Novogradac Journal of Tax Credits Volume 12 Issue 10

One-hundred community development entities (CDEs) got good news Sept. 1 when the Community Development Financial Institutions (CDFI) Fund announced calendar-year 2020 (CY 2020) new markets tax credit (NMTC) allocation awards.

There is unprecedented demand for private activity tax-exempt housing bonds paired with 4% low-income housing tax credits (LIHTCs), driven by several factors, including a recently enacted minimum 4% credit rate. This increased demand for tax-exempt bonds paired with the 4% LIHTC has prompted several states to change the way they approach tax-exempt bond allocations, making it all the more critical for developers to understand the nuances of the 50% test.

Certain low-income housing tax credit (LIHTC) compliance relief that was issued because of the pandemic delayed the scheduled implementation of new inspection requirements.

After years of advocacy, education and lobbying by the Affordable Housing Tax Credit Coalition and others in the affordable housing community, the Consolidated Appropriations Act of 2021 was signed into law Dec. 27, 2020, effectively “fixing” the 4% low-income housing tax credit (LIHTC).

For several years now, across the nation, competition for multifamily private activity bonds (PABs) has been increasing. Every year, a few more states find that they have more applications for affordable housing PAB financing than they can fund. Affordable housing PAB issuance set a new recorded high in 2019, according to the Council of Development Finance Agencies (CDFA), and when 2020 reporting is complete, we anticipate yet another record high.

Hunt Associated Bank coordinated $43.8 million in financing for developer Cedar Street to redevelop the Bridgeview Bank building in Chicago. Formerly the Sheridan Trust and Savings Bank Building, the 12-story, mixed-use property is slated to become 176 apartments along with office space. Associated arranged a $35.4 million construction loan as well as a $3.4 million bridge loan for federal historic tax credits (HTCs). Associated Community Developed provided $5 million in federal HTC equity. The construction, planned to take place in two phases, is scheduled for completion in mid-2022 and the first quarter of 2023.***MVB Financial Corp. invested $1.2 million in state and federal HTCs in a $4 million development to renovate the historic Granada Theater in Bluefield, West Virginia. The 500-seat venue will have movies, music, dance and live theater. The venue, which opened in 1928, hosted a reopening ceremony in August with screenings of “Looney Tunes” cartoons and “The Lego Movie.”***Legislation introduced in August in the House of Representatives would provide an increase in the HTC for supermarkets in underserved areas. H.R. 4687 would increase the HTC for qualified rehabilitation expenditures for properties that fit the definition of supermarkets in underserved areas from 20% to 24%. The bill would be effective for taxable years beginning after Dec. 31, 2021. The bill also would increase the work opportunity tax credit and create a tax credit for 15% of the gross receipts of

AmeriCorps and the U.S. Department of the Treasury announced Aug. 11 three Community Development Financial Institutions (CDFIs) were awarded more than $2.5 million through the inaugural round of the AmeriCorps CDFI Economic Mobility Corps program.

The Internal Revenue Service (IRS) published a private letter ruling July 30 stating that facilities that generate solar electricity are not public utility property (PUP) under the Internal Revenue Code. PLR 202130005 clarifies that those facilities should not be treated as a PUP owned by a public utility or by the financial institution contributing capital. The IRS based the ruling on the fact that each partnership in a transaction will charge market-based rates to the operator for the electricity produced by the solar facilities. While the PLR applies only to the taxpayer involved, the ruling would make it more tax-efficient for regulated utilities to own and operate renewable energy and clean-tech facilities.***An August report from the U.S. Department of Energy (DOE) showed wind power capacity was added at record pace in 2020. The nation added 16,836 megawatts (MW) totaling $24.6 billion, with Texas’ installation capacity (4,137 MW) far exceeding any other state for the year. Internationally, the United States was second only to China for the year and for overall cumulative capacity. Wind turbine prices average between $775 and $850 per kilowatt, down more than 40% from 2010 costs.***The Inclusive Community Solar Adder program launched in July to make $52.5 million available for community solar projects in New York to help underserved New Yorkers and disadvantaged communities, aims to help up to 50,000 low to moderate income homes, affordable housing providers and

The U.S. Department of Housing and Urban Development (HUD) published in the Aug. 6 Federal Register a notice of fiscal year 2022 (FY 22) fair market rents (FMRs) for the Housing Choice Voucher program, Moderate Rehabilitation Single-Occupancy program and other HUD programs. The notice provides a description of FMR methodology, lists area definition changes and provides information on FMR re-evaluations. HUD provides an FMR schedule for metropolitan and nonmetropolitan areas and for small areas. Comments on the notice were due Sept. 30 and the FMRs take effect Oct. 1.***HUD awarded Aug. 26 nearly $95 million to government agencies to protect children and families from lead-based paint and other home health hazards. The Lead Based Paint Hazard Reduction Grant Program funds are scheduled to go to 28 state agencies and 19 local government agencies for cleanup. The funds are expected to help more than 3,700 homes combat lead-based paint and other lead-based hazards.***Hartford Terrace, a decades-old public housing apartment building in Muskegon, Michigan, is set for an $18 million renovation thanks to low-income housing tax credit equity from $14.4 million in allocations. The renovation is a Rental Assistance Demonstration transaction. The Muskegon Housing Commission operates the building, which has 160 one-bedroom apartments for those elderly or disabled and earning up to 30% of the area median income. The property was built in 1973.

Minnesota Housing released in August the Housing Support Rental Assistance Worksheet to help determine when funds from its Housing Support program can be considered rental assistance. The worksheet is a resource to prevent rent violations. Minnesota Housing encouraged using the worksheet for new and existing tenants. The Housing Support program pays for room and board for seniors and adults with disabilities who have low incomes.***New Hampshire Housing Finance Authority issued a reminder Aug. 27 to owners of low-income housing tax credit properties that transfer of partnership interest after the 15th year of compliance requires prior written consent. While acknowledging consent is often granted, the agency asked for owners to “provide [it] with notice early in the process” when such transfers are desired. The notice can be provided to the asset manager assigned to the property.***The Nebraska Investment Finance Authority updated Aug. 21 its guidance for inspections, which will inspect only building exteriors through 2021. Guidance for 2022 is expected at a later date. Additionally, owners will not be penalized for temporarily suspending supportive services that include organized tenant activities or group settings during the pandemic. Owners are asked to provide a document in their files stating the reason for the cancellation/postponement, along with copies of any notification to tenants.