Low-Income Housing Tax Credit

News Archive - 2003

December

Annapolis, Md. - December 30, 2003

Gov. Robert L. Ehrlich, Jr. this month approved the Maryland Department of Housing and Community Development’s qualified allocation plan (QAP), which is used to administer the low-income housing tax credit (LIHTC) program. Maryland’s QAP is one of more than 35 draft and/or final 2004 QAPs that have been posted on Novogradac & Company LLP’s QAPs & Application web page.

Washington, D.C. - December 24, 2003

The U.S. Department of Housing and Urban Development (HUD) today invited comments on the mortgage insurance application for multifamily housing projects, specifically the requirements for professional liability insurance for Section 232 programs. HUD says the information from sponsors and general contractors, and submitted by a HUD-approved mortgagee, is needed to determine project feasibility, and mortgagor/contractor acceptability. In addition, documentation from operators/managers of health care facilities is also required as part of the application for firm commitment for mortgage insurance. HUD analyzes financial data, cost data, drawings, specifications and other documentation to determine whether the proposed project meets program requirements for mortgage insurance. Today’s revision includes changes and additional Exhibits to Section K of Form HUD-92013-NHICF. Click here for details.

Washington, D.C. - December 19, 2003

The U.S. Department of Housing and Urban Development (HUD) today published a notice that designates Difficult Development Areas (DDAs) and Qualified Census Tracts (QCTs) for 2004 for purposes of the low-income housing tax credit (LIHTC) under section 42 of the Internal Revenue Code. HUD makes new DDA designations annually; today’s QCT designations reflect the recent release of relevant data from the 2000 Census. The DDAs designated in the notice are for each of the 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the Virgin Islands. The QCTs designated today are for American Samoa, Guam and the Northern Mariana Islands. The 2003 QCTs designated December 12, 2002 for the 50 states, the District of Columbia, Puerto Rico and the Virgin Islands are unchanged by today’s notice. Click here for more information.

Washington, D.C. - December 17, 2003

The Internal Revenue Service (IRS) has agreed to consider changing its regulations governing rent adjustments at low-income housing tax credit (LIHTC) properties where residents pay all or a portion of their utilities, according to the National Multi Housing Council (NMHC). NMHC joined with affordable housing professional associations including the Council for Affordable and Rural Housing (CARH), the National Apartment Association (NAA), the National Affordable Housing Management Association (NAHMA), the National Association of Home Builders (NAHB) and the National Leased Housing Association (NLHA) to urge the IRS to consider the issue. NMHC says current regulations overestimate utility costs, and thus reduce rental income, because they use data from mostly older properties to establish the rates even though most LIHTC properties are newer and much more energy efficient. The groups are also encouraging the IRS to amend their rules and allow properties to become stabilized before having to potentially reduce rental income due to utility adjustments. NMHC reports that the IRS has indicated it will take action on the matter in 2004. Click here for a joint letter from the groups outlining their concerns.

Washington, D.C. - December 16, 2003

President George W. Bush will sign the American Dream Downpayment Act (S. 811) into law at 1:30 p.m. EST today at the Department of Housing and Urban Development (HUD) in Washington. HUD’s Acting Secretary Alphonso Jackson and former HUD Secretary Mel Martinez will join President Bush. This law will help an estimated 40,000 low-income families to become homeowners by assisting them with the upfront costs necessary to buy a home. A webcast of the event is available on HUD’s web site.

Washington, D.C. - December 12, 2003

President George W. Bush is expected to nominate Alphonso Jackson today as the new housing secretary, replacing Mel Martinez, who resigned this week. Jackson, a Texas native, has been deputy secretary of the Housing and Urban Development Department (HUD) since June 2001. Before joining HUD, Jackson was chief executive of American Electric Power-TEXAS, an Austin utility company. He was also president of the Dallas housing authority and director of the Washington, D.C., department of public housing.

Washington, D.C. - December 11, 2003

The Internal Revenue Service (IRS) today issued final regulations on the arbitrage restrictions applicable to tax-exempt bonds issued by state and local governments. The regulations affect issuers of tax-exempt bonds and provide a safe harbor for qualified administrative costs for brokers’ commissions and similar fees incurred in connection with the acquisition of guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow. Click here for a copy of the regulations.

Washington, D.C. - December 10, 2003

Averting a six-week suspension of the Federal Housing Administration (FHA) multifamily mortgage insurance program and allaying concerns of the resulting effect on affordable housing, the Senate last night passed H.J.Res. 82 making further continuing appropriations for the program’s 2004 fiscal year. HUD was forced to temporarily shut down the FHA multifamily mortgage insurance program on December 4 when the $3.8 billion in commitment authority supplied in the September 30 continuing resolution was exhausted. H.J.Res. 82 increases the FHA commitment authority to $7.667 billion and should allow the agency to resume activity through January 31, 2004. Click here for a copy of H.J.Res. 82.

Washington, D.C. - December 9, 2003

Mel Martinez resigned today as Secretary of the U.S. Department of Housing and Urban Development (HUD), effective at noon Friday, Dec. 12, 2003. Martinez has held the position since Jan. 24, 2001. The White House issued a statement, but hasn’t indicated any candidates to replace Martinez, who is expected to run for a Florida U.S. Senate seat.

Washington, D.C. - December 9, 2003

The U.S. House of Representatives yesterday approved  Conference Report 108-401 to accompany the fiscal year (FY) 2004 Omnibus Appropriations bill (H.R. 2673) with a vote of 242 to 176. The $328 billion bill contains seven of the 13 annual appropriations bills, including the FY 2004 Veterans Administration (VA), Department of Housing and Urban Development (HUD) and Independent Agencies Appropriations measure. The bill must now be approved by the Senate, but the Senate is not expected to consider it until it reconvenes in January. In the meantime, a continuing resolution will keep the federal government operating at FY 2003 levels through Jan. 31.

The House also passed H.J.Res. 82 making further continuing appropriations for fiscal year 2004 for the Federal Housing Administration (FHA). HUD was forced to temporarily shut down the FHA multifamily mortgage insurance programs on December 4 when FHA exhausted the $3.8 billion in General Insurance/Special Risk Insurance (GI/SRI) commitment authority that was included in the September 30 continuing resolution. H.J.Res. 82 increases the FHA commitment authority to $7.667 billion. However, without Senate passage, there is concern that a six-week shutdown will have a significant effect on new developments as well as projects with commitments for other funding, including low-income housing tax credits (LIHTC).

Washington, D.C. - December 5, 2003

The National Council of State Housing Agencies (NCSHA) today released a report revising its recommended practices for state housing agency use in administering the Low Income Housing Tax Credit (LIHTC) program. The NCSHA board of directors adopted the new recommended practices in LIHTC allocation and underwriting at its meeting this week in New York. Click here for the report and a list of working group participants. Additional information will be available in the January issue of Novogradac & Company’s LIHTC Monthly Report.

Washington, D.C. - December 4, 2003

The U.S. Department of Housing and Urban Development (HUD) this week published a notice for multifamily program directors, field office directors and project managers providing guidance on asset management issues concerning bond-financed Section 8 projects. Click here for a copy of the notice.

Washington, D.C. - December 3, 2003

The Internal Revenue Service (IRS) announced in Revenue Procedure 2003-85 the inflation-adjusted low-income housing tax credit (LIHTC) and private activity bond caps for 2004. For calendar years beginning in 2004, the amount used under §42(h)(3)(C)(ii) to calculate the state LIHTC ceiling is the greater of $1.80 multiplied by the state population or $2,075,000. The amount used under §146(d)(1) to calculate the state ceiling for the volume cap for private activity bonds in 2004 is the greater of $80 multiplied by the state population or $233,795,000. Click here to view Rev. Proc. 2003-85.

Washington, D.C. - December 2, 2003

In two identical private letter rulings (PLRs), the Internal Revenue Service (IRS) granted an extension of time to file bond disposition form and post surety bonds (PLRs 200348017-018). In each of the rulings, the taxpayer intended to file a Form 8693 and to post low-income housing tax credit (LIHTC) surety bonds under §42(j)(6) for various properties disposed of during Year 1. However, the taxpayer in each case inadvertently failed to file the Form 8693 or post the surety bonds. The failure to post the surety bonds would lead to recapture of the LIHTC, but acting pursuant to Treas. Reg. §301.9100-1 and Treas. Reg. §301.9100-3, the IRS granted an extension of the time allowed by IRS announcement 94-97 to file the Forms 8693 in order to make the election to post surety bonds under §42(j). Click here for copies of the PLRs.

Washington, D.C. - December 1, 2003

The U.S. Department of Housing and Urban Development (HUD) today published an interim rule that implements statutory changes that enable the use of mixed-finance and for-profit participation in the Section 202 supportive housing programs for the elderly and the Section 811 supportive housing program for persons with disabilities, as well as making other changes to those programs. The rule uses the mixed-finance development model to leverage the capital and expertise of the private developer community to create attractive and affordable supportive housing developments for the elderly or persons with disabilities. In addition, the rule is structured so that low-income housing tax credits (LIHTC) can be used to provide additional units, as well as supplement capital advance funds for the Section 202 or 811 projects. Click here for a copy of the rule.

November

Washington, D.C. - November 26, 2003

The Senate this week passed S. 811, the “American Dream Downpayment Act,” legislation that contains several provisions designed to increase rental and homeownership opportunities. S. 811 would boost the new limits for FHA-insured multifamily loans in high-cost areas such as New York, Boston, San Francisco, Chicago and Los Angeles from the current 110 percent above the base limit to 140 percent above the limit. For special projects in high-cost areas, the U.S. Department of Housing and Urban Development (HUD) Secretary would have the discretion to raise the maximum loan limit up to 170 percent above the base. The bill would also authorize $200 million annually in grants to assist low- and moderate-income home buyers with downpayment and closing costs. Click here for the latest version of S. 811.

Washington, D.C. - November 24, 2003

The Internal Revenue Service provides safe harbors under which IRS will treat a residential rental unit in a building as a low-income unit if the incomes of the individuals occupying the unit are at or below the applicable income limitation before the beginning of the building's credit period, but exceed that limitation at the beginning of the building's credit period (Rev. Proc. 2003-82). This revenue procedure addresses questions that have arisen regarding when individuals must satisfy the applicable income limitation under §42(g)(1) or §142(d)(4)(B)(i) of the Internal Revenue Code when they move into a residential unit in an existing building under §42(j)(5) on or after the date a taxpayer acquires the existing building for rehabilitation under §42(e), but before the beginning of the first taxable year of the building's credit period under §42(f)(1). The revenue procedure is effective for taxable years ending on or after Nov. 24, 2003. For more information, click here. For a copy of Rev. Proc. 2003-82, click here.

Washington, D.C. - November 21, 2003

In accordance with section 206A of the National Housing Act, the U.S. Department of Housing and Urban Development (HUD) has adjusted the basic statutory mortgage limits for multifamily housing programs for calendar year 2004. Click here for a copy of the updated limits.

Chicago, Ill. - November 20, 2003

Freddie Mac announced that with its $5 million dollar equity investment in the multifamily development in Jackson Park Terrace, it will exceed the $3 billion dollar mark for low-income housing tax credit (LIHTC) investments. Since first investing in LIHTCs in 1988, Freddie Mac has helped create more than 200,000 units of affordable rental housing. When the rehabilitation of Jackson Park Terrace, a rental housing community located on the south side of Chicago, Ill. is completed it will include 268 apartments and townhomes affordable to residents earning less than 60 percent of the area median income. One year ago Freddie Mac passed the $2 billion mark in LIHTC investments. Freddie Mac invests in LIHTC funds sponsored by not-for-profit and for-profit syndicators, purchases tax credits in the secondary market and also has a separate investment fund, the Freddie Mac Equity Plus fund. Through its Equity Plus fund, Freddie Mac will provide as much as 100 percent of the tax credit equity in qualified affordable multifamily projects. Freddie Mac is one of the largest corporate investors in tax credit housing development and its growing portfolio consists of more than 200,000 units in more than 2,800 projects throughout the United States and Puerto Rico.

Washington, D.C. - November 19, 2003

The House yesterday passed the conference report for H.R. 6, the “Energy Policy Act of 2003,” legislation that contains tax incentives to increase energy efficiency and conservation in the housing market. The comprehensive measure would provide a $1,000 tax credit to builders for the construction of a new home that is at least 30 percent more energy-efficient than a home built under the 2000 International Energy Conservation Code (IECC). The tax credit jumps to $2,000 for homes built at least 50 percent above the 2000 IECC. The legislation also gives consumers a 20 percent tax credit of as much as $2,000 for qualified remodeling projects that improve energy efficiency in existing homes. The package also contains a $1.50 per square foot commercial property deduction for rental housing four stories and higher that is at least 50 percent more efficient than housing built under the standards of the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Click here for a copy of the conference report.

New York - November 18, 2003

Cities that discourage apartments do so at their own peril, according to of the National Multi Housing Council (NMHC).  Speaking at the U.S. Conference of Mayors' National Economic Summit last week, NMHC President Doug Bibby told the gathering of mayors and business executives that they can no longer cater to NIMBY (not-in-my-backyard) opposition to apartments if they want to create vibrant, livable communities. Bibby cited one study in his prepared remarks that found that the Minneapolis-St. Paul, Minn. region forgoes an estimated $265 million per year in consumer spending and business income because it lacks sufficient workforce housing. The National Economic Summit was sponsored by the U.S. Conference of Mayors and co-sponsored by the Council for Investment in the New American City and the National Urban League. Click here for details.

Washington, D.C. - November 13, 2003

Reps. Jim Ramstad (R-Minn.) and Benjamin Cardin (D-Md.) yesterday introduced legislation to preserve hundreds of thousands of apartments as affordable housing for the next 30 years. H.R. 3485, the Affordable Housing Preservation Tax Relief Act of 2003, authorizes states to allocate preservation tax credits to owners of affordable housing properties who are willing to sell those properties to new owners committed to preserve them. Taxes that sellers would otherwise face—so-called “exit taxes”—have discouraged sales to buyers committed to preserving the properties. State allocating agencies would be responsible for qualifying new owners, calculating the amount of tax relief due the owner and monitoring compliance with the bill’s affordability requirements. The National Council of State Housing Agencies applauded the measure, noting that states already carry out similar responsibilities in their administration of the low-income housing tax credit (LIHTC) and suggested that as such, the proposed program would share many of the strengths for which the LIHTC program is well known. NCSHA also reports that in a recently completed analysis, the National Association of Home Builders (NAHB) estimates that more than 300,000 apartments could be transferred to “socially responsible” owners if exit tax relief were enacted. Click here for a copy of the measure.

Washington, D.C. - November 11, 2003

The National Council of State Housing Agencies (NCSHA) honored 11 state housing finance agencies (HFAs) for their development and implementation of outstanding public purpose programs and projects with its Annual Awards for Program Excellence. Awards in six categories were presented during NCSHA’s Annual Conference in Seattle on October 25-28. They were: homeownership, rental housing, special housing needs, management innovation, legislative campaign and communications. For more information, click here.

Sacramento, Calif. - November 10, 2003

The California Tax Credit Allocation Committee (TCAC) is expected to soon publish a first draft of the proposed 2004 low-income housing tax credit (LIHTC) regulations. TCAC expects that there will be several changes to the regulations for next year, among them, revisiting both the delineation of geographic areas in which many applicants compete, as well as the percentages of credit ascribed to those areas. Additionally, the committee anticipates some changes to the tie-breakers, and possibly to the leveraging section of the regulations. Although TCAC staff usually publishes a first draft of the regulations prior to gathering public input and comment, it was decided that it might be helpful to the process to hold various meetings prior to the publication of any proposed regulatory changes. In furtherance of that goal, TCAC will hold meetings for interested parties to express their views on the proposal.

Washington, D.C. - November 6, 2003

The Department of Housing and Urban Development (HUD) is seeking comment from multifamily property owners on a proposal for utility allowance adjustments. Multifamily owners are invited to advise HUD of the need for and requests approval of a new utility allowance for tenants. Interested persons should submit comments to: Lauren Wittenberg, OMB Desk Officer, Office of Management and Budget, Room 10235, New Executive Office Buildings, Washington, DC 20503; Fax 202.395.6974. Comments are due December 8, 2003. For more information, click here.

October

Phoenix, Ariz. - October 28, 2003

The Arizona Department of Housing (ADOH) presents three annual focus group meetings this week to provide comments on the draft 2004 low-income housing tax credit (LIHTC) qualified allocation plan (QAP). ADOH anticipates the focus groups will consist of individuals with diverse backgrounds and interest in the LIHTC program. Click here for a copy of the draft QAP.

Washington, D.C. - October 21, 2003

The U.S. Department of Housing and Urban Development (HUD) today published a notice of funding availability (NOFA) announcing the availability of $574 million for the HOPE VI Program. Of this amount, approximately $447.8 million in fiscal year 2003 funds are available for the HOPE VI Revitalization Program and $40 million for the HOPE VI Demolition Program. The remaining funds will be made available for other purposes including Neighborhood Networks, technical assistance and Housing Choice Voucher Assistance. Click here for a copy of the notice.

Dinuba, Calif. - October 16, 2003

Speaking yesterday about housing and the economy, President George W. Bush called on the Senate to approve a homeownership downpayment fund. The House has already passed legislation to fund downpayment assistance; H.R.1276, the “American Dream Downpayment Act” will provide $200 million in downpayment assistance grants to low-income families under the U.S. Department of Housing and Urban Development’s (HUD) HOME Investment Partnerships Program. Meanwhile, the Senate Committee on Banking, Housing and Urban Affairs met yesterday to markup S. 811, its version of the measure. The Senate has provided $50 million for this program in its fiscal year 2004 VA, HUD and Independent Agencies spending bill.

Washington, D.C. - October 15, 2003

The Kentucky Housing Corporation (KHC) today began accepting pre-applications and applications for the 2004 low-income housing tax credit (LIHTC) open window pool. All successful applicants whose projects are awarded 2004 LIHTCs must comply with the 2004 qualified allocation plan, which KHC expects to have finalized early next month. Of the $3 million available in the open window pool, approximately $1.8 million will be used for projects that obtain permanent financing through KHC’s Center for Affordable Housing Finance. The remaining approximately $1.2 million will be used in projects that are financed only with LIHTCs and that can be identified as rural projects or preservation projects.

Washington, D.C. - October 8, 2003

The U.S. Department of Housing and Urban Development published a notice yesterday lowering mortgage insurance premiums (MIP) in fiscal year (FY) 2004. Effective October 1, MIPs were lowered to 50 basis points for multifamily programs authorized under sections 207, 220, and 221(d)(4) of the National Housing Act and without low-income housing tax credits (LIHTCs); Section 231 of the National Housing Act; and insured programs with HOPE VI with or without LIHTCs. Multifamily programs under the following sections will remain at 80 basis points and will continue to require a credit subsidy obligation: Section 221(d)(3) for not-for-profit and cooperatives for new construction or rehabilitation, Section 223(d) for operating loss loans for both apartments and health care facilities, and Section 241(a) for supplemental loans for additions or improvements to existing apartments. The MIP for sections 223(a)(7), and 207 pursuant to 223(f), 232, 232 pursuant to 223(f), 242, and 241(a) for health care facilities, Title XI, and low-income housing tax credit projects remain unchanged at 50 basis points. Click here for a copy of the notice.

Washington, D.C. - October 7, 2003

The House of Representatives passed H.R. 1276, the American Dream Downpayment Act, by a voice vote last week. The measure would provide $200 million in grant funds for low-income, first-time homebuyers. The grants would be distributed through the Department of Housing and Urban Development’s (HUD) HOME program. HUD estimates that the $200 million would assist approximately 40,000 low-income families with downpayment and closing costs on their homes. Click here for a copy of H.R. 1276.

Washington, D.C. - October 6, 2003

The Internal Revenue Service (IRS) Exempt Organizations (EO) office last week published its 2004 implementing guidelines announcing new offices, areas of increased focus and planned guidance for the coming year. In 2004, EO plans to issue guidance on joint ventures between exempt organizations and for-profit companies; and low-income housing partnerships and 501(c)(3) organizations. Click here for more information.

Washington, D.C. - October 3, 2003

The U.S. Department of Housing and Urban Development (HUD) this week published a final rule that revises HUD regulations to remove barriers to the participation of faith-based organizations in certain HUD programs, including Community Development Block Grants (CDBG), Housing Opportunities for Persons With AIDS (HOPWA) and supportive housing. HUD says the purpose of the revisions made by this rule is to ensure that faith-based organizations are able to compete on an equal footing with other organizations for HUD funding. This final rule follows publication of a January 6, 2003, proposed rule and takes into consideration the public comments received on that proposal. Among the significant revisions to the final rule is the clarification that HUD funds may not be used for acquisition, construction or rehabilitation of sanctuaries, chapels or any other rooms that a religious congregation that is a recipient or subrecipient of HUD assistance uses as its principal place of worship. Click here for a copy of the notice.

Washington, D.C. - October 2, 2003

The Senate Finance Committee yesterday approved S. 1637, the Jumpstart Our Business Strength (JOBS) Act of 2003, a bill that would, among other things, repeal the 10 percent tax credit under Internal Revenue Code §47 for  rehabilitation expenditures with respect to buildings first placed in service before 1936, effective for expenditures incurred in taxable years beginning after December 31, 2003. S. 1637 would retain the existing 20 percent tax credit. The measure would also provide for mandatory basis adjustments under IRC §734; it also contains provisions regarding tax shelters.  Click here for more information.

Washington, D.C. - October 2, 2003

The U.S. Department of Housing and Urban Development this week published final fiscal 2004 Section 8 fair market rents (FMRs), effective October 1, 2003. FMRs are used 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. Because HUD is still analyzing rent data from the 2000 census, the FMRs are generally based on 1990 rent data. Based on public comments, HUD increased the proposed FMRs for Miami, Honolulu, Assumption Parish, La., and Navarre County, Texas. HUD plans to publish revised proposed FMRs for comment in late 2003 or early 2004 based on 2000 census rent data and new metropolitan area definitions released by the Office of Management and Budget (OMB) in June.

Sacramento, Calif. - October 1, 2003

The California Tax Credit Allocation Committee (TCAC) met on September 29 to confirm the low-income housing tax credit (LIHTC) reservations for the 2003 second round allocation. Approximately $313,917,980 in 10-year federal credits and $28,275,691 in state credits were awarded to projects requesting 9 percent tax credits. Approximately $9,683,098 in state tax credits was awarded to tax-exempt bond projects. During the meeting, TCAC decided to reserve credits for certain projects not initially recommended for reservations and, therefore, the results distributed at the meeting may change. Certain counties were reserved more credits than the maximum available, using waivers allowed in TCAC regulations. These overages are expected to be funded from the credits available for 2004. Click here for a list of applicants. Details of LIHTC awardees will be posted as soon as they become available.

September

Washington, D.C. -  September 30, 2003

Congress last week passed with nearly unanimous support H.J. Res. 69, the continuing resolution (CR) which is needed to keep the government operating into the new fiscal year beginning October 1. The stop-gap spending measure continues to fund ongoing federal programs at the FY 2003 rate through Oct. 31. The CR includes an exception to the normal CR rate rules to give FHA access to more commitment authority than they normally would receive during the time of the CR ($3.8 billion instead of $1.8 billion), in order to ensure that any loans that could not be processed by September 30 could be accommodated in fiscal year 2004, and allow FHA multifamily programs to operate without risk of another shutdown early in the fiscal year.

Washington, D.C. -  September 29, 2003

The Internal Revenue Service (IRS) today released Private Letter Ruling 200339022 regarding the student exceptions under §42(i)(3)(D) of the Internal Revenue Code (IRC) for the purposes of determining whether a tenant’s unit can be treated as a low-income unit under IRC §42(i)(3)(A). Click here for a copy of the ruling.

Washington, D.C. -  September 25, 2003

Public concern about the lack of affordable housing choices may be at an all-time high, according to a new survey released today by the National Association of Realtors ® (NAR) at its National Summit on Housing Opportunities. The survey, conducted by Public Opinion Strategies last month, suggests that people are concerned enough over the lack of affordable housing that 82 percent are willing to support the construction of more for-rent or for-sale affordable homes in their area if they fit in the community. Click here for a copy of the survey.

Sacramento, Calif. -  September 24, 2003

The California Debt Limit Allocation Committee meets today to consider $666,244,329 in applications for tax-exempt housing bond allocation from its Qualified Residential Rental Pool. CDLAC has approximately $2.6 billion in bond volume available in 2003, of which more than half is set-aside for multifamily housing.

Norfolk, Conn. -  September 22, 2003

The Financial Accounting Standards Board (FASB) this week published a proposed staff position, FIN 46-e, that will defer the effective date of FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, for a public entity.  A public entity need not apply the provisions of Interpretation 46 until the end of the first interim or annual period ending after December 15, 2003 (as of December 31, 2003, for an entity with calendar year-end quarters), if all of the following conditions are met:

1. The public entity acquired its interests in a variable interest entity or potential variable interest entity before February 1, 2003;

2. The assets of the variable interest entity or potential variable interest entity are predominantly nonfinancial ;

3. The variable interest entity or potential variable interest entity was not specifically created by or for the public entity to undertake a narrow and well-defined objective; and

4. The determination of whether the entity is a variable interest entity or whether the public entity is the variable interest entity’s primary beneficiary has not been completed as of the issuance of the financial statements for the interim or annual period beginning after June 15, 2003.

FASB says nonfinancial assets are assets other than financial assets as defined in paragraph 364 of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Financial assets are cash, evidence of an ownership interest in an entity, or a contract that conveys to a second entity a contractual right (a) to receive cash or another financial instrument from a first entity or (b) to exchange other financial instruments on potentially favorable terms with the first entity. 

In an attempt to respond to off-balance sheet financing transactions, FIN 46 was intended to address only special purpose entities, but its final provisions are much broader and have significant consequences to the low-income housing tax credit (LIHTC) industry. The board met last week to consider modifying to clarify certain provisions of FIN 46.

Washington, D.C. -  September 17, 2003

Effective yesterday, the U.S. Department of Housing and Urban Development (HUD) temporarily suspended the issuance of all Federal Housing Administration (FHA) multifamily and health care mortgage insurance because HUD determined its commitment authority may be exhausted prior to the end of the fiscal year. The action was announced in Mortgagee Letter 2003-13, issued September 13.  The suspension will remain in effect until Congress enacts either supplemental commitment authority for fiscal year 2003 or new commitment authority for fiscal year 2004. The 2004 fiscal year begins October 1, 2003. In the meantime, HUD will continue to issue conditional commitments, site appraisal and marketing analysis (SAMA) letters, and multifamily accelerated processing (MAP) invitation letters and to initially and finally endorse mortgages with firm commitments issued before September 16. Click here for a copy of Mortgagee Letter 2003-13.

Raleigh. N.C. -  September 16, 2003

The North Carolina Housing Finance Agency (NCHFA) today announced that it has been issued a favorable private letter ruling from the Internal Revenue Service (IRS). Mark Shelburne with NCHFA and Jerry Breed with Powell Goldstein Frazer & Murphy say the ruling resolves an important technical issue regarding the federal income tax treatment of the state's new refundable credit. More information is available at NCHFA’s web site.

Raleigh. N.C. -  September 15, 2003

The North Carolina Housing Finance Agency (NCHFA) today published a draft of its qualified allocation plan (QAP) for the 2004 allocation of low-income housing tax credits. Click here for a copy of the QAP.

Sacramento, Calif. -  September 10, 2003

The California Assembly Committee on Labor and Employment is expected to consider S.B. 360 today. The bill would extend the deadline of particular provisions of prevailing wage law that exempted certain residential and low-income housing projects. Click here for the most recent version of the bill.

S.B. 975, which became effective on January 1, 2002, subjected many types of affordable housing development to state prevailing wages law for the first time, with certain limited exemptions, which are set to expire December 31, 2003. S.B. 360 would extend those exemptions by one year to sunset on December 31, 2004.

Interested parties are encouraged to contact the Committee on Labor and Employment regarding S.B. 360. E-mail and other contact information for committee members can be found on the committee’s web site.

Pasadena, Calif. -  September 9, 2003

The 9th District U.S. Court of Appeals ruled yesterday in support of the City of Los Angeles’ Rent Stabilization Ordinance (LARSO) covering housing developments subsidized by the U.S. Department of Housing and Urban Development (HUD) whose owners have prepaid their HUD subsidized mortgage or opted out of their Section 8 contract. In the case (TOPA Equities, Ltd. v. City of Los Angeles, No. 02-56034; No. CV 00-10455-GHK, RNBx, C.D. California. April 8, 2002), TOPA Equities Ltd. purchased an apartment property, Morton Gardens, and prepaid the HUD Section 236 mortgage. As a result of the mortgage payoff, HUD no longer required TOPA to maintain the Section 236 program’s below-market rents. The City of Los Angeles, however, used its rent stabilization law to prevent the owner from raising the rents. TOPA filed suit against the city arguing that the Low Income Housing Preservation and Resident Homeownership Act (LIPPRHA) preempted it from the rent control law. However, in its decision yesterday, the court concluded that “LARSO is a generally applicable municipal rent control ordinance that safeguards tenants from excessive rent increases. It treats properties exiting federal housing programs neither better nor worse than properties that were never part of such programs. The 1990 LARSO amendments are not expressly preempted by LIHPRHA, nor are they preempted on conflict grounds.” Click here for a copy of the ruling.

Washington -  September 5, 2003

Despite President George W. Bush’s proposal to eliminate the program, both houses of Congress have funded HOPE VI in their versions of fiscal year (FY) 2004 Veterans Affairs (VA), Housing and Urban Development (HUD) and Independent Agencies appropriations legislation. The Senate’s bill, released by the Appropriations Committee yesterday, includes $195 million for HOPE VI. After forgoing its scheduled subcommittee markup of the FY 2004 VA-HUD and Independent Agencies Appropriations bill on September 3, the full Senate Appropriations Committee instead opted to unveil and mark up its version of the measure yesterday. The bill will now go before the full Senate for debate. Additional highlights of the $122.1 billion bill include: overall funding for HUD of $36.086 billion, an increase of $157.6 million over the budget request; and $4.546 billion for the Community Development Block Grant program; the Office of Rural Housing and Economic Development and Brownfields are funded at $25 million - both were eliminated in the budget request; empowerment zones were not funded, consistent with the budget request. Click here for the details and status of the appropriations’ bill. 

Washington -  September 3, 2003

The U.S. Department of Housing and Urban Development (HUD) today invited comments regarding the Rural Housing and Economic Development program. HUD staff will use the information collected to determine the eligibility, qualifications and capacity of applicants to carry out activities under the Rural Housing and Economic Development program. HUD will review the information provided by the applicants against the selection criteria contained in the Notice of Funding Availability (NOFA) in order to rate and rank the applications and select the best and most qualified applicant for funding. Eligible applicants include local rural non-profit organizations, community development corporations, state housing finance agencies, state and community development agencies and federally recognized Indian tribes.

Washington -  September 2, 2003

The purchaser of a rehabilitated condominium building can treat it as a separate new building under §42(e)(1) for purposes of the low-income housing tax credit (LIHTC), according to private letter ruling (PLR) 200335030. In the same ruling, the Internal Revenue Service (IRS) holds that the purchaser “steps into the shoes” of the seller in order to determine that the building is federally subsidized for purposes of claiming the 30 percent present value credit for the building. Click here for a copy of the ruling. 

August

Washington -  August 29, 2003

In Private Letter Ruling (PLR) 200334011, the Internal Revenue Service (IRS) ruled that the redemption of tax-exempt bonds after a project is placed in service does not preclude classification of the project under §42(h)(4)(B). Click here for the complete text of the ruling.

Washington -  August 27, 2003

The National Multi Housing Council (NMHC) last week published a new white paper that refutes one of the most persistent not-in-my-backyard (NIMBY) claims -- that new apartments will reduce property values.  The paper, “From NIMBY to Good Neighbors,” summarizes several new research studies that conclude that apartments can actually help raise nearby property values. It also identifies other literature and resources that community leaders and housing providers can use to overcome NIMBY opposition. Click here for more information.

Anchorage, Alaska -  August 26, 2003

The Alaska Housing Finance Corporation (AHFC) last week announced the availability of federal and state funds for the development of rental housing for low- and moderate-income families, seniors and persons with disabilities. The funds will be made available through three separate applications; the GOAL program, the Special Needs Housing Grant Program (SNHG) and the Senior and Special Needs Housing Pre-Development Fund program. Approximately $6 million in grants and $20 million in federal low-income housing tax credits (LIHTC) will be available under these programs. Each program requires a separate application and has separate rating criteria. Sponsors can apply for all three funding sources for the same project. Click here for AHFC’s application, qualified allocation plan and related materials.

Washington -  August 25, 2003

The Internal Revenue Service (IRS) today published the amounts of unused housing credit carryovers allocated to 27 qualified states under §42(h)(3)(D) of the Internal Revenue Code for calendar year 2003 in Revenue Procedure 2003-67. The revenue procedure is effective for allocations of housing credit dollar amounts attributable to the National Pool component of a qualified state’s housing credit ceiling for calendar year 2003. New figures for the unused credit dollar amounts are released annually by IRS under Rev. Proc. 92-31, which provides guidance to state housing credit agencies of qualified states on the procedure for requesting allocation of unused housing credit carryover under §42(h)(3)(D). Click here for a copy of Rev. Proc. 2003-67.

Washington -  August 19, 2003

Construction of new homes and apartments rose in July in all but one region, according to figures released today by the Commerce Department. However, last month’s gains resulted wholly from single-family home building; there was virtually no change from the previous month as multifamily housing starts were reported at a seasonally adjusted annual rate of 351,000 units.

Sacramento, Calif. -  August 8, 2003

In late June, the California State Board of Equalization (BOE) released draft guidelines for the valuation of properties financed with low-income housing tax credits (LIHTC) for review by interested parties. Proposed changes were accepted through July 21 and the BOE will hold a meeting to discuss the proposed changes to the draft at 9:30 a.m. August 19, 2003, at 450 N Street, Sacramento, Room 122. The board released a matrix that summarizes the proposed changes, with the BOE staff’s responses to them, which will serve as the basis for discussion at the meeting. If agreement regarding final guidelines text cannot be reached at the August 19th meeting, unresolved issues will be taken to the Property Tax Committee on September 24, 2003, for resolution.

The valuation of LIHTC properties has been raised as an ongoing issue in many states recently and California property tax matters often have significant impact on the rest of the nation.

Sacramento, Calif. -  August 8, 2003

Ninety-eight applicants requested more than $76 million in federal 9 percent low-income housing tax credits (LIHTC) and almost $50 million in state LIHTCs in the California Tax Credit Allocation Committee’s (TCAC) second round of allocations. Combined, the 98 applications would produce 6,393 units of affordable housing. Click here for detailed lists of the applicants for TCAC’s second round, including requests for 4 percent LIHTCs to be used in combination with tax-exempt private activity housing bonds.

July

Washington -  July 31, 2003

The U.S. Department of Agriculture's (USDA) Rural Housing Service (RHS) this week announced the availability of $6 million of grant funds for the Rural Community Development Initiative (RCDI). Applicants must provide matching funds in an amount at least equal to the federal grant. These grants will be made to qualified intermediary organizations that will provide financial and technical assistance to recipients to develop their capacity and ability to undertake projects related to housing, community facilities or community and economic development. Applications are due by 4 p.m. EST on October 28, 2003. Click here for a copy of the notice.

Washington -  July 30, 2003

The U.S. Department of Housing and Urban Development (HUD) today published an interim rule amending HUD’s regulations with respect to funding for project completion. Current regulations require that funds provided by the mortgagor must be disbursed in full for project work, material, and incidental charges and expenses before any disbursement of the mortgage proceeds with the exception of federal, state or local government or instrumentality grants or loans. The interim rule adds to the exception and provides that the mortgagor’s equity from the sale of low-income housing tax credits (LIHTC) or historic tax credits, or both, need not be fully disbursed before the distribution of mortgage proceeds. HUD will accept comments through September 29, 2003, but the rule goes into effect August 29, 2003. HUD says that good cause exists to publish this interim rule for effect without first soliciting public comment because this change will result in savings in time and money for projects funded with tax credits, thereby making rents more affordable in these projects. Click here for a copy of the rule.

Lincoln, Neb. -  July 29, 2003

The Nebraska Investment Finance Authority (NIFA) invites the public to a series of focus group meetings to provide comments on the proposed 2004 low-income housing tax credit (LIHTC) qualified allocation plan (QAP) and application forms. Click here for more information and dates for NIFA’s focus group meetings. Click here for a copy of the draft QAP and related materials.

Washington -  July 28, 2003

The Treasury Department and Internal Revenue Service last week announced the release of the 2003 - 2004 Priority Guidance Plan. In Notice 2003-26, the IRS solicited suggestions from all interested parties, including taxpayers, tax practitioners and industry groups in order to formulate a guidance plan that focused resources on guidance items that are most important to taxpayers and tax administration. The 2003-2004 Priority Guidance Plan contains 268 projects to be completed over a 12-month period, from July 2003 through June 2004. In addition to the items on this year’s plan, the plans’ appendix lists the more routine guidance that is published each year. Planned guidance includes that on low-income housing partnerships and §501(c)(3) participation; §42; §45D regarding the new markets tax credit; §63A regarding "negative" additional §263A costs; arbitrage; and final regulations under §§1.42-6 and 1.42-14 to conform to statutory changes. Click here for a copy of the plan.

Washington -  July 23, 2003

The House Financial Services Housing and Community Opportunity Subcommittee, chaired by Rep. Bob Ney (R-Ohio), by a voice vote yesterday approved for full committee consideration a bill to increase affordable housing availability for low- and moderate-income families. H.R. 1985, the FHA Multifamily Loan Limit Adjustment Act of 2003, which was introduced by Rep. Gary G. Miller (R-Calif.) and Barney Frank (D-Mass.), would allow the Department of Housing and Urban Development (HUD) Secretary to increase multifamily mortgage loan limits for Federal Housing Administration (FHA) insured properties in high-cost areas from the current level of 110 percent to as much as 170 percent above their base loan limits.

Washington -  July 16, 2003

The House Appropriations subcommittee on Veterans Affairs, the U.S. Department of Housing and Urban Development, and Independent Agencies marked up its fiscal year 2004 appropriations bill yesterday. All amendments were tabled until the full committee markup, which has been scheduled for 5 p.m. Monday, July 21. The committee has not yet released official language, but did announce that the Department of Housing and Urban Development (HUD) would be funded at $37 billion, $942 million above last year and $98 million above President Bush’s request.

Washington -  July 8, 2003

The first of two reports being published by the Department of Housing and Urban Development (HUD) to discuss the impact of Census 2000 data on the allocation of Community Development Block Grant (CDBG) resources, “Redistribution Effect of Introducing Census 2000 Data Into the CDBG Formula,” details how and why funding allocations have shifted between jurisdictions over the past 10 years. The purpose of this report is to be a resource for understanding the intricacies of the existing formula. It does not discuss how the shifting allocations have impacted CDBG targeting of community development need. The second report, expected to be available in the winter of 2003/2004, will discuss targeting to community development need. For a copy of the report, visit our Research Center.

Washington -  July 7, 2003

The Internal Revenue Service (IRS) today published a proposal to amend several existing regulations concerning the low-income housing tax credit (LIHTC). The Community Renewal Tax Relief Act of 2000 (Pub. L. 106-554) amended various provisions in Section 42 of the Internal Revenue Code, including provisions relating to the time for meeting the 10 percent basis requirement for carryover allocations under section 42(h)(1)(E) and (F), and the order in which LIHTC dollar amounts are allocated from the different components of a state’s housing credit ceiling under section 42(h)(3)(C). The proposed regulations also amend Sec. 1.42-6 and Sec. 1.42-8 regarding the election of appropriate percentage month by removing the requirements that certain documents be attached to a taxpayer’s income tax return when it is filed. Click here for more information.

Washington -  July 2, 2003

The U.S. Department of Housing and Urban Development (HUD)yesterday announced the lowering of mortgage insurance premiums (MIPs) in FY 2004 to 50 basis points for multifamily programs authorized under Sections 207, 220 and 221(d)(4) of the National Housing Act (12 U.S.C. 1709(c)(1)) without low-income housing tax credits (LIHTCs). HUD also lowered MIPs for programs under Section 231, and insured programs with HOPE VI with or without LIHTCs. The effective date of these changes is October 1, 2003. Click here for more information.

Washington - July 1, 2003

State agencies allocated approximately $502,957,930 in federal low-income housing tax credit (LIHTC) authority in 2002, the National Council of State Housing Agencies (NCSHA) reports. According to NCSHA’s 2002 Housing Credit Utilization chart, these tax credits will provide more than 68,201 affordable housing units. Click here for details.

June

Washington -  June 30, 2003

The U.S. Department of Housing and Urban Development (HUD) published a final rule, effective June 24, 2003, that simplifies and streamlines HUD’s regulatory requirements for small public housing agencies (PHAs) that administer the public housing and voucher assistance programs under the United States Housing Act of 1937. Consistent with HUD’s basic regulatory responsibilities, the final rule further streamlines the PHA Annual Plan requirements for certain small PHAs and deregulates the assessment and scoring of small PHAs under the Public Housing Assessment System (PHAS) and the Section 8 Management Assessment Program (SEMAP).

Frankfort, Ky. -  June 27, 2003

Due to the overwhelming number of preliminary applications and applications for the low-income housing tax credit (LIHTC) received through its open window application process, the Kentucky Housing Corporation (KHC) has closed the window for LIHTC applications. KHC says pre-applications or applications currently under review will continue to be processed until the amount of LIHTCs available through the open window has been awarded. Any credit that remains will be recaptured and reallocated through this year’s second competitive round, as indicated in KHC’s 2003 qualified allocation plan (QAP). Applications for the upcoming competitive round must be received by July 16, 2003.

San Diego, Calif. -  June 26, 2003

Speaking today to attendees of NCSHA’s Housing Credit Conference & Marketplace being held through tomorrow at the Sheraton San Diego Hotel & Marina, National Council of State Housing Agencies (NCSHA) executive director Barbara Thompson led her panel through a multi-layered discussion that addressed the question: “With the passage of the recent tax law, how can the industry, public and private, work to make the low-income housing tax credit program a better one?” Panelists included Richard Goldstein of Nixon Peabody, Joseph Hagan of the National Equity Fund, Edwin Neill of Fannie Mae, Jeanne Peterson of the California Tax Credit Allocation Committee, Marc Schnitzer of Related Capital Cos. and Wallace Scruggs of Housing Trust of America.

Thompson greeted her audience at the opening plenary session with: “Let’s talk about victory, and it’s wonderful to talk about victory.” Her’s might have been a different greeting had the tax law, as originally proposed by the Bush administration, passed because, as Thompson then noted, the original proposal put at risk 40 percent, or 35,000, LIHTC units. Thompson and her panel of experts then delved into topics such as long-term pricing, developer trends, QAP requirements and Year 15 issues, as well as the effect of cap increases. Panelists concurred that the industry’s work is not done. Thompson’s question about whether vigilance was the lesson learned during the passage of the tax law was answered with a definite “Yes.”

Washington - June 25, 2003

Legislation introduced earlier this year would provide a tax credit to developers or investors who build or substantially rehabilitate homes for sale to low- or moderate-income buyers in low-income areas. In a statement introducing S. 875, the Community Development Homeownership Tax Credit Act, Sen. John Kerry (D-Mass.) estimated the legislation will result in approximately 50,000 homes built or refurbished annually.

The tax credit volume would be limited to $1.75 per capita for each state and allocated by the states themselves; credits would be claimed over 5 years, starting when homes are sold. The maximum tax credit under S. 875 equals 50 percent of the cost of construction, substantial rehabilitation and building acquisition and the minimum rehabilitation costs is $25,000. Eligible building acquisition costs are limited to one-half of rehabilitation costs. The bill requires that 10 percent of the available credit will be set aside for not-for-profit organizations.

For details on this and similar proposals, visit www.homeownertaxcredit.com.

Washington - June 24, 2003

In Revenue Ruling 2003-77, the Internal Revenue Service (IRS) yesterday provided clarification of the criteria for community service facilities in low-income housing tax credit (LIHTC) projects. To be included in project basis, a facility must be designed to serve primarily individuals with an income no higher than 60 percent of area median income. Rev. Rul. 2003-77 says this primary service requirement can be satisfied if the services will improve the quality of life for community residents and the taxpayer demonstrates that the services will be appropriate and helpful to individuals earning 60 percent or less of the area median income (AMI). The ruling also says the facility must be located on the same tract of land as one of the project buildings, and any fees for services must be affordable to individuals at or below 60 percent of area median income.

Washington - June 19, 2003

The Department of Housing and Urban Development (HUD) released its revised HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This handbook provides guidance for owners, management agents, residents, contract administrators and HUD staff on the admission and continued occupancy for approximately 1.4 million households in project-based subsidized housing units. Look for an analysis of the changes to the handbook in the August issue of the Property Compliance Report. 

Washington - June 17, 2003

The U.S. Department of Housing and Urban Development’s (HUD) Section 202 program provides a valuable housing resource but has reached only about an estimated 8 percent of very low income elderly households, notes the U.S. General Accounting Office (GAO) in a report to the Senate Special Committee on Aging published today. Section 202 is the only federal program devoted exclusively to providing this type of housing, offering approximately 260,000 rental units nationwide. The GAO report presents findings on delays in Section 202 project approval and construction, and their causes, and makes several recommendations for remedies.

Washington - June 13, 2003

The Senate Committee on Banking, Housing and Urban Affairs yesterday concluded hearings to examine issues relating to expanding homeownership opportunities, focusing on the American Dream Downpayment Initiative, HOME Investment Partnerships Program, Community Development Block Grant programs, Federal Housing Administration mortgage insurance product, Single-Family Affordable Housing Tax Credit and HUD’s Section 8 Housing Choice Voucher Program. Click here to read testimony from witnesses including Rep. Katherine Harris (R-Fla.); Mel Martinez, Secretary of Housing and Urban Development; Terri Y. Montague, Enterprise Foundation; Cathy Whatley, National Association of Realtors; Thomas L. Jones, Habitat for Humanity International; and James R. Rayburn, Rayburn Associates on behalf of the National Association of Home Builders.

Washington - June 10, 2003

The Rural Housing Service (RHS) today proposed to amend its regulations for the Guaranteed Rural Rental Housing Program (GRRHP). Under this program, RHS guarantees loans for the development of housing and related facilities for low- or moderate-income families in rural areas. The GRRHP regulations are being amended to allow RHS, in the case of a default, to buy back guaranteed loans from investors. Another change includes lowering the minimum level of rehabilitation work when guaranteed loans are used for acquisition and rehabilitation. RHS says these regulatory changes are made to increase participation by the secondary mortgage market in the GRRHP. Click here for the proposed rule.

Sacramento, Calif. - June 9, 2003

The California Tax Credit Allocation Committee (TCAC) announced last week that it considered 92 applications requesting a total of more than $73 million in federal LIHTCs and $63 million in state tax credits in the first round of low-income housing tax credit (LIHTC) allocation. TCAC had a total of $24.7 million in federal LIHTCs and $27 million in state tax credits available in the first round. Of the 92 applicants, 38 projects received tax credit allocations that will result in 2,344 affordable apartments. Related materials can be found in the “Additional Documents” column at www.novoco.com/QAP.shtml.

Washington - June 5, 2003

The U.S. Department of Housing and Urban Development (HUD) today invited industry comments about the Multifamily Housing Mortgage and Housing Assistance Restructuring (Mark-to-Market) Program. The Mark-to-Market Program reduces Section 8 rents to market and restructures debt as necessary to preserve low-income rental housing affordability while reducing the long-term costs of federal rental assistance and minimizing the adverse effect on the FHA insurance funds. HUD is seeking comments on Forms HUD-9624 and HUD-9625, which are used to determine the eligibility of FHA-insured multifamily properties for participation in the program and the terms on which participation should occur. Click here for a copy of the notice and details about submitting comments.

Washington - June 3, 2003

This week, the U.S. Department of Agriculture's Rural Housing Office published an 82-page proposed rule in the Federal Register that, if implemented, will replace nearly all of the existing Multi-Family Housing (MFH) program regulations for Section 515 Rural Rental Housing and Section 514/516 Farm Labor Housing. The proposed rewrite covers loan making, loan servicing (including prepayment) and property management.  According to the notice, the intent of the proposal is to streamline and consolidate USDA's MFH rules. Comments will be accepted through August 1, 2003. For more information, click here.

May

Washington - May 29, 2003

The U.S. Department of Housing and Urban Development yesterday published the proposed Section 8 Fair Market Rents (FMRs) for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program for fiscal year 2004. Comments on the proposed rents are due by June 27, 2003. The final FMRs will go into effect October 1, 2003, the start of the 2004 fiscal year. FMRs are used 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 - May 28, 2003

Rep. Danny Davis (D-Ill.) this month introduced a bill to provide for a temporary low-income housing credit to encourage the provision of housing, job training and other essential services to ex-offenders through a structured living environment designed to assist the ex-offenders in becoming self-sufficient. H.R. 2166, the Public Safety Ex-Offender Self-Sufficiency Act of 2003, currently has 11 co-sponsors and was referred to the House Committee on Ways and Means upon introduction.

Washington - May 27, 2003

The House Committee on Financial Services approved two high-profile affordable housing bills last week by voice vote. H.R. 1276, the American Dream Downpayment Act, would provide $200 million in grant funds for low-income, first-time homebuyers across the United States. The grants would be distributed through the Department of Housing and Urban Development’s (HUD) HOME program. HUD estimates that the $200 million would assist approximately 40,000 low-income families with downpayment and closing costs on their homes. The committee also approved H.R. 1614, the HOPE VI Program Reauthorization and Small Community Main Street Rejuvenation and Housing Act, which would provide public housing authorities with incentives to form partnerships and create mixed-income affordable housing.

Washington - May 23, 2003

The efforts of affordable housing advocates who hastened to protect the low-income housing tax credit (LIHTC) from proposals included in H.R. 2, the Jobs and Growth Reconciliation Tax Act, have paid off. The Senate today approved the final tax bill conference agreement by a 51 to 50 vote, with Vice President Dick Cheney breaking the tie; the House approved the bill earlier this morning on a vote of 231 to 200. The tax cut for dividends included in the final bill is not expected to have an adverse effect on LIHTC investment. The package totals $320 billion in tax cuts and $20 billion in aid to state and local governments. Click here for the final version of H.R. 2, as approved by Congress.

Washington - May 16, 2003

The Senate last night passed H.R. 2, the Jobs and Growth Reconciliation Tax Act, by a vote of 51 to 49 after substituting the original language with the text of S. 1054 and voting on numerous amendments, including Amendment No. 622 offered by Sen. John Ensign (R-Nev.) to repeal the tax credit under §47 of the Internal Revenue Code for rehabilitation of non-historic structures. The amendment does not affect the rehabilitation tax credit for historic structures; it was passed by a vote of 75 to 25.

Although neither the House nor Senate versions of the bill feature a dividend tax exclusion that will threaten investment in the low-income housing tax credit (LIHTC), the legislation has another hurdle - bicameral conference negotiations - before it is finalized. However, the Senate last night also approved Amendment No. 672, a non-binding Sense of the Senate Resolution offered by Sen. Jack Reed (D-R.I.), that LIHTCs be protected in the final version that emerges from conference. The amendment was co-sponsored by Sens. Jon Corzine (D-N.J.), Barbara Mikulski (D-Md.), John Kerry (D-Mass.), John Rockefeller (D-W.V.), Mary Landrieu (D-La.) and Paul Sarbanes (D-Md.).

Washington - May 15, 2003

The Internal Revenue Service (IRS) this week published proposed regulations on the definition of private activity bond applicable to tax-exempt bonds issued by state and local governments. These regulations affect issuers of tax-exempt bonds and provide needed guidance for applying the private activity bond restrictions to refunding issues. The IRS also announced a public hearing and invited public comments on these proposed regulations. Click here for the proposed regulations and instructions on submitting comments.

Sacramento, Calif. - May 12, 2003

The California Debt Limit Allocation Committee (CDLAC) last week released a list of applicants for tax-exempt bonds in the second round of allocations for the qualified residential rental project pool. Applications for the third and final allocation round are due Wednesday, July 16 and awards will be made in September. Novogradac & Company LLP will host two tax-exempt bond application workshops — June 19 in Los Angeles and June 20 in San Francisco — for third-round California applicants.

Washington - May 9, 2003

The House of Representatives today approved H.R. 2 by a 222-203 vote. In the House version of President Bush's "jobs and growth" package, taxes paid on stock dividends and capital gains would be lowered to 15 percent for most taxpayers and 5 percent for lower income filers. Senate Finance Committee members yesterday voted 12-9 to clear an amended version of the package featuring $421 billion in tax cuts and $71 billion in revenue offsets. The Senate is expected to consider the bill May 12; the Senate version includes an $85 billion dividend tax cut, acceleration of tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001, an increase in the individual alternative minimum tax exemption, and $20 billion to fiscally ailing state and local governments.

Washington - May 8, 2003

Senate Finance Committee Chair Charles E. Grassley (R-Iowa) yesterday secured sufficient votes to ensure that a scaled-back version of President Bush's proposed dividend tax cut will be included in the committee's version of H.R. 2, the "Jobs and Growth Reconciliation Tax Act of 2003. Grassley says the cost of the dividend cut - which will cost more than $80 billion over 10 years - will be offset by up to $85 billion in new revenue sources. H.R. 2 would also increase to 50 percent the 30 percent bonus depreciation provision enacted under the Job Creation and Worker Assistance Act of 2002, extend it by one year and expand the rapid depreciation provisions for which rental real estate partnerships have been eligible. The Finance Committee is scheduled to mark-up H.R. 2 today.

Washington - May 6, 2003

Republican tax writers in the Senate included a dividend tax cut in the first draft of their legislation, putting it a step closer to President Bush's outline for economic growth. Bush welcomed what he called "some progress" in Congress but argued for more.

The elimination of taxes on stock dividends has run into serious opposition in the Republican-controlled Senate. Some Republicans wanted to phase in such a break or place limits on it. In response, Finance Committee Chairman Charles Grassley, R-Iowa, inserted a three-year version of the president's tax proposal to eliminate dividend taxes into his bill as a placeholder. In Grassley's version, taxes on dividends are eliminated for one year in 2005 and the tax is reduced in 2003 and 2004 at a cost of $90 billion. Republicans will have until Thursday's committee debate to rewrite the idea to make it fit in their $350 billion tax cut. Click here for the Joint Committee on Taxation’s description of the Senate Finance Committee’s version of the package. 

To learn more about how this proposal could impact the low-income housing tax credit (LIHTC) program, click here.

Washington - May 6, 2003

Rep. Nancy Johnson (R-Conn.) last week introduced a bill to amend §42 the Internal Revenue Code to clarify the eligibility of certain expenses for the low-income housing credit (LIHTC). H.R. 1928 would allow associated development costs to be taken into account when determining the basis of LIHTC buildings. Click here for a copy of H.R. 1928.

Boston - May 2, 2003

Mayor Thomas Menino, president of the U.S. Conference of Mayors, this week called for President George W. Bush to convene a bipartisan summit of government, business and labor leaders in the next 60 days to come up with a national economic revitalization plan. He also suggested Bush choose "good tax cuts" such as boosting the low-income housing tax credit (LIHTC), rather than eliminating the tax on dividends, which Menino says will make the LIHTC "unworkable." Click here to read his comments to the National Press Club.

Washington - May 1, 2003

Legislation introduced this week by Sen. Wayne Allard (R-Colo.) and Rep. Bob Ney (R-Ohio) would radically restructure the Section 8 Housing Choice Voucher program. If passed, S. 947 and H.R. 1841, would rename the voucher program Housing Assistance for Needy Families (HANF) and the federal government would no longer have an obligation to fund individual vouchers. Instead, the program would be converted into a block grant, in which states would receive funds that they would then allocate to housing authorities or other local providers.

April

Washington - April 30, 2003

The House Financial Services Housing Subcommittee, chaired by Rep. Bob Ney (R-Ohio), yesterday held a hearing to examine HOPE VI, a housing program that targets the demolition and revitalization of severely distressed public housing units. HOPE VI is administered by the Department of Housing and Urban Development (HUD) and was not funded in the fiscal year 2004 budget. A bill introduced by committee members Reps. James A. Leach (R-Iowa) and Mel Watt (D-N.C.), H.R. 1614, would reauthorize the program and open the funds, which are aimed at urban housing developments, to smaller communities as well. Michael Liu, HUD’s assistant secretary of public and Indian housing and Renee Glover, executive director of Atlanta Public Housing and president of the Council of Large Public Housing Authorities were among the witnesses scheduled to testify. Click here for their prepared testimony.

Washington - April 24, 2003

The U.S. Department of Housing and Urban Development (HUD) this week announced the availability of more than $2.3 billion in funding to serve homeless persons, produce affordable housing, stimulate economic development and protect children from the dangers of lead poisoning. That figure includes $64 million available for the Assisted Living Conversion program for eligible multifamily projects; $473.8 million for Section 202 supportive housing for the elderly; and $116.8 million for Section 811 supportive housing for persons with disabilities. Click here for details.

Raleigh, N.C. - April 21, 2003

The State Supreme Court of North Carolina overturned a decision of the North Carolina Court of Appeals requiring counties to consider rent restrictions when assessing low-income housing tax credit (LIHTC) properties. The court ruled that the taxpayer — Greens of Pine Glen, Ltd. — failed to prove that the assessment was illegal or arbitrary and stated that the tax assessor did not have to consider the rent restricted nature of the project when assessing the project. Attorneys for the Greens of Pine Glen argued that rent restrictions are similar to zoning provisions and are typically taken into account on assessments. Click here for a copy of the ruling.

Washington - April 18, 2003

The current demographic profile of the “typical American household” can be expected to change dramatically over the coming decades, according to three papers on demographic trends shape both housing demand and supply over the coming decades released this week. These papers, commissioned by the U.S. Department of Housing and Urban Development (HUD), review past immigration patterns, how assumptions about future immigration can influence population predictions, and current and future trends in households’ age and minority compositions. Click here for a copy of the papers.

Washington - April 17, 2003

Even without taking economic growth into account, the impact of President George W. Bush’s proposed Growth and Jobs Plan on the low-income housing tax credit (LIHTC) and other housing programs is likely to be small, says Assistant Treasury Secretary for Tax Policy Pamela F. Olson in a letter to National Council of State Housing Agencies (NCSHA) Executive Director Barbara Thompson last week. The letter was sent in response to correspondence from Thompson alerting the Treasury Department to an error in the report, “Estimated Impact of the Major Components of the Bush Administration's Growth and Jobs Plan on Housing and the Economy,” released by the Mortgage Bankers Association of America, which found that the dividend exclusion proposal would have a “limited effect” on the LIHTC. Click here for copies of the letters.

Washington - April 15, 2003

Energy conservation legislation passed last week by the House of Representatives would provide builders with a voluntary tax credit of $2,000 for each new home built that is 30 percent above the 2000 International Energy Conservation Code (IECC). H.R. 6 also provides consumers a tax credit of up to $2,000 on the cost of qualified home remodeling projects that improve energy efficiency. A Senate energy tax package is still in committee and is not expected to be ready for a vote on the full Senate floor until later this spring. The National Association of Home Builders (NAHB) says when the bills are considered in a conference committee, it will lobby to restore a tax credit of $2.25 per square foot for multifamily buildings that are 50 percent more efficient than properties built to standards of the American Society of Heating, Refrigerating and Air-Conditioning Engineers; this credit was dropped from H.R. 6 prior to passage.

Washington - April 14, 2003

Congress is expected to resume deliberation on a fiscal year 2004 budget bill when it returns from its recess the week of April 28th. Legislation passed last week instructs the House Ways and Means Committee and the Senate Finance Committee to complete work on a tax bill by May 8th. The committees have yet to reconcile the differences between the House’s proposed $550 billion tax cut and the Senate’s suggested tax cut of only $350 billion. It is still uncertain whether President George W. Bush’s proposal to exclude certain corporate dividends from federal taxation will be included in the final tax cut reconciliation legislation. In addition, the final budget plan contains $784.5 billion in total discretionary spending, which is a 2.4 percent increase over the fiscal year 2003-enacted level of $765 billion.

Washington - April 9, 2003

The Internal Revenue Service (IRS) is soliciting comments concerning Form 8611, Recapture of Low-Income Housing Credit. IRC §42 permits owners of residential rental projects providing low-income housing to claim a low-income housing tax credit (LIHTC) against their income tax. If the LIHTC property is disposed of or if it fails to meet certain requirements throughout a 15-year compliance period and a bond is not posted, the owner must use Form 8611 to recapture part of the credits taken in prior years. There are no changes being made to the form at this time, but comments will be accepted on or before June 9, 2003 and should be submitted to P. Kirkland, Internal Revenue Service, Room 6411, 1111 Constitution Avenue N.W., Washington, D.C. 20224. Click here for today’s Federal Register notice. Click here for a copy of Form 8611.

Sacramento, Calif. - April 8, 2003

The California Tax Credit Allocation Committee (TCAC) received 93 applications for the first round of low-income housing tax credit (LIHTC) allocation, requesting a total of $73,294,842 in federal credits and $62,203,697 in state credits. In the first round this year, TCAC has approximately $25 million available in federal tax credits and $27 million in state tax credits. Click here for the list of applicants.

March

Washington - March 31, 2003

To validate the findings of its report on the impact of President George W. Bush’s economic growth proposal on investment in low-income housing tax credits (LIHTC), Ernst &Young provided the Mortgage Bankers Association of America (MBA) with a clarification of certain simplifying financial assumptions incorporated in that report, according to a copy of a Multifamily Alert sent to MBA members. MBA also says it is working to address the proposal’s impact on LIHTC pricing. Click here for details.

Washington - March 26, 2003

The Senate yesterday in a 56-44 vote approved a concurrent resolution on the fiscal year 2004 budget featuring $350 billion in tax cuts. The House last week passed a budget that called for $726 billion in tax cuts - the full Jobs and Growth plan proposed earlier this year by President George W. Bush. The Senate version, S. Con. Res. 23, is capped at $350 billion, which could effectively eliminate the proposed dividend tax exclusion. The bills will now be sent to a bicameral budget conference where the House and Senate must resolve the differences between the two versions and the White House is expected to actively lobby key Republican Senators to assess what they believe they can accept in the House/Senate budget agreement. For the text of both versions, click here.

Austin - March 25, 2003

The Texas Department of Housing and Community Affairs (TDHCA) will hold a series of five public hearings April 1-7 to accept public comment on applications received for the 2003 low-income housing tax credit (LIHTC) program allocation. The hearings are scheduled for El Paso, Harlingen, Austin, Houston and Arlington. The LIHTC program is the state’s primary means of directing private capital toward the creation or rehabilitation of affordable multifamily rental housing and has helped create more than 96,000 units of affordable housing since its inception in 1987. The hearings will provide the public an opportunity to comment on 121 applications received by TDHCA for the 2003 allocation, as well as department LIHTC program practices and procedures. Click here for details.

Washington - March 21, 2003

The House of Representatives yesterday approved, by a vote of 215 - 212, a concurrent resolution on the fiscal year 2004 budget, which is intended to jumpstart stronger economic growth and, according to the House Ways and Means Committee, brings the budget into balance in fewer than 10 years. H. Con .Res. 95  also accommodates President George W. Bush’s entire $726 billion proposed economic growth and jobs package, including the exclusion of certain corporate dividend payments from federal taxation, and makes permanent tax relief measures enacted in 2001. The bill now goes to the Senate, which is expected to act on it shortly. Click here for a copy of H. Con. Res. 95.

Washington - March 18, 2003

The Internal Revenue Service (IRS) released Notice 2003-16, which informs state and local housing credit agencies that allocate low-income housing tax credits (LIHTCs) under § 42 of the Internal Revenue Code, as well as states and other issuers of tax-exempt private activity bonds under § 141, of the proper population figures to be used for calculating the 2003 calendar year population-based component of the state LIHTC ceiling under § 42(h)(3)(C)(ii), the 2003 calendar year volume cap under § 146, and the 2003 volume limit under § 142(k)(5). Click here for Notice 2003-16 and the IRS’ 2003 calendar year resident population estimates.

Oklahoma City - March 12, 2003

A bill that would have required voter approval before apartment developers using low-income housing tax credits (LIHTC) to finance projects could begin construction was rejected on the Oklahoma House floor this week in a 39-59 vote. House Bill 1561, by Rep. Kevin Calvey (R-Del City), would have required developers of LIHTC projects to notify residents who live within the six square miles surrounding a proposed development before beginning a project. Those residents would then have had to approve the housing in a public vote funded by the developer. Upon the bill’s rejection, Calvey indicated he may bring the bill up for reconsideration, a procedural move that could allow a second vote. Click here for the text of H.B. 1561.

Washington  - March 11, 2003

While it is clear that the Bush administration’s proposed exemption of certain corporate dividends from federal taxation would have some impact on low-income housing tax credit (LIHTC) investment, it is still unclear how significant that impact would be, according to a report issued this week by the Mortgage Bankers Association of America (MBA). In an appendix to its report, “Estimated Impact of the Major Components of the Bush Administration’s Growth and Jobs Plan on Housing and the Economy,” MBA examines the numerous factors affecting LIHTC investment and pricing and suggests these factors may be sufficient to mitigate any negative effect of the dividend exclusion proposal. Click here for a copy of the report.

Washington  - March 6, 2003

Rep. Melvin Watt (D-N.C.) last week introduced legislation to reauthorize the HOPE VI program for the revitalization of severely distressed public housing. HOPE VI is a federal grant program that was created in by Congress in 1992 and administered by the U.S. Department of Housing and Urban Development (HUD). It was not funded in the proposed fiscal year 2004 budget, but H.R. 1077 would extend the program through September 30, 2005. Click here for a copy of the bill.

Washington  - March 6, 2003

Reps. Bernard Sanders (I-Vt.), Robert Simmons (R-Conn.), and Barbara Lee (D-Calif.) yesterday introduced a bill authorizing creation of a national housing trust fund that would emphasize production and preservation of rental units for the lowest-income tenants. H.R. 1102 was introduced with 161 cosponsors. Supporters, including the National Low Income Housing Coaltion, contend that such a fund would build and preserve 1.5 million units of rental housing for the lowest income families over the next 10 years. The text of H.R. 1102 will be posted at www.novoco.com/Legislations as soon as it becomes available.

Washington  - March 5, 2003

In a hearing today, the House Financial Services Committee, chaired by Rep. Michael G. Oxley (R-Ohio), will examine the Bush Administration’s fiscal year 2004 budget for U.S. housing agencies. The Committee will examine budget proposals for the Department of Housing and Urban Development (HUD), the Department of Agriculture’s Rural Housing Service (RHS), the Neighborhood Reinvestment Corporation and the National Flood Insurance Program. The administration proposed a $31.3 billion budget for HUD in 2004, which includes several reform measures such as converting Section 8 tenant-based housing vouchers to state-managed block grants, the creation of a Federal Housing Administration mortgage insurance product for sub-prime mortgage markets and the elimination of the HOPE VI public housing program, among others. Click here to read a related discussion on the fiscal year 2004 budget in the March Washington Wire. 

Washington - March 4, 2003

During U.S. Treasury Department Secretary John Snow’s testimony before a House Ways and Means Committee hearing today on President George W. Bush’s economic growth proposal, committee member Rep. Nancy Johnson (R-Conn.) noted that there was a “good deal of concern” on the interaction of the administration’s dividend exclusion proposal with the construction of affordable housing. Snow testified that he expects the “effect will be quite modest” but says he looks forward to working with Johnson on her concerns about the proposal’s potential impact on the low-income housing tax credit. Assistant Secretary for Tax Policy Pamela Olson and Assistant Secretary for Economic Policy Richard Clarida were also slated to testify. The hearing will continue March 5-6 and 11. For a description of the proposal and other relevant materials, click here.

Washington  - March 3, 2003

On February 13, Rep. Rob Portman (R-Ohio) introduced the Renewing the Dream Tax Credit Act, H.R. 839, to create a new, state-administered homeownership development credit much like the credit the Bush Administration has proposed for the third consecutive year in its fiscal year 2004 budget. The bill is nearly identical to H.R. 5052, introduced in the 107th Congress. It would establish a homeownership development tax credit, modeled after the low-income housing tax credit (LIHTC), that state housing finance agencies would award developers of for-sale housing in state-designated areas of chronic economic distress, census tracts with median incomes that do not exceed 80 percent of the greater of area or statewide median income, rural areas and Indian reservations. The text of H.R. 839 is available at www.homeownertaxcredit.com.

February

Washington  - February 28, 2003

Rep. Bill Thomas (R-CA), chairman of the Ways and Means Committee, during a news conference with Treasury Secretary John Snow this morning, introduced legislation offering tax relief intended to generate jobs and economic growth. The bill, H.R. 2, includes the elimination of the double taxation of corporate earnings. Sen. Don Nickels (R-Okla.) introduced a similar bill, S. 2, in the Senate. In his news conference, Thomas promised "as extensive hearings as we ever have." Ways and Means has scheduled a four-part hearing to examine the economic growth proposals, including the proposal to exclude certain corporate dividend payments from federal income taxes. The hearings will take place March 4-6 and 11 before the full committee. For a copy of the proposed legislation, click here.

Washington  - February 26, 2003

Rep. Bill Thomas (R-Calif.) this week announced that the House Committee on Ways and Means will hold a four-part hearing to examine the economic growth proposals included in the Bush administration’s fiscal year 2004 budget, including the proposal to exclude certain corporate dividend payments from federal income taxes. The hearings will take place March 4-6 and 11 before the full committee. As tentatively scheduled, the dividend exclusion proposal would be heard in the third segment, planned for March 6. Only invited witnesses’ testimony will be heard, but written statements will be accepted for consideration by the Committee or for inclusion in the printed record of the hearing.  Written statements can be sent electronically to hearingclerks.waysandmeans@mail.house.gov, and a copy faxed to (202) 225-2610, by the close of business on Tuesday, March 18, 2003.

Washington  - February 26, 2003

Thirty-five percent fewer low-income housing tax credit (LIHTC) apartments - 40,000 fewer apartments serving about 100,000 residents - would be produced annually if the dividend exclusion proposal included in President George W. Bush's Jobs and Growth Package were enacted as proposed, according to a new study by Ernst & Young and commissioned by the National Council of State Housing Agencies (NCSHA). "The Impact of the Dividend Exclusion Proposal on the Production of Affordable Housing" was released yesterday and NCSHA says the study objectively documents the unintended adverse impact the proposed dividend tax exclusion would have on the production of affordable rental housing in the U.S. For a copy of the study, as well as a letter sent from NCSHA to U.S. Treasury Secretary John Snow, and other relevant materials, click here.

Washington  - February 25, 2003

The California Tax Credit Allocation Committee (TCAC) last week published applications for 4 percent and 9 percent low-income housing tax credit (LIHTC) allocation, as well as several other important documents including market study guidelines and a Placed in Service Package. Click here to download the applications and other relevant materials.

Washington  - February 21, 2003

HUD today released median family income and income distribution estimates for Fiscal Year 2003 (FY 2003). They are calculated for each metropolitan and nonmetropolitan area using the Fair Market Rent (FMR) area definitions applied in the Section 8 Housing Choice Voucher Program. The estimated median family income for the United States for FY 2003 is $56,500. For details click here.

Washington - February 20, 2003

Marking the fastest pace of housing construction in 16 years, builders began work on 1.85 million housing units in January, according to Commerce Department figures released this week. The bulk of this activity was in the single-family sector, as multifamily housing starts declined 7.6 percent to a 340,000-unit rate following a 3.1 percent rise posted in December.

Washington - February 14, 2003

Congress yesterday passed a $397.4 billion fiscal year 2003 omnibus spending bill covering 11 of the 13 appropriations measures, including funding for the U.S. Department of Housing and Urban Development (HUD), that the last Congress failed to pass last session. HUD is funded at a total program level of $36.3 billion, an increase of $1.8 billion over fiscal year 2002. The House voted 338 to 83 and the Senate approved the package by a 76 to 20 vote; President Bush is expected to sign the measure. Click here for the text of the bill. In related news, the Boston Globe today reports that HUD secretary Mel Martinez, in his announcement of Bush’s 2004 budget proposal, indicated that the administration plans to shift its focus away direct federal involvement in housing in favor of fostering involvement by states, local governments and private groups.

Washington - February 12, 2003

A coalition of nine national housing organizations this week laid out a dynamic plan that calls on Congress and the Bush Administration to take immediate and specific actions to stimulate the production and preservation of affordable housing, create new jobs and spur economic growth. The coalition, formed under the auspices of the National Housing Conference (NHC), recommends implementing a homeownership tax credit, like the one proposed by President Bush in his fiscal year 2004 budget; calls for a new multifamily production program to expand and preserve the supply of affordable rental housing in mixed-income communities; and recommends enhancements to the low-income housing tax credit (LIHTC), the HOME Investment Partnerships program (HOME), and the mortgage revenue bond (MRB) program. More information will also be available in the March issue of the LIHTC Monthly Report.

Chicago - February 11, 2003

In an effort to spur mixed-income housing development that meets the housing endorsement criteria recently adopted by the Metropolitan Mayors Caucus, the Illinois Housing Development Authority (IHDA) and the Metropolitan Planning Council (MPC) as well as the Chicago, Cook County and Lake regional housing authorities have joined to form the Regional Housing Initiative (RHI). RHI will attach a new pool of housing subsidies to IHDA’s next low-income housing tax credit (LIHTC) round. During initiative's pilot phase this year, RHI committed subsides to fund 328 apartments within mixed-income communities. Developers who secure a commitment from RHI may improve their score with the LIHTC ranking system. Final applications are due by March 7, 2003. Click here for details.

Oklahoma City - February 7, 2003

Apartment developers in Oklahoma who use low-income housing tax credits (LIHTC) to finance their developments will have to get voter approval before starting development under a state law proposed last month by Rep. Kevin Calvey (R-Del City). House Bill 1561, if approved, would require developers who want to build low-income housing with the help of LIHTCs to notify residents who live within the six square miles that surround the proposed development. Those residents would then have to approve the housing in a public vote that would be funded by the developer. Click here to read the text of the legislation.

Washington, D.C. - February 6, 2003

Senate Finance Committee Chairman Sen. Chuck Grassley (R-Iowa) is working on tax legislation that will incorporate much of President Bush’s economic growth proposal, but says he cannot guarantee that it will include a provision to eliminate double taxation on stock dividends, according to the Daily Tax Report. Meanwhile, the number of housing and community development organizations that have signed a joint letter expressing concern that President George W. Bush’s proposal to eliminate double taxation of corporate dividends could jeopardize the future of the low-income housing tax credit (LIHTC) and other investment programs has more than doubled to 49 groups, up from 20 last week. Click here for a copy of the letter and other relevant materials. If you want to make your voice heard, Novogradac & Company LLP has prepared a letter suitable for sending to your Congressperson. Click here for a copy of that letter.

Washington, D.C. - February 3, 2003

While Congress has yet to approve fiscal year 2003 appropriations for the U.S. Department of Housing and Urban Development (HUD), President Bush has proposed a $31.3 billion budget for HUD in fiscal year 2004. The budget includes a single-family affordable housing tax credit of up to 50 percent of the cost of new construction or rehabilitation of single family homes targeted to low-income households earning less than 80 percent of an area’s median income. The proposal also provides for a new state block grant for Section 8 vouchers and the end of HUD’s HOPE VI program for severely distressed public housing.

January

Washington, D.C. - January 30, 2003

A collaboration of more than 20 housing and community development organizations this week issued a joint letter expressing concern that President George W. Bush’s proposal to eliminate double taxation of corporate dividends could jeopardize the future of the low-income housing tax credit (LIHTC) program. The group reports that corporate investment accounts for more than 98 percent of the equity capital generated by the housing credit, and NCSHA’s preliminary analysis suggests that if Congress enacts the proposal corporations would forgo LIHTC investments in favor of maximizing the distribution of tax-free dividends to shareholders. To read the joint letter, click here. For more information on the proposal and the industry’s reaction to it, click here.

Sacramento, Calif. - January 27, 2003

In an effort to assure that there is sufficient allocation to fund all viable general pool projects in program year 2003, the California Debt Limit Allocation Committee (CDLAC) adopted adjustments to its allocation process earlier this month, which among other things, set the allocation amount for the general pool in the third round higher than the first two rounds. The multifamily housing pool will receive more than 54 percent of the state cap, or about $1,436,000,000; 30 percent of that will be available in each of the first two rounds and 40 percent will be available for the third round. Click here for more information.

Washington, D.C. - January 24, 2003

The U.S. Department of Housing and Urban Development (HUD) this week published fiscal 2003 Section 8 contract rent annual adjustment factors (AAFs) for contract rents on housing assistance payment contracts. The AAFs are based on a formula using data on residential rent and utilities cost changes from the most current Bureau of Labor Statistics consumer price index (CPI) survey and from HUD’s random digit dialing (RDD) rent change surveys; they went into effect January 22, 2003. Click here for the notice.

Sacramento, Calif.  - January 23, 2003

The California Tax Credit Allocation Committee (TCAC) this week published a second draft of its regulations for the low-income housing tax credit (LIHTC) program in 2003. TCAC recently held two public meetings and accepted comments on the revised guidelines. Changes include eliminating extra points for proposals in areas without recent tax credit development; establishing greater differentiation in distances, times and types of amenities in the site amenities category; and reconfiguring the geographic regions using new census data and various indices of “need.” Click here for the latest draft regulations.

San Francisco - January 20, 2003

Since its announcement early this year, concern has grown in the affordable housing and community development industries over the potential negative impact of the Bush administration’s proposed exemption of corporate dividend payments from federal income taxes. Novogradac & Company LLP has prepared an analysis of the possible effects of the plan on real estate tax credits, such as the low-income housing tax credit (LIHTC). To read that analysis, click here. To read the Treasury Department’s description of the proposal, click here.

Washington, D.C. - January 14, 2003

President Bush’s proposal to exclude certain corporate dividend payments from federal income taxes could have “a catastrophic impact” on the low-income housing tax credit (LIHTC) program, says Rep. Charles Rangel (D-N.Y.). In a letter to Department of Housing and Urban Development (HUD) secretary Mel Martinez, Rangel, the ranking Democrat on the Ways and Means Committee, warns that the president’s stimulus package is “unfair and reckless” and requests Martinez’ “urgent assistance in changing the proposal or clarifying its impact so that the low-income housing tax credit program can maintain its record of effectiveness.” Click here to read a copy of the letter.

Washington, D.C. - January 13, 2003

Reps. Amo Houghton (R-N.Y.) and Richard Neal (D-Mass.) last week reintroduced the Housing Bond and Credit Modernization and Fairness Act, H.R. 284. The bill would repeal the mortgage revenue bond (MRB) 10-Year Rule, reform the MRB purchase price limit, and make low-income housing tax credit (LIHTC) development possible in very low-income, especially rural, areas. The bill is identical to H.R. 951, which Houghton and Neal introduced in the 107th Congress. Eighty-two percent of the members of Congress cosponsored that bill. Sens. Orrin Hatch (R-Utah) and John Breaux (D-La.) are expected to reintroduce an identical bill in the Senate shortly. The text of H.R. 284 will be posted at http://www.novoco.com/Legislations/ as soon as it becomes available. To view the identical text from H.R. 951, introduced last session, click here.

Raleigh, N.C. - January 8, 2003

The North Carolina Housing Finance Agency (NCHFA) has issued additional guidance regarding the state’s 2003 low-income housing tax credit (LIHTC). The new state tax credit is different from the federal low-income housing tax credit — and from the state credit in effect prior to 2003 — in that it is not an investment. The document contains explanatory text, excerpts from the qualified allocation plan (QAP) and the state statute.

Washington, D.C. - January 7, 2003

The U.S. Department of Housing and Urban Development (HUD) yesterday published a proposed rule to revise regulations that impose barriers to the participation of faith-based organizations in HUD programs. HUD calls such barriers “unwarranted” and says the changes would implement the department’s policy that, within the framework of constitutional church-state guidelines, faith-based organizations should be able to compete on an equal footing with other organizations for HUD funding. The changes would affect subsidies including HUD’s HOME Investment Partnerships and Community Development Block Grants (CDBG) programs. Click here for the Federal Register notice.

Washington, D.C. - January 2, 2003

On December 27, 2002 , the U.S. Department of Agriculture Rural Housing Service (RHS) issued its fiscal year 2003 request for applications on all four of its multifamily housing programs. Although the federal budget process is still pending, RHS is now accepting applications in anticipation of funding. The programs administered by RHS include Section 514/516 Farm Labor Housing Loans & Grants, Section 538 Guaranteed Rural Rental Housing Loans, Section 515 Rural Rental Housing Loans and Section 533 Housing Preservation Grants. For more information, click here.