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Novogradac Journal of Tax Credits Volume 1 Issue 6

The June 2010 issue of the Novogradac Journal of Tax Credits.

Journal cover June 2010

Articles

James R. Kroger

Tuesday, June 1, 2010

One year after the largest round in new markets tax credit (NMTC) history, community development entities (CDEs) are still hungry. “When we look at this round, it is very clear that there is a higher percentage of applications that scored very well,” said Brad Elphick, partner in the Atlanta office of Novogradac & Company LLP, of the Round 14 awards announced in February. “This tells me that the quality of applicants is getting better. Unfortunately, what that means for some CDEs [community development entities] is that really good applicants are not receiving an award.” Bob Rapoza, founder and president of Rapoza Associates and spokesman for the New Markets Tax Credit Coalition, said, “Competition is so keen that it’s very easy to score high on the application and still not receive credits.” The Community Development Financial Institutions (CDFI) Fund awarded $3.5 billion in allocation authority to 73 CDEs Feb. 13. The CDFI Fund selected awardees from a pool of 230 applicants who requested approximately $16.2 billion in allocation authority. The allocatees are headquartered in 29 states, the District of Columbia and Guam.“There was no dramatic change in the CDFI Fund’s focus,” said Matthew Philpott, senior vice president of NMTC and historic tax credit production at U.S. Bancorp Community Development Corporation (USBCDC), which received a $70 million award in the 2017 round. “This application looked similar to the previous year.”Paul Anderson, director of policy and

John Leith-Tetrault

Tuesday, June 1, 2010

Question: Can a new markets tax credit (NMTC) qualified equity investment (QEI) also qualify for qualified opportunity zones (OZ) incentives?Answer: There is nothing in the OZ statute that precludes a QEI from qualifying for OZ incentives. However, OZ is a new tax law and it is expected that guidance will be issued by Treasury. This guidance could impose restrictions. About Opportunity ZonesThe OZ incentives allow investors to defer (up to nine years) paying tax on gains if those gains are invested in qualified opportunity funds (QOFs) that in turn invest in OZ. OZs are generally 25 percent of a state’s low-income communities designated by the governor. To qualify, the gain must be invested in the QOF during a 180-day period that begins on the date of the sale or exchange that generated the gain. The deferral is temporary, as H.R. 1 (the legislation enacting opportunity zones) requires the gain be recognized on the earlier of Dec. 31, 2026, or the date the investment in the QOF is sold or exchanged. The amount of gain includible is the lesser of the amount of gain originally deferred or the excess of the fair market value of the investment over the taxpayer’s basis in the investment. For this purpose, the taxpayer’s basis in the QOF is deemed to be zero except as adjusted as discussed below.In addition to the deferral of gain, the provision incentivizes long-term investment by allowing for partial forgiveness (up to 15 percent) of the deferred gain. This is accomplished by

Michael J. Novogradac

Tuesday, June 1, 2010

By preserving history, Sunflower Development Group is creating affordable senior housing in the Tri-Blenheim neighborhood of Kansas City, Mo. “There are very limited options for rental apartments in the neighborhood,” said Mark Moberly, director of development at Sunflower Development Group, which has completed 15 historic tax credit (HTC) developments, with three more under construction. “This is a very heavy residential neighborhood. There are a lot of folks who want to move out of their single-family homes because of the burden of maintaining it.”Blenheim School, an elementary school built in 1924, is being transformed into 52 affordable apartments for seniors 55 and older. The development–Blenheim School Apartments–will include three studios, 35 one-bedroom and 14 two-bedroom apartments. Of the 52 apartments, 11 will be reserved for tenants earning up to 50 percent of the area median income (AMI), while the remaining 41 will be reserved for tenants earning up to 60 percent AMI. There will be a community room in the back of the auditorium building, which will have a common area with a television and couches, and a small library with a computer room. The Blenheim School Apartments will also include a common laundry facility. Because it is a former school, the development has plenty of parking and outdoor space for residents. Moberly said the apartments will be of high quality and will feature energy-efficient appliances, including an electric range, a microwave and a

Tony Grappone, Novogradac & Company LLP RETC Working Group

Tuesday, June 1, 2010

Question: Are payments received by taxpayers under section 1603 of the American Recovery and Reinvestment Act of 2009 includible in gross income for state income tax purposes?

Jennifer Dockery

Tuesday, June 1, 2010

Google Inc.’s first low-income housing tax credit (LIHTC) investment will end 227 California seniors’ search for affordable housing. In March the search engine company made a $25 million investment in two California affordable housing properties. The investment will fund the construction of Fair Oaks Plaza in Sunnyvale, Calif. and the acquisition and rehabilitation of Regency Towers Senior Housing in Inglewood, Calif. Google, one of the few companies outside the financial services industry to invest in LIHTCs, made the investment through a fund with Union Bank’s community development finance division.


News Briefs

Tuesday, June 1, 2010

A report from the National Low Income Housing Coalition (NLIHC) concluded that the recession has worsened an already severe housing crisis. Released in April, "Out of Reach 2010" calculated the amount a full-time worker must earn to afford the fair market rent (FMR) on a two-bedroom unit for every state...

Tuesday, June 1, 2010

The National Affordable Housing Management Association (NAHMA) last month released the NAHMA 2010 Affordable 100, a list of the 100 largest affordable multifamily property managers ranked by affordable unit counts. The Affordable 100...

Tuesday, June 1, 2010

On April 22, the Department of Housing and Urban Development (HUD) and Treasury Department published a notice seeking public input on establishing a more stable and sound housing finance system. As described in an announcement on April 14,...

Tuesday, June 1, 2010

In late April Ohio lawmakers considered two bills aimed at making the state's tangible personal property tax on generation for wind and solar projects competitive with other states. The American Wind Energy Association (AWEA) says that these bills, if adopted,...

Tuesday, June 1, 2010

The Community Development Financial Institutions (CDFI) Fund is soliciting comments concerning the conflict of interest reporting requirements for contract readers of applications submitted for funding or tax credit allocation authority under the CDFI Fund's award programs...

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