Low-Income Housing Tax Credits:

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2010

December

CONGRESS PASSES TAX EXTENDERS PACKAGE

Washington, D.C. – December 17, 2010

The House last night passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 by a vote of 277-148. The Senate approved the bill on December 15 by a vote of 81-19. The president is expected the sign the bill into law today. The final measure extends for one year through 2011 of the placed in service date for GO Zone low-income housing tax credit (LIHTC) properties. Prior to the final Senate vote, Senator Mary Landrieu, D-La., secured a bipartisan agreement with Senate Finance Committee Chairman Max Baucus and Republican Whip Jon Kyl to further extend the LIHTC placed in service deadline for GO Zone properties to January 1, 2013 in a tax technical corrections bill early next year. The tax extenders bill passed yesterday did not extend the Section 1602 LIHTC cash grant exchange program or include funding for the National Housing Trust Fund. 

Join Novogradac & Company for the 17th Annual Tax Credit Developers Conference on January 20-21, 2011 in Miami, Fla. to hear more about the provisions included in the tax extenders legislation and what they mean for LIHTC development, as well as what the affordable housing community’s legislative priorities will be in 2011.

TAX EXTENDERS PACKAGE INTRODUCED IN SENATE

Washington, D.C. – December 10, 2010

Senate Majority Leader Harry Reid, D-Nev., last night introduced the  Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, a bill to extend current tax rates for all income levels, extend unemployment insurance benefits and temporarily reduce Social Security taxes. The bill also includes a one year extension through 2011 of the Section 1603 grant in lieu of energy tax credit program, a two year extension through 2011 of the new markets tax credit (NMTC) at a level of $3.5 billion each year, a two year extension of the increase in the rehabilitation tax credit for property placed in service through the end of 2011 in the Gulf Opportunity (GO) Zone, an extension for one year through 2011 of the placed in service date for GO Zone low-income housing tax credit (LIHTC) properties, and an extension for one year through 2011 of bonus depreciation for GO Zone property.

The Senate bill introduced yesterday does not include an extension of the Section 1602 LIHTC cash grant exchange program, additional funding for the Section 48C advanced energy manufacturing tax credit, an extension of the Build America Bonds program, a provision to allow the NMTC to offset the alternative minimum tax (AMT), nor any funding for the National Housing Trust Fund.

It is expected that additional changes to the tax extenders package may be made as the House and Senate consider the legislation in the coming days. Follow @Novogradac to get regular updates on the status of the bill, tune in to the Tax Credit Tuesday podcast on December 14 to hear about the latest developments, and join Novogradac & Company for the 17th Annual Tax Credit Developers Conference on January 20-21, 2011 in Miami, Fla. to hear expert discussion and analysis of the measure.

HUD ANNOUNCES AVAILABILITY OF $16 MILLION IN TCAP FUNDS

WASHINGTON, D.C. - December 6, 2010

The U.S. Department of Housing and Urban Development (HUD) announced today that application information, submission deadlines, funding criteria and other requirements for the reallocation of Tax Credit Assistance Program (TCAP) funds are available on its web site. The announcement makes $16 million available to properties that received an award of low-income housing tax credits between October 1, 2006 and September 30, 2009. The information will be at http://portal.hud.gov/portal/page/portal/HUD/recovery/programs/tax.

SEN. BAUCUS INTRODUCES BAB, SECT. 1602 EXTENSIONS

WASHINGTON, D.C. - December 3, 2010

Sen. Max Baucus, D-Mont., yesterday introduced the Middle Class Tax Cut Act of 2010. The act includes extensions of numerous affordable housing, new markets and renewable energy bonds and tax credits. Among other provisions, the bill would extend the Build America Bond program and the Section 1602 tax credit exchange grant program. until 2011. A summary of the bill can be found on Novogradac & Company’s Hot Topics page.

Tune in to the Tax Credit Tuesday podcast on December 7 to hear more about the bill.

November

CTCAC RELEASES NEW TENANT INCOME COLLECTION FORMS

SACRAMENTO, Calif. - November 23, 2010

The California Tax Credit Allocation Committee (CTCAC) today announced a policy change related to the U.S. Housing and Urban Development’s (HUD’s) tenant income collection (TIC) initiative. Low-income housing tax credit (LIHTC) property owners will be required to use one of two forms posted on CTCAC’s Web site to provide the TIC data that HUD requires property owners to collect from tenants as part of the Housing and Economic Recovery Act of 2008. Owners must use the Tenant Income Certification with Supplemental Information Form for all new households who move in on or after January 1, 2011; the form replaces the form CTCAC issued in March 2009. For households residing in units on or before December 31, 2010, owners may use the Supplemental Information Form for Existing Households at all LIHTC properties, including those in their extended use period. Beginning on January 1, 2011, all LIHTC property owners must complete one of the two forms for all households at their properties and transmit the demographic and economic data to CTCAC electronically. Additional information about the TIC forms can be found on CTCAC’s compliance monitoring Web page.

HUD’s tenant data collection initiative will be one of many topics discussed at Novogradac & Company LLP’s Tax Credit Housing Finance Conference on December 2-3 in Las Vegas, Nev. Property owners and managers can also get a more in-depth discussion of the data collection initiative by attending the conference’s two-day Property Compliance Workshop.

HUD INVITES COMMENTS ON PROPOSED RENTAL HOUSING FINANCE SURVEY

WASHINGTON, D.C. - November 19, 2010

The U.S. Department of Housing and Urban Development (HUD) today published a notice soliciting public comments on its 2011 Rental Housing Finance Survey (RHFS). HUD said the RHFS survey results will provide a comprehensive picture of multifamily rental property characteristics that the agency requires to monitor and design housing policies and programs affecting the nation’s multifamily housing stock. Comments on the proposed survey are due on January 18.

ARKANSAS, TENNESSEE ISSUE SECTION 1602 10%, 30% TEST GUIDELINES

LITTLE ROCK, ARK. and NASHVILLE, TENN. - November 12, 2010

The Arkansas Development Finance Authority (ADFA) and Tennessee Housing Development Agency (THDA) have issued guidelines for developers with allocations of low-income housing tax credits (LIHTCs) and Section 1602 tax credit exchange grants.

In an October 29 memo, ADFA informs developers with allocations of LIHTCs and Section 1602 grants that the 30 percent carryover-basis test required by the exchange program can be submitted in lieu of the 10 percent carryover-basis test required by the ADFA’s qualified allocation plan (QAP). ADFA reminds developers that they must incur or expend by December 17, 2010 more than 10 percent of the reasonably anticipated basis of their development by December 31, 2011. Additionally, if any of the buildings are placed in service by December 31, 2010, a completed final cost certification submitted by December 17, 2010 may be submitted instead.

Similarly, THDA announced on November 10 that developers with allocations of LIHTCs and Section 1602 grants could submit their 30 percent carryover-basis test in lieu of the 10 percent carryover-basis test required by the THDA’s QAP. The 30 percent test must be satisfied by December 31, 2010 and the test forms, which are available on the THDA web site, must be submitted by January 5, 2011.

Questions about these requirements, or the requirements in other states, can be directed to CPAs@novoco.com. Additional information about the test requirements can also be found on the Affordable Housing Resource Center on the Recovery Act Hot Topics page.

October

HUD SEEKS COMMENTS ON PROPOSED HOUSING TRUST FUND RULES

WASHINGTON, D.C. - October 29, 2010

The Department of Housing and Urban Development (HUD) today published proposed regulations governing the Housing Trust Fund (HTF). The Housing and Economic Recovery Act established the HTF to provide states with grants to preserve and expand the rental housing supply and increase homeownership for extremely low- and very low-income families. HUD said the HTF will operate much like the HOME program, with formula grants used to develop affordable housing units, and that both programs require the same grantee administration and HUD oversight functions. The agency proposes codifying the HTF regulations into a new subsection of the HOME program regulations to streamline program requirements for grantees. The proposed rule includes general provisions for the Housing Trust Fund as well as definitions, the allocation plan and grantee requirements. Comments on the proposed rule are due by December 28.

IRS INCREASES LIHTC, BOND CAPS FOR 2011

WASHINGTON, D.C. - October 29, 2010

The Internal Revenue Service (IRS) announced in Revenue Procedure 2010-40 the inflation-adjusted low-income housing tax credit (LIHTC) and private activity bond caps for 2011. For calendar year 2011, the amount used under §42(h)(3)(C)(ii) to calculate the state LIHTC is the greater of $2.15 multiplied by the state population or $2,465,000. The amount used under §146(d)(1) to calculate the state ceiling for the volume cap for private activity bonds in 2011 is the greater of $95 multiplied by the state population or $277,820,000.

Tune in to the Tax Credit Tuesday podcast on November 2 to hear more about this change, as well as other news of interest to the LIHTC community.

IRS: NO UNUSED LIHTC CARRYOVER FOR 2010

WASHINGTON, D.C. - October 28, 2010

The Internal Revenue Service (IRS) today issued Notice 2010-74 to inform taxpayers that there is no unused 2010 low-income housing credit (LIHTC) carryover amount to be allocated to qualified states because there is no national pool amount from which LIHTCs can be redistributed. Notice 2010-74 will appear in Internal Revenue Bulletin 2010-46 dated November 15, 2010.

NPS PROPOSES CHANGES TO HISTORIC CERTIFICATION REGULATIONS

WASHINGTON, D.C. - October 15, 2010

The National Park Service (NPS) today proposed amending its procedures for obtaining historic preservation certifications for rehabilitation of historic structures. The proposed rule published in today's Federal Register incorporates references to the revised sections of the Internal Revenue Code containing the requirements for obtaining a tax credit; replaces references to NPS's regional offices with references to its Washington Area Service Office (WASO); requires NPS to accept appeals for denial of certain certifications; and removes the certification fee schedule from the regulation. Comments on the proposed rule will be accepted until December 14, 2010.

Tune in to the October 19 Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, discuss the proposed rule and other news of interest to the tax credit community.

CALIFORNIA ANNOUNCES 4 PERCENT LIHTC FUNDING ROUND

SACRAMENTO, Calif. - October 11, 2010

The California Tax Credit Allocation Committee (TCAC) on October 7 announced a third funding round for federal 4 percent low-income housing tax credits (LIHTCs) with state tax credits. Approximately $30 million in state LIHTCs will be available in this round. Applications are due by 5 p.m. November 3, 2010 and TCAC anticipates presenting funding recommendations at its December 15, 2010 meeting. Properties located outside of federally designated difficult to develop areas and qualified census tracts are eligible for the credits.

IRS INVITES COMMENTS ON EXISTING LIHTC REGULATIONS

WASHINGTON, D.C. - October 4, 2010

The Internal Revenue Service (IRS) today invited public comments on Treasury Decision (TD) 8563, State Housing Credit Ceiling and Other Rules Relating to the Low-Income Housing Credit. TD 8563 provides rules relating to the order in which low-income housing tax credit (LIHTC) dollar amounts are allocated from each state’s housing credit ceiling under Internal Revenue Code section 42(h)(3)(C) and the determination of which states qualify to receive credit from a national pool of credit under section 42(h)(3)(D). No changes are being made to the regulation at this time; the comment request was made as part of the effort to reduce paperwork and respondent burden under the Paperwork Reduction Act of 1995. Written comments should be received on or before December 3, 2010 to be assured of consideration.

HUD PUBLISHES FINAL 2011 FAIR MARKET RENTS

WASHINGTON, D.C. - October 4, 2010

The U.S. Department of Housing and Urban Development today published final fiscal year 2011 fair market rents (FMRs). 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. The 2011 FMRs are effective on October 1, 2010.

Tune in to the October 5 Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, discuss highlights of the new FMRs and their significance for the low-income housing tax credit (LIHTC) community.

September

TCAC PROPOSES CHANGE TO READINESS SCORING REGULATIONS

SACRAMENTO, Calif. - September 30, 2010

The California Tax Credit Allocation Committee (TCAC) yesterday proposed a change regarding readiness scoring. The proposed regulation change would allow nine percent low-income housing tax credit (LIHTC) project sponsors 180 days, rather than the current 150 days, to close their construction period financing and receive issued building permits. TCAC will hold a public hearing on October 5 to discuss the proposal and will also accept written comments through October 22.

GEORGIA REMINDS AWARDEES OF LIHTC, EXCHANGE DEADLINES

ATLANTA, GA. - September 28, 2010

The Georgia Department of Community Affairs (DCA) yesterday issued a reminder that all 9 percent low-income housing tax credit (LIHTC) properties must meet the 10 percent test no later than one year from the tax credit carryover allocation date. For properties receiving Section 1602 funds, if the exchange assistance agreement date is before the LIHTC carryover allocation date, it must meet the 10 percent test no later than the earlier of one year from the tax credit carryover allocation or one year from the date of the exchange assistance agreement. If a property has or will have Section 1602 funding, properties must meet the 30 percent test by December 31, 2010. Four percent LIHTC properties that are financed with tax-exempt bonds will not need to meet the 10 percent test; 4 percent properties with Section 1602 funding must meet the 30 percent test no later than December 31, 2010. DCA has posted the 30 percent test forms to its web site.

Additional information about the test requirements can be found on the Affordable Housing Resource Center on the Recovery Act Hot Topics page. Questions about the 30 percent test in Georgia can also be directed to Chris Key, CPA, at (678) 867-2333.

CONGRESS PASSES SMALL BUSINESS JOBS BILL

NEW YORK, N.Y. - September 23, 2010

The House of Representatives passed H.R. 5297, the Small Business Jobs Act of 2010, today in a 237-187 vote. The measure, which includes $12 billion in tax relief, passed the Senate last week and now awaits President Barack Obama’s signature.

Download the September 21 Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, highlight the bill’s provisions of interest to the tax credit community.

And don’t miss the chance to discuss the Small Business Jobs Act and other developments at Novogradac & Company’s upcoming Affordable Housing Tax Credit Conference in San Francisco, Calif. and the New Markets Tax Credit Investors Conference in Chicago, Ill.

NEW YORK STATE HOUSING AGENCIES CONSOLIDATE

NEW YORK, N.Y. - September 22, 2010

New York’s top housing official Brian Lawlor today announced the merger of nyhomes and the Division of Housing and Community Renewal (DHCR) to form a new organization, New York State Homes and Community Renewal (HCR). Lawlor, now HCR commissioner and CEO, said the integration is expected to better align and coordinate the state’s housing and community development programs and resources. The state has reorganized programs previously administered by the Housing Trust Fund Corporation, the State of New York Mortgage Agency, the Housing Finance Agency, the Affordable Housing Corporation and DHCR into three units – finance and development, housing preservation, and community renewal – that will operate under a single leadership structure. The integration is part of Gov. David Paterson’s directive to consolidate numerous state agencies to reduce costs and increase transparency and accountability. View remarks from the meeting and a presentation online at www.housing.ny.gov.

SENATOR BAUCUS INTRODUCES REVISED TAX EXTENDERS BILL

WASHINGTON, D.C. - September 16, 2010

Senate Finance Committee Chairman Max Baucus today introduced a new version of tax extenders legislation. The Job Creation and Tax Cut Act of 2010 includes provisions from H.R. 4213, the American Jobs and Closing Tax Loopholes Act (also known as the tax extenders bill), including an extension for one year (through 2010) of the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program; a $1 billion, one-time capitalization of the National Housing Trust Fund (NHTF); an extension for one year (through 2010) of the New Markets Tax Credit (NMTC) program; and a provision to allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. Upon the bill’s introduction Sen. Baucus requested unanimous consent, which would have expedited its consideration, but the request was rejected. This means the bill will be subject to consideration on the Senate floor, leaving unclear its chances of passage before the next congressional recess.

To stay updated on the bill’s progress in Congress, follow Michael J. Novogradac, CPA, on Twitter. You can also tune in to the Tuesday Credit Tuesday podcast for weekly updates.

To learn what the tax extender provisions of the Job Creation and Tax Cut Act of 2010 could mean for the low-income housing tax credit community, join Novogradac & Company for the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif.

HUD DESIGNATES DDAS FOR 2011

WASHINGTON, D.C. - September 9, 2010

The U.S. Department of Housing and Urban Development (HUD) today designated difficult development areas (DDAs) for 2011 for purposes of the low-income housing tax credit (LIHTC) under Section 42 of the Internal Revenue Code (IRC). HUD makes new DDA designations annually. LIHTC projects in DDAs or QCTs are eligible for as much as 30 percent more LIHTC subsidy than projects not located in DDAs or QCTs. Today’s notice designates DDAs for each of the 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands. In accordance with the Gulf Opportunity Zone (GO Zone) Act of 2005, GO Zone DDAs expire on December 31, 2010. Thus, today’s notice does not designate GO Zone DDAs. The designations of qualified census tracts (QCTs) under IRC Section 42 published October 6, 2009, remain in effect.

Tune in to the Tax Credit Tuesday podcast on September 14 to hear more about the new 2011 DDAs.

This will also be among the many topics discussed by industry experts at the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif.

FHFA SETS NEW HOUSING GOALS FOR FANNIE, FREDDIE

WASHINGTON, D.C. - September 2, 2010

The Federal Housing Finance Agency (FHFA) announced today that it has sent a final rule to the Federal Register that establishes its 2010 to 2011 housing goals for Fannie Mae and Freddie Mac. In response to market conditions, the FHFA’s final rule set goals lower than initially proposed. The rule sets three multifamily goals: Fannie Mae is to acquire mortgages that finance at least 177,750 low-income rental units and 42,750 very low-income rental units; Freddie Mac is to acquire mortgages that finance at least 161,250 low-income rental units and 21,000 very low-income rental units; and both enterprises must report on their acquisition of mortgages involving low-income units in small (5- to 50-unit) multifamily properties. The rule also changes the way that goal compliance is measured and prohibits using the purchase of mortgages in private-label securities to meet their goals. The final rule will take affect 30 days after it is published in the Federal Register.

Tune in to the next Tax Credit Tuesday podcast to hear more about these housing goals and the other changes included in the FHFA rule.

WISCONSIN SECTION 1602 GRANTEES REMINDED OF 30 PERCENT TEST DEADLINE

MADISON, WIS. - September 1, 2010

The Wisconsin Housing and Economic Development Authority (WHEDA) today circulated a memorandum regarding the 30 percent test to be utilized by owners of projects that have received an award of Section 1602 funds. Recipients of funds awarded under the Recovery Act Section 1602 low-income housing tax credit exchange program that have not expended 100 percent of their Section 1602 funds by December 31, 2010 are to demonstrate that they have paid or incurred at least 30 percent of the project’s total adjusted basis in land and depreciable property by December 31. WHEDA requires a certification be completed by a third party tax or accounting professional in a form provided by the Treasury Department; the last date WHEDA will accept these certifications is January 5, 2011. If a project does not meet this 30 percent test as of December 31, all Section 1602 funds that have not been drawn down by that date to pay for eligible costs incurred will be forfeited by the owner

Join Novogradac & Company at the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif. to discuss the Recovery Act and other LIHTC hot topics.

Questions about meeting the 30 percent test and the documentation requirements in Wisconsin can be directed to your Novogradac & Company representative or Stacey Stewart at (330) 365-5405.

August

IRS INVITES PUBLIC COMMENT ON LIHTC REGULATIONS

WASHINGTON, D.C. - August 30, 2010

The Internal Revenue Service (IRS) today invited public comment regarding PS-19-92 (Final) Carryover Allocations and Other Rules Relating to the Low-Income Housing Credit, TD 9420 - Section 42 Utility Allowance Regulations Update. The regulations provide the IRS the information it needs to ensure that low-income housing tax credits (LIHTCs) are being properly allocated. No changes have been proposed at this time. Written comments should be received on or before October 29, 2010.

PERAB SENDS REPORT ON TAX REFORM OPTIONS TO PRESIDENT

WASHINGTON, D.C. - August 27, 2010

The President’s Economic Recovery Advisory Board (PERAB) today voted unanimously to present the tax reform subcommittee’s “Report on Tax Reform Options: Simplification, Compliance and Corporate Taxation,” to President Barack Obama. The report discusses the pros and cons of a spectrum of reform ideas relating to tax reform, without taking a position on those ideas. There are a number of proposals included in the report, including a discussion of reducing or eliminating tax expenditures. In the tax expenditure discussion, the tax reform subcommittee specifically addresses the low-income housing tax credit. It is important to note that presenting the report to the President does not mean the PERAB supports any of the proposals included in the document.

To hear this report discussed in detail, tune in to the Tax Credit Tuesday podcast on August 31.

The range of proposals being considered related to tax expenditures are discussed in the Washington Wire in the September issue of the Novogradac Journal of Tax Credits, which will be available for download next week.

This topic will also be examined by industry experts at the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif.

OTHER PROGRAM OPTION ADDED TO RENT & INCOME LIMIT CALCULATOR

SAN FRANCISCO, Calif. - August 23, 2010

Novogradac & Company LLP's Rent & Income Limit Calculator© has been updated to include an "Other Program" option. The Rent & Income Limit Calculator© calculates rent and income limits based on U.S. Department of Housing and Urban Development's (HUD) 2010 rent and income limit data. The Other Program option allows users to calculate income and rent limits based on the HUD published area median income (AMI), 30 percent, 50 percent, or 80 percent income limits—and to customize imputed persons per bedroom for rent calculations.

The Rent & Income Limit Calculator© is available with the compliments of Novogradac & Company LLP.

To learn what the 2010 rent and income limits mean for your property, register for Novogradac & Company’s Property Compliance Workshop on September 30 - October 1 in San Francisco, Calif.

HUD FINAL RULE PROHIBITS REQUIRED ESCROWING OF TAX CREDIT EQUITY

WASHINGTON, D.C. - August 23, 2010

The U.S. Department of Housing and Urban Development (HUD) released its final rule today on the prohibition of the escrowing of tax credit equity. The final rule, in accordance with a provision in the Housing and Economic Recovery Act of 2008, bars HUD from requiring the escrowing of equity from the sales of low-income housing tax credits (LIHTCs), historic tax credits (HTCs) and new markets tax credits (NMTCs) for HUD-insured mortgages. Mortgagors will now be able to deposit cash deemed by the Federal Housing Commissioner to be sufficient, when added to the proceeds of the insured mortgage, to assure completion of the project and to pay the initial service charge, carrying charges, and legal and organizational expenses incident to the construction of the project. Additionally, the tax credit equity need not be fully disbursed before the disbursement of mortgage proceeds.

Tune in to tomorrow’s Tax Credit Tuesday podcast to learn more.

INDIANA SECTION 1602 GRANTEES REMINDED OF 30 PERCENT TEST DEADLINE

INDIANAPOLIS, Ind. - August 16, 2010

The Indiana Housing and Community Development Authority (IHCDA) last week released forms for the 30 percent test to be utilized by owners of projects that have received an award of Section 1602 funds. IHCDA also announced the 30 percent test will be due on January 5, 2011.  IHCDA requires recipients of funds awarded under the Recovery Act Section 1602 low-income housing tax credit exchange program that have not expended 100 percent of their Section 1602 funds by December 31, 2010 to demonstrate that they have paid or incurred at least 30 percent of the project’s total adjusted basis in land and depreciable property by December 31. If a project does not meet this 30 percent test as of December 31, all Section 1602 funds that have not been drawn down by that date to pay for eligible costs incurred will be forfeited by the owner.

Join Novogradac & Company at the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif. to discuss the Recovery Act and other LIHTC hot topics.

Questions about meeting the 30 percent test and the documentation requirements in different states can be directed your Novogradac & Company representative or to CPAs@novoco.com.

IRS INVITES COMMENTS ON FORM 8877

WASHINGTON, D.C. - August 12, 2010

The Internal Revenue Service (IRS) is soliciting comments concerning Form 8877, Request for Waiver of Annual Income Recertification Requirement for the Low-Income Housing Credit, as part of an ongoing information collection. No changes to the form have been proposed at this time. Written comments should be received on or before October 12.

SECTION 1602 GRANTEES REMINDED OF 30 PERCENT TEST DEADLINE

SACRAMENTO, Calif. - August 5, 2010

The California Tax Credit Allocation Committee (TCAC) announced today that it is preparing forms for the 30 percent test to be utilized by owners of projects that have received an award of Section 1602 funds. TCAC requires that recipients of funds awarded under the Recovery Act Section 1602 low-income housing tax credit exchange program that have not expended 100 percent of their Section 1602 funds by December 31, 2010 to use these forms to demonstrate that they have paid or incurred at least 30 percent of the project’s total adjusted basis in land and depreciable property by December 31. If a project does not meet this 30 percent test as of December 31, all Section 1602 funds that have not been drawn down by that date to pay for eligible costs incurred will be forfeited by the owner.

Join Novogradac & Company at the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif. to discuss the Recovery Act and other LIHTC hot topics.

Questions about meeting the 30 percent test and the documentation requirements in different states can be directed to Chris Key, CPA, at (678) 867-2333.

July

IRS INVITES GUIDANCE ON SEVERAL LIHTC REGULATIONS

WASHINGTON, D.C. - July 6, 2010

The Internal Revenue Service (IRS) today invited comments concerning existing final regulations, Treasury Decision (T.D.) 8430, Procedure for Monitoring Compliance With Low-Income Housing Credit Requirements; T.D. 8521, Rules To Carry Out the Purposes of Section 42 and for Correcting Administrative Errors and Omissions; and T.D. 8859, Compliance Monitoring and Miscellaneous Issues Relating to the Low-Income Housing Credit. No changes are proposed to the regulations at this time; the comment request was issued as part of the Treasury Department’s continuing effort to reduce paperwork and respondent burden as required by the Paperwork Reduction Act of 1995. Written comments should be received on or before September 7, 2010 to be assured of consideration.

June

SENS. BAUCUS AND LANDRIEU UNVEIL SMALL BUSINESS JOBS ACT

WASHINGTON, D.C. - June 30, 2010

An amended version of H.R. 5297, the Small Business Jobs Act, was released yesterday by Senate Finance Committee Chairman Max Baucus, D-Mont., and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La. The bill’s provisions are meant to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship. Among other things, H.R. 5297 would extend the carryback for general business credits to five years for certain small businesses. Click here for a summary of H.R. 5297 or for more information about the Small Business Jobs Act.

To learn what the Small Business Jobs Act could mean for the low-income housing tax credit community, join Novogradac & Company for the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif.

To stay updated on the bill’s progress in Congress, follow Michael J. Novogradac, CPA, on Twitter. You can also tune in to the Tuesday Credit Tuesday podcast for weekly updates.

TAX EXTENDERS BILL DEFEATED IN SENATE

WASHINGTON, D.C. - June 25, 2010

The Senate yesterday failed to pass H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, also known as the tax extenders bill. The bill was defeated 57 to 41, three votes short of the majority it needed to pass. The bill would have extended the New Markets Tax Credit (NMTC) program for one year and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. It would also have extended the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and made Gulf Opportunity (GO) Zone LIHTCs and Disaster LIHTCs eligible for the program. Reports indicate that Sen. Harry Reid will set aside the tax extender bill for now and instead concentrate on the small business tax bill.

Tune in to the Tax Credit Tuesday podcast on June 29 to hear what the next steps may be for the extenders package.

SENATOR BAUCUS DRAFTS REVISED EXTENDERS BILL

WASHINGTON, D.C. - June 22, 2010

Senate Finance Chairman Max Baucus has released a new Senate amendment substitute for H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, also known as the tax extenders bill. The latest version includes provisions to extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, expand the Section 1602 program to make Gulf Opportunity (GO) Zone LIHTCs and Disaster LIHTCs eligible for the program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for GO Zone LIHTCs. The Senate could vote on the revised extenders package this week. Follow Michael J. Novogradac, CPA, on Twitter for updates as they develop.

PUBLIC HEARINGS ON COMMUNITY REINVESTMENT ACT REGULATIONS ANNOUNCED

WASHINGTON, D.C. - June 17, 2010

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Office of Thrift Supervision announced today that the agencies will hold four public hearings on modernizing the regulations that implement the Community Reinvestment Act (CRA). The hearings will focus on regulatory, rather than statutory, changes and address the following topics: geographic coverage; performance tests, asset thresholds and designations; affiliate activities; community development; ratings and incentives; and disclosures and performance evaluations. Interested parties must register for the hearings and are encouraged to provide written copies of their testimony in advance. People may also submit written comments through August 31, 2010. Dates and locations of the hearings are available here. A formal notice about the hearings will also be published in the Federal Register.

SUMMARY, COST ESTIMATES POSTED FOR SENATE EXTENDER AMENDMENT

WASHINGTON, D.C. - June 9, 2010

The Senate Finance Committee has released additional documents related to Senate Amendment 4301, a substitute for H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. Provisions included in H.R. 4213, also known as the tax extenders bill, would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The documents released yesterday include a summary of the amendment, a summary of changes made by the amendment, and estimates from the Congressional Budget Office (CBO) budget and Joint Committee on Taxation (JCT) of the budget effects of the amendment. The Senate resumed consideration of the bill today.

To hear more about the status of H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, download this week’s Tax Credit Tuesday podcast.

NOVOGRADAC'S RENT & INCOME CALCULATOR UPDATED FOR 2010

WASHINGTON, D.C. - June 1, 2010

Novogradac & Company LLP's Rent & Income Limit Calculator© has been updated to include the U.S. Department of Housing and Urban Development's (HUD) 2010 rent and income limit data. It is available online at www.novoco.com/products/rentincome.php with the compliments of Novogradac & Company LLP.

The Rent & Income Limit Calculator© will calculate IRC Section 42(i)(3)(A) low-income housing tax credit (LIHTC) rent and income limits for every county and for every metropolitan statistical area (MSA) in the United States.

To learn what the 2010 rent and income limits mean for your property, download a recording of Novogradac & Company's webinar: Income Limits and Your Project.

If you would like to engage Novogradac & Company LLP to calculate the rent and income limits for your property, please contact Jim Kroger at jim.kroger@novoco.com.

May

REVISED REVENUE ESTIMATES AVAILABLE FOR EXTENDERS BILL

WASHINGTON, D.C. - May 27, 2010

The House Ways and Means Committee released additional documents related to H.R. 4213, the American Jobs and Closing Tax Loopholes Act, also known as the tax extenders bill. Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The documents released today include a manager's amendment by Ways and Means Committee Chairman Rep. Sander Levin, D-Mich., updated revenue estimates and a description of changes made since May 20. The House is expected to vote today on H.R. 4213; the bill could be sent to the Senate tomorrow.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

TEXT OF REVISED TAX EXTENDERS LEGISLATION RELEASED

WASHINGTON, D.C. - May 21, 2010

The legislative text of H.R. 4213, the American Jobs and Closing Tax Loopholes Act, a package of tax extender legislation, has been released. The bill was released yesterday as a House Amendment to the Senate Amendment to H.R. 4213. The House vote on the extenders has been delayed until May 25 because of House concerns, including carried interest taxation and total cost.

Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The Tax Extenders Act of 2009 passed the House of Representatives on December 9, 2009 and the Senate on March 10 passed a similar package, the American Workers, State and Business Relief Act, as an amendment to the House bill. Ways and Means Committee Chairman Sander Levin, D-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., worked with House and Senate leadership and their colleagues to merge these two packages into the American Jobs and Closing Tax Loopholes Act.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

REVISED TAX EXTENDERS LEGISLATION TO BE INTRODUCED

WASHINGTON, D.C. – May 20, 2010

Ways and Means Committee Chairman Sander Levin, D-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., will release today the legislative text of the American Jobs and Closing Tax Loopholes Act, a package of tax extender legislation. Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The Tax Extenders Act of 2009 passed the House of Representatives on December 9, 2009 and the Senate on March 10 passed a similar package, the American Workers, State and Business Relief Act, as an amendment to the House bill. Sen. Baucus and Rep. Levin worked with House and Senate leadership and their colleagues to merge these two packages into the American Jobs and Closing Tax Loopholes Act, which they will introduce today as a House Amendment to the Senate Amendment to H.R. 4213. The House is expected to take up the bill tomorrow, May 21.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

HUD RELEASES INCOME LIMITS FOR 2010

WASHINGTON, D.C. May 14, 2010

The U.S. Department of Housing and Urban Development (HUD) today released income limits for 2010. Click here for links to the 2010 income limits and accompanying information and tables. Under the Housing and Economic Recovery Act of 2008 (Public Law 110-289), income limits used to determine qualification levels as well as set maximum rental rates for projects funded with low-income housing tax credits (LIHTC) and projects financed with tax-exempt housing bonds - referred to by HUD as Multifamily Tax Subsidy Projects (MTSPs) - are now calculated and presented separately from the Section 8 income limits.

Novogradac & Company LLP is currently updating its Rent & Income Limit Calculator© to include 2010 data. Subscribers to the free Industry Alert E-mail service will receive an e-mail announcement when the update has been completed.

In the meantime, for questions about using the new 2010 income limits please call Jim Kroger, CPA, at (415) 356-8000 or click here to learn more about Novogradac & Company’s property compliance services.

To hear this news discussed in detail, tune in to the Tax Credit Tuesday podcast on May 18.

To learn what the 2010 rent and income limits mean for your property, tune in to Novogradac & Company's webinar: Income Limits and Your Project. Stay tuned to www.novoco.com/events for details about this webinar.

HUD TO END HOLD-HARMLESS POLICY FOR SECTION 8 INCOME LIMITS

WASHINGTON, D.C. May 12, 2010

The U.S. Department of Housing and Urban Development (HUD) will eliminate the hold-harmless policy in estimating Section 8 income limits, according to a pre-publication copy of a notice posted online today. The notice says this change will allow Section 8 income limits to decrease beginning with the fiscal year (FY) 2010 income limits, but HUD will limit all annual decreases to no more than 5 percent and limit all annual increases to 5 percent or twice the change in national median family income, whichever is greater. The notice, which still must be published officially in the Federal Register, follows notices of September 14, 2009, and October 7, 2009, that solicited public comment on HUD’s proposal to discontinue its hold-harmless policy. In the new notice, HUD discusses the comments received about the proposed policy change, including questions regarding how this policy change will impact multifamily tax subsidy projects (MTSPs) financed with low-income housing tax credits (LIHTCs). HUD also announced that rents used in its HOME Investment Partnerships program (HOME) will continue to be held harmless and that income limits for rural housing programs will continue their current hold-harmless policy, based on different area definitions.

HUD TO SURVEY LOW-INCOME HOUSING TAX CREDIT PROPERTY OWNERS

WASHINGTON, D.C. – May 11, 2010

The U.S. Department of Housing and Urban Development (HUD) today invited public comments on a proposed “Study of the Low-Income Housing Tax Credit (LIHTC) Program After 15 Years.” HUD’s Office of Policy Development and Research (PD&R) has commissioned this study to learn what happened to LIHTC properties after the first 15 years, when the original use restrictions for properties that received tax credit allocations before 1990 expired, and when some tax credit properties funded after that date also were able to leave the program. In a notice published in today’s Federal Register, HUD says a survey of LIHTC property owners is planned for the fall 2010. That survey will collect data on LIHTC property owners' experience with the program and gather information that factored into property disposition decisions. Data will also be collected on whether projects were sold and whether projects continued as affordable rental housing. Comments on the proposed survey will be accepted through July 12, 2010.

CANTWELL INTRODUCES 5-YEAR LIHTC CARRYBACK BILL

WASHINGTON, D.C. May 7, 2010

Senator Maria Cantwell, D-Wash., yesterday introduced S. 3326, the Job Creation and Affordable Housing Act. The bill would extend for one-year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and expand the program to include 4 percent LITHCs. S. 3226 would also allow a 5-year carryback of the LIHTC. The measure is co-sponsored by Sens. John Kerry, D-Mass., and Barbara Boxer, D-Calif. Upon introduction, S. 3326 was referred to the Senate Finance Committee.

Tune in to the Tax Credit Tuesday podcast on May 11 to hear more about the proposals and other tax credit legislation.

To learn the latest about working with the Section 1602 LIHTC cash grant program, it’s not too late to register for Novogradac & Company’s affordable housing conference, “Working with LIHTCs in an ARRA World” next week in New Orleans, La.

KENTUCKY PROVIDES INFORMATION FOR LIHTC PROPERTIES AFFECTED BY FLOODS

Frankfort, Ky. May 5, 2010

In response to recent flooding in the state, the Kentucky Housing Corporation (KHC) yesterday released encouraged multifamily housing property owners to contact them with questions related to or reports of flood damage to affordable multifamily housing developments. KHC also announced that it is currently updating its online database with information about flood damages to multifamily developments. While funding availability is limited, KHC can provide temporary rental assistance to income-eligible households through partnerships with local housing agencies throughout the state. Contact KHC at (800) 633-8896 for information or to report flood damage to projects participating in the project-based rental assistance program or projects financed with KHC funding sources, including low-income housing credits.

April

CALIFORNIA STATE BOND FREEZE LIFTED

WASHINGTON, D.C. - April 29, 2010

The California Department of Housing and Community Development (HCD) on April 27 released a memorandum regarding Department of Finance Budget Letter (BL) 10-09, which was released the same day and lifted the state's bond freeze that had been in place since December 2008. HCD explains in the memo that BL 10-09 supersedes BL 08-33, which directed state departments and agencies that had expenditure authority over bond funds to cease making new contracts or obligations for programs or projects that were funded from general obligation (GO) bond and lease revenue bonds. This restriction included funds under Proposition 46 and 1C, which were widely used to develop affordable housing. HCD says the release of BL 10-09 will allow HCD, grant applicants and the contracting community to begin to plan for the future; HCD plans to provide information to project developers as soon as possible regarding the removal of the restrictions that had been placed on previously announced awards.

HUD INVITES PUBLIC INPUT ON HOUSING FINANCE SYSTEM REFORM

WASHINGTON, D.C. - April 22, 2010

The Department of Housing and Urban Development (HUD) today published a notice seeking public input on establishing a more stable and sound housing finance system. As described in an announcement last week, HUD is inviting public comment on the future of the housing finance system, including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy. Today’s notice lists seven questions on which HUD and the Treasury Department would like public input, and describes the process for submitting comments, which are due by July 21.

SEN. LINCOLN URGES END TO NEGOTIATIONS OF H.R. 4213

WASHINGTON, D.C. - April 2, 2010

Sen. Blanche Lincoln, D-Ark., yesterday released the text of a letter she sent to Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi urging the lawmakers to complete Senate-House negotiations of H.R. 4213, the American Workers, State, and Business Relief Act of 2010, also referred to as the tax credit extenders package. The Senate-passed version of the bill includes an extension of the New Markets Tax Credit program and makes Gulf Opportunity Zone and Midwestern Disaster Credits eligible for the low-income housing tax credit exchange program. Lincoln's letter urged Reid and Pelosi to prioritize the legislation when Congress reconvenes April 10. The text of Lincoln's letter can be found here. The version of H.R. 4213 that was passed by the Senate on March 10, 2010 can be found here.

The NMTC program extension will be one of the hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference June 10-11 in Washington, D.C.

March

HUD REQUESTS COMMENT ON RECOVERY ACT REPORTING

WASHINGTON, D.C. - March 26, 2010

The U.S. Department of Housing and Urban Development (HUD) in today’s Federal Register issued an emergency request for comment related to its American Recovery and Reinvestment Act Section 1512 reporting. HUD is requesting comment on the revised information collection requirement that it submitted to the Office of Management and Budget for emergency review. The comments are being solicited to evaluate if the proposed information collection is necessary for the proper performance of the agency’s functions; evaluate the accuracy of the agency’s estimate of the burden of the proposed information collection; enhance the quality, utility and clarity of the collected information; and minimize the burden of information collection on those who are to respond. Affected programs include the Tax Credit Assistance and Community Development Block Grant programs. Interested parties should submit comments by April 2. Click here to view the notice.

The Recovery Act will be the focus of Novogradac & Company’s conference Working with LIHTCs in an ARRA World, May 13-14, 2010 in New Orleans, La.

HOUSE APPROVES JOB BILL WITH 4 PERCENT EXCHANGE PROVISION

WASHINGTON, D.C. - March 24, 2010

The House of Representatives today approved H.R. 4849, the Small Business and Infrastructure Jobs Tax Act, by a vote of 246-178. The bill includes tax relief for small businesses and financing measures to create jobs. Among other things, the bill would make tax-exempt bond-financed properties eligible for the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program.

HUD UPDATES LIHTC DATABASE WITH DATA THROUGH 2007

WASHINGTON, D.C. - March 23, 2010

The U.S. Department of Housing and Urban Development (HUD) last month updated its Low-Income Housing Tax Credit (LIHTC) Database. The update includes data for projects placed in service through 2007. This included 618 projects and 58,650 units placed in service between 1995 and 2006 that were not included in the previous updates. The database, available to the public since 1997, now includes information on more than 1.8 million housing units placed in service between 1987 and 2007. The database details the size, unit mix, construction type, financing sources and location of individual projects. A set of 36 tables released with last month’s update report national and regional trends.

BINGAMAN BILL WOULD PROVIDE FIVE-YEAR LIHTC CARRYBACK

WASHINGTON, D.C. - March 19, 2010

Sen. Jeff Bingaman yesterday introduced legislation aimed at stimulating new affordable housing development by adding incentives to the Low-Income Housing Tax Credit (LIHTC) program. S. 3141, the Low Income Housing Tax Credit Recovery Act of 2010, allows LIHTCs for existing and future investments to be carried back up to five years. Click here for more information about S. 3141

To learn more about the carryback proposal, tune in to the Tax Credit Tuesday podcast on March 23.

IRS PROVIDES GUIDANCE ON TAX TREATMENT OF SECTION 1602 FUNDS

WASHINGTON, D.C. - March 17, 2010

In Notice 2010-18 the Internal Revenue Service provides guidance to low-income housing tax credit allocation agencies in determining how to reduce the LIHTC ceiling under Internal Revenue Code Section 42(h)(3) when tax credits are exchanged for funds under Section 1602 of the American Recovery and Reinvestment Tax Act of 2009. The notice also provides guidance regarding the effect of Section 1602 funds on building basis and taxpayer income.

To hear a detailed discussion of what the notice means for the LIHTC community, tune in to the Tax Credit Tuesday podcast on March 23.

WAYS AND MEANS TO CONSIDER SMALL BUSINESS, INFRASTRUCTURE JOB CREATION BILL

WASHINGTON, D.C. - March 15, 2010

U.S. House Committee on Ways and Means Chairman Sander M. Levin, D-Mich., today unveiled a discussion draft of the Small Business and Infrastructure Jobs Tax Act, legislation that would provide tax relief to small businesses and extend financing measures to create jobs. Among other things, the bill would make tax-exempt bond-financed properties eligible for the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and allow the new markets tax credit (NMTC) to be used to offset the alternative minimum tax (AMT). The Committee on Ways and Means is expected to consider the legislation on Wednesday.

AGENCIES ADOPT FINAL INTERAGENCY CRA QUESTIONS AND ANSWERS

WASHINGTON, D.C. - March 11, 2010

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision today adopted as final a revised set of “Interagency Questions and Answers Regarding Community Reinvestment.” The Questions and Answers provide guidance for use by agency personnel, financial institutions and the public regarding implementation of the Community Reinvestment Act (CRA). The Questions and Answers were last revised on January 6, 2009; in response to comments received on the last revisions, the agencies made minor clarifications to the CRA guidance. Those revisions are included in the final Questions and Answers that are effective today.

IRS ACCEPTS COMMENTS ON FORM 8610

WASHINGTON, D.C. - March 4, 2010

The Internal Revenue Service (IRS) today invited public comments on Form 8610, Annual Low-Income Housing Credit Agencies Report, and Schedule A (Form 8610), Carryover Allocation of Low-Income Housing Credit. No changes are being proposed at this time; the comment invitation was made as part of the effort to reduce paperwork and respondent burden under the Paperwork Reduction Act of 1995. Written comments should be submitted on or before May 3, 2010 to be assured of consideration.

REPORT DESCRIBES IMPACT OF FEDERAL HISTORIC TAX CREDIT

WASHINGTON, D.C. - March 3, 2010

The federal historic tax credit is a highly efficient job creator-accounting for the creation of 1.8 million new jobs over the life of the program, according to the "First Annual Report on the Economic Impact of the Federal Historic Tax Credit," which was released today. The report found that historic tax credits generated jobs more efficiently than other stimulus options and the study concludes that the economic activity leveraged by the historic tax credit returns more tax revenue to the U.S. Treasury than the cost of implementing the program. The report, the first to ever to comprehensively examine the economic impact of the federal historic tax credit, also underscores the need for additional legislation to strengthen the federal credits, making them more widely available for smaller, rural projects and also encouraging their use for green and sustainable rehab projects.

Tune in to next week's Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, discuss the report's findings and their significance.

HUD RELEASES DETAILS ABOUT LIHTC TENANT DATA COLLECTION

WASHINGTON, D.C. - March 3, 2010

The U.S. Department of Housing and Urban Development (HUD) will use a system similar to, and based on, the current Tenant Rental Assistance Certification System (TRACS) system to collect data about tenants of low-income housing tax credit (LIHTC) properties, according to a notice published in today’s Federal Register. The Housing and Economic Reform Act of 2008 requires each state agency to furnish HUD, not less than annually, information concerning the race, ethnicity, family composition, age, income, use of rental assistance under Section 8 or other similar assistance, disability status, and monthly rental payments of households residing in each property receiving LIHTCs through the agency. On March 30, 2009, HUD published a notice seeking early input on a methodology or approach for the data collection. HUD says it received approximately 25 comments from state housing finance and tax credit agencies; tax credit property managers; housing trade associations; research institutes; and not-for-profit organizations. In today’s notice, HUD summarizes those public comments, addresses the significant issues raised and issues specific information collection requirements.

SENATE CONSIDERS TAX EXTENDERS LEGISLATION THIS WEEK

WASHINGTON, D.C. - March 2, 2010

The Senate yesterday began consideration of the American Workers, State, and Business Relief Act of 2010, which would extend tax provisions that expired on December 31, 2009, as well as address several provisions that expired on February 28, 2010. Senate Finance Committee Chairman Max Baucus, D-Mont., and Senate Majority Leader Harry Reid, D-Nev., introduced the amendment that would, among other things, extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions.

February

REID INTRODUCES TAX EXTENDERS PACKAGE

WASHINGTON, D.C. - February 25, 2010

Sen. Harry Reid yesterday introduced legislation to extend several tax provisions that expired on December 31, 2009. The American Workers, State, and Business Relief Act of 2010 would extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions. The package of tax extenders is estimated to cost about $31 billion over 10 years. One of the cost offsets included in the bill is codification of the economic substance doctrine. Reports indicate the bill could be considered as early as next week.

HUD INVITES COMMENTS ON LIHTC DATABASE

WASHINGTON, D.C. - February 24, 2010

The U.S. Department of Housing and Urban Development (HUD) today invited comments on a requirement of the Housing and Economic Recovery Act (HERA) of 2008. HERA requires each state agency administering low-income housing tax credits (LIHTCs) to furnish HUD information concerning the race, ethnicity, family composition, age, income, use of rental assistance under Section 8 or other similar assistance, disability status, and monthly rental payments of households residing in each property receiving such credits. Comments will be accepted through March 26, 2010.

SUMMARY POSTED: UNITS FUNDED, JOBS CREATED BY SECTION 1602

WASHINGTON, D.C. - February 23, 2010

Nearly 28,000 jobs have been created or retained by the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act), according to figures released today by the Treasury Department. Under the Section 1602 program, state housing entities are required to report quarterly to Treasury on subawards made, including the number of jobs that have been or will be created or retained by projects funded by those subawards, and the number of housing units that have been or will be rehabilitated or constructed. The Summary of State Housing Credit Agencies’ Quarterly Reports posted today includes data reported through December 31, 2009; the summary shows that the 410 subawards made under the Section 1602 program are expected to fund the construction or rehabilitation of more than 23,400 low-income housing units.

FHFA PROPOSES HOUSING GOALS FOR FANNIE, FREDDIE

WASHINGTON, D.C. - February 17, 2010

The Federal Housing Finance Agency (FHFA) sent a proposed rule to the Federal Register establishing new housing goals for government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The Housing and Economic Recovery Act of 2008 (HERA) gave FHFA authority for establishing housing goals for the GSEs. Pursuant to HERA, FHFA is proposing separate goals for GSE purchases of multifamily mortgages. Specifically, FHFA proposes multifamily goals for low-income families and for very low-income families, both expressed in terms of minimum numbers of units financed. The proposed rule will be open for public comment for 45 days from the date of its publication in the Federal Register; click here for an advance copy of the notice. Additionally, FHFA says it intends to issue two related proposed rules in the near future regarding affordable housing goals for the Federal Home Loan Banks and the GSEs duty to serve rule. Click here for more information.

BAUCUS, GRASSLEY RELEASE DRAFT JOBS BILL WITH TAX EXTENDERS

WASHINGTON, D.C. - February 11, 2010

Senate Finance Committee Chairman Max Baucus, D.-Mont., and Ranking Member Chuck Grassley, R-Iowa, today released a draft of jobs legislation called the Hiring Incentives to Restore Employment (HIRE) Act. The draft bill extends several tax provisions that expired on December 31, 2009; the HIRE Act would extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions. The tax extenders are estimated to cost about $31 billion over 10 years. Sens. Baucus and Grassley list three offsets for the cost of the HIRE Act, including codification of the economic substance doctrine.

Novogradac & Company will provide regular updates via e-mail to Industry Alert subscribers regarding the progress of jobs legislation and related proposals.

In addition, Michael Novogradac, CPA, will review the proposed legislation in detail in the next Tax Credit Tuesday podcast. You will find the podcast in iTunes or online at www.novoco.com/podcast.

In the meantime, you can also follow us on Twitter @taxcreditnews and @Novogradac.

SENATE JOBS BILL COULD INCLUDE TAX CREDIT EXTENSIONS

WASHINGTON, D.C. - February 9, 2010

Despite inclement weather that could delay a vote, Senate Majority Leader Harry Reid, D-Nev., is reported to be working to get a bill designed to spur job growth to the Senate floor by the end of this week. A draft of the bill circulated today features several tax extensions, including an extension of the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); an extension for one year of the new markets tax credit (NMTC); and a retroactive extension of deadlines for Gulf Opportunity (GO) Zone provisions that expired in 2009. The draft bill also includes the codification of the economic substance doctrine, but reports indicate that the issue is still under discussion.

FHFA RELEASES FANNIE, FREDDIE CONSERVATORSHIP LETTER

WASHINGTON, D.C. - February 2, 2010

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today sent a letter about Fannie Mae’s and Freddie Mac’s (GSEs’) conservatorship to Reps. Barney Frank, D-Mass., and Spencer Bachus, R-Ala., of the House Financial Services Committee, and Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., of the Senate Banking, Housing and Urban Affairs Committee. The letter addressed FHFA’s plans for the GSEs business activities while they are in conservatorship. The eight-page letter reviews the establishment and purposes of the conservatorship; operation of the conservatorships; and FHFA’s views on the GSEs’ future business activities, including loan modifications and mitigating credit losses, retained portfolio, new products and affordable housing mission. In the letter, DeMarco concludes that the conservatorship cannot be a long term solution, but that, while there are many ways of reorganizing the GSEs, the only option available under the existing law is to reconstitute the GSEs under their current charters.

Additional information about Fannie Mae and Freddie Mac and the FHFA’s conservatorship of the GSEs can be found here.

FEDERAL BUDGET PROPOSAL EXTENDS LIHTC EXCHANGE PROGRAM

WASHINGTON, D.C. - February 1, 2010

Today President Barack Obama transmitted the fiscal year (FY) 2011 proposed budget to the Congress, which includes an extension of the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act). Under the proposal, states would be able to exchange 100 percent of unused housing credit ceiling for 2009, 40 percent of the state’s 2010 per capita authority, and 40 percent of the state’s share of the 2010 national pool allocation, if any. States would have until December 31, 2012 to utilize the cash assistance. Click here for more information about the exchange program.

Tune in to the February 9 Tax Credit Tuesday podcast to hear more about this proposal and the next steps in the federal budget process.

January

HISTORIC SCHOOLS REHABILITATION ACT INTRODUCED IN THE SENATE

WASHINGTON, D.C. - January 29, 2010

Senators Jim Webb, D-Va., and Mark Warner, D-Va., today introduced The Rehabilitation of Historic Schools Act of 2010. The bill, which provides a tax credit for communities to partner with private sector developers to rehabilitate the nation’s older school buildings, is a the companion bill to H.R. 4133, introduced in the House by Virginia Rep. Eric Cantor on November 19, 2009. The measure would change a provision in the federal rehabilitation tax credit that restricts renovation of older public school buildings, limiting the ability of local governments to partner with private developers to rehabilitate schools. A copy of the bill and a fact sheet about the legislation can be found here.

Novogradac & Company will follow the progress of the Rehabilitation of Historic Schools Act and provide updates during the Tax Credit Tuesday podcasts and in the newly expanded Novogradac Journal of Tax Credits.

DOE ISSUES RULE REGARDING LIHTC, HUD PROPERTIES' ELIGIBILITY FOR WAP

WASHINGTON, D.C. - January 25, 2010

The U.S. Department of Energy (DOE) today released a final rule amending the eligibility provisions applicable to multi-unit buildings under the Weatherization Assistance Program (WAP). Under the final rule, if a multi-unit building is under an assisted or public housing program and is identified by the U.S. Department of Housing and Urban Development (HUD), participates in the low-income housing tax credit (LIHTC) program, or includes units that participate in the U.S. Department of Agriculture (USDA) Rural Housing Service's Multifamily Housing Programs, and is included on a list published by DOE, that building will meet certain WAP eligibility requirements without the need for further evaluation or verification. DOE says this rule, which is effective February 24, 2010, will reduce the procedural burdens on evaluating applications from buildings that are part of these programs.

HUD ISSUES FHA MULTIFAMILY RENTAL CLOSING DOCUMENTS FOR COMMENT

WASHINGTON, D.C. - January 21, 2010

In today’s Federal Register, the U.S. Department of Housing and Urban Development (HUD) announced that it was issuing for public comment a comprehensive set of revised closing documents for use in Federal Housing Administration (FHA) multifamily rental projects. Today’s notice starts anew the process for updating the multifamily rental project closing documents that originally began in 2004. In revising these forms, HUD says it identified language and policies that were outdated and needed to be changed to be consistent with modern real estate and mortgage lending laws and practices. By reflecting current terminology and current lending laws and practices, HUD says the updated multifamily rental project closing documents will better protect and benefit all parties involved in these transactions. The multifamily closing documents are posted on HUD’s web site here.

HUD AWARDS $2 BILLION THROUGH NEIGHBORHOOD STABILIZATION PROGRAM

WASHINGTON, D.C. - January 15, 2010

U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced yesterday the award of $2 billion in American Recovery and Reinvestment Act funding to states, local governments and non-profit housing developers, under HUD’s Neighborhood Stabilization Program (NSP). Nearly 80 grantees are receiving awards. A full list of grants awarded can be found here. The $2 billion in NSP grants will help state and local governments and non-profit developers collaborate to acquire land and property; to demolish or rehabilitate abandoned properties; offer down-payment and closing cost assistance to low- to middle-income homebuyers; and create “land banks” to assemble, temporarily manage and dispose of foreclosed homes.

ADMINISTRATION COMPLETES TRANSACTIONS UNDER HFA INITIATIVE

WASHINGTON, D.C. - January 13, 2010

The U.S. Department of the Treasury, together with the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) today announced the completion of all transactions under the recently-introduced state and local Housing Finance Agency (HFA) Initiative, a key element of the Obama Administration's Homeowner Affordability and Stability Plan. As part of the initiative, the New Issue Bond Program (NIBP) provided temporary financing for HFAs to issue new housing bonds. Treasury reports that more than 90 state and local HFAs representing 49 states participated in the NIBP for an aggregate total new issuance of $15.3 billion. Participating HFAs are expected to provide affordable multifamily loans that will help keep rents affordable for tens of thousands of renters. The Treasury Department says that government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac played a central role in both the program’s design and transaction execution.

JOINT CENTER REPORT EXAMINES DISRUPTION OF LIHTC PROGRAM

CAMBRIDGE, Mass. - January 6, 2010

There is cautious optimism that much delayed affordable rental housing production will occur in 2010, although more should be done to mitigate vulnerabilities in the low-income housing tax credit (LIHTC) program and address issues surrounding investor demand, according to a new report from Harvard University’s Joint Center for Housing Studies. A paper released this week, “The Disruption of the Low-Income Housing Tax Credit Program: Causes, Consequences, Responses, and Proposed Correctives,” examines the experience to date with two programs created by the Recovery Act — the Tax Credit Assistance Program (TCAP) and the Section 1602 program, which provides cash grants in lieu of LIHTCs. The report discusses the current situation and assesses several proposals for reform. Click here to download the paper from the Joint Center for Housing Studies.

The findings of this report will be one of the many topics discussed at Novogradac & Company LLP’s 16th Annual Tax Credit Developers Conference in Miami, Fla. on January 14 and 15.