Notes from Novogradac
On Jan. 3, the first day of the 116th Congress, the House of Representatives passed H.R. 21, the Consolidated Appropriations Act including funding for the Agriculture; Commerce, Justice, and Science; Financial Services and General Government, Interior and Environment; State and Foreign Operations; and Transportation-HUD (THUD) annual spending bills, enabling the federal agencies the bills fund to reopen during the partial government shutdown that began Dec. 21.
The Community Development Financial Institutions (CDFI) Fund recently released a summary report and public data on new markets tax credit (NMTC) investments through fiscal year (FY) 2016. Updated annually, the data once again reflects the flexibility of the NMTC with respect to the types of businesses financed with flexible or non-traditional rates and terms.
With Democrats taking control of the House, of the numerous issues that may find their way to Congress’s 2019 docket, infrastructure is one of the most notable. Infrastructure saw much fanfare in 2017 through mid-2018, especially with the release of the administration’s infrastructure principles in February, but progress stalled because of lack of agreement. And now, the subject is seeing renewed interest as infrastructure is one of the few major issues that could garner bipartisan support in the current political climate.
How we got Here
In November, the Community Development Financial Institutions (CDFI) Fund released data that reveal the diversity of institution types (i.e. banks, credit unions, loan funds and venture funds), products and services offered by CDFI Fund awardees, and resulting impacts in low-income communities.
The New Markets Tax Credit (NMTC) program was authorized as part of the Community Renewal and Tax Relief Act of 2000. Since then, the Community Development Financial Institutions (CDFI) Fund has made 1,105 awards totaling $54 billion in tax credit authority. Out of the pool of successful allocatees, only 12 awards or approximately 1 percent have gone to either an affiliate of a credit union (Self Help Ventures Fund) or the sponsor of a credit union (Hope Enterprise Corporation).
What Credit Unions should know about the NMTC
Harvard’s Joint Center for Housing Studies (JCHS), as part of its ongoing analysis of the State of the Nation’s Housing Report, recently released a look at characteristics of older adult households. Housing America’s Older Adults 2018, the latest in a series of JCHS reports on housing older adults, looks at 2016 data for older adult households, those headed by individuals 50 years of age or older.
Forty years ago this month–Nov. 6, 1978–President Jimmy Carter signed legislation that created America’s first federal historic tax credit (HTC), a 10 percent investment tax credit for commercial buildings that were at least 20 years old and retained at least 75 percent of their existing walls.
Not all states issue multifamily private activity bonds (PABs) each year, and the number of states issuing no multifamily PABs has varied widely since 2000, according to data reported by the Council of Development Finance Agencies (CDFA). The lowest number of states issuing no multifamily PABs was 2003, with only seven states reporting no issuance of multifamily PABs. With the onset of the financial crisis, that number grew to 30 in 2011. As the nation recovered, the number of states issuing no multifamily PABs fell to 10 in 2016, increasing slightly to 11 in 2017.
As more and more developers and state agencies explore income averaging, one of the biggest questions is what happens if a unit goes out of compliance. Unfortunately, this is a difficult question to answer without knowing the details of the low-income housing tax credit (LIHTC) project, and in some cases without more information from the IRS. This discussion will examine some of the most hotly discussed topics around non-compliance in LIHTC projects that have elected the average income minimum set-aside.
Impact of the Minimum Set-Aside
The Internal Revenue Service published Revenue Procedure 2018-55, announcing the amounts of unused low-income housing tax credit (LIHTC) carryovers allocated to qualified states for calendar year 2018. The $2.69 million of unused LIHTC carryovers was placed in a national pool and reallocated to 32 qualified states and Puerto Rico.
About the National Pool
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