The United States Supreme Court granted certiorari in Third Circuit Court of Appeals decision in the Township of Mount Holly, NJ vs. Mount Holly Gardens Citizens in Action. The genesis of the case is a proposed redevelopment plan by Mt. Holly Township, New Jersey that would eliminate existing homes in a neighborhood occupied by low-income residents and replace these homes with more expensive housing. The residents of this neighborhood organized and filed an action against the Township alleging violations of various anti-discrimination laws. The Third Circuit held that the adverse impact test under the Fair Housing Act, rather than a discriminatory intent test, should be applied and remanded the case back to the District Court for a determination of whether the proposed redevelopment plan of Mt. Holly Township violated the Fair Housing Act. The Township appealed to the U.S. Supreme Court and the high court will review the decision of the Third Circuit Court of Appeals.
U. S. Supreme Court denies Cert. on the Historic Boardwalk Hall Case
The Historic Boardwalk Hall Case in which the Internal Revenue Service challenged the traditional structure used by tax credit investors in the syndication of Federal Historic Tax Credits came to an uncerimonial end with the denial by the United State Supreme Cout of the taxpayer’s writ of certiorari to the high court. As reported in an earlier entry on this blog, the Service has announced its intention to provide guidance, most likely in the form of a Revenue Procedure, which will provide a safe harbor for investors in Federal Historic Tax Credits. It is anticipated that the safe harbor will reflect the position of the Service in the Historic Boardwalk Hall Case and an investor must demonstrate that it is a partner for Federal income tax purposes with downside risk and upside potential as a partner.
IRS to Issue Historic Tax Credit Safe Harbor
In the aftermath of the Third Circuit’s decision in Historic Boardwalk Hall LLC v. Commissioner, the IRS has announced its intention to provide guidance for tax structures where developers work with investors to use Federal Historic Tax Credits to further the development of historic structures. While the Service acknowledges that Congress supports the rehabilitation of historic buildings, the position of the Service is that partnerships with investors must conform to the Service’s historic requirements for tax partnerships. It is anticipated that the guidance from the IRS to come in a revenue procedure that provides a safe harbor similar to what Rev. Proc. 2007-65, 2007-45 offers for the section 45 wind energy production tax credit.. If this is the case, we can expect the Service to require that the investors have real upside and downside as a partner which was the Service’s position articulated in the Historic Boardwalk Hall LLC case.
Bipartisan Coalition Proposes Hurricane Sandy Tax Releif Act of 2013
U.S. Rep. Bill Pascrell, Jr. (D-NJ-09) lead a bipartisan coalition including Reps. Joseph Crowley (D-NY), Rodney Frelinghuysen (R-NJ), Michael Grimm (R-NY), John Larson (D-CT), Frank LoBiondo (R-NJ), Charles Rangel (D-NY), Tom Reed (R-NY) and Carolyn McCarthy (D-NY) in introducing legislation to provide tax relief to the victims of the devastating storm that caused widespread destruction throughout the Northeast. The Hurricane Sandy Tax Relief Act of 2013 is aimed at providing tax relief for victims of Hurricane Sandy in areas designated as Federal Disaster Areas by the President. The bipartisan coalition will propose supplemental new market tax credit allocation authority for community development entities serving Hurricane Sandy disaster areas and increased low-incme housing tax credit allocation authority for delcared disaster areas.
CDFI Fund Releases 2012 Allocation Agreement
The form of 2012 New Markets Tax Credit Allocation Agreement has been released by the Community Development Financial Institutions (CDFI) Fund. Notably the form allocation agreement has two significant changes. First, the Allocation Agreement provides the following definition of a Real Estate Qualified Active Low-Income Community Business: “shall mean any QALICB whose predominant business activity (i.e. activity that generates more than 50 percent of the business’ gross income) includes the development (including construction of new facilities and rehabilitation/enhancement of existing facilities), management, or leasing of real estate.” In addition, the form of 2012 Allocation Agreement has the following disclosure requirement. “Disclosure to QALICBs. Each time the Allocatee makes one or more QLICs in the form of a loan(s) to, or investment(s) in, a QALICB, it shall disclose to the QALICB, in a separate stand-alone document, any and all direct and indirect NMTC related transaction costs related to the QLICI(s) (e.g. legal, accounting, compliance), fees and compensation that the Allocatee is assessing the QALICB or otherwise requiring the QALICB to incur prior to, during, and at the conclusion of the seven-year NMTC term.”
Governor Christie to Announce HUD Approval of NJ Sandy Action Plan
It is anticipated that today at a news conference with Governor Christie the Governor will announce HUD’s approval of the New Jersey Sandy CDBG DR Action Plan. This approval by HUD of the first tranche of $1.8 billion will pave the way for additional allocations by HUD which may total over $4 billion for New Jersey from a Congressional allocation of $16 billion in CDBG DR funds for Sandy and other natural disasters. Within the approved action plan there is an allocation of $75 million of funds for Neighborhood and Community Revitalization. This program will be administered through the New Jersey Economic Development Authority. Also the action plan provides for an allocation $100 million of funds for the New Jersey Housing and Mortgage Finance Agency. The New Jersey Housing and Mortgage Finance Agency will use these funds with allocations of Federal low income housing tax credits to fund affordable housing projects in counties affected by Super Storm Sandy.
HUD Approves NY State Sandy CDBG Action Plan
On Friday April 26th the U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced federal approval of New York State’s recovery action plan to help homeowners and businesses following Superstorm Sandy, Hurricane Irene, and Tropical Storm Lee. Funded through HUD’s Community Development Block Grant Disaster Recovery (CDBG – DR) program, New York State’s recovery action plan calls for a combined $1.7 billion investment in a variety of housing, infrastructure and business recovery activities. New York State’s approach will focus principally on meeting the immediate recovery needs for housing and business assistance in the communities affected by Hurricane Sandy. These activities include $838 million to support a variety of housing programs and $415 million to assist economic revitalization programs. On January 29th, President Obama signed the Disaster Relief Appropriations Act, 2013 into law, providing a total of $16 billion in CDBG Disaster Recovery funding. HUD quickly allocated $5.4 billion to five states (including New York) and New York City. New York State submitted its required action plan describing how the funds will be used on April 3rd and HUD conducted an expedited review to enable New York State to access these funds as quickly as possible.
Treasury Announces New Markets Tax Credit Awards
Today the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) announced $3.5 billion in New Markets Tax Credit (NMTC) awards nationwide. The Treasury has awarded 85 certified community development entities with tax credit allocation authority under the tenth award round of the NMTC Program. A list of the certified community development entities which were awarded New Markets Tax Credit allocation can be found at http://www.cdfifund.gov/docs/2012/nmtc/2012%20NMTC%20Award%20Book.pdf
Bipartisan House Support for Hurricane Sandy Tax Relief Bill
A group of 32 U.S. representatives sent House Speaker John Boehner a letter urging tax relief for the victims of Super Storm Sandy. The letter cited tax relief legislation passed in the aftermath of Hurricane Katrina as the basis for the passage of similar tax relief legislation in the aftermath of Super Storm Sandy. The letter urged the adoption of the Hurricane Sandy Tax Relief Act of 2012 (H.R. 6682) which was introduced during the 112th Congress. If adopted this Act includes a temporary, additional $250 million in new markets tax credit allocation authority for investments in areas affected by Super Storm Sandy.
NJHMFA Announces the Fund for the Restoration of Multifamily Housing
The New Jersey Housing and Mortgage Finance Agency has held two information sessions on the Additional Tax Credits/Fund for Restoration of Multifamily Housing which will be funded from the Super Storm Sandy CDBG grant provided to the State of New Jersey from HUD. The proposed Community Development Block Grant Disaster Recovery Action Plan submitted by the State of New Jersey to HUD for approval includes the creation of the Fund for Restoration of Multifamily Housing. This Fund will be administered by the New Jersey Housing and Mortgage Finance Agency (HMFA) and is expected to provide over $104 million in CDBG-DR funding to replenish the stock of quality, affordable housing units lost as a result of Super Storm Sandy. The NHMFA information sessions provided a description of the Fund’s proposed components, which includes leveraging CDBG-DR funds with the federal Low Income Housing Tax Credit Program.