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Journal of Tax Credits Volume 1 Issue 10
Articles
Expanding the investor base of the low-income housing tax credit (LIHTC) program is a top priority for professionals in all sectors of the affordable housing community. While much attention has been focused on legislative changes—such as extending the current law LIHTC carryback from one to five years and altering the passive activity rules—there are a number of approaches to expanding the investor base that don’t require federal tax legislation.
It’s one of the biggest fears of the low-income housing tax credit industry — recapture. The subject haunts investors, syndicators, developers, lenders, lawyers, accountants and property managers alike. It is the dirty word of the industry that no one wants to hear—especially when the context involves one of his or her projects. Hopefully you will never need to face this ugly villain, but occasionally it is necessary to take the monster out of the closet and expose it so that we can understand the risks and what needs to be done to avoid those risks.
The U.S. Department of Housing and Urban Development (HUD) issued a final rule in August prohibiting required escrowing of tax credit equity and announcing other changes to reduce burdens on tax credit transactions. Previously, the Federal Housing Administration’s (FHA’s) multifamily mortgage insurance regulations required a substantial portion of the tax credit sales proceeds to be placed in escrow at the time of initial endorsement to assure project completion.
Funding a historic building renovation with historic tax credits (HTCs) can be an uncertain undertaking. The HTCs are not awarded until after the National Park Service (NPS) certifies the building, and the NPS does not certify the building until after the developer completes millions of dollars of renovations. Although NPS issues guidance on the program, it judges each building on a case-by-case basis, so there is no guarantee that materials used on one building will be compliant on another building.
Question: How is fair market value determined for renewable energy assets?
News Briefs
The Treasury Department in response to a recent survey’s finding that state housing agencies sought further clarification on recapture events released guidance in August for Section 1602 low-income housing tax credit (LIHTC) exchange funds.
The Ohio Housing Finance Agency’s (OHFA’s) office of program compliance has updated the state’s affirmative fair housing marketing plan (AFHMP) form and instructions.
On August 25, the U.S. Department of Housing and Urban Development (HUD) announced the availability of $189 million in combined grants for the HOPE VI Revitalization program and the Choice Neighborhoods pilot initiative.
The Michigan Economic Development Corporation (MEDC) has approved incentives for 12 business projects and one brownfield development project that are expected to bring more than 4,000 jobs and nearly $100 million in new investment to the state.
The Community Development Financial Institutions (CDFI) Fund posted submissions received in response to its request for public comment concerning improving its data collection system, the Community Investment Impact System.
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