Affordable Housing Gurus

PHFA Announces 2010 Conditional Tax Credit Reservations

The Pennsylvania Housing Finance Agency (PHFA) made their much anticipated announcement of the 2010 conditional low-income housing tax credit reservations yesterday. It was a very competitive round. According to information on PHFA’s website, 28 projects received conditional awards out of the 83 projects that submitted applications to receive credits in the 2010 funding round. PHFA received applications for over $74 million of credits, however only $23.7 million of credits are available for 2010. There was no stimulus funding available for the 2010 round, which in addition to an average equity pay-in of 71 cents, made for the fewest number of projects funded in the past few years. No due date has been announced at this time for the 2011 round applications, however it is anticipated to be between December 2010 and January 2011.

Tax Extenders Legislation Defeated in the Senate

On June 24, 2010, the Senate voted against passing H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, also known as the tax extenders bill.  This bill would have extended, among other things, the Section 1602 low-income housing tax credit (LIHTC) exchange program through 2010. This is a loss to the affordable housing community, as it does not allow state housing finance agencies the option to exchange tax credits for cash, which could then be used to fund projects that cannot secure equity investors in 2010. This bill also would have made Gulf Opportunity Zone LIHTCs and Disaster LIHTCs eligible for the exchange program.  It is not known at this time if the Senate will reconsider H.R. 4213.

GAO Issues Reports to Congress on American Reinvestment and Recovery Act Funding

McKonly & Asbury had the opportunity to speak with several members of the United States Government Accountability Office (GAO) on June 18, 2010 regarding the GAO’s May 2010 report to Congress on the American Reinvestment and Recovery Act (ARRA) funding. The GAO has 16 state teams in place to monitor for and report to Congress about the ARRA funding. The Pennsylvania team, headed by Phil Herr and Mark Gaffigan, is monitoring, among other things, the use of TCAP and Exchange funds. The Pennsylvania team plans to visit five sites for GAO’s September 2010 Recovery Act report. See pages PA-21 through PA-24 of the May Report for specifics on GAO’s work in Pennsylvania.

Proposed Bill Includes LIHTC Carryback and Extends Exchange Program

Senator Maria Cantwell (D-WA) introduced legislation yesterday called the Job Creation and Affordable Housing Act (S. 3326). The bill would extend the Section 1602 Exchange Program for one year and increase the carryback period for low-income housing tax credits from one year to five years. Senator John Kerry (D-MA) and Senator Barbara Boxer (D-CA) co-sponsored the bill. A copy of the bill was not available at the time of this post.

To hear more about current legislation affecting the low-income housing tax credit industry, attend McKonly & Asbury’s Spring Affordable Housing Seminar on May 14, 2010.

Proposed Bill Would Provide Five Year Carryback of LIHTC

Senator Jeff Bingaman introduced legislation on March 18, 2010, intended to stimulate investment in affordable housing. Bingaman introduced S. 3141 Low-Income Housing Tax Credit Recovery Act of 2010, which extends the period during which low-income housing tax credits can be carried back from one year to five years. All “carried back” proceeds must be invested in new housing developments, which ensures that this tax benefit flows only to investors who are committed to creating additional housing.

Low-Income Housing Tax Credit Legislative Update

Today, March 17, 2010, the IRS released Notice 2010-18 which provides guidance on three issues under Section 1602, the Low-Income Housing Tax Credit Exchange Program, of the American Recovery and Reinvestment Tax Act of 2009.  The notice clarifies that exchange funds do not reduce building basis. The notice also clarifies that exchange funds, even though awarded in the form of grants, are not subject to federal taxation. Additionally, Notice 2010-18 provides guidance to state housing credit agencies as to how to reduce their annual low-income housing tax credit ceiling by the amount of credits exchanged for cash.

On March 10, 2010, the Senate passed the American Workers, State, and Business Relief Act of 2010, H.R. 4213, which had previously passed the House on December 9, 2009. This legislation will now be reviewed by a committee of senators and representatives in the hopes of resolving the differences between each version and then will go to the president for signature. If this bill is signed into law, it would extend the Section 1602 Exchange Program for one year.

On February 24, 2010, Representative Linda Sanchez of California introduced H.R. 4687 the Low-Income Housing Tax Credit Exchange Expansion and Job Creation Act of 2010. This bill would expand the Section 1602 Exchange Program to include credits generated from tax-exempt bond financing or 4% credits.

Proposed 2011 Federal Budget Extends LIHTC Exchange Program

Included in the fiscal year 2011 proposed budget transmitted to Congress today is an extension of the low-income housing tax credit exchange program created under Section 1602 of the American Recovery and Reinvestment Act of 2009 (the “Exchange Program”). Under the proposed extension of the Exchange Program, state housing credit agencies would be able to exchange their unused housing credit ceiling for 2009, prior year credit allocations returned to the state in 2010, 40% of their 2010 low-income housing tax credits, and 40% of the state’s share of the 2010 national pool allocation, if any, for cash.

This good news was much anticipated by Pennsylvania developers as they are looking at financing options for the 2010 tax credit application funding round.

For additional information on the Exchange Program, contact Elizabeth Brooks at ebrooks@macpas.com. 

Report on Lancaster County Regulatory Barriers to Affordable Housing

The Lancaster County Planning Commission and the Lancaster Housing Opportunity Partnership released a study this week titled “An Analysis of Regulatory Barriers to Housing Affordability”. The goal of the study is to identify ways in which land use regulations in Lancaster County may contribute to the lack of affordable housing in the county. The study states that a change in local land use regulations alone will not result in the production of additional affordable housing. The study recognizes that there are numerous factors that contribute to housing price and availability. The study concludes that it is crucial to work towards providing additional housing choice and affordability in Lancaster County and by raising public awareness, understanding, and support for affordable housing, potential regulatory barriers to affordable housing can be addressed.