Low-Income Housing Tax Credits:

News Archive

2012

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December

HUD REQUESTS COMMENTS ON LIHTC TENANT DATA COLLECTION

WASHINGTON, D.C. – Dec. 28, 2012

The U.S. Department of Housing and Urban Development (HUD) today released a request for comments on the statutorily-mandated collection of information for tenants of low-income housing tax credit (LIHTC)-funded properties. The form used to collect 2009, 2010 and 2011 tenant data expires May 31, 2013. HUD is required to renew the form to remain in compliance with the Housing and Economic Recovery Act. HUD is accepting comments until Feb. 26, 2013.

IRS PROVIDES GUIDANCE ON INCOME LIMIT EFFECTIVE DATE

WASHINGTON, D.C. – Dec. 19, 2012

The Internal Revenue Service (IRS) will treat the revised fiscal year 2013 Multifamily Tax Subsidy Program (MTSP) income limits released on Dec. 11 as if they were released on Dec. 4 for all Internal Revenue Code (IRC) §42 purposes, according to LIHC Newsletter #50. MTSP property owners must start using the revised 2013 income limits for all purposes no later than 45 days after the Dec. 4 release date, which is Jan. 18, 2013. In LIHC Newsletter #50, released today, the IRS says that for buildings placed in service after Dec. 4, 2012 and before Jan. 18, 2013, taxpayers may choose to either rely on the 2012 income limits, or rely on the revised 2013 income limits, whichever provides the greater tax benefit. If a taxpayer placed a building in service between Dec. 5 and Dec. 11 (inclusive), 2012 and relied on income limits released on Dec. 4, the IRS said it will honor the designation, but the revised income limit released on Dec. 11 should be used to calculate the gross rent floor.

If you have questions about the 2013 income limits, please contact Thomas A. Stagg, CPA, at 425.453.5783 or thomas.stagg@novoco.com.

RENT & INCOME LIMIT CALCULATOR© UPDATED: REVISED 2013 DATA

SAN FRANCISCO, Calif.. – Dec. 14, 2012

Novogradac & Company LLP's is pleased to announce that the Beta version of the Rent & Income Limit Calculator© has been updated to include the U.S. Department of Housing and Urban Development's (HUD’s) revised fiscal year 2013 rent and income limit data. 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.

HUD originally released income limits for 2013 on Dec. 4, followed by a set of revised income limits on Dec. 11. The Rent & Income Limit Calculator© has been updated with the revised limits. The Rent & Income Calculator © assumes 2013 rent and income limits are effective Dec. 11, 2012, however this date is tentative pending IRS confirmation. The Beta version of the calculator is undergoing additional testing and results are subject to change. Please let us know if you find any errors or bugs in the 2013 limits.

HURRICANE SANDY TAX PACKAGE TO BE INTRODUCED IN SENATE

WASHINGTON, D.C. – Dec. 11, 2012

Sens. Charles Schumer, D-N.Y., and Robert Menendez, D-N.J. announced that they will introduce The Hurricane Sandy and National Disaster Tax Relief Act of 2012. The tax package will include a $500 million emergency supplemental new markets tax credit (NMTC) allocation per year for three years for community development entities (CDEs) serving disaster areas. It would also increase affected states’ low-income housing tax credit (LIHTC) authority in 2013, 2014 and 2015 by $8 per capita for use in the disaster area and provide an increased LIHTC value for areas that were also affected by Hurricane Irene. Additionally, the bill would increase the historic tax credit from 20 percent to 26 percent for the rehabilitation of buildings within the disaster zone. The text of the legislation will be posted to www.taxcredithousing.com when it becomes available.

Learn more about this legislation and other current developments at the Novogradac Tax Credit Developers Conference, Jan. 10-11 in Miami, Fla.

HUD TO REVISE 2013 MEDIAN FAMILY INCOMES, INCOME LIMITS

SAN FRANCISCO, Calif. – Dec. 11, 2012

Novogradac & Company LLP has learned that the U.S. Department of Housing and Urban Development (HUD) may revise its fiscal year 2013 estimates of median family incomes and income limits. The Rent & Income Limit Calculator© has been restored to the 2012 version until amended fiscal year 2013 rent and income limit data is available.

RENT & INCOME LIMIT CALCULATOR© UPDATED WITH 2013 DATA

SAN FRANCISCO, Calif. – Dec. 10, 2012

Novogradac & Company LLP's is pleased to announce that the Rent & Income Limit Calculator© has been updated to include the U.S. Department of Housing and Urban Development's (HUD’s) fiscal year 2013 rent and income limit data. 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.

Nationwide, 84 percent of counties saw a decrease in the 2013 HUD published 50 percent multifamily tax subsidy project (MTSP) limit compared to 2012. For existing MTSP properties, the income and rent limits will be held harmless at the highest level the project reached since it was placed in service. New MTSP properties placed in service in 2013 will be required to use the 2013 income limit, which is lower than the 2012 income limit for the majority of the counties.

A Beta version of the Rent & Income Limit Calculator© is available online at www.novoco.com/products/rentincome.php with the compliments of Novogradac & Company LLP. Please let us know if you have comments about calculator or if you find any irregularities in the results; we will incorporate these comments into the final release.

If you have questions about the 2013 income limits and what they could mean for your affordable housing property, please contact James R. Kroger, CPA, at 415.356.8000 or jim.kroger@novoco.com, or Thomas A. Stagg, CPA, at 425.453.5783 or thomas.stagg@novoco.com.

GAO ISSUES REPORT ON 2008 CHANGES TO LIHTC PROGRAM

WASHINGTON, D.C. – Dec. 6, 2012

The Government Accountability Office (GAO) today released a report on the implementation of changes to the Low-Income Housing Tax Credit (LIHTC) program under the Housing and Economic Recovery Act (HERA). Stakeholders told GAO that HERA’s broad effects on the LIHTC program are difficult to determine, but that the temporary increase in per capita credit allocations, temporary credit rate floor and discretion to use enhanced credits improved the financial viability of some projects. GAO also found incomplete information in the U.S. Department of Housing and Urban Development’s (HUD’s) LIHTC project database, and recommended that HUD evaluate and improve its data collection. HUD agreed with the recommendation, noting that it has made efforts to improve data collection despite resource constraints.

Tune in to next week’s Tax Credit Tuesday podcast for more discussion of GAO’s findings.

HUD RELEASES INCOME LIMITS FOR FY 2013

WASHINGTON, D.C. – Dec. 4, 2012

The U.S. Department of Housing and Urban Development (HUD) today released income limits for fiscal year (FY) 2013. These are used to determine income eligibility for HUD’s assisted housing programs, including public housing, Section 8, Section 202 and Section 811. Income limits that are used to determine qualification levels and to set maximum rental rates for low-income housing tax credit (LIHTC) or tax-exempt bond projects, which HUD refers to as Multifamily Tax Subsidy Projects (MTSPs), are calculated and presented separately from the Section 8 income limits.

Novogradac & Company LLP is currently updating the Rent & Income Limit Calculator© to include the 2013 data. Subscribers to Novogradac & Company’s free Industry Alert service will receive an email announcement when this update has been completed.

Register for Novogradac & Company’s free webinar on Tuesday, Dec. 11, for an in-depth discussion of HUD’s 2013 rent and income limits.

November

HUD GRANTS WAIVERS FOR SANDY DISASTER AREAS

WASHINGTON, D.C. – Nov. 30, 2012

The U.S. Department of Housing and Urban Development (HUD) today issued notices granting waivers for multifamily housing programs and public and Indian housing programs to assist with recovery and relief in Superstorm Sandy disaster areas. As of Nov. 26, the Office of Multifamily Housing is allowing owners of HUD project-based Section 8 properties in areas designated as federal disaster areas because of Sandy may provide housing to those displaced by the storm for a period of up to 60 days. As of Nov. 15, the Office of Public and Indian Housing (PIH) is allowing entities that administer PIH programs to defer compliance with program requirements for an initial period of 12 months. Owners interested in providing assistance to those affected by Superstorm Sandy must provide notice of their intent to HUD and should review the Federal Register notices for specific instructions and requirements.

HUD PUBLISHES 2013 SMALL AREA FMRS

WASHINGTON, D.C. – Nov. 20, 2012

The U.S. Department of Housing and Urban Development (HUD) today released its final fair market rents (FMRs) for fiscal year (FY) 2013 for public housing authorities (PHAs) participating in the Small Area FMR (SAFMR) Demonstration. Only those PHAs that have agreed to participate in the demonstration are authorized to use the SAFMRs within their metropolitan operating areas. HUD said it is testing SAFMRs through this demonstration program to better understand the programmatic impacts of changing the way Housing Choice Voucher payment standards are set. The FY 2013 SAFMRs are effective as of Oct. 1, 2012.

FHFA ESTABLISHES GSE HOUSING GOALS THROUGH 2014

WASHINGTON, D.C. – Nov. 12, 2012

The Federal Housing Finance Agency (FHFA) today published a final rule that establishes new annual housing goal levels through 2014 for government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae. According to FHFA, both GSEs exceeded the multifamily housing goal levels for 2011; however, because of uncertainty in the housing market and the GSEs’ role in the marketplace, the goal levels for 2013 are set below the 2012 level, and are further decreased for 2014. The rule will take effect Dec. 13.

IRS CANCELS HEARING ON UTILITY ALLOWANCE SUBMETERING

WASHINGTON, D.C. – Nov. 7, 2012

The Internal Revenue Service (IRS) has cancelled a public hearing on a proposed rulemaking relating to low-income housing tax credit utility allowance regulations. The proposed regulations, contained in an Aug. 7 notice, clarify that utility costs paid by a tenant based on actual consumption in a submetered rent-restricted unit are treated as paid by the tenant directly to the utility company. The notice also instructed those interested in testifying at a Nov. 27 public hearing on the proposal to submit a request to speak and an outline of topics to be addressed. The IRS reports it has not received any requests as of Nov. 2; the official cancellation notice is scheduled to be published in the Nov. 8 Federal Register.

IRS RELEASES DISASTER HOUSING GUIDANCE

WASHINGTON, D.C. – Nov. 6, 2012

The Internal Revenue Service (IRS) today released Notice 2012-68, which provides additional details about yesterday’s announcement that certain requirements of the low-income housing tax credit (LIHTC) program will be temporarily suspended to expand disaster housing availability. Under the notice, state housing agencies may approve LIHTC property owners in their respective states to provide temporary emergency housing for displaced individuals. This approval may be given to properties in any state, regardless of whether a major disaster declaration has been issued for that state as long as the displaced individual being housed in the LIHTC property resided in a jurisdiction designated for Individual Assistance and was displaced because his or her residence was destroyed or damaged as a result of the devastation caused by Hurricane Sandy. Displaced individuals temporarily occupying vacant units will not be treated as low-income tenants; however, the IRS said it will continue to treat the units as vacant and owners are not required to attempt to rent them to low-income individuals during the temporary housing period. State agencies will determine the period of temporary housing for each property, not to extend beyond Nov. 30, 2013.

IRS WAIVES LIHTC RULES FOR CERTAIN PROPERTIES

WASHINGTON, D.C. – Nov. 5, 2012

To provide some relief from the devastation caused by Hurricane Sandy, the Internal Revenue Service (IRS) and the Treasury Department will temporarily waive low-income housing tax credit (LIHTC) rules that prohibit property owners from providing housing to hurricane victims who do not qualify as low-income. The agencies will temporarily suspend the LIHTC program’s income limitation requirements and non-transient requirements to enable LIHTC property owners that choose to rent vacant units to displaced individuals to house affected individuals in designated counties.

October

CALIFORNIA CONSIDERS LIHTC REGULATION CHANGES FOR 2013

SACRAMENTO, Calif. – Oct. 25, 2012

The California Tax Credit Allocation Committee (TCAC) is accepting comments on proposed low-income housing tax credit (LIHTC) regulation changes for 2013. The changes include a greater focus on high-scoring developments with larger LIHTC requests and the elimination of the requirement that at least 50 percent of a 9 percent applicant’s LIHTC request remain in a geographic apportionment. TCAC will conduct four public hearings in November to gather public comments on its proposals.

IRS PUBLISHES LIHTC, BOND CAPS FOR 2013

WASHINGTON, D.C. – Oct. 18, 2012

The Internal Revenue Service (IRS) announced in Revenue Procedure 2012-41 the inflation-adjusted low-income housing tax credit (LIHTC) and private activity bond caps for 2013. For calendar year 2013, the amount used under §42(h)(3)(C)(ii) to calculate the state LIHTC ceiling is the greater of $2.25 multiplied by the state population or $2,590,000. The amount used under §146(d)(1) to calculate the state ceiling for the volume cap for private activity bonds in 2013 is the greater of $95 multiplied by the state population or $291,875,000.

IRS DISTRIBUTES UNUSED 2012 LIHTC ALLOCATION

WASHINGTON, D.C. – Oct. 16, 2012

The Internal Revenue Service (IRS) today published the amounts of unused low-income housing tax credit (LIHTC) carryovers for calendar year 2012 that were allocated to 34 qualified states and Puerto Rico. Revenue Procedure 2012-42 details how nearly $2.43 million of unused LIHTCs were divided among the states and territories in the national pool. California received the largest allocation, $364,494 in LIHTCs.

IRS INVITES COMMENTS ON LIHTC CLAIM FORM

WASHINGTON, D.C. – Oct. 10, 2012

The Internal Revenue Service (IRS) today requested comments on Form 8586, which is used to compute and claim the low-income housing tax credit (LIHTC). No changes to the form have been proposed. Comments are due by Dec. 10.

HUD RELEASES FINAL 2013 FMRS

WASHINGTON, D.C. – Oct. 4, 2012

The U.S. Department of Housing and Urban Development released its fiscal year (FY) 2013 fair market rents (FMRs). The FY 2013 FMRs took effect on Oct. 1. HUD uses FMRs to determine payment standard amounts for the Housing Choice Voucher program, to determine initial renewal rents for some expiring project-based Section 8 contracts and to determine initial rents for housing assistance payments (HAP) contracts in the Moderate Rehabilitation Single Room Occupancy (SRO) program.

Learn more about the FMRs at HUD 101: Understanding Multifamily Programs, Nov. 28, in Las Vegas, Nev. This Tax Credit Housing Finance Conference pre-conference workshop will teach you the basics of HUD’s multifamily programs. The FY 2013 FMRs will also be discussed at the Property Compliance Workshop on Nov. 29-30, in Las Vegas, Nev.

September

HUD DESIGNATES 2013 DDAs

WASHINGTON, D.C. – Sept. 28, 2012

The U.S. Department of Housing and Urban Development (HUD) today designated difficult development areas (DDAs) for 2013 for purposes of the low-income housing tax credit (LIHTC). LIHTC developments in DDAs or qualified census tracts (QCTs) are eligible for as much as 30 percent more LIHTC subsidy. HUD also announced that it will delay the adoption of small area DDAs by one year. HUD said it will publish the 2014 DDAs in a separate notice after further consideration of the small area DDA concept.

Tune in to the Tax Credit Tuesday podcast on Oct. 2 to hear more about the 2013 DDAs.

Discuss what lies ahead for LIHTC property financing at Novogradac & Company’s Tax Credit Housing Finance Conference, Nov. 29-30 in Las Vegas, Nev.

GAO RELEASES REPORT ON EFFECT OF CRA ON LIHTC INVESTMENTS

WASHINGTON, D.C. – Sept. 27, 2012

The Government Accountability Office (GAO) today released a report on the Community Reinvestment Act’s (CRA’s) influence on low-income housing tax credit (LIHTC) equity investments. GAO found that CRA’s effects on LIHTC investment are difficult to quantify because regulatory ratings cannot be linked to banks’ LIHTC investments, among other reasons. It also found issues with assessing demand for LIHTCs and a lack of complete and reliable data about equity contributions.

You can learn more about the report’s significance by tuning in to Michael Novogradac’s Tax Credit Tuesday podcast on Oct. 2.

HUD EXPANDS MULTIFAMILY LIHTC PILOT PROGRAM

WASHINGTON, D.C. – Sept. 27, 2012

The U.S. Department of Housing and Urban Development’s (HUD’s) Office of Housing announced a nationwide expansion of the Multifamily Low-Income Housing Tax Credit (LIHTC) Pilot program, which is designed to test streamlined approval processes for the purchase or refinancing of LIHTC properties. Offices in Atlanta, Denver, Fort Worth, San Francisco and Seattle have joined the four original pilot processing offices in Boston, Chicago, Detroit and Los Angeles. Projects not located in the jurisdictions of the nine pilot processing offices will be assigned to one of those offices for underwriting. HUD also said it plans to begin qualifying additional multifamily accelerated processing lenders this month through a second lender selection process.

IRS INVITES COMMENTS ON LIHTC RECAPTURE FORM

WASHINGTON, D.C. – September 17, 2012

The Internal Revenue Service (IRS) today invited public comments on Form 8611: Recapture of Low-Income Housing Credit. Low-income housing tax credit (LIHTC) property owners use Form 8611 to recapture part of the LIHTCs claimed in previous years if the property is disposed of or if it fails to meet certain requirements over a 15-year compliance period and a bond is not posted. No changes to the form have been proposed. Comments must be received by Nov. 16.

August

LA. REQUESTS STATUS OF HURRICANE ISAAC-AFFECTED LIHTC UNITS

BATON ROUGE, La. – August 31, 2012

The Louisiana Housing Corporation (LHC) is requesting that low-income housing tax credit developers provide information about the conditions of their low-income housing tax credit (LIHTC) properties, measures being taken to house tenants of damaged units, and vacant units available to storm victims and evacuees in the wake of Hurricane Isaac. LHC asks that developers include the number of units offline because of the storm and an anticipated restoration date for those units in the information they submit. The information should be emailed to LHC at LIHTCAnnualAudit@lhc.la.gov by 4:30 central time today.

APPEALS COURT REVERSES TAX COURT DECISION IN BOARDWALK HALL

PHILADELPHIA, Pa. – August 27, 2012

The U.S. Court of Appeals for the 3rd Circuit today filed an opinion overturning the U.S. Tax Court’s Jan. 3, 2011 decision on Historic Boardwalk Hall (HBH) v. Commissioner. The court found that the project’s historic tax credit (HTC) equity investor, Pitney Bowes Inc., was not a bona fide partner in HBH because it lacked a meaningful stake in the project’s success or failure. The court remanded the case for further proceedings consistent with its opinion.

Learn about the implications that the court’s decision may have for the HTC industry at the National Historic Tax Credit Conference, Sept. 6-7 in Louisville, Ky.

IRS: BOND ISSUER CAN CHANGE LIHTC UNIT MIX

WASHINGTON, D.C. – August 14, 2012

The Internal Revenue Service (IRS) August 10 issued Private Letter Ruling (PLR) 201232006 to allow a multifamily housing bond issuer to file an amended Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues, for a development where a filing error resulted in the issuer entering the wrong minimum set-aside requirements on the original form. The IRS granted a 45-day extension from the date of the PLR to amend the form. PLRs are directed to the taxpayers who requested them and may not be used or cited as precedent.

Tune in to the Tax Credit Tuesday podcast August 21 to hear more about the ruling.

BILL WOULD DIRECT MORE LIHTCS TO MOD-INCOME SENIORS

WASHINGTON, D.C. – August 6, 2012

Rep. Joe Baca, D-Calif., introduced a bill intended to encourage the development of more affordable housing for moderate-income seniors through the Low-Income Housing Tax Credit (LIHTC) program. H.R. 6295, the Affordable Housing for Moderate-Income Seniors Act  would require states to increase the number of points awarded to developments targeted at moderate-income seniors. The bill was referred to the House Committee on Ways and Means.

Michael J. Novogradac, CPA, will discuss the Affordable Housing for Moderate-Income Seniors Act in the August 14 Tax Credit Tuesday podcast. Tune in or miss out!

IRS PROPOSES CHANGES TO UTILITY ALLOWANCE RULES

WASHINGTON, D.C. – August 6, 2012

The Internal Revenue Service (IRS) today released for public inspection a notice containing proposed updates to low-income housing tax credit (LIHTC) utility allowance regulations. The proposed regulations clarify that utility costs paid by a tenant based on actual consumption in a submetered rent-restricted unit are treated as paid by the tenant directly to the utility company. Use of a ratio utility billing system (RUBS) would still be disallowed. The notice also outlines topics to be discussed at a November 27 public hearing on the proposed regulations. The official notice is scheduled to be published in the August 7 Federal Register. Click here for more information on utility allowances.

Find out what this proposed rulemaking and other regulatory changes could mean for your LIHTC development at the 19th Annual Affordable Housing Conference on September 20-21 in San Francisco, Calif.

LIHTC AMENDMENT ADDED TO EXTENDERS PACKAGE

WASHINGTON, D.C. – August 2, 2012

An amendment to provide for a fixed 9 percent low-income housing tax credit (LIHTC) for allocations made through December 31, 2013 was approved by voice vote during a Senate Finance Committee hearing today. The vote means the amendment, cosponsored by Sens. Maria Cantwell, D-Wash., and Olympia Snowe, R-Maine, has been added to The Family and Business Tax Cut Certainty Act of 2012, a package of tax extenders that was the subject of the Finance Committee’s hearing.

To discuss what lies ahead for the LIHTC program, join Novogradac & Company at the 19th Annual Affordable Housing Conference, September 20-21, in San Francisco.  

HUD ANNOUNCES PROPOSED 2013 FAIR MARKET RENTS

WASHINGTON, D.C. – August 2, 2012

The U.S. Department of Housing and Urban Development (HUD) today released proposed fiscal year (FY) 2013 fair market rents (FMRs) for the Housing Choice Voucher (HCV) and Moderate Rehabilitation Single Room Occupancy programs. FMRs are used to determine payment standards for the HCV program, to determine initial renewal rents for some expiring project-based Section 8 contracts, to determine initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program and to serve as rent ceilings for the HOME program. The official notice is expected to appear in the August 3 Federal Register.

July

NYU's FURMAN CENTER RELEASES ANALYSIS OF LIHTC TENANTS

NEW YORK CITY, N.Y. – July 12, 2012

New York University’s Furman Center for Real Estate and Urban Policy has released preliminary results of a study of tenants living in low-income housing tax credit (LIHTC)-funded developments. “What Can We Learn about the Low Income Housing Tax Credit Program by Looking at the Tenants?” uses data that the U.S. Department of Housing and Urban Development collected from LIHTC property owners in 2010. The study encompasses approximately 8,000 developments in 15 states. The analysis reveals, among other things, that nearly 40 percent of LIHTC tenants are extremely low-income and 60 percent of LIHTC tenants have incomes at or below 40 percent of the area median income.

You can learn more about the Furman Center study by tuning in to the July 17 Tax Credit Tuesday podcast.

June

FHFA PROPOSES INCREASING LIHTC LENDING GOALS

WASHINGTON, D.C. – June 11, 2012

The Federal Housing Finance Agency (FHFA) today released for comment proposed changes to its existing housing goals and housing goals for 2012, 2013 and 2014. The proposed rule says the low-income housing tax credit (LIHTC) market has recovered and the Office of Management and Budget has forecasted an increase in LIHTC equity investments. As such, FHFA says that as LIHTC investments return to pre-2008 volumes, opportunities for the Fannie Mae and Freddie Mac to finance LIHTC properties will increase and, therefore, goals-eligible units should increase.

CALIFORNIA RELEASES SECOND ROUND GUIDANCE

SACRAMENTO, Calif. – June 4, 2012

The California Tax Credit Allocation Committee (CTCAC) today released guidance for first round applicants reapplying in the second low-income housing tax credit round and additional guidance for all second round applicants. Applications for the second round are due by July 25, 2012. The memo said that first round applicants who are reapplying in the second round must submit a complete application, but CTCAC said that it will accept time-sensitive documents submitted during the first round, with a few exceptions. The memo also suggests that applicants review their applications for common errors. A second memo clarifies application requirements for all second round applicants.

IRS ISSUES ADVICE MEMO ON CALIF. RDA DISSOLUTION

WASHINGTON, D.C. – June 1, 2012

The Internal Revenue Service Office of the Chief Counsel today issued AM2012-004, an advice memo on how the dissolution of California’s redevelopment agencies (RDAs) affects tax-exempt and Build America Bonds previously issued by the agencies. In the memo, the IRS concludes that regardless of whether the bonds are recourse or nonrecourse, the change in obligator does not result in a reissuance of the bonds. Additionally, the IRS says the RDA successor agencies are entitled to claim the refundable credit allowed under section 6431.

Tune into the Tax Credit Tuesday podcast on June 5 to hear more about this memo.

May

BILL WOULD EXPAND LIHTCs IN IRENE, LEE DISASTER AREAS

WASHINGTON, D.C. – May 24, 2012

Sen. Kirsten Gillibrand, D-N.Y., today introduced legislation to expand the low-income housing tax credit (LIHTC) for communities affected by Hurricane Irene and Tropical Storm Lee. The LIHTC has previously been expanded to encourage the development of affordable housing to help areas recover from natural disasters such the Gulf Opportunity (GO) Zone along the Gulf Coast following hurricanes Katrina and Rita in 2005 and the Midwest Disaster Area following extreme flooding in 2008. The text of the bill will be posted to the LIHTC legislation page when it becomes available.

IRS ISSUES GUIDANCE RELATED TO LIHTC PROPERTY DISPOSITION

WASHINGTON, D.C. – May 2, 2012

The Internal Revenue Service (IRS) today issued Revenue Procedure 2012-27, which describes how to make the notifications required to begin the three-year statutory period for assessing a deficiency resulting from a reduction in the qualified basis of a low-income housing tax credit (LIHTC) building that occurs after the taxpayer disposes of the building (or an interest therein). The guidance will be published in IRB 2012-21 dated May 21, 2012.

IRS TO ISSUE FINAL QUALIFIED CONTRACT REGULATIONS

WASHINGTON, D.C. – May 2, 2012

The Internal Revenue Service (IRS) will formally publish final regulations tomorrow regarding low-income housing tax credit (LIHTC) qualified contract rules. The final regulations provide guidance concerning LIHTC property owners’ requests to LIHTC agencies to obtain a qualified contract for the acquisition of an LIHTC building. The rules will affect owners requesting a qualified contract, potential buyers and agencies responsible for the administration of the LIHTC program. The final regulations are scheduled to be officially published in the May 3 Federal Register; click here for a copy of the pre-publication version of the final qualified contract regulations. Additional information on qualified contracts and related issues can be found on the Year 15 Hot Topics web page.

Questions about the final qualified contract regulations can be directed to Mike Morrison, CPA, at mike.morrison@novoco.com or (415) 356-8000.

Tune in to the May 8 Tax Credit Tuesday Podcast to hear Michael J. Novogradac, CPA, discuss the guidance and what it will mean for the LIHTC industry.

Join Novogradac & Company and LIHTC experts and practitioners to discuss what lies ahead for the LIHTC program at the Affordable Housing Tax Credit Conference: Meeting the Challenges of 2012, May 17-18, in New Orleans, La.

April

HUD DESIGNATES 2013 QUALIFIED CENSUS TRACTS

WASHINGTON, D.C. – April 24, 2012

The U.S. Department of Housing and Urban Development (HUD) has designated qualified census tracts (QCTs) for 2013 for purposes of the low-income housing tax credit (LIHTC) under Section 42 of the Internal Revenue Code (IRC). HUD based the 2013 QCTs on new data from the 2010 Decennial Census and the 2006-2010 tabulations of American Community Survey. This is the first time since 2007 that the QCTs have changed substantially, and the 2010 census tract boundaries and numbers may differ from those established in 2000. The 2013 QCTs will take effect on January 1, 2013. The 2012 difficult development areas (DDAs) designated in the October 27, 2011 Federal Register remain in effect. Questions about the QCTs transition rules can be directed to Jim Kroger, CPA, at (415) 356-8000.

Learn more about the benefits of developing in QCTs and DDAs by attending Affordable Housing Tax Credit Conference: Meeting the Challenges of 2012, May 17-18, in New Orleans, La.

March

GAO RELEASES REPORT ON TAX EXPENDITURES

WASHINGTON, D.C. – March 30, 2012

The Government Accountability Office (GAO) has released a report about measuring the effectiveness of community development tax expenditures including the low-income housing tax credit, new markets tax credit and historic tax credit, among others. The report, titled “Limited Information of the Use and Effectiveness of Tax Expenditures Could Be Mitigated through Congressional Attention,” suggests ways that Congress could improve its ability to assess tax expenditures. The report says that limited data has affected the ability of researchers to provide definitive results about the effectiveness of some community development tax expenditures.

Tune in to next week’s Tax Credit Tuesday Podcast to hear Michael J. Novogradac, CPA, discuss the report and GAO’s recommendations.

IRS RELEASES POPULATION ESTIMATES FOR 2012

WASHINGTON, D.C. – March 26, 2012

The Internal Revenue Service (IRS) today released its 2012 Calendar Year Resident Population Estimates. These figures are used to determine states' 2012 low-income housing tax credit (LIHTC) ceilings and tax-exempt private activity bond caps. Each state's LIHTC ceiling in 2012 is equal to the greater of $2.20 multiplied by the state population or $2,525,000; a state's tax-exempt bond volume cap will be the greater of $95 multiplied by the state population or $284,560,000. Notice 2012-22 includes the population estimates for each state, territory and insular area.

Join Novogradac & Company to discuss what lies ahead for the LIHTC program at the Affordable Housing Tax Credit Conference: Meeting the Challenges of 2012, May 17-18 in New Orleans, La.

UTAH ENACTS LIHTC PROPERTY TAXATION LAW

SALT LAKE CITY, Utah – March 22, 2012

Utah Gov. Gary Herbert last week signed H.B. 75 to require low-income housing tax credit (LIHTC) property owners to annually provide certain information to county assessors. Under the new law, owners must provide rent rolls and a financial operating statement for the prior year, a signed statement that the property continues to meet LIHTC requirements, and financing terms and agreements for the property. Owners who fail to provide this information before April 30 of each year will be subject to a penalty equal to the greater of $250 or 5 percent of the tax due on the property for that year. The law will take effect on January 1, 2013.

DALLAS DISTRICT COURT RULES AGAINST TDHCA IN DISPARATE IMPACT CLAIM

DALLAS, Texas – March 20, 2012

The Dallas Federal District Court today ruled in favor of the plaintiff in a lawsuit that challenged the Texas Department of Housing and Community Affairs’ (TDHCAs’) allocation of low-income housing tax credits (LIHTCs) in the Dallas metropolitan area. The court found that the plaintiff, The Inclusive Communities Project Inc. (ICP), proved its claim under the Fair Housing Act (FHA) that the agency’s allocation decisions have a disparate racial impact, albeit an unintentional one. TDHCA has 60 days to submit a remedial plan to address the FHA violations. There is a possibility that the ruling and the agency’s remedial actions could affect the release of TDHCA’s 2012 LIHTC allocations, according to the Texas Affiliation of Affordable Housing Providers.

To learn more about the ruling’s potential effects on LIHTC allocations in Texas, tune in to the March 27 Tax Credit Tuesday podcast. Questions about the ruling can be directed to George Littlejohn, CPA, at 512.340.0420.

REP. BACA INTRODUCES BILL TO FUND AFFORDABLE HOUSING

WASHINGTON, D.C. – March 9, 2012

Rep. Joe Baca, D-Calif., on Tuesday introduced H.R. 4144, the Strengthening Economic Development Through Affordable Housing Act. H.R. 4144 makes community housing development organizations eligible to receive direct funding from the State Small Business Credit Initiative (SBCI) funds for affordable housing development. The SBCI would provide not-for-profit agencies and community development corporations (CDCs) with access to funds necessary to improve blighted areas and spur economic development. The act amends Section 3003 of the State Small Business Credit Initiative Act of 2010. The bill was referred to the House Committee on Financial Services.

REPS. TIBERI AND NEAL URGE SUPPORT OF H.R. 3661

WASHINGTON, D.C. – March 2, 2012

Reps. Patrick Tiberi, R-Ohio, and Richard Neal, D-Mass., on February 28 sent a letter to members of Congress urging them to support H.R. 3661. H.R. 3661 would make permanent the fixed floor rate for 9 percent low-income housing tax credits that was enacted as part of the Housing and Economic Recovery Act. The letter says that developers will have to assume an 18 percent reduction in the amount of investor equity that they will be able to access as the 9 percent fixed floor expires. The representatives also describe the cost of the 2008 legislation as minimal.

February

OCC EXTENDS DEADLINE FOR CRA ACTIVITIES IN GULF COAST DISASTER AREA

WASHINGTON, D.C. – February 27, 2012

The Office of the Comptroller of the Currency (OCC) has extended the deadline for consideration of Community Reinvestment Act (CRA) activities in areas that were affected by hurricanes Rita and Katrina. The OCC is extending through December 31, 2014 the period that banks can receive CRA consideration for disaster recovery-related revitalization or stabilization activities. OCC Bulletin 2012-8 says weight will be given to activities that benefit low- and moderate-income individuals and areas and banks may receive CRA consideration if the activities are outside their assessment area, as long as they also meet the CRA-related needs of their local communities.

NPS RELEASES 2011 REPORT ON HISTORIC TAX CREDIT

WASHINGTON, D.C. – February 27, 2012

The National Park Service (NPS) has released its annual report on the historic tax credit (HTC) program for fiscal year (FY) 2011. The report, “Federal Tax Incentives for Rehabilitating Historic Buildings: Annual Report for Fiscal Year 2011,” includes information about the program’s use and performance throughout FY 2011. According to the NPS, the HTC has spurred $4.02 billion in new rehabilitation work, which created 55,458 jobs and 7,470 low- and moderate-income housing units. Along with the annual report, the NPS released “Federal Tax Incentives for Rehabilitating Historic Buildings: Statistical Report and Analysis for Fiscal Year 2011.” The statistical report provides a more detailed analysis of the program, including state-by-state project activity and program trends over time.

Questions about the HTC? Call Charlie Rhuda, CPA, at 617-330-1920 or Tom Boccia, CPA, at 216-298-9000.

PRESIDENT RELEASES BUSINESS TAX REFORM FRAMEWORK

WASHINGTON, D.C. – February 22, 2012

The White House and the U.S. Department of the Treasury today released “The President’s Framework for Business Tax Reform.” The document outlines President Obama’s five recommendations for business tax reform. The five elements include eliminating certain tax expenditures and reforming the business tax base; refocusing the manufacturing deduction and reducing the effective rate on manufacturing, while encouraging research and development and clean energy production; introducing a minimum tax on foreign earnings; making tax filing simpler for small businesses and entrepreneurs; and either eliminating or making permanent and fully paying for temporary tax provisions now in the tax code. Renewable energy tax credits are discussed addressed in the section on extending, consolidating and enhancing clean energy incentives, but the framework does not specifically mention low-income housing tax credits, new markets tax credit or historic tax credits.

Highlights of the plan can be found in today’s Notes from Novogradac blog post. Tune into the February 28 Tax Credit Tuesday podcast to hear more about the president’s tax reform plan.

PRESIDENT PROPOSES REFORM, EXPANSION OF HOUSING TAX CREDIT

WASHINGTON, D.C. – February 13, 2012

In the proposed fiscal year 2013 budget, released today, President Barack Obama proposes reforming and expanding the low-income housing tax credit (LIHTC). Specifically, the proposal would allow LIHTC properties to elect an average-income criterion, a provision that was also proposed in the fiscal year 2012 budget but not enacted. In addition, the Administration proposes allowing a 30-percent basis boost for LIHTCs for certain developments involving preservation, recapitalization and rehabilitation of ex­isting housing that was originally financed with federal funds and is subject to a long-term use agreement limiting occupancy to low-income households; making changes to make LIHTCs more beneficial to real estate investment trusts (REITs); and requiring LIHTC-supported housing to provide protections for victims of actual or threatened domestic violence.

Michael J. Novogradac, CPA, will discuss these proposals in more detail in tomorrow’s Tax Credit Tuesday podcast.

PILOT PROGRAM TO ACCELERATE LIHTC DEVELOPMENT FINANCING

WASHINGTON, D.C. – February 10, 2012

The Federal Housing Administration (FHA) today announced a pilot program to test an accelerated approval process for the purchase or refinancing of low-income housing tax credit (LIHTC) properties. The Multifamily Low Income Housing Tax Credit Pilot program aims to reduce the time needed to review and approve LIHTC-assisted financing applications from one year to 90 to 120 days by reducing the time required to review and approve financing applications under FHA’s Section 223(f) program. FHA is launching this first phase of the pilot program in Chicago, Detroit, Boston and Los Angeles.

VOLCKER RULE COMMENT PERIOD CLOSES MONDAY

WASHINGTON, D.C. – February 10, 2012

Organizations that wish to submit comments on a proposal to implement the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act commonly referred to as the Volcker Rule are reminded that the deadline to submit comments is Monday, February 13. The so-called Volcker Rule places certain prohibitions and restrictions on the ability of a banking entity and non-bank financial company to make certain kinds of equity investments, and thus could have significant implications for the tax credit equity market.

Because of the rule’s significance to the low-income housing tax credit (LIHTC), new markets tax credit (NMTC) and renewable energy tax credits, the LIHTC Working Group, NMTC Working Group and Renewable Energy Working Group will each submit comment letters on the proposed rule. 

IRS INVITES COMMENTS ON LIHTC PROPERTY INSPECTIONS

WASHINGTON, D.C. – February 8, 2012

The Internal Revenue Service (IRS) today issued Notice 2012-18 to inform state housing finance agencies (HFA) participating in the Physical Inspections Pilot Program of an alternate method of satisfying certain requirements under Section 42. The pilot program was created by the Rental Policy Working Group to test the feasibility of avoiding duplicative physical inspections by conducting one coordinated inspection. The IRS also invited comments on the 20 percent rule for physical inspections and certification rule under Section 42. Comments on these topics, or Notice 2012-18, should be submitted by May 31.

To learn more about Notice 2012-18 and the Physical Inspections Pilot Program, tune in to the Tax Credit Tuesday Podcast on February 14.

TCAC TO CONSIDER EXTENSION OF READINESS DEADLINE

SACRAMENTO, Calif. – February 7, 2012

The California Tax Credit Allocation Committee (TCAC) has proposed an extension of the readiness deadline to first-round 2011 low-income housing tax credit award recipients with redevelopment agency funding commitments. The 90-day extension would apply to awardees that have already received one 90-day extension. The current loan closing date is March 19, 2012; the extension would extend the closing date to June 18, 2012. TCAC will hold a hearing on the proposal and other proposed changes to the state’s qualified allocation plan on February 22.

Questions about redevelopment agency funding for LIHTC properties can be directed to James R. Kroger, CPA at jim.kroger@novoco.com.

CALIF. ASSEMBLY INTRODUCES BILL TO PRESERVE RDA HOUSING FUNDS

SACRAMENTO, Calif. – February 3, 2012

The California State Assembly yesterday introduced A.B. 1585, a proposal that preserves redevelopment agencies’ unencumbered Low/Mod-Income Housing funds, which local communities use to fund affordable housing development. Under Assembly Bill 1X26, which the California Supreme Court upheld in December, redevelopment agencies were eliminated February 1. A.B. 1585 is a companion bill to S.B. 654, which passed the state senate on January 31.

January

CALIFORNIA SENATE PASSES S.B. 654

WASHINGTON, D.C. – January 31, 2012

The California State Senate today passed S.B. 654, the proposal that preserves redevelopment agencies’ unencumbered Low/Mod-Income Housing funds, which local communities use to fund affordable housing development. Under Assembly Bill 1X26, which was upheld in December by the California Supreme Court, redevelopment agencies will be eliminated effective tomorrow, February 1. The bill, which passed the senate by a vote of 34 to 1, would preserve approximately $1.5 billion for affordable housing development. S.B. 654 will now be sent to the Assembly.

PRESIDENT PROPOSES NEW TAX CREDITS IN STATE OF THE UNION

WASHINGTON, D.C. – January 25, 2012

In last night’s State of the Union address, President Barack Obama proposed a new $6 billion Manufacturing Communities Tax Credit. The proposed tax credit would provide $2 billion per year for three years to encourage investments in communities affected by job loss caused by the closure of a military base or a major employer. The president also discussed tax reform, energy tax credits and housing.

In his Notes from Novogradac blog, Michael J. Novogradac, CPA, discusses relevant points from the address, additional information that has since been released, and what these proposals mean for programs such as the new markets tax credit, historic tax credit, low-income housing tax credit and renewable energy tax credit.

BILL INTRODUCED TO INCREASE LIHTCs FOR STATES DAMAGED BY HURRICANE IRENE

WASHINGTON, D.C. – January 18, 2012

Rep. Christopher Gibson, R-N.Y., last week introduced H.R. 3769, the Irene and Lee Tax Relief Storm Recovery Act. The act would increase the amount of low-income housing tax credits (LIHTCs) that may be allocated in states damaged in 2011 by Hurricane Irene or Tropical Storm Lee. Regions included in the Irene-Lee disaster area, which the bill defines as each county covered by a qualifying natural disaster declaration and contiguous counties, would also be designated as difficult development areas under the bill. H.R. 3769 was referred to the Ways and Means Committee.

RENTAL POLICY WORKING GROUP RELEASES REPORT

WASHINGTON, D.C. – January 3, 2012

The Rental Policy Working Group (RPWG) on December 31 released its administrative proposals for the alignment of federal affordable rental housing programs. The report, called “Federal Rental Alignment Administrative Proposals” proposes ways to reduce the cost and burden of various affordable housing programs operated by the U.S. Department of Agriculture, U.S. Department of Housing and Urban Development, U.S. Department of the Treasury and others. The suggestions include aligning physical inspections, income reporting, financial reporting, energy efficiency requirements, appraisals, market study standards, subsidy layering, capital needs assessments, data sharing on owner defaults and fair housing compliance enforcement. Learn more about the Obama Administration’s ongoing rental policy alignment initiative by visiting the Rental Policy Alignment Hot Topics page.

Want to discuss the rental alignment policies with your peers? There’s still time to register for the 18th Annual Tax Credit Developers Conference, January 12-13, in Miami, Fla.