Spring 2012 issue of Horizons

However, it should be noted that an allocation from a tax-exempt bond authority in an amount sufficient to qualify for the 4% credit would have to be obtained for the project. Likewise, a state’s annual bond volume cap would be reduced as if the bonds were issued. Additionally, state housing agencies could provide a 30% basis boost for all, or a portion, of the qualified basis of projects that have a “federal investment protection designation,” regardless of whether they were bond-financed or met the alternative requirement to qualify for 4% credits without the issuance of bonds. In regards to these 30% basis boosts, state agencies would be limited to no more than 0.8% of their annual private activity bond volume cap. Unused amounts, though, could be carried forward for up to five years, thereby allowing state agencies to “save up” and maximize the provision for certain priority projects.

set-aside targeting requirement, whereby at least 40% of the units in a project could be occupied by tenants with incomes that average no more than 60% of the area median income (AMI). Further, some units could be rented to tenants with incomes as high as 80% of AMI, provided other units are rented to tenants with incomes below 60% of AMI, such that the average of the income limits for all low- income units does not exceed 60% of AMI. Any units with tenant income limits below 20% of AMI would be treated as being 20%. A special rule would apply to rehabilitation projects with units receiving ongoing subsidies (rent, operating, interest) through the U.S. Departments of Housing and Urban Development or Agriculture. Under this provision, a tenant at or below 60% of AMI when admitted to a property, but whose income has risen to 61%-80% by the time of measurement for LIHTC income eligibility, could stay on as a resident without reducing the LIHTC earned by the property. encourage the preservation of projects. Under this provision, state housing agencies would be able to provide a new federal investment protection designation to a project that: • Involves the preservation, recapitalization and rehabilitation of existing housing • Demonstrates a serious backlog of capital needs or deferred maintenance • Involves housing previously financed with federal funds or that benefited from LIHTCs • Because of federal support, the housing was subject to a long-term use agreement limiting occupancy to low-income households Projects receiving this designation could qualify for 4% housing credits (30% present value) without the issuance of tax-exempt private activity bonds financing more than 50% of the project’s cost, as normally required. Preservation of Projects The second proposed change is designed to

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