As New York, New Jersey and the City of New York begin to administer HUD CDBG monies for Super Storm Sandy recovery efforts, recipients of CDBG grants must comply with the HUD CDBG procurement requirements. When a grantee elects to hire a contractor, whether to administer a program, complete a task or do construction, those contractors must be procured competitively. Both grantees and sub recipients must follow federal procurement rules when purchasing services, supplies, materials, or equipment. Small purchase procedures allow recipients to acquire goods and services totaling no more than $100,000 without publishing a formal request for proposals or invitation for bids. The small purchases method can also be used to acquire eligible types of services, such as professional consulting, environmental review, or planning. However, if the services contract will exceed $100,000 in value, the grantee must issue a RFP under the competitive proposals requirements. The use of CDBG grants will also trigger compliance with the Davis-Bacon Act. In addition to federal regulations, most states and many local governments have laws and regulations regarding procurement.
New Jersey Receives $1.8 Billion of Sandy Recovery Monies
New Jersey has received $1.82 billion allocation of Federal Sandy aid from the U.S. Department for Housing and Urban Development. This initial allocation of Federal Sandy assistance will be distributed as Community Development Block Grants. The grants will be administered by the New Jersey Economic Development Authority in conjunction with the Department of Community Affairs. Governor Christie is required to provide a proposal to HUD for the use of the aid which will explain how New Jersey agencies will meet HUD’s guidelines for allocating federal funds. The $1.82 billion represents New Jersey’s first share of a total $16 billion in anticipated block grants that will be shared among storm-hit areas of New Jersey, New York City and New York State and Connecticut.
CDFI Fund Issues Interim Rules for Bond Guaranty Program
The CDFI Fund recently published Interim Rules in the implementation of the CDFI Bond Guarantee Program authorized under the Small Business Jobs Act of 2010. Under the CDFI Fund Bond Guaranty Program, the CDFI Fund may issue federally guaranteed bonds to eligible Community Development Financial Institutions (CDFIs). These CDFIs will use the bond proceeds to make loans for community development in economically underserved areas. The CDFI Fund plans to issue its first bond guarantee this year. Under the Bond Guaranty Program, the CDFI Fund is authorized to issue up to 10 bonds per year, each at a minimum of $100 million, with a total of up to $1 billion in bonds guaranteed per year. The goal of the CDFI Bond Guarantee Program is to provide low cost capitals to CDFIs which will be used to provide financing to economically underserved areas.
New York City Focuses Hurricane Sandy Funds on Resiliency Efforts
Mayor Bloomberg of New York City has announced that the City plans to spend its initial allocation from HUD of $1.77 billion from the Hurricane Sandy Recovery Act in Community Development Block Grants for housing recovery, business recovery, and infrastructure resiliency. The housing recovery initiatives include rehabilitation grants for housing and grants for resiliency efforts for public housing. The City of New York will provide grants to businesses for resiliency measures including grants for innovations in resiliency technology. The infrastructure grants will be for resiliency innovations for neighborhoods and utilities. The City of New York is working with HUD for an additional $600 million for Hurricane Sandy recovery efforts.
Senate Passes Hurricane Sandy Bill
Yesterday the Senate voted 62-36 to approve the House version of the Hurricane Sandy Bill. The $51 billion aid package for Hurricane Sandy victims is expected to be signed into law by President Barack Obama. The Act will provide $16 billion for Housing and Urban Development Department community development block grants. Of the $16 billion, approximately $12 billion will be shared among Hurricane Sandy victims as well as those from other federally declared disasters in 2011-2013. The remaining $4 billion is solely for Hurricane Sandy-related projects. The Act will also provide $11 billion to the Federal Emergency Management Agency’s disaster relief aid fund for providing shelter, restoring power and other storm-interrupted utility services and meeting other immediate needs arising from Super Storm Sandy and other disasters. The Act will also provide $10 billion to repair the New York and New Jersey transit systems as well as make the systems more resistant to future storms.
Appeal of Historic Boardwalk Hall Case made to the U. S. Supreme Court
On Thursday, January 17, 2013 Counsel for Historic Boardwalk Hall and the New Jersey Sports and Exposition Authority filed a Petition for a Writ of Certiorari in the United States Supreme Court seeking reversal of the Third Circuit Opinion in the Historic Boardwalk Hall Case. The Third Circuit in the Historic Boardwalk Hall case had reversed the Tax Court decision and ruled that the Pitney Bowes affiliate was not a true partner in Historic Boardwalk Hall, LLC. As a result, the Third Circuit affirmed the IRS Administrative Adjustment to reallocate all of the Historic Rehabilitation Tax Credits from Pitney Bowes to the tax-exempt New Jersey Sports and Exposition Authority, a political subdivision of the State of New Jersey. The taxpayer in the petition argues that “…this is the first litigated case in the country in which the IRS has made a sweeping challenge to the allocation of federal HRTCs from a partnership to a partner in the very type of rehabilitation project that formed the basis for Congressional enactment of the HRTC statute. In a true sense, this case represents a dramatic legal clash between the Legislative Branch’s clearly stated intent in enacting the HRTC statute to encourage private investment in the restoration of historic properties…”. While petitions for a writ of certiorari are rarely granted by the Supreme Court, the taxpayer advanced several arguments which may form the basis of granting the writ including the resolution of conflicting decisions in the Circuits and a reversing a decision which is inconsistent with the Supreme Court’s holding in Commissioner v. Culbertson.
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.
CDFI Fund to Announce NMTC Awards in April
The CDFI Fund announced today its plans to award $3.5 billion of Federal New Markets Tax Credit authority for the 2012 round in April of 2013. Earlier in the day President Obama signed the American Taxpayer Relief Act of 2012 which included an extension of the Federal New Markets Tax Credit Program for 2012 and 2013. The New Markets Tax Credit authority is $3.5 billion for each year. In addition the current Senate version of the Hurricane Sandy and National Relief Act of 2012 provides for $500,000,000 of additional annual New Markets Tax Credit authority for National Disaster areas, including areas affected by Hurricane Sandy.
Congress Extends New Markets Tax Credit Program, Minimum 9% LIHTC rate, Wind Credit, and Bonus Depreciation
The American Taxpayer Relief Act of 2012 passed by Congress yesterday extends several Federal tax credit benefits critical to the development of affordable housing, low-income community development, and renewable energy. The Act authorizes the extension of the Federal New Markets Tax Credit Program for two additional years at $3.5 billion dollars of New Markets Tax Credit authority for each year. The American Taxpayer Relief Act of 2012 also extends the minimum credit rate for the Federal low-income housing tax credit of not less than 9% for non-federally subsidized new buildings for allocations made prior to January 1, 2014, the Wind production tax credit for facilities placed in service before January 1, 2014, and bonus depreciation for an additional year.
Senate to Vote on Hurricane Sandy Bill
Voting 91 to 1, Senate Democrats and Republicans joined to move for a vote this week on the Hurricane Sandy and National Relief Act of 2012. This $60.4 billion Bill would fund recovery efforts in states affected by Hurricane Sandy. If passed by the Senate, the Bill would still need passage by the Republican controlled House. Although the Bill is less than the $82 billion requested by the governors of New York, New Jersey and Connecticut, the Bill would provide much needed funds for affected states to clean up storm damage and undertake long-term projects to protect against the effects of future storms. The Bill would authorize an increase of allocation of Federal low-income housing tax credits, Historic Tax Credits, and New Markets Tax Credits as well as Recovery Zone Bonds in those areas affected by Hurricane Sandy.