Low-Income Housing Tax Credit


News Archive - 2000


December

The U.S. population grew to 281.4 million in 2000, about a 13.2 percent increase since the 1990 census, Commerce Secretary Norman Mineta announced Dec. 28. The IRS determines the annual low-income housing tax credit and private activity bond caps based on the most recent population estimates. To access more information about the 2000 census, click here.

President Clinton signed a $450 billion budget package Dec. 21 that includes an increase to the low-income housing tax credit cap. Added to a year-end funding bill, the GOP majority and White House agreed to $25 billion in tax incentives over the next 10 years to encourage renewal of economically distressed communities. The community renewal proposal would increase the LIHC cap from $1.25 to $1.50 per capita in 2001 and to $1.75 per capita in 2002. The LIHC would be adjusted for inflation beginning in 2003. The bill also assures that no state will receive less than $2 million annually. The legislation would accelerate a scheduled increase in the state volume cap on tax-exempt private activity bonds to the greater of $62.50 per resident or $187.5 million in 2001, and to $75 per resident or $225 million in 2002. These limits would be indexed for inflation starting in 2003.

President-elect George W. Bush (R) is expected to nominate Mel Martinez as the secretary of the U.S. Department of Housing and Urban Development (HUD) on Dec. 20. Martinez, who holds a B.A. and J.D. from Florida State University, serves as chairman of Orange County, Fla. Martinez co-chaired Bush’s presidential campaign in Florida.

A lame-duck 106th Congress on Dec. 15 passed a $450 billion budget package that includes an increase to the low-income housing tax credit (LIHC) cap. Added to a year-end funding bill, the GOP majority and White House agreed to $25 billion in tax incentives over the next 10 years to encourage renewal of economically distressed communities. The community renewal proposal would increase the LIHC cap from $1.25 to $1.50 per capita in 2001 and to $1.75 per capita in 2002. The LIHC would be adjusted for inflation beginning in 2003. The legislation would accelerate a scheduled increase in the state volume cap on tax-exempt private activity bonds to the greater of $62.50 per resident or $187.5 million in 2001, and to $75 per resident or $225 million in 2002. These limits would be indexed for inflation starting in 2003. President Clinton has pledged to sign the bill.

The GOP leadership and Clinton administration have agreed to approximately $25 billion in tax incentives over the next 10 years to encourage community renewal in distressed areas. Included in this tax cut package is an incremental increase in the low-income housing tax credit (LIHC) cap, from $1.25 per capita to $1.50 per capita in 2001, and then to $1.75 per capita in 2002. The LIHC would be adjusted for inflation starting in 2003. In addition, the tax package would accelerate a scheduled increase in the state private activity bond cap to the greater of $62.50 per resident or $187.5 million in 2001, and to $75 per resident or $225 million in 2002. These limits would be indexed for inflation beginning in 2003. Both the Senate and House plan to vote this week on the tax plan. You can reach House and Senate leaders, as well as your congressional delegation, through the Capitol switchboard at (202) 224-3121.

The California Debt Limit Allocation Committee (CDLAC) has finalized its 2001 multifamily bond allocation schedule. CDLAC has set a Feb. 21 deadline for all residential rental projects, followed by a March 23 Tax Equity and Fiscal Responsibility Act (TEFRA) hearing. The bond-allocating panel will meet Jan. 17 to set its 2001state ceiling and pools.

Republican lawmakers and President Clinton approached a tentative budget agreement Dec. 13 that may include an increase to the low-income housing tax credit (LIHC) cap, among other items. The 10-year, $25.2 billion tax package, passed by the House and endorsed by Clinton, is designed to revitalize poverty-stricken areas. The House is expected to vote on the measure on Dec. 14.

ATLANTA—Novogradac & Company LLP is pleased to announce that Jeffrey A. Thompson, MAI has joined the firm’s Atlanta office. This move bolsters the San Francisco-based national certified public accounting and consulting firm’s fast-growing valuation practice.

The Washington State Housing Finance Commission has released its proposed changes to the 2001 low-income housing tax credit (LIHC) program. The agency will hold two public hearings: Dec. 13 in Spokane and Dec. 15 in Seattle. To access the proposed changes, click here.

The Internal Revenue Service (IRS) has released its low-income housing tax credit percentages that apply to low-income rental housing buildings placed in service in December. The appropriate percentage for the 70 percent present value credit is 8.39 percent, down from November’s 8.42 percent. The 30 percent present value credit is 3.59 percent, down from November’s 3.61 percent. To access low-income housing tax credit percentages from January 1997 to December 2000, click here.

November

The California Tax Credit Allocation Committee (TCAC) has urged affordable housing practitioners to review a series of IRS-issued Technical Advice Memorandums (TAMs) that address the calculation of eligible basis, among other related issues. "You should immediately make yourself aware of the content of these TAMs and discuss issues raised therein with your other development team members," TCAC Executive Director Jeanne Peterson wrote in a  Nov. 15 memo. "We have not made any decisions at this time as to how our 2001 underwriting and allocation procedures will respond to the TAMs."

Construction starts on new single-family homes and multifamily apartments rose in October 0.1 percent to a seasonally adjusted annual rate of 1.532 million, the U.S. Commerce Department reported Nov. 17. Permits for new housing projects in the U.S. rose 1.3 percent last month to a seasonally adjusted annual 1.537 million, the highest level in six months.

The Internal Revenue Service (IRS) has issued two Technical Advice Memorandums (TAMs), addressing whether low-income housing tax credit project costs may be included in eligible basis. To access TAM 200044004 and 200044005, click here.

The California Tax Credit Allocation Committee (TCAC) released its proposed changes to its 2001 Qualified Allocation Plan (QAP), Nov. 7. The proposed changes include eliminating the leveraging and mixed-income point categories, as well as awarding more points to large family projects. TCAC plans to hold two public hearings: Nov. 30 in Sacramento and Dec. 1 in Los Angeles. TCAC will accept written comments through Dec. 4. To access the proposed 2001 QAP, click here.

The Texas Department of Housing and Community Affairs (TDHCA) announced its 45-day public comment period for the proposed 2001 Qualified Allocation Plan (QAP), starting Nov. 13 and ending Dec. 27. TDHCA plans to post the draft QAP by early next week. To access information about TDHCA’s tax credit program, click here.

The Arizona Department of Commerce has released its draft 2001 Qualified Allocation Plan (QAP) governing its low-income housing tax credit program. Among the 2001 goals, the agency has called for substantial community involvement, more acquisition rehabilitation projects and more mixed-income developments. Applications will be available around Jan. 1, 2001. The deadline is April 2, 2001. To access the draft QAP, click here.

The Internal Revenue Service held that recertification is not required at the date the rehabilitation is placed in service if the tenant was certified at the acquisition date, according to a private letter ruling (PLR) released Nov. 6. To access PLR 200044020, click here.

Construction spending increased by 2.4 percent in September to a seasonably adjusted rate of $819.3 billion, the U.S. Commerce Department reported Nov. 1. Residential construction rose 1.1 percent from the previous month, according to the report.

President Clinton and GOP leaders won’t hash out their differences regarding a tax plan containing an increase to the low-income housing tax credit (LIHC) cap until after the presidential election on Nov. 14, according to a Nov. 1 Senate vote. Republican lawmakers and the White House agreed to the post-election lame duck session in order to allow members to go home to campaign for reelection. The House is expected to make a similar vote on Nov. 2.

October

The U.S. Department of Housing and Urban Development (HUD) has announced new affordable housing goals governing Fannie Mae and Freddie Mac, according to an Oct. 31 Federal Register notice. The new regulations raise the required percentages of mortgage loans for low- and moderate-income families that Fannie Mae and Freddie Mac must buy annually from the current 42 percent of their total purchases to 50 percent. To access the notice, click here.

The Colorado Housing Finance Authority (CHFA) released its final draft 2001 Qualified Allocation Plan (QAP), CHFA officials announced Oct. 31. CHFA will hold one application cycle, with a February 21, 2001 deadline. Colorado will have approximately $5.1 million in federal tax credits and $5 million in state tax credits available in 2001. The draft QAP will be presented to the CHFA Board of Directors for approval at its board meeting on Nov. 16. To access the final draft QAP, click here.

The Internal Revenue Service (IRS) has issued three Technical Advice Memorandums (TAMs) that outline the agency’s approach to characterizing eligible basis in low-income housing tax credit projects. The TAMs discuss the IRS’ position regarding cost categories such as land preparation, bond issuance, developer fees and rent up, among others. To access TAM 200043015, 200043016 and 200043017, click here.

President Clinton signed the fiscal year 2001 budget bill that covers the nation’s federal housing programs on Oct. 27. This year’s budget includes increases to all major affordable housing production programs. The Community Development Block Grant Program (CDBG) receives $5.1 billion, a $258 million increase over FY 2000. The HOME Program receives $1.8 billion, a $200 million increase over last year.

President Clinton vowed to veto a GOP-penned tax-cut package that contains an increase to the low-income housing tax credit (LIHC) cap, Oct. 26. The 10-year, $240 billion tax plan includes an increase to the LIHC, from $1.25 per capita to $1.75 per capita between 2001-02, with an index to inflation thereafter. The House voted 237-to-174 to pass the measure. In a letter to GOP leaders, Clinton wrote that he has no choice but to veto the tax plan because it doesn’t address Democratic priorities such as school construction, health care and pension policy.

The U.S. House of Representatives approved legislation that includes an increase to the low-income housing tax credit (LIHC) and private activity bond caps, Oct. 26. The Certified Development Company Program Improvements Act of 2000 includes an increase to the LIHC, from $1.25 per capita to $1.75 per capita between 2001-02, with an index to inflation thereafter. It also includes an increase to the private activity bond cap from the current $50 per capita to $75 per capita over the 2001-02 period, with an index to inflation thereafter. The bill will now move to the Senate for consideration.

Spurred by the high demand for state tax credits, California Treasurer Phil Angelides (D) is expected to introduce legislation to permanently increase the state low-income housing tax credit by $15 million in 2001, according to the Treasurer's Office.The Treasurer’s Office submitted a budget request to California Gov. Gray Davis (D) the week of Oct. 16, which included additional funding for the state tax credit. The state tax credit currently receives $50 million annually.

GOP leaders and the tax committee chairmen are poised to unveil a House-Senate compromise tax plan, which is expected to contain an increase to the low-income housing tax credit (LIHC) cap. It remains unclear whether the tax package will contain a full and immediate LIHC increase from $1.25 to $1.75 per capita, or a phased-in increase over several years. GOP leaders hope to complete action this week.

The Internal Revenue Service has released the monthly bond factor amounts for July, August and September 2000. These amounts are used to calculate the amount of bonds considered satisfactory for dispositions of qualified low-income buildings or interests for buildings placed in service from 1987 to 2000.

Almost three weeks into the new fiscal year, Congress overwhelmingly passed the fiscal year 2001 budget bill that covers the nation’s federal housing programs on Oct. 19. The House passed the record $32.4 billion HUD budget by a vote of 386-to-24, while the Senate passed it by 85-to-8. This year’s budget includes increases to all major affordable housing production programs. The Community Development Block Grant Program (CDBG) receives $5.1 billion, a $258 million increase over FY 2000. The HOME Program receives $1.8 billion, a $200 million increase over last year.

The Internal Revenue Service (IRS) has released its low-income housing tax credit percentages that apply to low-income rental housing buildings placed in service in November. The appropriate percentage for the 70 percent present value credit is 8.42 percent, up slightly from October’s 8.41 percent. The 30 percent present value credit is 3.61 percent, up from October’s 3.60 percent.

The Pennsylvania Housing Finance Agency plans to allocate $15 million in low-income housing tax credits (LIHCs) in two funding cycles for 2001, agency officials said Oct. 19. The first submission deadline is Dec. 15, 2000, while the second deadline is May 1, 2001. The 2001 LIHC application deadlines were pushed up from previous years to coincide with the agency’s other multifamily program cut-off dates.

The U.S. Department of Housing and Urban Development (HUD) has released its revised 2001 list of designated Difficult Development Areas (DDAs), according to a recent Federal Register notice. Low-income housing tax credit (LIHC) projects located in DDAs are eligible for up to 130 percent of the regular credit amount. The revised DDAs reflect the deletion of some areas from the prior year’s list. HUD defines DDAs as areas with high construction, land or utility costs relative to area median income or fair market rents. The revised DDAs are effective for tax credit allocations made after Dec. 31, 2000.

The National Council of State Housing Agencies (NCSHA) has released its recommended practices designed to help state credit agencies better administer low-income housing tax credit (LIHC) property compliance. These recommended practices are expected to strongly influence how states monitor their LIHC housing stock. To access the recommended practices, click here.

Housing starts rose by 0.3 percent between August and September, to a seasonally adjusted annual rate of 1.53 million, the U.S. Commerce Department reported Oct. 18. Building permit applications also experienced a slight gain, rising to 1.506 million a year in September, from 1.486 million the previous month.

California State Treasurer Phil Angelides (D) has appointed Laurie Weir as executive director of the California Debt Limit Allocation Committee (CDLAC), the state’s bond allocating panel. As CDLAC’s chief administrator, Weir will administer the state’s $1.6 billion private activity bond cap. Before joining CDLAC, Weir served as a manager of the Major Project Finance Unit for the City of Los Angeles Housing Department.

The U.S. Department of Housing & Urban Development (HUD) recently released a report summarizing the characteristics of households assisted by public housing, tenant-based Section 8 housing, private, project-based Section 8 housing and non-Section 8 project-based housing. The report identifies race data, income data, household composition, income and economic characteristics of households that received HUD assistance in 1999. To access the HUD report, click here.

Housing affordability in California fell to 29 percent in August, down from 35 percent in August 1999, the California Association of Realtors (CAR) reported Oct. 4. The affordability index nationwide dropped by one percentage point since May 1999, to 52 percent.

Sen. William Roth (R-Del.) introduced a community renewal bill Oct. 3 that includes a full and immediate increase to the low-income housing tax credit (LIHC) and private activity bond caps. S. 3152 would raise the LIHC cap from the current $1.25 per capita to $1.75 per capita in 2001, with indexation to inflation starting in 2002. In addition, the bill would create a $2 million state ceiling minimum. The bond cap would rise from the greater of $50 per capita to $150 million per state to $75 or $225 million in 2001, with indexation beginning in 2002. To access S.3152, click here.

California Gov. Gray Davis (D) outlined his reasons for vetoing A.B. 1903, the state tax credit bifurcation bill, in a Sept. 30 veto letter to the California Assembly. "Although I am aware this bill could increase the value of the low-income housing credits by allowing the credit to be targeted to those entities that can use it, I am concerned about the possible abuses that may arise," Davis wrote. The governor argued that allowing the credit to be separated from the economic interest each involved partner would have in the profits and losses of the project could lead to allocations for tax shelter purposes.

The governor offered the following possible scenario: An investor buys rights to low-income housing tax credits through the purchase of a partnership share. The investor could then, after using all of the credits that could exceed the cost of the investment, walk away from the partnership and have a negative basis in the investment. The investor could then write off the amount of the negative basis against other income, and, in turn benefit from the use of the credit and the negative basis.

California Gov. Gray Davis (D) vetoed A.B. 1903, the state tax credit bifurcation bill, Sept. 30. State Assembly member Alan Lowenthal’s (D-Long Beach) legislation would have separated the state low-income housing tax credit from the federal credit, allowing the credits to be sold to different classes of investors and, in turn, would have increased the value of both types of credits.

Construction spending increased by 1.4 percent in August to a seasonably adjusted rate of $794.5 billion, the U.S. Commerce Department reported Oct. 2. This is the first time since March that this economic indicator has risen.

September

Senate Finance Committee Chairman William Roth (R-Del.) cancelled his own committee’s mark up of a bill that includes a increase to both the low-income housing tax credit and private activity bond caps, and sent it directly to the full Senate on Sept. 28. The Community Renewal and New Markets Act of 2000 includes a full and immediate increase to the tax credit cap, from $1.25 per capita from $1.75 per capita, with an index to inflation thereafter. The bill also includes an immediate increase to the private activity bond cap, from $50 per capita to $75 per capita, with an index to inflation thereafter. "I regret that I have to cancel Committee action on this legislation. I am very concerned that going forward would have opened the bill up to become a grab-bag of special interest provisions," Roth told the Senate Finance Committee. "Instead, I intend to introduce my modified chairman's mark as stand-alone legislation. I hope that members of the committee will all consider joining me as cosponsors of this legislation. I believe that this will strengthen our hand in negotiations with the House and the White House in the coming days."

The U.S. poverty rate fell last year to 11.8 percent, the lowest point in 21 years, while median household incomes reached a record high, the U.S. Census Bureau reported Sept. 26. In 1999, 32.2 million Americans lived in poverty, down from 34.4 million, or 12.7 percent, the previous year. Adjusted for inflation, the median household income level increased 2.7 percent to $40,816 last year. The average poverty threshold for a family of four in 1999 was $17,029 in combined annual income. To access the Census Bureau’s new poverty report, click here.

The California bond allocating agency has approved its second-round multifamily rental project reservations. The California Debt Limit Allocation Committee (CDLAC) approved approximately $336 million in qualified residential projects.

Thirty-six states and Puerto Rico will divide $1,177,768 in unused low-income housing tax credits allocated through the 2000 national pool, the Internal Revenue Service announced in Revenue Procedure 2000-36. To qualify for the national pool, states must allocate all, or virtually all, of their available tax credits in the prior calendar year.

SAN FRANCISCO

Affordable housing practitioners must lobby Washington lawmakers to support a full and immediate increase to the low-income housing tax credit and private activity bond caps before time runs out, National Council of State Housing Agencies’ (NCSHA) Executive Director John McEvoy told NCSHA’s 30th Anniversary Conference, Sept. 25.

Despite the fact that 85 percent of Congress has cosponsored the cap increases and both the Bush and Gore presidential campaigns, as well as the White House, have endorsed a full and immediate cap increase, victory is not inevitable. "We have never come so close to victory as we have today," McEvoy told conference attendees. "What can go wrong? Everything. Run, don’t walk to the phone. You have to call every cosponsor and tell them you want an immediate cap increase, not this swishy, soft phased-in increase. We’ve come too far to falter now." To contact a member of Congress, call the Capitol switchboard at (202) 224-3121.

The U.S. Department of Housing & Urban Development published its final 2001 Section 8 Fair Market Rents on Sept. 25, to be effective Oct. 1, 2000. Fair Market Rents are set at the higher of the 40th percentile of the local rent distribution or the statewide average of metropolitan counties and are subject to a rent ceiling. To access the 2001 Fair Market Rents, click here.

The Internal Revenue Service (IRS) has released its low-income housing tax credit percentages that apply to low-income rental housing buildings placed in service in October. The appropriate percentage for the 70 percent present value credit is 8.41 percent, down from September’s 8.44 percent. The 30 percent present value credit is 3.60 percent, down from September’s 3.62 percent.

The Senate Finance Committee has postponed its mark up of a community renewal bill that contains a full and immediate increase to the low-income housing tax credit and private activity bond caps. The panel expects to reconvene the mark up the week of Sept. 25. In the meantime, Senate Finance Committee staff is working to reach a final agreement on a limited set of amendments, none of which will increase the cost of the measure. Committee members have filed more than 70 amendments to the legislation. The community renewal bill would provide numerous tax incentives to encourage the revitalization of poor urban and rural communities.

California Gov. Gray Davis (D) signed a bill that offers incentives to developers who rehabilitate multifamily rental projects on Sept. 22. A.B. 2755, by Assemblywoman Audie Bock (I-Piedmont), requires local governments to grant density bonuses to developers who rehabilitate residential or multifamily rental complexes. To access a copy of A.B. 2755, click here.

A worker earning the national minimum wage would have to work 97 hours a week to afford the typical rent for a two-bedroom unit, according to a new report released Sept. 20. Out of Reach, by the National Low Income Housing Coalition, contains income and rental housing cost data by state, metropolitan area and county, for the 50 states and the District of Columbia. The report calculates the income that renter households need in order to afford rental housing and estimate how many of these households cannot afford to pay the Fair Market Rent. "We must expand the availability of housing assistance and invest more resources in production and preservation of affordable housing," the report concludes. To access the report, click here.

Affordable housing, the environment and inequality are three issues that have been ignored by this year’s presidential candidates, Oakland Mayor Jerry Brown (D) told Novogradac & Company LLP’s 7th Annual Affordable Housing Conference, Sept. 15. Brown challenged attendees to come up with innovative ways to create affordable housing at affordable prices.

Multifamily housing starts dropped 16 percent between July and August 2000, the U.S. Commerce Department reported Sept. 19. Multifamily housing starts fell to a seasonally adjusted annual rate of 270,000 units in August, compared to 321,000 units in July.

The Senate Finance Committee plans to mark up community renewal legislation Sept. 20 that contains a full increase to the low-income housing tax credit and private activity bond caps. Under the bill, the tax credit cap would be increased from the current $1.25 per capita to $1.75 per capita effective Jan. 1, 2001. The tax credit would be indexed to inflation starting in 2002. In addition, the bill would implement a $2 million state tax credit minimum. The state private activity bond cap would be increased from $50 per capita or $150 million minimum per state to $75 per capita or $225 million minimum per state in 2001, with indexation to inflation starting in 2002.

SAN FRANCISCO

Affordable housing practitioners must urge California Gov. Gray Davis (D) to sign legislation that would separate the state low-income housing tax credit from the federal credit, a housing credit agency official told the 7th Annual Affordable Housing Conference, Sept. 15. "I would urge you in the next three days to write the governor to encourage him to sign A.B. 1903," said Tax Credit Allocation Committee Executive Director Jeanne Peterson. "It’s unclear whether or not the governor supports it. Please weigh in on the issue."

SAN FRANCISCO

The Senate Finance Committee is poised to mark up community renewal or pension fund legislation next week that contains a full increase to the low-income housing tax credit cap, Boston Capital Vice President of Public Affairs David Gasson told Novogradac & Company LLP’s 7th Annual Affordable Housing Conference, Sept. 14. "The long and the short of it is that the prospects look good for a full tax credit and bond cap increase with indexation this year," Gasson said.

Affordable housing professionals will address the potential low-income housing tax credit (LIHC) cap increase, stressing the importance of urging Washington lawmakers to raise the cap before leaving to hit the campaign trail Oct. 6, at Novogradac & Company LLP’s 7th Annual Affordable Housing Conference in San Francisco, Sept. 14-16. The move to boost the LIHC from $1.25 per capita to $1.75 per capita could be considered as part of an omnibus tax bill during the final days of the congressional session. To contact your member, call the Capitol switchboard at (202) 224-3121, or click here to access a sample letter.

The Senate is poised to mark up its fiscal year 2001 appropriations bill covering U.S. Department of Housing and Urban Development programs. As a result, the National Low-Income Housing Coalition has called on affordable housing practitioners to urge Congress to support more funding for federal housing programs.

The Colorado Housing and Finance Authority (CHFA) has released its draft 2001 qualified allocation plan (QAP). CHFA will hold a public meeting Sept. 20 at 1981 Blake Street, Denver, Colo. 80202, 2nd Floor Community Room, 10:00 a.m. to 12:00 p.m. The housing credit agency will accept public comments until Sept. 20.

The U.S. Department of Housing & Urban Development (HUD) issued a notice Sept. 7 regarding admission and occupancy requirements in the public housing and Section 8 housing assistance programs. These guidelines provide guidance to a final rule released in late March. The guidelines apply to all multifamily housing properties that have received Section 8 project-based assistance.

Reduced multifamily production, less public assistance and a loss of federally-subsidized affordable housing units are just a few of the many problems facing California’s housing market, California Budget Project (CBP) Executive Director Jean Ross told a San Francisco housing briefing Sept. 7.

In a joint presentation of the report, Locked Out: California’s Affordable Housing Crisis, CPB and advocacy group Housing California made the following recommendations: 1) increase the federal government’s commitment to affordable housing 2) use existing resources for affordable housing more effectively 3) increase state support for housing 4) link housing support to services for special needs populations. "We need more commitment, particularly on the federal level," Ross said. "It’s time for the federal government to step up to the plate." To access the report, click here.

The California Department of Housing and Community Development (HCD) has published the application for the first $50 million available for its new Multifamily Housing Program. Enacted June 30, the Golden State’s fiscal year 2000-2001 budget provides $188 million in financing to produce new and rehabilitated affordable units. Applications are due November 20. To access a copy of the application or program guidelines, click here.

Democratic presidential contender Vice President Al Gore and running mate Sen. Joe Lieberman (D-Conn.) promised to make a continued commitment to the low-income housing tax credit and Community Reinvestment Act, in their 191-page economic plan, released Sept. 5.

"Al Gore and Joe Lieberman will continue to expand our commitment to having a strong Low-income Housing Tax Credit and strong Community Reinvestment Act enforcement to ensure that America keeps its commitment not only to the production of low- and moderate-income housing, but that we continue to ensure access to the banking and mortgage services to Americans who live not only in our suburbs, but in our lower-income urban and rural communities as well," the Gore-Lieberman plan stated.

Construction spending for single- and multifamily housing dropped for the fourth month in a row in July, the U.S. Commerce Department reported Sept. 1. U.S. construction fell by 1.6 percent from June to July to a seasonally adjusted rate of $789 billion. The past four months have marked the biggest drop in more than six years, the Commerce Department said.

August

The U.S. Department of Housing and Urban Development (HUD) awarded $347 million in new Section 8 rental assistance vouchers to subsidize the rent for 60,000 very low-income families, HUD Secretary Andrew Cuomo announced Aug. 31. The Section 8 vouchers were awarded to about 500 housing authorities based on a competitive application system. Section 8 allows qualified tenants to pay no more than 30 percent of their income as rent, while HUD pays the remainder.

The Texas Department of Housing and Community Affairs will host a series of discussion groups to gather suggestions to revise the 2001 Qualified Allocation Plan. The discussions will be held Sept. 18 and Sept. 19 in Austin, Texas. For more information, click here.

The California State Assembly unanimously passed the Senate-amended version of A.B. 1903, California’s tax credit bifurcation bill, on Aug. 30. The bill is now on its way to the governor. A.B.1903, by State Assembly member Alan Lowenthal (D-Long Beach), would allow the California state low-income housing tax credit to be separated from the federal tax credit. This bill would allow the credits to be sold to different classes of investors and, in turn, increase the value of both types of credits.

California affordable housing advocates must urge the governor to sign the tax credit bifurcation bill.

National Association of Home Builders President Robert Mitchell said that the low-income housing tax credit (LIHC) cap increase still has a good chance of passage before Congress adjourns later this year on Aug. 29. The move to boost the LIHC from $1.25 per capita to $1.75 per capita, which has strong bipartisan support, could be considered as part of an omnibus tax bill during the final days of the congressional session, scheduled to end Oct. 6. "For years, Congress and the Administration have focused on giving low-income renters vouchers to assist them in finding affordable rental housing and covering their monthly rental payments," Mitchell said. "Now the debate has shifted. More and more members of Congress on both sides of the aisle recognize that we have a serious supply problem and need to look for new ways to stimulate construction of affordable rental housing."

Combining 4 percent low-income housing tax credits and tax-exempt bonds is a critical tool to produce affordable housing to low- and moderate-income households. However, the tax credits carry risks, especially for inexperienced owners and managers, an Aug. 29 report by Moody’s Investors Service found. The report, "Using Low-Income Tax Credits in Affordable Housing Deals: Two Sides of the Story," outlines the rating agency’s view on the impact that tax credits can have on bond-financed transactions. To access the report, click here.

The Texas bond allocation agency has announced the details of its 2001 private activity bond allocation round. This year, the Texas Bond Review Board has earmarked more than $167.8 million of the Lone Star State’s $1 billion private activity bond cap for multifamily rental housing projects. The agency will accept applications from Oct. 10 to Oct. 20. Agency officials have scheduled the lottery for Oct. 27.

The California Tax Credit Allocation Committee (TCAC) has published its 2nd round low-income housing tax credit application recommendations. In addition, the agency has published its 2000 recommended waiting list. TCAC received 269 applications in its second round, requesting $88,635,328 in federal tax credits and $97,713,846 in state tax credits. Approximately $45 million in state and federal tax credit authority is available.

The Internal Revenue Service (IRS) has ruled to waive the 10-year holding period requirement in a partnership’s acquisition of a project, according to an Aug. 18 private letter ruling (PLR). The IRS ruled that the buildings in the project were both federally-funded and at risk. To access PLR 200033017, click here.

The Iowa Finance Authority (IFA) will host a public hearing to discuss its recently revised Low-Income Housing Tax Credit (LIHC) Compliance Manual Sept. 11. IFA made revisions to the compliance manual in late July.

The Internal Revenue Service (IRS) has released its low-income housing tax credit percentages that apply to low-income rental housing buildings placed in service in September. The appropriate percentage for the 70 percent present value credit is 8.44 percent, down from August’s 8.47 percent. The 30 percent present value credit is 3.62 percent, down slightly from August’s 3.63 percent.

Texas is accepting applications to enter multifamily projects in the 2001 private activity bond state lottery. The deadline to submit private activity bond applications is Sept. 11. Approximately $167 million of Texas’ approximate $1 billion private activity bond cap will be allocated for multifamily projects in program year 2001.

The California bond allocating agency has made its preliminary recommendations for multifamily rental projects. The California Debt Limit Allocation Committee (CDLAC) plans to approve roughly $360 million in qualified residential rental projects at its Sept. 8 meeting.

Housing starts fell by 3.3 percent in July, the U.S. Commerce Department reported Aug. 16. This marks the third month in a row that housing starts have declined. Housing starts dropped from a seasonally adjusted annual rate of 1.563 million in June to a seasonally adjusted annual rate of 1.512 million units in July.

The New York housing credit agency will host a public forum on the draft regulations for the recently enacted New York State low-income housing tax credit program Aug. 22. The state tax credit will be reserved for the construction and rehabilitation of rental housing for households earning up to 90 percent of the area median income. Approximately $20 million in state tax credits will be available over the next 10 years.

The forum will be held at the Ballroom of Hampton Plaza, 38-40 State Street, Albany, N.Y. on August 22 from 11 a.m. to 1 p.m.

The Democratic Party’s National Platform calls for support of the low-income housing tax credit as a means to create and expand affordable housing. "Al Gore and Democrats have long defended the mortgage interest deduction and the Low-Income Housing Tax Credit, and believe we must reinvigorate our communities and support our families through partnerships and targeted investments and eliminating community redlining by lenders that will better harness the power of markets to create the housing we need," the platform says.

The departments of Justice, Treasury and Housing and Urban Development signed a Memorandum of Understanding (MOU) Aug. 11 regarding Fair Housing Act compliance in low-income housing tax credit properties.

Approximately half of the 30 states that responded to Novogradac & Company LLP’s 2001 State Bond Allocation Survey have an estimate of what percentage of their 2001 private activity bond cap will be allocated toward multifamily rental housing. To access each state’s estimated 2001 private activity bond cap, estimated portion of the cap allocated toward multifamily housing and application deadlines, click here.

With a vote of 6-to-1, California’s tax credit bifurcation bill, A.B. 1903, passed the Senate Revenue & Taxation Committee and was re-referred to the Senate Appropriations Committee Aug. 10. Legislative analysts are optimistic that this bill will be enacted into law before the end of the session Aug. 31. Observers anticipate one hurdle: the only opposition to the bill came from State Sen. Pat Johnston (D-Stockton), who chairs the Senate Appropriations Committee. A.B.1903, by State Assembly member Alan Lowenthal (D-Long Beach), would allow the California state low-income housing tax credit to be separated from the federal tax credit. To access A.B. 1903, click here.

Fixed-rate loans dropped this week to the lowest level since December 1999, Freddie Mac reported Aug. 10. The average rate for 30-year fixed-rate mortgages was at 8.04 percent and has been steadily decreasing in the last three weeks. In addition, the average rate for 15-year mortgages also fell to from last year’s 7.88 percent to 7.75 percent this week.

Two major apartment associations have called on their members to lobby lawmakers to create a "more balanced housing policy—one that seeks to provide all Americans with good, quality housing, regardless of whether that home is one they own or rent." The National Apartment Association and the National Multi-Housing Council, which published "Toward a More Balanced Housing Policy," have called on multifamily practitioners to call their representatives during the August summer recess, which ends Sept. 5. To access the report, click here.

California affordable housing advocates must make a push for the tax credit bifurcation bill, in light of the Senate Revenue & Taxation Committee's hearing scheduled for Aug. 9. A.B. 1903, by State Assembly member Alan Lowenthal (D-Long Beach), would allow the California state low-income housing tax credit to be separated from the federal tax credit.

Twenty-eight cities and the Virgin Islands will divvy up $564 million to replace and renovate some of the nation’s worst public housing, the U.S. Department of Housing and Urban Development (HUD) announced Aug. 7. The latest round of fiscal year 2000 HOPE VI grants is expected to house more than 10,000 families in new or renovated housing. To access more information about the HOPE VI grants, click here.

Vice President Al Gore (D) selected the main democratic sponsor of a bill that would expand the low-income housing tax credit and private activity bond caps, as his running mate Aug. 7. Sen. Joseph Lieberman’s (D-Conn.) community renewal initiative would raise the low-income housing tax credit from the current $1.25 per capita to $1.75 per capita in 2001, with an index to inflation thereafter. It would also raise the private activity bond cap to $75 per resident in 2001 and index subsequent increases to inflation. To access S.2779, click here.

On the Republican side, Texas Gov. George W. Bush (R) called for "transforming" the nation’s multifamily rental program, but did not outline how he would achieve this, in the GOP presidential contenders Republican National Convention acceptance speech last week. "We will transform today’s housing rental program to help hundreds of thousands of low-income families find stability and dignity in a home of their own," Bush told GOP delegates Aug. 3.

The Republican Party’s national platform calls for a "balanced" national housing policy that includes both decent multifamily rental housing and more opportunities for low-income families to own their own homes. "Affordable housing is in the national interest," the platform says. "That is why the mortgage interest deduction for primary residences was put into the federal tax code, and why tax reform of any kind should continue to encourage homeownership. At the same time, a balanced national housing policy must recognize that decent housing includes apartments, and addresses the needs of all citizens, including renters."

June’s U.S. housing completions were at the lowest level in 16 months, the U.S. Commerce Department reported Aug. 4. June’s housing completions fell from 1,705 million units in May to 1,539 units in June, a 9.7 percent decline.

Fannie Mae committed to invest over $900 million in low-income housing tax credit (LIHC) properties during the first six months of 2000, the government sponsored enterprise (GSE) announced Aug. 1. This nearly matches the record $1 billion in LIHC investments made for all of 1999.

July

Many states have already set low-income housing tax credit (LIHC) application deadlines for year 2001 application cycles, according to Novogradac & Company LLP’s 2001 state LIHC allocation survey. Although many of these deadlines are estimates and are subject to change, 27 of the 38 states that responded have set application deadlines for the upcoming year. Click here to view the entire results.

In an effort to increase the supply of affordable housing for low-income working families, the Republican Party's draft platform calls for the establishment of a "Renewing the Dream" tax credit. The proposed federal credit would create or renovate over 100,000 single-family housing units in distressed communities, according to the draft platform. The draft GOP platform makes no mention of affordable multifamily rental housing.

The Texas tax credit allocating agency announced its low-income housing tax credit (LIHC) reservations for its 2000-application cycle, July 27. Demand outpaced supply by a ratio of more than 1-to-4. Some 179 applicants requested a total of $109.4 million, while just $21.8 million in credit authority was available. To access the Texas Department of Housing and Community Affairs reservation list, click here.

Five major trade associations called on presidential candidates George W. Bush (R) and Vice President Al Gore (D) to make housing a greater national priority July 27. The National Association of Home Builders, American Bankers Association, America’s Community Bankers, Mortgage Bankers Association of America and the National Association of Realtors presented "Housing Policy for the 21st Century," which urges the federal government to take a more supportive role in supplying incentive programs for low-and moderate-income households. To access a copy of Housing Policy for the 21st Century, click here.

The U.S. House of Representatives overwhelmingly passed a community renewal bill July 25 that would increase the low-income housing tax credit (LIHC) cap over five years. By a vote of 394-to-27, House lawmakers passed H.R. 4923, by Reps. J.C. Watts (R-Okla.) and Jim Talent (R-Mo.). The legislation would raise the $1.25 LIHC cap by 10 cents a year starting in 2001 until 2004. The proposal would then increase the LIHC cap by 5 cents a year until it reaches $1.75 in 2006, with an index to inflation thereafter. To access H.R. 4923, click here.

The California Department of Housing and Community Development (HCD) is asking affordable housing practitioners to provide comments for its new affordable multifamily production program. Enacted June 30, the state’s fiscal year 2000-2001 budget provides $188 million in financing to produce new and rehabilitated units. Public comments are due by Aug. 11 at 5 p.m. HCD expects to publish a Notice of Funding Availability by Sept. 1.

The Internal Revenue Service (IRS) has released its low-income housing tax credit percentages that apply to low-income rental housing buildings placed in service in August. The appropriate percentage for the 70 percent present value credit is 8.47 percent, and for the 30 percent present value credit, 3.63 percent. To access IRS Revenue Ruling 2000-38, click here.

Housing starts dropped 3 percent from May to a seasonally-adjusted rate of 1,554,000 in June, the U.S. Commerce Department reported July 20. Building permits remained at a seasonally-adjusted rate of 1,511,000.

Sens. Rick Santorum (R-Pa.) and Joseph Lieberman (D-Conn.) failed to attach their community renewal initiative as an amendment to the Estate Tax Relief Bill, July 14. The Santorum-Lieberman bill would raise the low-income housing tax credit from the current $1.25 per capita to $1.75 per capita in 2001, with an index to inflation thereafter. It would also raise the private activity bond cap to $75 per resident in 2001 and index subsequent increases to inflation.

Housing affordability in California fell to 29 percent in May from 37 percent last year, the California Association of Realtors (CAR) reported July 13. The affordability index nationwide dropped by 4 percentage points since May 1999, to 52 percent.

Roughly 43 million Americans—or 15.9 percent of the population—moved between March 1998 and March 1999, the U.S. Census Bureau reported July 12. This is down 16 percent from the previous 12-month period and 17.8 percent from a decade ago. To access the Bureau’s Geographic Mobility/Migration data, click here.

The need for affordable housing has increased in the face of a prospering economy, according to a report released by Lend Lease Real Estate Investments July 10. The decline in available low-income housing and overall rent inflation are worsening the affordable housing crisis, stated America’s Prosperity: A Chicken in Every Pot. The report calls for an increase to the low-income housing tax credit as a means to relieve this growing need.

Construction spending increased 0.1 percent in May to an annually-adjusted rate of $809.3 billion, the Commerce Department reported July 3. This increase was spurred by a rise in commercial projects. Spending for residential projects dropped 0.4 percent during May to an annually-adjusted rate of $368 billion.

SAN DIEGO—Affordable housing practitioners must urge their members of Congress to raise the low-income housing tax credit and private activity bond caps this year, National Council of State Housing Agencies’ (NCSHA) Executive Director John McEvoy told the NCSHA House Credit Conference & Marketplace June 29. If Washington lawmakers fail to boost the LIHC cap to $1.75 per capita and accelerate the bond cap to $75 per capita, lobbyists will have to "start all over again next year with a new president and a new Congress," McEvoy said. "The only thing keeping this from happening this year is inertia. No one else can carry the message but you." 

To contact your member, call the Capitol switchboard at (202) 224-3121.

June

The California Tax Credit Allocation Committee (TCAC) has published the list of applicants from their June 15, 2000 low-income housing tax credit application round.

Sens. Rick Santorum (R-Pa.) and Joseph Lieberman (D-Conn.) introduced a community renewal bill June 22 that would raise the low-income housing tax credit from the current $1.25 per capita to $1.75 per capita in 2001, with an index to inflation thereafter. Mirroring a measure by House Speaker Dennis Hastert (R-Ill.) and the White House, the $12 billion Santorum-Lieberman bill calls for tax breaks and incentives to spur economic development in low-income communities. To access S.2779 click here.

U.S. apartment development has shifted in recent years to favor central city locations, a June 8 National Multi Housing Council (NMHC) report found. The number of housing units (single and multifamily), as measured by residential building permits increased by 73 percent for the nation from 1991 to 1999. During this period, central city construction in the 50 largest metro areas increased more rapidly than did suburban construction. The end result was an increase in central cities’ market share of metro area permits from 17 percent to 21 percent, the report found. To access a copy of "Measuring and Interpreting the Recent Increase in Central City Housing Construction," click here.

Housing starts slowed to a seasonally-adjusted rate of 1,592,000 in May, a 4 percent drop over the previous month, the U.S. Commerce Department reported June 16.

House lawmakers have launched debate on its fiscal year 2001 housing spending bill. H.R. 4635, the FY 2001 HUD-VA spending bill, includes reductions to key affordable rental housing financing programs, including HOPE VI, the HOME program and Community Development Block Grants. The House of Representatives is expected to vote on the housing bill the week of June 19. For a chart outlining HUD’s budget for selected programs, click here.

While an economy fueled by high-tech job growth may be revitalizing America’s cities, it is worsening the nation’s affordable housing shortfall, according to a recent U.S. Department of Housing and Urban Development (HUD) report. Despite the 4.6 million city residents that have gained employment since 1993, one in eight cities suffer from high poverty rates and high unemployment, according to HUD’s State of the Cities 2000, released June 12. The need for rental assistance is at an "historic high," the report concludes.

An effort to create a New Jersey state tax credit has moved one step closer to passage. The New Jersey Senate Budget and Appropriations Committee unanimously approved S.1137, the new bill sponsored by state Sens. Joseph Kyrillos (R) and Bernard Kenny (D) that would establish a state tax credit for New Jersey, June 8. Under the bill, any housing sponsor that has received federal low-income housing tax credits (LIHCs) would be eligible to apply to the state allocating agency for state LIHCs. The New Jersey Housing Finance Agency would be responsible for allocating state tax credits, the total of which could not exceed $10 million in a fiscal year. The bill will now move to the full Senate for consideration. To access S.1137, click here.

The Internal Revenue Service questions combining 9 percent low-income housing tax credits with 4 percent tax credits in mixed-financed projects, in a soon-to-be published private letter ruling. To access the ruling, click here.

More than 3 million moderate-income working families face critical housing needs despite working the equivalent of a full-time job, according to a new report by the Center for Housing Policy. The report, "Housing America’s Working Families," found that the number of moderate-income working families with critical housing needs rose by 17 percent, or 440,000 people, between 1995 and 1997.

Affordable housing advocates have launched a letter-writing campaign designed to persuade California Gov. Gray Davis (D) and the state legislature to approve $300 million for affordable rental housing financing. The state Assembly and Senate Budget Conference Committee is meeting this week to hammer out the differences between the Assembly and Senate fiscal 2000-2001 budgets. The Assembly has included $750 million for housing, including $300 million for rental housing, the Senate $650 million, including $200 million for rental housing and the governor $500 million, including $87 million for rental housing.

The California State Assembly unanimously passed legislation that would allow California’s state tax credit to be separated from the federal credit last month. By a vote of 77-to-0, the Assembly approved A.B. 1903 May 25, by State Assembly member Alan Lowenthal (D-Long Beach). The legislation would allow the California state low-income housing tax credit to be separated from the federal tax credit. This change would allow federal and state credits to be sold to different classes of investors. Proponents of the measure say it would increase the value of both types of tax credits. The bill will now move to the state Senate for consideration. To access A.B. 1903, click here.

Nearly two-thirds of low-income renters in California paid more than half their income on housing in 1997 and 86 percent spent over 30 percent of their income on housing, a new study by the California Budget Project showed, May 24. The study, Locked Out: California’s Affordable Housing Crisis, found that the number of low-income renter households in the state’s metropolitan areas exceeded low-cost rental units by 2.1-to-1, a gap of 684,000 units in 1997.

Housing advocates plan to gather at the State Capitol June 22 to urge California Gov. Gray Davis (D) to sign the state budget, which includes a record-high $250 million for affordable rental housing.

May

President Clinton and House Speaker Dennis Hastert (R-Ill.) announced a bipartisan community revitalization bill that includes a 40 percent increase to the low-income housing tax credit (LIHC) cap on May 23. Under the New Markets & Renewal Communities Initiative, the LIHC cap would be increased from the current $1.25 per capita to $1.75 per capita, with an index to inflation thereafter. This increase is expected to help create approximately 180,000 affordable housing units over the next five years. The initiative is expected to cost approximately $20 billion over the next 10 years.

The California Tax Credit Allocation Committee (TCAC) has published answers to frequently asked questions about their second low-income housing tax credit funding round. The deadline for the second round is Thursday, June 15 at 5:00 p.m.

As expected, the Federal Reserve raised the inter-bank loan rate by a half point, spurring commercial banks to increase the Prime rate from 9 percent to 9.5 percent, at the board’s May 17 meeting. This marks the sixth time in just 11 months that the Prime rate has been raised in an effort to reduce inflation risk.

The Texas Department of Housing and Community Affairs has posted its 2000 submission log for federal tax credits. TDHCA received a total of 179 applications requesting $110,434,577 in tax credits. There is about $21.3 million in 2000 tax credit authority available. The agency expects to approve the 2000 tax credit reservations on July 28.

Multifamily housing starts rose by 14 percent last month to 334,000 units, the U.S. Commerce Department reported May 16. In addition, multifamily permits jumped 15.3 percent to 414,000 units in April.

Legislation that would allow California’s state tax credit to be separated from the federal credit has moved one step closer to passage. By a unanimous vote of 21-to-0, the state Assembly Appropriations Committee approved A.B. 1903, by State Assembly member Alan Lowenthal (D-Long Beach), May 17. Affordable housing practitioners say that the legislation would increase the value of both types of tax credits. To access A.B. 1903, click here.

American voters are largely neutral in assessing the effectiveness of the U.S. Department of Housing and Urban Development (HUD), Novogradac & Company LLP’s 3rd Annual National Affordable Housing Survey shows. The survey asked 800 registered voters to rate HUD’s effectiveness on a scale of 1-to-10, with 1 being "not effective at all" and 10 being "very effective." Five percent of the voters polled said HUD was very effective, while 6 percent rated the federal agency not effective at all. The overwhelming majority of voters surveyed lay right in the middle, with 25 percent giving HUD a rating of 5.

By a 3-to-2 margin, voters believe that Vice President Al Gore will be more sensitive to the nation’s affordable housing crisis than GOP presidential contender, Texas Governor George W. Bush (R), Novogradac & Company LLP’s 3rd Annual National Affordable Housing Survey shows.

The majority of voters favor spending a portion of the federal budget surplus on providing affordable housing for low-income families, Novogradac & Company LLP’s 3rd Annual National Affordable Housing Survey found.

Presidential contender Texas Gov. George W. Bush (R) last month proposed $1.7 billion in new federal tax credits to developers to pay for half the cost of the new construction or rehabilitation of single-family houses in distressed neighborhoods for low- to moderate income residents.

Some 5.4 million low-income families pay more than half their incomes for housing or live in dilapidated units, according to a the U.S. Department of Housing and Urban Development (HUD) report entitled Rental Housing Assistance—The Worsening Crisis.

The U.S. Department of Housing and Urban Development (HUD) has published its proposed fiscal year 2001 Fair Market Rents used to determine Section 8 and other program rents. Public comments are due June 27, 2000.

The Community Reinvestment Act has spurred more than $600 billion in lending to low- and moderate-income communities and borrowers between 1993 and 1998, said a U.S. Treasury Department report released April 19. The report looked at lending trends in 305 U.S. cities between 1993 and 1998.