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Notes from Novogradac
Given the state of the nation’s infrastructure and the ability of infrastructure to assist in the economic recovery from the COVID-19 pandemic, many advocates have pushed for infrastructure funding to be included in the COVID-19 spending packages to date. Addressing the country’s infrastructure needs has been one of the few issues both Democrats and Republicans could rally behind.
The Affordable Housing Credit Improvement Act of 2019 (AHCIA) includes several provisions that affect boosts to eligible basis (similar provisions were included in the 2017 version of AHCIA). If enacted, these provisions could make the low-income housing tax credit (LIHTC) more productive and effective.
The coronavirus pandemic has swept the United States with more than 1.3 million cases and counting. While the pandemic has had huge health and economic impacts nationally, it is disproportionately affecting low-income, minority and rural communities that desperately needed investment even before COVID-19. The new markets tax credit (NMTC) is designed to serve these communities in the form of investments that support small businesses, manufacturing, and community-based facilities like hospitals and health clinics. As such, the NMTC can be an important tool in the nation’s economic recovery moving forward.
On May 14 California Governor Gavin Newsom proposed a revised budget that addresses what will be severe COVID-19 related revenue shortfalls. To help raise revenue over the near term, many changes are proposed, including a “three-year suspension of net operating losses and limitation on business incentive tax credits to offset no more than $5 million of tax liability per year.”
A change in a 30-year-old statutory provision for tax-exempt private activity bond (PAB) financing for affordable rental housing could result in hundreds of thousands of additional homes being built or preserved over a decade–a change that could also rescue some properties whose construction is endangered by the COVID-19 pandemic.
The new markets tax credit (NMTC) equity market—like so many others—is affected by the COVID-19 pandemic.
However, the incentive helps finance many of the deemed ‘essential businesses.’
“The types of businesses we are financing are the ones whose work is needed now more than ever,” said Gina Nisbeth, director at Citi Community Capital. Nisbeth said those business sectors include grocery stores, education, manufacturing and health care.
On May 15, the House passed H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), a $3 trillion “phase 4” bill providing supplemental funding and other provisions in response to the COVID-19 pandemic.
Community Development Financial Institutions (CDFI) Fund director Jodie Harris announced May 6 a request for public comment (RPC) on proposed changes to the CDFI Certification Application as well as a RPC on proposed changes to the Annual Certification and Data Collection Report (ACR) and a new Certification Transaction Level Report (CTLR).
The COVID-19 pandemic will almost certainly result in an economic recession, although the magnitude is unclear. Conventional wisdom suggests that owners of low-income housing tax credit (LIHTC) properties will face a decrease in occupancy rates and rental income.
While the COVID-19 pandemic continues to severely affect the nation’s health care and economy, among the many markets experiencing negative effects are the wind and solar industries. The Solar Energy Industry Association (SEIA) and the American Wind Energy Association (AWEA) have been releasing reports and statements describing these effects and attempting to answer the overarching question: How can Congress protect these vulnerable industries during this time?
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