Notes from Novogradac
As the opportunity zone (OZ) incentive continues to gather momentum and interest, Novogradac has been tracking and compiling data on opportunity funds and their plans. In June, a post in this space provided the results of an initial survey of funds raised and related information. Since that writing, activity in the OZ community has continued and based on Novogradac research the amount of capital raised by qualified opportunity funds (QOFs) is nearly $2.5 billion.
On Aug. 30 the U.S. Department of Housing and Urban Development (HUD) published fair market rents (FMRs) for fiscal year (FY) 2020 in Federal Register Vol 84 No. 169. While HUD continuously strives to provide the most accurate FMRs, it is constrained by the data that is available. Occasionally, a user will believe that the FMRs calculated by HUD do not accurately reflect the rents for the area.
As more and more developers are exploring the average income minimum set-aside, one of the looming questions is how income limits should be calculated for units that are not using the 50 percent and 60 percent limit that are published by HUD for low-income housing tax credit (LIHTC) and tax-exempt bond developments.
The need for affordable rental housing nationwide is obvious. However, the cause of this shortfall is multifaceted. A recent survey and accompanying report produced by the National Apartment Association (NAA) provides more insight into some of those factors by examining what is preventing multifamily housing–both market-rate and affordable–from being built.
In July, California Gov. Gavin Newsom signed Assembly Bill 91, Loophole Closure and Small Business and Working Families Tax Relief Act of 2019 (A.B. 91). A.B. 91, authored by Assemblywoman Burke, Chair of the Assembly Committee on Taxation, selectively conforms California law to certain changes introduced in the 2017 federal tax reform bill (H.R. 1). It is estimated that A.B.
According to anecdotal reports, in 2018 many low-income housing tax credit (LIHTC) developers opted for their properties to use the average income minimum set-aside (AI). The number doubtless has increased dramatically in 2019. Some buildings may be under construction or have even been placed in service.
Low-income housing tax credit (LIHTC) allocating agencies have their work cut out in implementing the average income minimum set-aside (AI). The Internal Revenue Code (IRC) leaves many aspects unresolved. One of the most important is Section 42(g)(1)(C)(ii)(I): The provision uses the word “designate” but does not define what it means.
The new markets tax credit (NMTC) has been subject to reauthorization since 2006-most recently through the Protecting Americans from Tax Hikes Act (PATH Act, 2015) that extended the credit through calendar year 2019.
Congress last week moved closer to finalizing H.R. 3877, the Bipartisan Budget Act of 2019, a two-year $2.7 trillion budget deal that would raise spending caps for fiscal years (FY) 2020 and 2021 and suspend the debt limit until July 31, 2021. The bill raises nondefense spending by $25 billion (4 percent) in FY 2020 compared to the FY 2019 spending cap, and $79 billion (15 percent) more than current law FY 2020 spending cap as mandated by the Budget Control Act of 2011 (BCA), but $9 billion less than the amount set by the House earlier this year when drafting its FY 2020 spending bills.
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