Legislation introduced this week in the Colorado General Assembly would extend the state low-income housing tax credit (LIHTC) through 2034 and increase the annual allocation cap from $10 million to $15 million beginning in 2023. HB22-1051 would extend the incentive, which is set to sunset at the end of 2024. The Colorado credit pairs with federal LIHTCs and has developed or preserved more than 8,000 units since its enactment in 2015, according to the Colorado Housing Finance Agency.
Legislation to create a state low-income housing tax credit (LIHTC) was introduced this week in the Illinois House of Representatives. H.B. 4596 would create the Build Illinois Home Tax Credit, which would have a statewide annual cap of $35 million, of which 75.5% would be allocated by the Illinois Housing Development Authority, with the remainder allocated by the City of Chicago Department of Housing. The credit could be taken over 10 years and carried forward five years. Any federal recapture would result in state recapture. The credit would be for taxable years after Jan. 1, 2023. Illinois currently has an affordable housing tax credit for 50% of a donation of money, securities, real estate or personal property to a nonprofit affordable housing sponsor for an affordable housing project.
A bill introduced this week in the Washington Senate would require the state housing finance commission to amend internal policies and project scoring criteria to encourage more private developer involvement in the state’s allocation of 9% low-income housing tax credits (LIHTCs). S.B. 5759 cites a state report that indicates private developers could build units at 87% the cost of nonprofit developers and 78% of the cost of governmental agencies and the need for a more diverse mix of developers for affordable housing.
Legislation introduced in the Indiana Senate would create a state low-income housing tax credit (LIHTC) worth 40% to 100% of the federal 4% LIHTC awarded to an affordable housing property. S.B. 262 would create Indiana affordable and workforce housing tax credits for affordable housing financed with private activity bonds (PABs) and 4% LIHTCs. The credits would be for five years and could be carried forward up to nine years. There would be a statewide cap of $30 million for fiscal years beginning after June 30, 2023, and before July 1, 2028.
The California Debt Limit Allocation Committee (CDLAC) will consider a proposal at a committee meeting Wednesday to hold just two allocation rounds for the state’s private activity bond (PAB) allocations for multifamily affordable housing. CDLAC has generally held three allocation rounds, but the proposal–recommended for approval by staff–calls for application deadlines of March 16 and July 7 only, with committee meetings to make the awards June 15 and Oct. 19.
The Internal Revenue Service (IRS) published a private letter ruling last week granting an extension to a taxpayer that filled out IRS Forms 8609 with incorrect information. PLR-202202002 states the taxpayer intended to begin the low-income housing tax credit (LIHTC) period in the year after the building was placed in service, but instead erroneously entered the date as the year service began. The taxpayer was granted an additional 120 days to make its elections. PLRs are directed only to the taxpayer requesting them and may not be used or cited as precedents.
Legislation introduced in the Virginia House of Representatives would expand the state low-income housing tax credit (LIHTC) to qualified special population developments, with a maximum of $2.5 million annually granted to such properties. H.B. 824 would make eligible low-income buildings that grant housing for individuals who have been issued an intellectual disability or developmental disability waiver, require behavioral health treatment or services, or require treatment or services for substance abuse and abuse recovery.
Legislation introduced in the Missouri Legislature would limit the annual allocation of the state low-income housing tax credit (LIHTC) to 70% of the federal 9% LIHTC allocation amount and reduce the state’s 4% LIHTC annual cap from $6 million to $4 million. S.B. 860 is similar to legislation that has been introduced in each of the previous five years.
The interaction of state and federal LIHTCs are among the topics at the virtual Novogradac 2022 Affordable Housing Developers Conference, beginning Thursday.
The Internal Revenue Service (IRS) will release a notice in Friday’s Internal Revenue Bulletin extending widespread temporary relief from certain requirements for low-income housing tax credit (LIHTC)-financed and private activity bond (PAB)-financed properties due to the COVID-19 pandemic.
Legislation introduced in the Kentucky House of Representatives this week would create a state low-income housing tax credit (LIHTC). H.B. 86 would create the Kentucky affordable housing credit would allow applications beginning Jan. 1, 2023, with an annual statewide ceiling of $12.5 million beginning in 2025. The state credit would be approved for five years, beginning with the first year credits are allocated.
A bill introduced in the New York State Assembly would expand the state low-income housing tax credit (LIHTC) to cover certain single-family homes. AB 5630 would add to the definition of qualified residences for the LIHTC, single-family homes with one to four units or condominiums.
Legislation in the Virginia state Senate would increase the annual allocation amount for the state low-income housing tax credit (LIHTC) from $15 million to $150 million per year, plus any credit amount recaptured or disallowed the previous year. S.B. 47 applies to the Virginia housing opportunity tax credit, which was signed into law in April 2021.
The future of the Build Back Better Act (BBBA) and related community development incentives after Sen. Joe Manchin’s announcement that he would not vote for the legislation is the subject of this week’s Tax Credit Tuesday episode. Michael Novogradac, CPA, is joined by Peter Lawrence, Novogradac director of public policy and government relations, and Tony Grappone, CPA, to discuss what’s next for potential tax extenders legislation, what tax incentive provisions could be included in a future version of the BBBA and more.
The Federal Housing Finance Agency (FHFA) today issued a final rule that establishes 2022 benchmark levels for multifamily housing goals for Fannie Mae and Freddie Mac (the Enterprises). The goals are for the Enterprises to purchase mortgages on low-income multifamily properties with 415,000 units, with 88,000 of those units for very-low-income residents. The subgoal for small multifamily properties (five to 50 units) is 17,000 units for Fannie Mae and 23,000 units for Freddie Mac. The FHFA also released benchmark levels for 2022-2024 for single-family housing, but due to public comments on the proposed rule and the differential impact of COVID-19 on various multifamily origination segments, the multifamily goals apply to 2022 only.
The Federal Housing Finance Agency (FHFA) today announced that in 2020 Fannie Mae met all of its single-family and multifamily housing goals, while Freddie Mac met all goals except the low-income refinance goals. FHFA notified Freddie Mac that it must prepare a housing plan describing actions it will take in 2022-2024 to improve its performance on the low-income refinance goal.
In response to last weekend’s swarm of tornadoes, the Kentucky Housing Corporation (KHC) today reminded affordable housing providers of federal assistance and options available under Revenue Procedure (Rev. Proc.) 2014-49 and 2014-50. KHC’s announcement included when to contact the agency concerning available units, uninhabitable units and major property damage. Under Rev. Proc. 2014-49 and 2014-50, low-income housing tax credit- (LIHTC-) and private-activity bond- (PAB-)financed properties have temporary relief from certain requirements of Internal Revenue Code (IRC) Section 42, as well as emergency housing relief for individuals displaced by a major disaster.
The Office of the Comptroller of the Currency (OCC) today issued a final rule to rescind the Community Reinvestment Act (CRA) rule it issued in June 2020. Today’s action replaces the 2020 rule with a rule based on rules adopted by the OCC, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) in 1995, as amended. The final rule applies to national banks, federal savings associations and state savings associations. The updated rule takes effect Jan. 1, 2022.
The Community Development Financial Institutions (CDFI) Fund today announced that 146 organizations submitted applications requesting more than $991.8 million in funding in the fiscal year 2021 (FY 2021) round of the Capital Magnet Fund (CMF) program. The application period closed Nov. 9 and up to $380.2 million in funding is available, with awards announced this spring. Through the CMF, the CDFI Fund awards CDFIs and qualified nonprofit housing organizations funds to finance affordable housing activities and related economic development activities and community service facilities. The CDFI Fund said half the applicants are certified CDFIs and half are nonprofit housing organizations.
A group of 32 commenters, including Novogradac, the Affordable Housing Tax Credit Coalition, Enterprise, LISC and the National Association of Home Builders, sent a letter to the Treasury Department urging modifications to proposed regulations on the average income minimum set-aside test or for Treasury to issue a set of new rules. The letter says the proposed regulations have “substantially chilled interest” in the average-income test set-aside, because as proposed the rule creates a level of risk not intended by Congress.
The Office of the Comptroller of the Currency released 17 Community Reinvestment Act performance evaluations made public in November. There were four outstanding and 13 satisfactory results on the list, which contains only national banks, federal savings associations and insured federal banks.
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