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.
As property values have increased, there’s been more litigation about what a below-market right of first refusal means. On Sept. 15, the Third District Court of Appeals for the State of Florida affirmed a Florida nonprofit’s ownership of an LIHTC site. Specifically, the court affirmed the Opa-Locka Community Development Corporation’s (OLCDC’s) right of first refusal under Section 42 of the Internal Revenue Code to acquire and preserve the site for affordable housing [Opa-Locka Community Development Corp. v. HK Aswan LLC, September 2021].
The Office of the Comptroller of the Currency (OCC) recently announced it will propose rescinding the Community Reinvestment Act (CRA) rule issued in May 2020. In 2020, the OCC proposed regulations intended to modernize the agencies’ regulations under the CRA, which haven’t been substantively updated for nearly 25 years.
Every year, the National Low Income Housing Coalition (NLIHC) puts out its "Out of Reach" report examining the housing wage, the hourly wage a full-time worker must earn to afford a modest, safe rental home without spending more than 30 percent of their income on housing costs. The report covers all states, counties, metropolitan areas, and ZIP codes in the country, highlighting the gap between what renters earn and what it costs to rent.
Harvard University’s Joint Center for Housing Studies recently released its annual “State of the Nation’s Housing 2021” report. You can download the report at www.jchs.harvard.edu/state-nations-housing-2021. Each year, the report summarizes the housing market and challenges faced by renters and homeowners. This year, the report finds soaring home prices, a tight housing supply, and millions facing risk of eviction or foreclosure.
