IRS Guidance Clarifies that Housing for Veterans and Special Populations is Eligible for Bond Financing

On April 3, the Internal Revenue Service (IRS) issued guidance clarifying that housing for military veterans and households with special needs are eligible for bond financing. Rev. Proc. 2019-17 coordinates the general public use requirements for qualified residential rental projects financed with tax-exempt bonds with IRS provisions that govern the Low-Income Housing Tax Credit (Housing Credit). This eliminates prior concern that housing for veterans and other specified groups financed with multifamily Housing Bonds and the 4 percent Housing Credit would be in violation of the multifamily bond general public use rule. Learn more about the guidance in this blog post.

Treasury Department Requests Information on Opportunity Zone Data Collection

Concurrent with publication of new proposed regulations on Opportunity Zones, the Treasury Department published a Request for Information (RFI) to seek public input on the development of information collection and tracking related to Opportunity Zone investments. In the RFI, Treasury notes the purpose of information collection and tracking is to measure the effectiveness of the Opportunity Zone policy in achieving its stated goals and to ensure that the investment remains an attractive option for investors.

The RFI suggests potential revisions to IRS Form 8996, used to certify that a corporation or partnership is a qualified Opportunity Fund and to report annually whether the fund met the investment standard during its tax year. It specifically requests comments on the following issues:

  1. What data would be useful for tracking the effectiveness of providing tax incentives for Opportunity Zone investment to bring economic development and job creation to distressed communities?
  2. In addition to Form 8996 revisions, what other information could be collected on a tax form that would be helpful in measuring the effectiveness of the Opportunity Zone incentive?
  3. What data would be useful for measuring how much would have been invested in qualified zones in the absence of the Opportunity Zone incentives?
  4. What data would be useful for ensuring that the Opportunity Zone investment remains an attractive option for investors?
  5. What are the costs and benefits of various methods of information collection? Who should perform this data collection?
  6. What considerations should government officials take into account when considering data to analyze the effectiveness of Opportunity Zone incentives to promote economic development to distressed areas? Over what time period should this analysis occur?
  7. How do you view the role of the federal government, and tribal, state, and local governments in the ongoing maintenance and administration of Opportunity Zones?

Please send your comments to Jim Tassos by May 3.

Legislation Introduced to Create Disaster Opportunity Zones

On April 4, Senators Marco Rubio (R-FL) and Rick Scott (R-FL) introduced legislation that would enact a new round of opportunity zone designations for low-income census tracts in selected 2018 disaster areas. The Disaster Opportunity Zones Act would allow governors to nominate the greater of 25 low-income census tracts or 25 percent of low-income census tracts affected by Hurricane Florence, Hurricane Michael, and the Mendocino, Carr, Camp, Woolsey, and Hill wildfires, spanning the states of North Carolina, South Carolina, Florida, Georgia, and California.

Enterprise believes that Opportunity Zones have the potential to leverage significant capital to help communities as they rebuild post-disaster; however, it is critical that Opportunity Fund investments support the equitable recovery of a community. We recommend that real estate investments into federal disaster areas that have lost a large stock of their housing aim to achieve at least a no net loss of affordable housing units, and that Opportunity Funds engage with local community partners to ensure that community needs are met and that low-income residents and businesses are served in recovery efforts.

Last Chance to Register: RAD Workshop in OKC

Oklahoma NAHRO is hosting a RAD Workshop in Oklahoma City on Monday, April 22, 2019. The deadline to register is TODAY – April 17, 2019.

HUD is concerned with providing and preserving affordable housing units funded through a wider set of resources. HUD is now developing tools for PHA’s to reposition their existing portfolios to create better quality housing. This is a great opportunity for OCAH members to learn more about RAD, network with PHAs and see how their skills can interact to provide more housing for low income Oklahomans.

Speakers include:

Greg Jungman – Director, Affordable Housing Transaction Division Office of

Recapitalization

Greg Byrne – Director, Affordable Housing Transaction Division Office of

Recapitalization

Jane Blumenfeld-Hornstein – Director, HUD’s Special Application Center

For more information or to register: https://drive.google.com/file/d/1h8l5qG3brOuEFL-nQLNxsa0H2aDwQhjb/view

Legislation to Permanently Extend the New Markets Tax Credit Continues to Gain Bipartisan Support

In March, Senators Roy Blunt (R-MO) and Ben Cardin (D-MD) and Representatives Terri Sewell (D-AL-7) and Tom Reed (R-NY-23) introduced the New Markets Tax Credit Extension Act of 2019 (S. 750 and H.R. 1680). This bipartisan legislation would: make the New Markets Tax Credit (NMTC) a permanent part of the tax code; increase annual NMTC allocation from $3.5 billion to just over $5 billion; index the credit for inflation; and provide alternative minimum tax relief to NMTC investors. This bipartisan effort is especially important as the NMTC – a critical tool for attracting private investment capital to some of the most distressed urban, suburban, and rural communities – is set to expire at the end of 2019 unless Congress acts.

As of this publication’s release, the Senate bill has 17 co-sponsors and the House bill has 38. Enterprise strongly supports the New Markets Tax Credit Extension Act and urges our partners to ask your Members of Congress co-sponsor the legislation.

RAD Workshop in OKC – April 17 Last Day to Register!

Oklahoma NAHRO is hosting a RAD Workshop in Oklahoma City on Monday, April 22, 2019. The deadline to register is April 17, 2019.

HUD is concerned with providing and preserving affordable housing units funded through a wider set of resources. HUD is now developing tools for PHA’s to reposition their existing portfolios to create better quality housing. This is a great opportunity for OCAH members to learn more about RAD, network with PHAs and see how their skills can interact to provide more housing for low income Oklahomans.

Speakers include:

Greg Jungman – Director, Affordable Housing Transaction Division Office of

Recapitalization

Greg Byrne – Director, Affordable Housing Transaction Division Office of

Recapitalization

Jane Blumenfeld-Hornstein – Director, HUD’s Special Application Center

For more information or to register: https://drive.google.com/file/d/1h8l5qG3brOuEFL-nQLNxsa0H2aDwQhjb/view

Housing Advocates’ Guide 2019 Now Available!

NLIHC’s annual publication Advocates’ Guide 2019: A Primer on Federal Affordable Housing & Community Development Programs, a comprehensive resource about virtually every affordable housing program and policy, is now available!
The Guide, written by NLIHC staff and other leading experts in the field, contains synopses of housing and community development programs, laws, and regulations, as well as tools and information to guide advocates’ communications with legislative and executive branches of government and to mobilize advocacy campaigns. The Advocates’ Guide is an invaluable resource for anyone involved in or concerned about affordable housing and community development – to refresh your familiarity with housing programs, statutes, and regulations or to educate new employees working at affordable housing and community development agencies and organizations.

Advocates’ Guide 2019: A Primer on Federal Affordable Housing & Community Development Programs is available at: http://nlihc.org/library/guides

Buy Now

Budget Cap Negotiations Begin

Last week, Senate Majority Leader Mitch McConnell (R-KY) and Speaker of the House Nancy Pelosi (D-CA-12) announced that they will begin negotiations to reach a bipartisan, two-year deal to raise budget caps and avoid drastic cuts to discretionary spending. Democratic leadership in the House had hoped to consider a “parity” budget last week, which would have increased both defense and domestic spending. The House legislation would have allocated $733 billion for defense and $631 billion for domestic programs in fiscal year (FY) 2020, but was not brought to the floor for a vote after House progressives withheld their support and called for larger increases to domestic spending. The House instead passed a resolution that set a $1.3 trillion ceiling for the FY20 budget, providing appropriators in the chamber with a topline number for FY20 spending bills.

As negotiations continue and Congress heads into recess, Enterprise calls on lawmakers to reach a bipartisan deal to increase the budget caps and allow for much-needed increases to domestic discretionary spending, including affordable housing and community development programs. After a lengthy shutdown at the beginning of the year, returning to regular order will provide stakeholders, federal employees, and constituents with stability and certainty going into FY20.

Data from the Tax Foundation

Tax Freedom Day 2019 Arrives on April 16

Tax Freedom Day is the day when the nation as a whole has earned enough to pay its federal, state, and local tax bill for the year.

This year, Tax Freedom Day will arrive on April 16, 105 days into the year.

Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of over $5.2 trillion, or 29 percent of the nation’s income.

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Click the chart above to learn more.
This year, Americans will work the longest to pay federal, state, and local individual income taxes (42 days) followed by payroll taxes (26 days), sales and excise taxes (15 days), property taxes (11 days), and corporate income taxes (5 days). The remaining six days are spent paying estate and inheritance taxes, customs duties, and other taxes.
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Click the chart above to learn more.
While national Tax Freedom Day arrives just one day after the tax filing deadline, the total tax burden borne by residents of different states varies considerably due to differing state tax policies and the progressivity of the federal tax system.
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The latest ever Tax Freedom Day was May 1, 2000; in that year, Americans paid 33 percent of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, meaning that Tax Freedom Day came on January 22.
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Click the chart above to learn more.
See the Full Report

NCSHA Washington Report | April 12, 2019

From our friends at NCSHA:

The IRS has been on our minds a lot lately and not just because it’s tax filing season.

Last week, NCSHA commended the Service for clearing the way for states to serve more homeless veterans and other special populations in housing financed with Housing Bonds and Housing Credits. IRS and Treasury staff’s responsiveness to calls from members of Congress, state HFAs, and other stakeholders to clean up an inconsistency in the tax code rules will ensure the optimal uses of $600 million in voter-approved housing funding in California and enable much-needed developments to proceed in Texas, Nevada, Hawaii, and other states.

Regrettably, IRS’s recent action on a related front goes in the opposite direction, imposing a massive new regulatory burden on states that will hurt affordable housing.

The Service’s newly amended final rules governing states’ responsibilities for monitoring Housing Credit properties substantially increase the number of site visits and tenant file reviews states must conduct every year. Preliminary feedback from Housing Credit agencies suggests the negative impacts will be far-reaching and include:

  • Large increases in units subject to site visits, ranging from 29 percent to 150 percent across several states and exceeding more than 1,000 additional units in a single year in one state.
  • Significantly higher costs to add staff and hire additional contractors in all regions of the country; one state projects it will need to hire 11 new full-time employees.
  • Hardships for developers and owners who will bear the brunt of high monitoring fees states will be forced to charge, and fewer resources for other housing programs in states that have to divert funds to meet IRS’ new monitoring mandate.

While the IRS rules modestly lower the state monitoring burden for larger properties, the much higher requirements for all other properties swamp any administrative savings.

And, since the new rules impose the relatively heaviest burden on smaller properties, rural states, which generally have smaller and more geographically dispersed Housing Credit portfolios, will be hardest hit. In some rural states, 90 percent or more of the entire Housing Credit stock will be subject to the more costly new requirements.

We have communicated our concerns to the Service on this issue and will continue to do so. The fact that the new rules give states until the end of 2020 to reflect the new monitoring requirements in their Housing Credit allocation plans affords an opportunity to develop a better approach.

NCSHA and the IRS have worked together constructively for decades to advance our shared goal of ensuring sound administration of the Housing Credit. This history of collaboration can — and must — be the basis for fixing a costly new mandate on states at a time when their affordable housing efforts can least afford it.