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Notes from Novogradac
Affordable rental housing properties across the nation will soon face difficulties covering their expenses as tenants in many thousands of apartments stop paying rent. The historic levels of unemployment mean households have less or no income, and the new federal moratorium on evictions (or similar state/local limits) could result in paying rent being less of an immediate priority for residents than other needs.
The CARES Act imposes a 120-day moratorium on tenant eviction filings and charging late fees for almost all of the nation’s affordable housing properties.
As the COVID-19 pandemic continues and the federal government works to mitigate both the health and economic fallout, operators of low-income housing tax credit (LIHTC) properties face the reality of a decline in short-term rent receipts. The amount of rent received–starting Wednesday, April 1–will drop, with the central questions being how far and for how long. The depth and length of the decline and how tenants, owners, lenders, investors and governments react to the decline will affect both individual properties and, more broadly, the future of affordable housing.
[Updated March 31, 2020; 9:20 p.m.; originally titled Senate Leadership Agrees to nearly $2 Trillion Phase 3 COVID-19 Response Bill]
Today, President Trump signed the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act (H.R. 748). The bill contains numerous tax, grant, and loan provisions designed to provide financial aid to individuals, businesses, nonprofits and state and local governments, to help address the tremendous health and economic fallout from the public health emergency.
Although it is likely too early to understand the long term effects of the COVID-19 pandemic on the economy, there are a lot of questions about the 2020 income limits that are anticipated to be released in the coming weeks. In short, the 2020 limits will not be impacted by COVID-19, but there likely will be consequences for 2021 and beyond.
On Feb. 5, the House Financial Services Subcommittee on Housing, Community Development, and Insurance held a hearing entitled “A Future Without Public Housing? Examining the Trump Administration’s Efforts to Eliminate Public Housing.”
https://www.fema.gov/disaster/4482On March 13 the White House declared the COVID-19 public health crisis a national emergency.
The agencies responsible for administering the low-income housing tax credit (LIHTC) have hard-earned experience dealing with challenges and disasters. Whether its legislation enacted with no notice, historic hurricanes/flooding, or sudden equity market changes, allocators respond quickly and effectively.
The Internal Revenue Service recently released the population figures used to calculate calendar year 2020 low-income housing tax credit (LIHTC) and private activity bond (PAB) limits for all 50 states, Washington, D.C., and U.S. territories (see Notice 2020-10).
The Tax Policy Center (TPC) recently released a paper titled "Are Tax Expenditures Worth the Money?" that critically misunderstands housing and community development tax incentives and as a result mischaracterizes their value.
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