)(C)(ii) to calculate the state LIHTC ceiling is the greater of $2.30 multiplied by the state population, up from $2.25 in 2013, or $2,635,000, up from $2,590,000. The amount used under §146(d)(1) to calculate the state ceiling for the volume cap for private activity bonds in 2014 is the greater of $100 multiplied by the state population, up from $95 in 2013, or $296,825,000, up from $291,875,000.
Tune into the Nov. 5 episode of the Tax Credit Tuesday podcast to learn more.
SACRAMENTO. – Oct. 23, 2013
The California Tax Credit Allocation Committee (TCAC) said yesterday that it is proposing to extend by 45 days the readiness to proceed deadline for some 2013 low-income housing tax credit (LIHTC) recipients. TCAC found that many developers were unable to meet the 180-day begin construction deadline because of the federal government shutdown. This change is designed to give developers the necessary time to meet the readiness to proceed point scoring. TCAC staff members will present this regulation change at their Nov. 13 committee meeting.
WASHINGTON D.C. – Oct. 18, 2013
The Internal Revenue Service (IRS) today released LIHC Newsletter #53. LIHC Newsletter #53 discusses developer fees for low-income housing tax credit (LIHTC) properties. The discussion covers audit issues and techniques, services provided, reasonable fees and methods of payment.
SACRAMENTO – Oct. 15, 2013
On Oct. 12, California Gov. Jerry Brown signed into law a bill that allows the California Tax Credit Allocation Committee (TCAC) to award state low-income housing tax credits (LIHTCs) to developments in qualified census tracts or difficult development areas if at least 50 percent of the units are reserved for special needs tenants. Under the law, TCAC can replace federal LIHTCs with state LIHTCs of up to 30 percent of a development’s eligible basis, as long as the federal LIHTC is reduced by the same amount.
Tune into the Oct. 22 episode of the Tax Credit Tuesday podcast to hear more about the bill.
WASHINGTON D.C. – Oct. 3, 2013
The U.S. Department of Housing and Urban Development (HUD) today released its fiscal year (FY) 2014 fair market rents (FMRs). The FY 2014 FMRs took effect on Oct. 1. HUD uses FMRs to determine payment standard amounts for the Housing Choice Voucher program, to determine initial renewal rents for some expiring project-based Section 8 contracts and to determine initial rents for housing assistance payments (HAP) contracts in the Moderate Rehabilitation Single Room Occupancy (SRO) program.
WASHINGTON D.C. – Sept. 25, 2013
The U.S. Department of Housing and Urban Development (HUD) today announced that the mortgage insurance premiums (MIPs) for Federal Housing Administration (FHA) multifamily, healthcare facilities and hospital mortgage insurance programs with commitments to be issued or reissued in fiscal year (FY) 2014 are the same as those in FY 2013. The notice also clarified that existing low-income housing tax credit (LIHTC) properties, housing with new LIHTC from a FY 2014-insured loan and other qualified affordable developments are eligible for the LIHTC MIPs. The upfront MIP amount charged for FHA mortgage insurance will be 50 basis points for affordable and market-rate properties. The notice is scheduled for publication in tomorrow’s Federal Register, and the FY 2014 MIPs are effective Oct. 1.