Novogradac Journal of Tax Credits Volume 8 Issue 7

Gallman Development Group knew the M.C. Kiser Building, a former shoe manufacturing facility in the south side of downtown Atlanta, would be a perfect fit for market-rate apartments. 

One of America’s first shelters for battered women is getting a significant upgrade by adding beds, enhancing programs and upgrading its security, thanks to equity leveraged using  new markets tax credits (NMTCs). 

Once upon a time, the Internal Revenue Service (IRS) audited partnerships (and LLCs, which are generally taxed as partnerships) by auditing the individual partners. This was full of difficulties–the individual partners didn’t necessarily have access to the relevant data, audits of different partners might yield different results (or even no audit for some), with multiple costs to do much the same investigation multiple times.

Question: At my low-income housing tax credit (LIHTC) property, we often have changes in household composition caused by adding or removing household members after the initial move-in. Would the unit cease to be treated as a low-income unit if the change in household composition puts the household income over the applicable income limit?

Low-income housing tax credit (LIHTC) transactions struggled to close, developers scrambled for gap funding to help their deals pencil out and state allocating agencies strategized to help prevent much-needed affordable housing developments from staying stuck in the pipeline. That was the story of the LIHTC market following November’s presidential election through the first few months of 2017–a far cry from the “frothy” investment landscape that characterized the better part of 2016. Fortunately for the affordable housing community, industry experts herald a stabilized market as investors return, albeit at different pricing and yield parameters. 

H.R. 2413 was introduced May 11 in the U.S. House of Representatives. Also known as the Offshore Wind Incentives for New Development Act or Offshore WIND Act, the bill would amend the Internal Revenue Code of 1986 to extend the 30 percent investment tax credit (ITC) for offshore wind properties through the year 2025. The ITC is into a phasedown under which it will drop from the current 30 percent to 26 percent in the year 2020 and eventually to a permanent 10 percent credit starting in 2022. Under this legislation, the ITC would remain at 30 percent for qualified offshore wind property through the end of the year 2025. The bill was introduced by Sens. Edward J. Markey, D-Mass., and Sheldon Whitehouse, D-R.I. H.R. 2413 (S. 1102 in the Senate) is available at www.energytaxcredits.com.

The CDFI Fund published May 26 an updated version of its calendar year (CY) 2017 New Markets Tax Credit Program Allocation Application Frequently Asked Questions. The supplemental guidance includes topics such as proposed financial product rates and terms, pipeline projects, track record of past investment activities and information on previous allocations. The updated document is in response to questions the CDFI Fund received during application round conference calls May 9 and 11. The updated FAQs document is available at www.newmarketscredits.com. 

Alabama House Bill 345 was enacted May 24 and authorizes a new refundable state historic tax credit (HTC) program. The program will make up to an aggregate $100 million available for tax years 2018 through 2022. A previous state HTC program expired in 2016 after legislation to renew it died in committee. H.B. 345 is available at www.historictaxcredits.com.

The U.S. Department of Housing and Urban Development (HUD) announced May 11 that its Rental Assistance Demonstration (RAD) program officially surpassed $4 billion in capital investment in the nation’s affordable housing stock. The funds are used to make critical repairs and improvements to affordable housing. The RAD program doubled capital in one year, with the program leveraging $19 in capital for every $1 of public housing funds. Ben Carson, HUD secretary, said in a press release that through the innovative RAD program, housing authorities can begin to address the backlog of capital repairs needed in their public housing stock and that reaching this $4 billion milestone means expanding opportunity for more families and ensuring they have access to quality, healthy, affordable housing. HUD has made awards to public housing agencies throughout the country for all the 185,000 units currently authorized to participate in RAD and estimates an additional $6 billion in new, largely privately funded construction investments will be made in the public housing units authorized to participate in RAD. In response to high demand from housing authorities to use RAD, the fiscal year 2017 omnibus budget signed by the president raises the RAD cap to 225,000 units from 185,000 units.

Mississippi Home Corporation’s (MHC’s) additions to the compliance monitoring plan for 2017 were effective May 1. Changes were made to the general policies and procedures section; Chapter 3: State Compliance Requirements; Chapter 4: Determining and Documenting Household Eligibility; Chapter 5, Income and Asset Determination and Responsibilities; and Chapter 7, Compliance Reporting and Administrative Responsibilities. In addition, one form was introduced, the Office of Rent Administration Lease Addendum, and two were revised, the Certification of Tip Income and the Employment Verification form. The additions were announced April 11-13 at its Annual Affordable Housing Conference in Biloxi, Miss.