Please see the following summary of key provisions from the conference report of HR 1: The American Recovery and Reinvestment Act. The House of Representatives and Senate voted in favor of the measure and  President Obama signed the measure into law Tuesday, Feb. 17.

Tax Provisions

Grants to States for low-income housing projects in lieu of low-income housing credit allocations for 2009

States may elect to convert up to 40 percent of their 2009 LIHTC allocation and up to 100 percent of any unused or returned 2008 credits into cash at 85 cents for each dollar of LIHTC.  These grants could be made to projects with or without a housing credit allocation, but all projects receiving an award would have to meet the normal LIHTC program requirements and state agencies would be required to perform or contract for asset management functions to ensure compliance.  Converting allocation to grants would reduce the overall tax credit ceiling for 2009 proportionately.

Increase in New Markets Tax Credit Authority

Authorizes an additional $1.5 billion for the 2008 New Markets Tax Credit allocation round and an additional $1.5 billion for the 2009 allocation round, bringing the 2009 allocation amount to $5 billion.  Entities eligible for additional NMTCs in 2008 but have submitted an allocation in 2008.  Only applicants that did not receive an allocation or received an allocation less than the amount requested in the allocation application will be eligible.

5–Year Carryback of Operating Losses of Small Businesses

Eligible small businesses may elect to carryback 2008 net operating losses five years.  Generally speaking, small businesses in this context cannot of have gross receipts in excess of $15 million in a taxable year (three year average).

Tax-Exempt Bonds

Eliminates the pro rata interest expense deduction disallowance for financial institutions investments in tax-exempt bonds.  Increases the small issuer qualified bond limit for financial institution bond investments.  Repeals the AMT on all private activity bonds issued in 2009 and 2010.

Spending Provisions

HOME LIHTC Capital Improvements

$2 billion for capital investments in LIHTC projects, in particular for projects that have been stalled due to funding gaps.

Assisted Housing Energy Retrofits

$250 million for energy retrofits and green investments in Section 202, Section 811 and Section 8 housing through the HOME program.

Project-Based Rental Assistance

$2 billion for project-based rental assistance for Section 202, Section 811 and Section 8 housing.  Will provide full funding for the contract amount for a 12 month period for these properties.

HOME Investment Partnerships Program

$250 million in HOME Funds to be allocated under existing program rules.

Public Housing Capital Fund

$5 billion for the Public Housing Capital Fund for PHAs.  The HUD Secretary has the discretion to allocate $1 billion for grants to PHAs for energy efficient and sustainable capital improvements.

CDBG

$1 billion for the Community Development Block Grant Program

Neighborhood Stabilization

$2 billion for the Neighborhood Stabilization Program.

Homelessness Prevention

$1.5 billion for homeless prevention activities.

Provisions Not Included in Final Agreement

  • Provision temporarily accelerating LIHTCs to early years of 10-year credit period.

  • 5-year carryback of general business credits (LIHTCs, NMTCs, 45L, etc).

  • AMT Exemption for 2009 NMTCs

We will be discussing how all of these provisions will be implemented and how they will impact your deals through-out the 2009 NH&RA Affordable Housing Conference and Annual Meeting (March 11-15, Key Largo, FL) and the 2009 Public Policy and Market Study Forum (April 6-7, Washington, DC).   As always, please feel free to contact me with any questions at 202-939-1753 or tamdur@housingonline.com.