Treasury Asked to Clarify Ability to Use Hurricane Sandy Tax-Exempt Bonds

In anticipation of the tax exempt bond financing to be provided by the Hurricane Sandy and National Relief Act of 2012, the Treasury has been requested to clarify the ability to finance the acquisition and rehabilitation with tax-exempt bonds of an affordable housing project which previously received an allocation of 9% federal low-income housing tax credits. The request has been made that the use of tax-exempt financing by an unrelated third-party purchaser of an affordable housing project which previously received an allocation of 9% Federal low-income housing tax credits in an amount sufficient to fund a portion of the cost of the notional “separate new buildings” that are constructed in response to federally declared natural disaster will not preclude the purchaser from stepping into the shoes of the prior owner with respect to the existing project which received an allocation of 9% federal low-income housing tax credits. This would allow existing projects which received 9% LIHTCs which have been damaged by Super Storm Sandy to be acquired and rehabilitated with tax-exempt bond financing and 4% LIHTCs through the “step in the shoes” provision of Section 42 and not affect the prior 9% LIHTC allocation.