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The U.S. Department of Treasury recently announced that it will allow state, local, and tribal governments more flexibility to use COVID-19 rescue funds to boost the supply of affordable housing, including permission to issue direct long-term project loans. The issued guidance permits State and Local Fiscal Recovery Funds (SLFRF) to fund the full principal amount of long-term affordable housing loans and expands the lost of programs for which the SLFRF can be used for affordable housing.
Reps. Alma Adams (D-N.C.) and David Rouzer (R-N.C.) recently announced the LIHTC Financing Enabling Long-Term Investment in Neighborhood Excellence Act or LIFELINE Act. This legislation would make American Rescue Plan funds more compatible for LIHTC housing developments.
The American Rescue Plan Act turned one this past month. The act authorized the second infusion of resources into the Emergency Rental Assistance Program (initially authorized and funded under the Consolidated Appropriations Act of 2021). In celebration of the law’s anniversary, the Treasury Department released a fact sheet on the impact the law has had.
On March 18, IRS issued Revenue Procedure 2022-20, providing permanent authority to conduct telephonic public hearings for tax-exempt private activity bonds. IRS provided temporary authority to conduct telephonic public hearings several times during the pandemic, with the most recent authority expiring at the end of March.
HUD recently published a notice seeking comments evaluating HUD’s annual collection of information of data on LIHTC sites and tenants. The notice can be found at www.federalregister.gov/d/2022-06282.
After a cooldown early in the pandemic, rental housing demand has come back aggressively in the second year, reducing vacancy rates and driving up rents, according to Harvard’s Joint Center for Housing Studies (JCHS). Its recently released annual “America’s Rental Housing 2022” report finds that rents in 77 of 150 markets analyzed increased by double digits in the third quarter of 2021, compared to a year earlier. And the vacancy rate for all rental units was at only 5.8 percent in the third quarter of 2021.
The Consolidated Appropriations Act, enacted in late 2020, amended Internal Revenue Code (IRC) Section 42(b) and established a minimum 4 percent credit rate for qualifying LIHTC projects. To qualify for the 4 percent minimum credit rate, a building must be placed in service after Dec. 31, 2020, and have received an issuance of tax-exempt bonds or an allocation of credits after Dec. 31, 2020. To clear up questions regarding its application to existing projects, the IRS recently issued Revenue Ruling 2021-20 and Revenue Procedure 2021-43.
The Federal Housing Finance Agency (FHFA) recently issued a final rule for Fannie Mae and Freddie Mac that establishes the benchmark levels for the multifamily housing goals for 2022. To help meet these goals, Fannie Mae and Freddie Mac, in part, capitalize on opportunities to finance LIHTC sites. The FHFA is required by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to set annual housing goals for mortgages purchased by Fannie and Freddie.
On Nov. 19, the U.S. House of Representatives passed the Build Back Better Act. The bill passed 220-213 and now goes to the Senate. This $1.7 trillion bill includes an historic expansion of the low-income housing tax credit. According to estimates, the bill could finance nearly 812,000 additional affordable homes than otherwise possible over the next decade by investing nearly $12 billion in the LIHTC program.
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