IRS Issues Final Regs on LIHTC Qualified Contracts

The IRS has issued the final regulations the LIHTC industry has been waiting for on qualified contracts.   The regs provide guidance regarding an owner’s request to housing credit agencies to obtain a qualified contract for the sale of a low-income housing credit building.  Section 42(h)(6)(F) of the IRC requires the IRS to issue regulations as necessary to carry out the provisions of section 42(h)(6)(F), including those to prevent the manipulation of the qualified contract amount. These regulations are important for owners requesting a qualified contract, potential buyers, and low-income housing credit agencies responsible for the administration of the LIHTC program.  The regulations are effective today, May 3, 2012.

To download the regs governing qualified contracts, go to www.lizbramletconsulting.com and click on Hot Topics in Housing.

To review the seminars and webinars on our current training calendar, go to www.lbctrainingcenter.com and click on Current Calendar.

To sign up for our free list service, send an email to housingnews@weber.com. 

 

Become A Certified LIHTC Compliance Specialist

Do you have a group of employees or members of an association who need to be certified in the compliance requirements of the LIHTC program?  If yes, you should know about Liz Bramlet Consulting’s, Establishing and Maintaining Compliance in the LIHTC Program.  In this 2-day seminar you will learn the regulations that govern establishing compliance at an LIHTC project, plus how to maintain that compliance through the 15-year compliance period.  We wrap up the second afternoon of the course by answering any remaining questions and conducting a review to prepare the participants to take an exam online to be certified as an LIHTC Compliance Specialist (LCS). 

Read the detailed description of Establishing and Maintaining Compliance in the LIHTC Program by going to http://stores.lbctrainingcenter.com/-strse-36/Establishing-and-Maintaining-Compliance/Detail.bok.  Send an email to support@lbctrainingcenter.com to request a proposal to have this seminar presented for your organization.  Or call our office at (800) 784 – 1009. 

Learn how to register for the LCS certification exam by clicking on http://stores.lbctrainingcenter.com/-strse-34/LIHTC-Compliance-Specialist-%28LCS%29/Detail.bok. We recommend taking the exam soon after completing our course to best insure your success in achieving the LCS designation.

See our current training calendar by going to http://stores.lbctrainingcenter.com/-strse-Current-Calendar/Categories.bok.

Send an email to housingnews@aweber.com to sign up for our free list service.

Spring Training Calendar

Managing a Mixed-Income LIHTC Project

It is much more complicated to plan and to operate a mixed-income LIHTC project than it is a 100 percent low income community. Through this interactive webinar, learn how to plan and to lease-up a mixed income project, and how to manage it through its compliance period so it produces its maximum possible tax credit. Learn how to locate your low income units, how to fix those low income units if that is your plan, and how to make the correct leasing and occupancy decisions so that your mixed income community meets your investors’ goals, and become an expert in operating the most complicated LIHTC projects in the process.  

This is an intermediate level class.  It is assumed that someone registering for this class has a working knowledge of the LIHTC program.  Generally, it is easier to learn how 100% LIHTC projects operate before tackling mixed income communities. 

Tuesday, April 24, 2012; 12:00 Noon – 4:00 PM, Eastern Time

Demonstrate your knowledge by taking the exam to become a certified Mixed Income Expert (MIE).  We recommend taking the exam soon after you participate in the webinar as the surest way to insure your success.  Register to take the exam by clicking on http://stores.lbctrainingcenter.com/-strse-21/Mixed-Income-Expert-%28MIE%29/Detail.bok.

For a detailed description and webinar agenda, click on http://stores.lbctrainingcenter.com/-strse-10/Managing-a-Mixed-Income/Detail.bok

 Bond Financed Projects – How They Work

A project financed through the private-activity, tax-exempt bond program may qualify to produce low income housing tax credits if it is structured to meet the program’s requirements.  Unique in the marketplace, Bond Financed LIHTC Projects – How They Work provides guidance for developers, asset managers and property managers on how to plan and operate a bond financed project so that it produces its anticipated tax credit.  Learn how a project’s tax credits are calculated when it does not receive an allocation of 9 percent credits through a credit allocating agency.  Learn the differences between 9 percent and 4 percent credits.  Learn the nuances involved in meeting the 50 percent test, including when an owner must meet this test if they want more than 50 percent of their units to produce a tax credit.  And learn how HERA 2008 streamlined the compliance requirements owners must follow at a bond-financed LIHTC project.

This is an intermediate level class on the LIHTC program.  It is assumed that someone registering for this class already has a working knowledge of the LIHTC program. 

Tuesday, May 22, 2012; 12:00 Noon – 4:00 PM, Eastern Time

For a detailed description and webinar agenda, click on http://stores.lbctrainingcenter.com/-strse-26/Bond-Financed-LIHTC-Projects/Detail.bok

 Maximizing Your Acquisition/Rehab LIHTC Project

The same rules apply to LIHTC projects a developer buys and rehabs as to those they build from scratch. But acquisition/rehab projects are more complicated to take through the allocation process and to place in service because there are more moving parts in play, all of which can impact the value of the tax credits. Unique in the marketplace, Maximizing Your Acquisition/Rehab LIHTC Project provides guidance for developers, syndicators, asset managers, property managers and LIHTC agency officials on how to manage and track those moving parts, including the existing residents, so that a project produces its maximum tax credit.  

Springfield, IL – Thursday, June 7th at the Hilton Springfield

BRING A CALCULATOR TO CLASS

Become a certified Acquisition/Rehab Expert (ARE®) by taking our online exam.  We recommend taking the exam soon after you participate in the seminar as the surest way to insure your success.  Register to take the exam by clicking on http://stores.lbctrainingcenter.com/-strse-19/Acquisition-Rehab-Expert-%28ARE%29/Detail.bok.

Read the full course agenda at http://stores.lbctrainingcenter.com/-strse-30/Maximizing-Your-Acquisition-fdsh-Rehab-LIHTC/Detail.bok.

Sign up for our free list service by sending an email to housingnews@aweber.com. 

 

HOME Recapture Provisions

HUD’s Office of Affordable Housing Programs has issued a notice outlining their requirements for recapture and resale provisions for homeownership projects funded by the HOME program.  Dated January 2012, it is available for download at http://www.lizbramletconsulting.com/hottopicsinhousing.html.

Send questions you would like answered on this blog to liz@lizbramletconsulting.com, and sign up for our free list service by sending an email to housingnews@aweber.com.  Follow Liz on Twitter at www.twitter.com/lizbramlet.

Training Available On-Demand

Good Morning,

We now offer recorded versions of our seminars as training On-Demand!

After registering for On-Demand training, you receive directions for how to access the audio recording of the webinar plus an electronic copy of its Power Point presentation.  It is provided as a PDF printed at 3 slides per page with room for taking notes as you listen to the audio recording.  You have 7 calendar days after you receive the information to access the audio recording 1 time.

Please send any questions you have about our training and consulting services to support@lbctrainingcenter.com.  Send questions you would like answered on this blog to liz@lizbramletconsulting.com.  Sign up for our free list service by sending an email to housingnews@aweber.com.  Follow me on Twitter at www.twitter.com/lizbramlet.

What Is Your Required LIHTC Income Limit?

Good Afternoon,

A reader has asked about the income limit required by the low income housing tax credit (LIHTC) program.  They are planning to build a 100 percent LIHTC project and commit to the 20% @ 50% minimum set aside.  They want to know if they rent 20 percent of their units to households with income below 50 percent of the AMI, can they occupy their remaining units with residents below 60 percent of the AMI as that is the highest income limit allowed in the LIHTC program?  The answer is NO! 

Every LIHTC owner must elect a minimum set aside for their project.  They may commit to the 20% at 50%, or they may choose the 40% at 60% and commit to renting at least 40 percent of their project’s units to residents with income not above 60 percent of the AMI.  An owner commits to a minimum set aside for a project when submitting their LIHTC application to their state housing finance agency and when answering Question 10c on their IRS 8609 form.  Once an owner commits to a minimum set aside on their 8609 form, it is irrevocable and applies to the project throughout its 15 year compliance period.

The second number in a project’s minimum set aside establishes the income limit for all of the project’s low income units, not just those required to comply with the minimum set aside.  When an owner elects the 20% @ 50% minimum set aside for a 100 percent LIHTC project, they must plan to:

• Rent all of the project’s units to residents with a gross annual income not above 50 percent of the AMI; and
• Charge all residents no more than the maximum LIHTC rent for their unit size calculated using the 50 percent of AMI limits.

Send questions you would like answered on this blog to liz@lizbramletconsulting.com.  Follow me on Twitter at www.twitter.com/lizbramlet.  Sign up for our free list service by sending an email housingnews@aweber.com.  Review our current course calendar at http://stores.lbctrainingcenter.com/-strse-Current-Calendar/Categories.bok.

Proposed Changes to the LIHTC Program

Good Morning,

Yesterday the Obama Administration issued their proposed budget which includes several changes to the LIHTC program.  LIHTC provisions:

• Encourage mixed income occupancy by allowing LIHTC-supported projects to elect a criterion employing a restriction on average income;

• Make the LIHTC beneficial to real estate investment trusts (REITS);

• Provide 30-percent basis “boost” to properties that receive an allocation of tax-exempt bond volume cap and that consume that allocation; and

• Require housing credit-supported housing to provide appropriate protections to victims of domestic violence.

Follow what happens with the proposed changes with the Affordable Housing Tax Credit Coalition at www.taxcreditcoalition.org.

IRS Notice 2012-18

The IRS has issued Notice 2012-18 describing the alternative methods for meeting their physical inspection requirements available to the six state housing finance agencies participating in a pilot program stemming from the work of the Obama Administration’s Rental Policy Working Group.  The notice also solicits comments from the LIHTC industry on the compliance regulations 1.42-5, including those governing project inspections. 

Download Notice 2012-18 at http://www.lizbramletconsulting.com/hottopicsinhousing.html.  Send questions you would like answered on this blog to liz@lizbramletconsulting.com.  Subscribe to our free list service by sending an email to housingnews@aweber.com.  Follow Liz on Twitter at www.twitter.com/lizbramlet.  Download our current course catalog at www.lizbramletconsulting.com/special-events.html.

LIHTC Webinars To Be Offered On Demand

Liz Bramlet Consulting’s Training Center will soon be offering our webinars On Demand!  Watch for a formal announcement with details and how you can benefit from this new opportunity to receive valuable training on the LIHTC program and other programs that support affordable housing today.

Follow me on Twitter at www.twitter.com/lizbramlet.  Sign up for our free list service by sending an email to housingnews@aweber.com.  Send an email to support@lbctrainingcenter and ask to receive our current course catalog.

Applicable Fraction VS Qualified Basis

Good Evening,

An Executive Director of a nonprofit organization new to the LIHTC program writes to ask about the difference between a building’s applicable fraction and its qualified basis.  They are learning how a developer uses the LIHTC program to attract investment to fund an affordable project, and from what she has read, it seems that the applicable fraction and qualified basis are the same thing.  They are not the same thing but are very much related.  In fact, a developer uses a building’s applicable fraction to calculate its qualified basis.  And I like that she asked about the difference between a building’s applicable fraction and qualified basis, because these are numbers calculated by building, not by project.  Let’s review these concepts.

The applicable fraction is that portion of a building occupied by LIHTC-qualified residents.  It is always calculated as the lesser of the percentage of units versus the percentage of floor space occupied by qualified low income households.  For example, if a building has 100 units taking up 78,000 square feet, and the owner’s targeted applicable fraction is 60 percent, they will want 60 units taking up no less than 46,800 square feet (78,000 sq ft x 60%), occupied by qualified families no later than the end of the first year of the credit period.  What can be forgotten is that it is the qualified low income families that actually produce a building’s LIHTC.  A building’s applicable fraction, representing that portion of the building occupied by qualified families, determines how much of it can produce an LIHTC.

A building’s eligible basis represents the costs associated with its development eligible to produce an LIHTC, and a developer quickly learns which costs the IRS has said may or may not go into basis.  For example, most of a building’s hard costs (bricks and mortar) may be included in basis, but the cost of the land below may not because land does not depreciate.  A building’s eligible basis totals those costs that are eligible to produce a credit, but ultimately, all those costs may not qualify to do so.

A building’s qualified basis includes those costs that actually qualify to produce an LIHTC because it  represents the costs for that portion of the building occupied by qualified residents.  It is calculated by multiplying a building’s eligible basis by its applicable fraction.  In our building above, we had an applicable fraction of 60 percent.  If its eligible basis was $10 million, its qualified basis is $6 million ($10 million x 60%).   If the state agency awarded an allocation of 9 percent credits to this building, we can project that it will produce an annual LIHTC of $540,000 ($6 million x 9%). 

Send a question you would like me to answer to liz@lizbramletconsulting.com.  Sign up for our free list service by sending an email to housingnews@aweber.com.  Follow me on Twitter at www.twitter.com/lizbramlet.  See our current training calendar at www.lbctrainingcenter.com and click on Current Calendar.  We have a webinar scheduled for Tuesday, February 7th, Introduction to the LIHTC Program.