Senators Charles Schumer (D-NY) and Robert Menendez (D-NJ) recently announced they are set to introduce the Hurricane Sandy and National Disaster Tax Relief Act of 2012. The bill will include provisions meant to reduce tax burden on families and businesses financially impacted by Hurricane Sandy. The bill summary provided by Menendez and Schumer describes several changes to the NMTC, LIHTC, and Historic Tax Credit programs:

  • Increase in New Markets Tax Credit Allocation for Community Development Entities Serving in Disaster Areas. This provision allows an additional allocation of the new markets tax credit in an amount equal to $500 million each year (for three years) to be allocated among qualified community development entities to make qualified community investments within in a federally declared major disaster area.
  • Increased Low-Income Housing Tax Credit Availability. This provision would permit affected states to allocate additional amounts of low-income housing tax credits for use in the disaster area of up to $8.00 multiplied by the state’s disaster area population for the allocation years of 2013, 2014 and 2015. Currently each state is limited in the amount of credits it may allocate to the greater of $2,525,000 or $2.20 times the state’s population. Additionally, the measure provides an increased credit value for areas impacted by Hurricane Irene in 2011.
  • Increased Rehabilitation Credits. This provision would increase the rehabilitation tax credit from 10 percent to 13 percent for the rehabilitation of buildings within the disaster zone that were constructed prior to 1936. For the rehabilitation of certified historic structures in the disaster zone, the credit was increased from 20 percent to 26 percent. Applies to expenditures made no later than December 31, 2014.
  • Increased Depreciation Allowance. This provision would allow businesses in the disaster zone to use bonus depreciation for capital expenditures associated with constructing commercial properties and residential rental properties. The provision increases the deduction to roughly 50% of the basis or the value of the property during the first year the property is placed in service.

UPDATE: A group of 32 U.S. representatives sent House Speaker John Boehner a letter urging support for H.R. 6683. Click here to read the letter and press release.

Click here to read the full text of the Hurricane Sandy and National Disaster Tax Relief Act of 2012.
Click here to read the bill summary released by Schumer and Menendez.

In addition, the Obama Administration recently sent a $60.4 billion supplemental spending request to Congress that details means for responding to Hurricane Sandy. Of this amount, $47.5 billion is for recovery and repair, and an additional $12.9 billion is for mitigation against future storms. A few highlights include:

  • Tenant-Based Rental Assistance. The administration requests $0 in funding, but asks that appropriations language be included to protect Public Housing Authorities (PHAs) affected by Hurricane Sandy from decreases in Housing Voucher renewal funding and administrative fees. PHAs are allocated renewal funding based on the prior year’s actual leasing rates, and administrative fees are based on ongoing leasing activity. The administration notes that these formula allocations could result in a decrease in renewal funding, which could be devastating to PHAs dealing with Sandy aftermath. The proposal would prevent PHA funding from dropping below 2012 levels. Similar authority was provided in appropriations language following Hurricane Katrina.
  • Community Development Block Grant (CDBG). The administration requests an extra $15 billion in flexible CDBG funds to assist State and local governments to address disaster recovery needs in areas most impacted by Hurricane Sandy. The proposal also requests waiver authority and other special rules for the CDBG disaster funds.
  • CDBG Mitigation Projects. The administration requests an additional $2 billion in CDBG funds for mitigation projects to reduce future risks and vulnerabilities. Recipients could use these funds to design and implement measures to reduce the risk of damage and loss from future disaster events.

Click here to read the letter.