Groups Submit Comments to the IRS on Concerted Community Revitalization Plans

Published by Mark Shelburne on Monday, March 6, 2017 - 12:00am

In December, the Internal Revenue Service (IRS) issued two documents relating to the allocation of low-income housing tax credits (LIHTC), Notice 2016-77 and Revenue Ruling 2016-29. An article explaining this guidance appears in the March issue of the Novogradac Journal of Tax Credits.

One purpose of the notice was to request input. Internal Revenue Code Section 42(m)(1)(B)(ii)(III) requires LIHTC allocating agencies give a preference to developments which contribute to a concerted community revitalization plan (CCRP) and also are located in a qualified census tract (QCT). Since there is no federal definition of what constitutes a CCRP, the notice says the IRS is “considering providing guidance to clarify the preference” and asked for comments from the public.

Below are highlights from six letters submitted, including two examples from three different perspectives: allocating agencies, community development organizations and fair housing advocates.

National Council of State Housing Agencies

NCSHA’s letter states it is “inappropriate for Treasury and IRS to establish a one-size-fits-all federal definition” of CCPRs. “We fear that such a definition would be overly prescriptive, difficult to modify should that be necessary, and needlessly burdensome.” NCSHA said it is unaware of instances where agencies have “given preference to projects that are located in QCTs without regard to whether the projects contribute to a concerted community revitalization plan.” Since the 1990s NCSHA has maintained “Recommended Practices in Housing Credit Administration.” Another update is now underway, which will involve seeking comments from “Fair Housing and Civil Rights groups.”

Minnesota Housing Finance Agency

In its comment letter, MHFA emphasized the need for “flexibility to establish criteria in response to local market conditions.” The federal government should “avoid requiring numerical metrics … For example, guidance could include that a plan be current, but should not require the plan to be current within a specific time period.” MHFA said any requirement should recognize CCRPs can be more than single document, and instead be “a broader set of documents/plans, construing a coordinated revitalization strategy.” Under MHFA rules, a CCRP qualifies for the preference if it is actively working or recently developed, includes specific geographic targeting, and has housing as a key component.

National Housing Trust

NHT wrote in its letter that LIHTC allocators “are the most appropriate entities for providing guidance for and evaluating” CCRPs. The group said CCRPs definitions may evolve over time “based on what experience demonstrates works best” and to respond to changing “market conditions and demographics.” NHT said it is “deeply concerned” that federal guidance “would not adequately reflect the range of conditions under which revitalization may be fostered, inadvertently excluding and preventing [LIHTCs] from being allocated to support revitalization in situations” federal regulators did not anticipate. Furthermore, the letter said the “preservation of valuable affordable housing occupied by low income households should not be forfeited simply because the local government does not have the capacity, resources, or time to develop a CCRP.”

Local Initiatives Support Corporation

LISC’s letter cited research by Novogradac & Company which found “the vast majority of qualified allocation plans (QAPs) already require specific plans in order for a project to receive the CCRP preference.” As such, LISC said allocators should be left to “define the components of a CCRP and to verify that the criteria are being met... any federal minimum runs the risk of being over or under inclusive of what makes sense.” LISC did recognize some federal guidance “may prove helpful as a resource.” LISC said CCRPs should be comprehensive, addressing not only housing needs but also access “jobs, transportation, commercial amenities, child care or healthcare centers, educational facilities, and safe, open spaces.” The letter also suggests process for creating one should involve soliciting input from “community residents and other stakeholders.”

Poverty and Race Research Action Council

In its letter, PRRAC said the “guidance should identify clear minimum threshold criteria” for CCRPs, including requirements for the following:

  1. clear geographic boundaries for the community;
  2. describe the community, including infrastructure, demographics, and economic characteristics;
  3. identify any planned or ongoing private or public development;
  4. enumerate non-housing resources committed to development;
  5. discuss the need for housing and non-housing development;
  6. reference any applicable state and federal revitalization programs;
  7. select feasible and meaningful revitalization goals;
  8. identify barriers to housing and non-housing revitalization;
  9. delineate measures to be taken and a timeline for implementation; and
  10. engage community partners and individuals in revitalization and planning.

Ohio Legal Aid

A coalition of Legal Aid and fair housing organizations wrote together, urging the IRS “to discourage awards of [LIHTCs] in any QCT lacking a [CCRP] by providing clear guidance.” In their view, in order to be effective a CCRP must include “development strategies beyond housing that will contribute to access to opportunity,” “strategies to improve neighborhood schools, create access for residents to local, high-performing schools, or both,” “investment in neighborhood businesses,” and “access to public transportation.” The letter said CCRPs must “support a car-free life-style for local residents because for many consumers of low-income housing, owning a car is not an option.”