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The Ten Minute Guide to the 2008 Housing Act Forrest Milder fmilder@nixonpeabody.com 617-345-1055

The Ten Minute Guide to the 2008 Housing Act Forrest Milder fmilder@nixonpeabody.com 617-345-1055. What are the Problems?. Fewer Investors than in prior years Varying credit rates and price per credit make it difficult to assure that projects have enough cash Shortage of Projects

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The Ten Minute Guide to the 2008 Housing Act Forrest Milder fmilder@nixonpeabody.com 617-345-1055

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  1. The Ten Minute Guide to the 2008 Housing Act Forrest Milder fmilder@nixonpeabody.com 617-345-1055

  2. What are the Problems? • Fewer Investors than in prior years • Varying credit rates and price per credit make it difficult to assure that projects have enough cash • Shortage of Projects • Too many restrictions on financing

  3. The Solutions– 1. More Credits • 10% more credits for two years • $11B more bonds • Can designate any building to be a 130% building • Remember that these are available, not automatic $1.00m of credits x 95¢ = $950,000 $1.27m of credits x 75¢ = $952,500

  4. The Solutions– 2. Easier Computations • Fixed 9% rate (for new construction and rehabs only) till 2013. What about “lock-ins? • Credits from tax exempt bonds still float • Eliminate Alternative Minimum Tax Problem (remember that there are 10 years worth of LIHTCs)

  5. The Solutions– 3. Make it Easier to Roll Over Old Properties • No recapture bonds makes it more likely that old projects will be transferred • Significant loosening of the related party test for acquisition credits, from 10% to 50% • 10 year last placed in service rule eliminated if the building is “substantially financed, assisted, or operated” under many federal and similar state programs • There’s still a 15-year rule for rolled-over LIHTC projects

  6. The Solutions– 4. Ease Financing Rules • No more “below market federal loans” (but tax exempt bonds are still a problem) • Grants that are turned into loans are okay • Operating subsidies don’t affect basis – but does this rule apply to existing projects?

  7. Miscellaneous Changes • Special needs, federal or state program and artists and literary housing are all okay • Bond and tax credit rules are conformed. • Changes to computation of permitted rents -- e.g., new rural “area median” and “hold harmless” rules • “Recycling Bonds”

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