Low Income Housing Tax Credit Programs

Low Income Housing Tax Credit Programs
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Overview

The federal Low-Income Housing Tax Credit ("LIHC") Program is often called the most successful and longest-lived Federal affordable rental housing production program, since its inception in 1987. Pursuant to Section 42 of the Internal Revenue Code, LIHC encourages private investment in the creation of affordable housing through a tax credit that provides a dollar-for-dollar reduction in a taxpayer’s income tax liability in return for making a long-term investment in affordable rental housing. LIHC has proven to be a versatile tool for the creation of all types of affordable housing.

Congress delegated administering LIHC to the states — a unique and unprecedented delegation of responsibility for a major federal tax program that is one of the key factors in LIHC’s success. In New York State, HCR is the  Housing Credit Agency (”HCA”) responsible for the overall  administration of the program. Emulating the success of LIHC, the Legislature  created a New York State Low-Income Housing Tax Credit (“SLIHC”) Program in 2000, under Article 2-a of Public Housing Law, with HCR as administrator.

There are two major categories of LIHC: 9 Percent LIHC, which provides for the allocation of  tax credits to projects under  federally-designated formula  based on a state’s population and other factors and 4 Percent LIHC allowing qualified rental housing projects financed with tax exempt private activity bonds to receive LIHC that does not count against the 9% LIHC annual credit availability. Authority to allocate SLIHC is authorized through the State budget.

Qualified Allocation Plans and SLIHC Regulations

Congress requires each HCA to adopt a Qualified Allocation Plan (“QAP”) which formally documents how the HCA administers the LIHC Program. The QAP, which sets forth the overall parameters for HCR’s administration of the program,  must contain a number of  components, including selection criteria, the allocation process and compliance monitoring procedures.   HCR has issued similar regulations for SLIHC.

HCR   administers the 9 Percent LIHC Program and the 4 Percent LIHC Program separately through two HCA’s (DHCR and HFA, respectively) with two separate QAP’s. SLIHC is governed by a single set of regulations.

Current Regulations

Proposed Revision of 9 Percent QAP, 4 Percent QAP and SLIHC Regulations

HCR published two Notices of Proposed Rulemaking in the State Register on May 22, 2019. One Notice covers the revision of the 9% QAP and SLIHC Regulation by DHCR.  The other covers the revision of the 4% QAP by HFA.

Proposed Revisions of 9 Percent QAP and SLIHC Regulations (DHCR)

Proposed Revision of 4 Percent QAP (HFA)

Public Hearing

A public hearing covering the revisions of the 9% QAP, 4% QAP and the SLIHC Regulations is scheduled at 1:00 PM on Monday, July 22, 2019 at the following locations:  38-40 State Street, 1st Floor, Albany NY; 25 Beaver Street, Room 642, New York, NY; 620 Erie Blvd W, Ste 312, Syracuse, NY; and, 535 Washington St, Ste 105, Buffalo, NY.

Application and Award Processes

 

9% LIHTC Application and Award Process

All projects must apply for 9% LIHTC through the Multifamily Finance 9% RFP process which is a twice annual, regionally-based, competitive funding opportunity for affordable multifamily housing.  It is a single application to access funding from multiple State and federal programs.  The 9% funding cycle is initiated by the publication of a Notice of Funding Availability / Notice of Credit Availability and Request for Proposals. More information on 9% LIHTC and Unified Funding is available on the HCR Multifamily Development Resources webpage and the LIHTC and SLIHC Program pages.

 


SLIHC Application and Award Process

There are two ways projects may apply for and be awarded SLIHC:

  1. Any project may apply for SLIHC through the Multifamily Finance 9% RFP process as described on the Multifamily Development Resources webpage, or
     
  2. Projects applying for Tax-Exempt Bond Financing and Subsidy from HCR in addition to SLIHC are not required to file a separate application for SLIHC. The HFA Financing Application permits a project to apply for SLIHC as part of the overall financing application. More information on this process is included on the Tax-Exempt Bond and Subsidy Financing Information for HFA Affordable Rental Housing webpage
     

4 Percent LIHC Application and Award Process

Projects applying for Tax-Exempt Bond Financing and Subsidy from HCR in addition to 4 Percent LIHC are not required to file a separate application, or pay any additional fees, to apply for 4 Percent LIHC. The HFA Financing Application permits a project to apply for 4 Percent LIHC as part of the overall financing application.

HCR also allocates 4 Percent Credits to projects financed by tax exempt private activity bonds issued by other State agencies, such as Industrial Development Agencies and Public Housing Authorities, through a separate application process for projects which only require the allocation of 4 Percent LIHC. Applications for 4 Percent LIHC may be made throughout the year.

Such allocations are made in accordance with the the 4 Percent LIHC QAP and any project receiving an allocation of LIHC under the 4 Percent QAP will be subject to the LIHC monitoring requirements described in the QAP.

Pursuant to the 4 Percent QAP, HCR may charge reasonable application, allocation and monitoring fees to projects which do not receive tax exempt bond financing from HCR and which receive LIHTC from HCR. The application fee is $2,000, due at the time of application. A credit allocation fee of three percent (3%) of the first year credit allocation amount is due when a project requests the issuance of Form or Forms 8609 evidencing the final credit allocation. Not-for-profit applicants (or their wholly owned subsidiaries) which will be the sole general partner of the partnership/project owner or sole managing member of the limited liability company/project owner may request and be approved to defer payment of the application fee until the time of issuance of the final credit allocation. Annual monitoring fees will be set at one percent (1%) of the maximum restricted rents for the low income units with a minimum annual monitoring fee of $10,000.

These fees are subject to revision by HCR without prior notice and will be adjusted, if necessary, to reflect the cost to HCR of the application, allocation and monitoring processes.

Projects Financed With HCR 9 Percent LIHC, 4 Percent LIHC, and SLIHC Allocations

Certification Forms

Mandatory Cost Certification Forms and Opinion Letters Required for Issuance of LIHC Forms 8609 and SLIHC DTF Form 625 for All Projects with “Costs as of” Dates on or after March 1, 2013.

HCR has adopted the Cost Certification Forms below to document the eligible and qualified basis for all HCR Tax Credit Programs. The appropriate forms and opinion letters must be used for 9% LIHC and SLIHC projects   along with “As of Right” LIHC and SLIHC  projects.

All of the Cost Certification Forms are Excel 93-2007 templates.  All worksheets are protected without any password.  If protection is removed from any sheet, additional rows or columns can be added to meet any project’s specific needs.  In the multiple Buildings templates, worksheets can also be copied where needed to add buildings.

Stand Alone LIHC/SLIHC Projects

New construction

Acquisition rehab

HTF/HOME Funded Projects with or without LIHC/SLIHC

New construction

Acquisition rehab


Opinion Letters are based on the National Council of State Housing Agencies Model Cost Certification Opinion Letter. They are available for download below in Word 97-2003 format.