House Debates Tax Extenders Bill: Reauthorizes Build America Bonds, Tax Credit Exchange, and Funding for National Housing Trust Fund

With the Memorial Day congressional recess looming the House today approved H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010, the tax extenders bill.” The vote was 215-204. The bill is steeped in controversy with deficit-conscious “Blue Dog” democrats insisting that its costs be offset. Several Senate democrats who will have a say in the bill when it is debated in the Senate following the recess have expressed concern over one of the ways the bill’s cost is partially offset, the tax treatment of income from venture capital and real estate partnerships.

The House bill would reauthorize through 2012 the popular “Build America Bonds” program. Under the program, which was authorized in the American recovery and Reinvestment Act of 2009 (ARRA), issuers receive a direct payment of 35% of the interest costs on these taxable bonds. Under the bill’s provisions, the interest subsidy would be reduced to 32% in 2011 and to 30% in 2012. The bonds, which are a compliment to traditional tax-exempt bonds, have been mainly used for infrastructure as they require the facility financed to be governmentally-owned. Their use for housing has been quite limited, although it is expected to grow in the future. In his FY 2011 budget President Obama urged Congress to make the program permanent. The provision is estimated to cost the Treasury $4 billion over 10-years.

The bill also authorizes through 2011 another ARRA bond program known as “Recovery Zone Bonds,” which could be used by communities for infrastructure, job training, education, and economic development in areas with significant poverty, unemployment or home foreclosures. The bill makes a change in the redistribution on bond authority such that each municipality gets a minimum allocation equal to its share of the national unemployment in December 2009.

Also extended through 2010 is a provision authorized by ARRA that permits 9% Low-Income Housing Tax Credits to be exchanged for cash. Under the provision housing credit allocating agencies may exchange for $.85 on the dollar all credits carried over from prior years as well as 40% of the current year’s allocation. This provision is intended to compensate for the withdrawal of Fannie Mae and Freddie Mac from the tax credit market. The bill does not extend the exchange program to 4% tax credits that accompany tax-exempt bonds, something that a coalition of national housing organizations is seeking. S. 3326, introduced by Senator Maria Cantwell (D-WA), would extend the exchange to the 4% credit. Such a provision was included in H.R. 4849, a small business jobs bill passed by the House in March. That provision could be added to a small business jobs bill that is to be considered by the Senate Finance Committee following the Memorial Day recess.

The tax extenders bill also provides for an additional round of New Markets Tax Credits in 2010 of $5 billion. It also permits investors to claim these credits against the AMT for investments made between March 15, 2010 and January 1, 2012. Also extended through 2010 is the designation of certain economically distressed census tracts as Empowerment Zones and Renewal Communities, which provide tax incentives for investments in these areas.

The bill also extends through 2011 a HERA provision permitting the Federal Home Loan Banks to guarantee tax-exempt bonds used for infrastructure. Tax-exempt housing bonds have for sometime been afforded this treatment on a permanent basis. In addition, the bill extends through 2011 the ceiling on “qualified small issuer” of $30 million, a provision also authorized by HERA. NACCED and NACo have supported this provision.

The House bill provides a one-time, $1 billion capitalization of the National Housing Trust Fund, a program authorized by HERA. Under the program, whose funding is allocated among the states, the bulk of these capital funds must be used for housing benefitting households at or below 30% of median income. Also provided is $65 million in project-based vouchers to provide rental assistance, the only way that households of extremely-low income can be served. According to the House Ways and Means Committee, the author of the bill, the funding will support 10,000 multifamily units and create 15,000 construction jobs and 4,000 permanent jobs.

One of the provisions that “pays” for the bill is a change in the tax law treatment of “carried interest.” Current law provides that carried interest that arises from venture capital, private equity and real estate partnerships be taxed at the 15% capital gains tax rate rather than the much higher ordinary income rate. The House bill would require that some portion of income arising from these partnerships be taxed as ordinary income. Proponents have criticized current law as permitting hedge fund managers to reap a tax windfall. NACCED and NACo passed a resolution at the March Legislative Conference urging Congress to preserve the present law treatment of carried interest, arguing that applying the change to real estate partnerships will serve as a disincentive for real estate investments in distressed neighborhoods which often is the only reason that such investment takes place.

Bank of America Announces First Year Results of 10-Year Community Lending Program

 This week Bank of America released the first-year results of its 10-year, $1.5 trillion community development goal to lend and invest in underserved communities. Initiated in 2009 as the largest community development goal ever established by a U.S. financial institution, Bank of America provided $168.2 billion to low- and moderate-income (LMI) communities and minority populations in the first year of this effort, exceeding annual expectations despite adverse economic conditions. This translates, on average, to nearly $667 million every business day throughout the past year.

The $1.5 trillion goal tracks community development lending and investing, focusing on four key categories: affordable housing, small business, consumer lending and economic development.  This goal also includes $50 billion to underserved rural and Native American communities directed toward these categories.

First-year lending and investing results include:

• Affordable Housing: $147 billion – this includes single-family mortgages; loan modifications to existing mortgages; and financing for predevelopment, construction, and term- and equity-financing for single- and multi-family housing that are affordably priced or located in designated LMI communities.
• Small Business: $12.8 billion – this includes conventional small business loans, loans and lines of credit for companies located in designated LMI communities; small business loan modifications; funding to small business investment companies (SBICs) and minority and inner-city business venture capital funds.  
• Consumer Lending:  $4.5 billion – this includes the full range of consumer financial services for low- and moderate-income individuals and families, such as auto loans and personal loans and lines of credit. Credit card borrowings are not included.
• Economic Development: $3.8 billion – this includes investments into nonprofits such as Community Development Financial Institutions (CDFIs), Community Development Corporations (CDCs), financial intermediaries and tax-exempt entities for lending and direct investments that promote neighborhood revitalization in communities designated as LMI, urban, rural and Native American.

Hundreds of individual loans and investments in nearly every state and major MSA across the country contribute to Bank of America’s community development goal. 

Examples include:

• More than $18 million in construction financing and low-income housing tax credits for Boston’s Olmsted Green, providing 50 housing units for low-income families and disabled individuals that is being built in accordance with LEED and Energy Star standards and has earned special recognition by the City of Boston for the hiring of minorities and women-owned businesses.
• More than $40 million in loans and investments to the YWCA of Greater Los Angeles to construct a new 60,000-square-foot commercial and residential facility located in the center of downtown to house the Los Angeles Job Corps and Urban Job Corps Campus, providing job training for up to 735 students.
• More than $23 million to help built 252 units of affordable family housing at The Woodmont Apartments in Fort Worth that includes onsite social and health services.
• A $1 million loan to Valley Economic Development Center, the largest nonprofit business development corporation in Southern California and a Community Development Financial Institution (CDFI), to establish a new below-market microloan program for small businesses and start-ups in underserved communities.

Annual results by state and major MSA are reported by Bank of America on its website, at www.bankofamerica.com/ahead.

Texas Settles Case of Affirmatively Furthering Fair Housing

HUD has asked all NSP1 grantees to submit an electronic version of the boundaries of their areas of greatest need where they are focusing NSP1 funds. HUD needs these maps to track any amendments to the boundaries of grantees’ areas of greatest need and to have clear and up-to-date information in order to evaluate the impact of the NSP program on those areas affected by abandoned and foreclosed properties. It also needs them to provide grantees with property-specific information in their designated areas such as FHA real estate-owned properties listings.

Three forms of submission have been offered by HUD: the NSP Mapping Tool on huduser.org; Google Earth to draw areas and email to HUD; or use existing GIS software and email shapefiles to HUD. HUD set a deadline of May 12 th for the submissions. This far according to HUD officials the response has been strong. HUD is also expected to use the maps for other, unspecified purposes.

HUD to Hold Webinar May 17th on NSP 1 Obligation Requirements

(Former NACCED President Norma Drummond, Deputy Commissioner of Planning for Westchester County, NY passed along the following HUD press release).

“A fair housing case involving requirements that recipients of government housing and development funds “affirmatively further” fair housing has been settled. The settlement is of a complaint filed by Texas Low Income Housing Information Service and Texas Appleseed against the State of Texas. It requires the State of Texas to conduct a new Analysis of Impediments to Fair Housing Choice and to document how its and Texas municipalities' expenditures comply with the obligation to "affirmatively further fair housing" (AFFH).

“The settlement was achieved through a Conciliation Agreement approved by HUD on May 25, 2010. The Agreement (and the State's submission of a new disaster recovery plan) paves the way for the release of $1.7 billion in Community Development Block Grant funds specifically appropriated for hurricane recovery efforts. HUD had withheld the funds after the Texas Low Income Housing Information Service and Texas Appleseed expressed concerns about the State's compliance with its planning and civil rights obligations.

“In furtherance of its AFFH obligations, the State will:

* Shift an additional $152 million toward housing needs of low- and moderate-income households

* Provide funding for the replacement of all public housing units in the City of Galveston and in other municipalities where units were destroyed, and set aside $100 million to rebuild subsidized housing in the Counties of Harris, Galveston and Orange

* Fund an $18 million "Impacted Area Buyout" program to permit low- and moderate-income victims of the hurricanes to move out of areas of high minority and high poverty concentration, and a "Title Clearance and Legal Assistance" program to resolve problems with "heir property" and to make those properties eligible for disaster assistance

* Provide up to $5 million to fund a "Moving to Opportunity" program under which tenants with portable rental subsidies can relocate to higher opportunity areas

“The Agreement also mandates AFFH and civil rights training for municipal recipients of disaster recovery funds, and requires State agencies and recipients to collect and publicly report data relevant to compliance with the AFFH and other civil rights obligations.

“The resolution of the Texas AFFH complaint builds on the success of last year's Westchester County settlement. It signals that HUD has raised the bar on AFFH compliance, and that recipients of federal funds have to take their civil rights obligations very seriously. Michael Allen served as lead counsel for the Firm. Michael, who was also lead counsel in the Westchester case, noted that "the innovative approach taken in Texas provides a new template for advocates and municipalities around the country to ensure that federal funds are, in fact, spent in a way that affirmatively furthers fair housing choice."

“A copy of the Conciliation Agreement is available at http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_.”

Announcement of NACCED Meetings in Connection with the NACo Annual Conference

This is an announcement of the NACCED Committee and Board meetings to be held in connection with the 2010 NACo Annual Conference. The meetings will be held on Friday, July 16th and Saturday, July 17th at the Reno-Sparks Convention Center in Reno/Washoe County, NV. The schedule is as follows:

Friday, July 16

 9:00 a.m.- 10:30 p.m. Housing Committee Meeting – Cassa Collinge, Allegheny County, PA, Chair

10:45 a.m. – 12:15 p.m. Community Development Committee Meeting – Chair, Nick Autorina, Cobb County, GA, Chair

1:30 p.m. – 2:30 p.m. Economic Development Committee Meeting – Karen Wiley, Salt Lake County, UT, Chair

2:30 p.m. – 3:30 p.m. Program Support and Education Committee Meeting – Christy Moffett, Travis County, TX, Chair

3:30 p.m. – 4:00 p.m. Membership Committee Meeting – Lance Crawford, Clayton County, GA, Chair

4:00 p.m. – 6:00 p.m. NACCED Board of Directors Meeting – Susan Walsh, President

Saturday, July 17

 9:00 a.m. – 10:30 a.m. Joint NACo/NACCED Economic Development Committee Meeting

10:30 a.m. – Noon Joint NACo/NACCED Housing Committee Meeting

1:00 p.m. – 4:00 p.m. NACo Community and Economic Development steering Committee Meeting

A block of rooms is being held at the Peppermill Hotel, located at 2707 South Virginia Street, Reno, NV. Use the code and password of NACCED10 to book your reservation in the online reservation system on the Peppermill website at www.peppermillreno.com , or by calling the main line at 1-800-282-2444 and tell the agent you are with a group code NACCED10.

The rate is $139 per night + 13% applicable Washoe County Room tax (subject to change) + $10 Resort Fee per night which includes internet access in all public areas and sleeping rooms, the Internet Café, Complimentary business center access, incoming and out going faxes up to 5 pages, in-room coffee makers, use of the health club, pool, valet, access to the parking garage and surface parking, concierge, local and #800 phone calls, and shuttle service to and from the airport.  

This rate is available until Friday, June 18, 2010.  Guests must cancel their reservation 24 hours in advance of arrival date to avoid a penalty of 1 st night room and tax.

House Debates Tax Extenders Bill: Reauthorizes Build America Bonds, Tax Credit Exchange, and Funding for National Housing Trust Fund

With the Memorial Day congressional recess looming the House today approved H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010, the tax extenders bill.” The vote was 215-204. The bill is steeped in controversy with deficit-conscious “Blue Dog” democrats insisting that its costs be offset. Several Senate democrats who will have a say in the bill when it is debated in the Senate following the recess have expressed concern over one of the ways the bill’s cost is partially offset, the tax treatment of income from venture capital and real estate partnerships.

The House bill would reauthorize through 2012 the popular “Build America Bonds” program. Under the program, which was authorized in the American recovery and Reinvestment Act of 2009 (ARRA), issuers receive a direct payment of 35% of the interest costs on these taxable bonds. Under the bill’s provisions, the interest subsidy would be reduced to 32% in 2011 and to 30% in 2012. The bonds, which are a compliment to traditional tax-exempt bonds, have been mainly used for infrastructure as they require the facility financed to be governmentally-owned. Their use for housing has been quite limited, although it is expected to grow in the future. In his FY 2011 budget President Obama urged Congress to make the program permanent. The provision is estimated to cost the Treasury $4 billion over 10-years.

The bill also authorizes through 2011 another ARRA bond program known as “Recovery Zone Bonds,” which could be used by communities for infrastructure, job training, education, and economic development in areas with significant poverty, unemployment or home foreclosures. The bill makes a change in the redistribution on bond authority such that each municipality gets a minimum allocation equal to its share of the national unemployment in December 2009.

Also extended through 2010 is a provision authorized by ARRA that permits 9% Low-Income Housing Tax Credits to be exchanged for cash. Under the provision housing credit allocating agencies may exchange for $.85 on the dollar all credits carried over from prior years as well as 40% of the current year’s allocation. This provision is intended to compensate for the withdrawal of Fannie Mae and Freddie Mac from the tax credit market. The bill does not extend the exchange program to 4% tax credits that accompany tax-exempt bonds, something that a coalition of national housing organizations is seeking. S. 3326, introduced by Senator Maria Cantwell (D-WA), would extend the exchange to the 4% credit. Such a provision was included in H.R. 4849, a small business jobs bill passed by the House in March. That provision could be added to a small business jobs bill that is to be considered by the Senate Finance Committee following the Memorial Day recess.

The tax extenders bill also provides for an additional round of New Markets Tax Credits in 2010 of $5 billion. It also permits investors to claim these credits against the AMT for investments made between March 15, 2010 and January 1, 2012. Also extended through 2010 is the designation of certain economically distressed census tracts as Empowerment Zones and Renewal Communities, which provide tax incentives for investments in these areas.

The bill also extends through 2011 a HERA provision permitting the Federal Home Loan Banks to guarantee tax-exempt bonds used for infrastructure. Tax-exempt housing bonds have for sometime been afforded this treatment on a permanent basis. In addition, the bill extends through 2011 the ceiling on “qualified small issuer” of $30 million, a provision also authorized by HERA. NACCED and NACo have supported this provision.

The House bill provides a one-time, $1 billion capitalization of the National Housing Trust Fund, a program authorized by HERA. Under the program, whose funding is allocated among the states, the bulk of these capital funds must be used for housing benefitting households at or below 30% of median income. Also provided is $65 million in project-based vouchers to provide rental assistance, the only way that households of extremely-low income can be served. According to the House Ways and Means Committee, the author of the bill, the funding will support 10,000 multifamily units and create 15,000 construction jobs and 4,000 permanent jobs.

One of the provisions that “pays” for the bill is a change in the tax law treatment of “carried interest.” Current law provides that carried interest that arises from venture capital, private equity and real estate partnerships be taxed at the 15% capital gains tax rate rather than the much higher ordinary income rate. The House bill would require that some portion of income arising from these partnerships be taxed as ordinary income. Proponents have criticized current law as permitting hedge fund managers to reap a tax windfall. NACCED and NACo passed a resolution at the March Legislative Conference urging Congress to preserve the present law treatment of carried interest, arguing that applying the change to real estate partnerships will serve as a disincentive for real estate investments in distressed neighborhoods which often is the only reason that such investment takes place.

Bank of America Announces First Year Results of 10-Year Community Lending Program

 This week Bank of America released the first-year results of its 10-year, $1.5 trillion community development goal to lend and invest in underserved communities. Initiated in 2009 as the largest community development goal ever established by a U.S. financial institution, Bank of America provided $168.2 billion to low- and moderate-income (LMI) communities and minority populations in the first year of this effort, exceeding annual expectations despite adverse economic conditions. This translates, on average, to nearly $667 million every business day throughout the past year.

The $1.5 trillion goal tracks community development lending and investing, focusing on four key categories: affordable housing, small business, consumer lending and economic development.  This goal also includes $50 billion to underserved rural and Native American communities directed toward these categories.

First-year lending and investing results include:

• Affordable Housing: $147 billion – this includes single-family mortgages; loan modifications to existing mortgages; and financing for predevelopment, construction, and term- and equity-financing for single- and multi-family housing that are affordably priced or located in designated LMI communities.
• Small Business: $12.8 billion – this includes conventional small business loans, loans and lines of credit for companies located in designated LMI communities; small business loan modifications; funding to small business investment companies (SBICs) and minority and inner-city business venture capital funds.  
• Consumer Lending:  $4.5 billion – this includes the full range of consumer financial services for low- and moderate-income individuals and families, such as auto loans and personal loans and lines of credit. Credit card borrowings are not included.
• Economic Development: $3.8 billion – this includes investments into nonprofits such as Community Development Financial Institutions (CDFIs), Community Development Corporations (CDCs), financial intermediaries and tax-exempt entities for lending and direct investments that promote neighborhood revitalization in communities designated as LMI, urban, rural and Native American.

Hundreds of individual loans and investments in nearly every state and major MSA across the country contribute to Bank of America’s community development goal. 

Examples include:

• More than $18 million in construction financing and low-income housing tax credits for Boston’s Olmsted Green, providing 50 housing units for low-income families and disabled individuals that is being built in accordance with LEED and Energy Star standards and has earned special recognition by the City of Boston for the hiring of minorities and women-owned businesses.
• More than $40 million in loans and investments to the YWCA of Greater Los Angeles to construct a new 60,000-square-foot commercial and residential facility located in the center of downtown to house the Los Angeles Job Corps and Urban Job Corps Campus, providing job training for up to 735 students.
• More than $23 million to help built 252 units of affordable family housing at The Woodmont Apartments in Fort Worth that includes onsite social and health services.
• A $1 million loan to Valley Economic Development Center, the largest nonprofit business development corporation in Southern California and a Community Development Financial Institution (CDFI), to establish a new below-market microloan program for small businesses and start-ups in underserved communities.

Annual results by state and major MSA are reported by Bank of America on its website, at www.bankofamerica.com/ahead.

Texas Settles Case of Affirmatively Furthering Fair Housing

HUD has asked all NSP1 grantees to submit an electronic version of the boundaries of their areas of greatest need where they are focusing NSP1 funds. HUD needs these maps to track any amendments to the boundaries of grantees’ areas of greatest need and to have clear and up-to-date information in order to evaluate the impact of the NSP program on those areas affected by abandoned and foreclosed properties. It also needs them to provide grantees with property-specific information in their designated areas such as FHA real estate-owned properties listings.

Three forms of submission have been offered by HUD: the NSP Mapping Tool on huduser.org; Google Earth to draw areas and email to HUD; or use existing GIS software and email shapefiles to HUD. HUD set a deadline of May 12 th for the submissions. This far according to HUD officials the response has been strong. HUD is also expected to use the maps for other, unspecified purposes.

HUD to Hold Webinar May 17th on NSP 1 Obligation Requirements

(Former NACCED President Norma Drummond, Deputy Commissioner of Planning for Westchester County, NY passed along the following HUD press release).

“A fair housing case involving requirements that recipients of government housing and development funds “affirmatively further” fair housing has been settled. The settlement is of a complaint filed by Texas Low Income Housing Information Service and Texas Appleseed against the State of Texas. It requires the State of Texas to conduct a new Analysis of Impediments to Fair Housing Choice and to document how its and Texas municipalities' expenditures comply with the obligation to "affirmatively further fair housing" (AFFH).

“The settlement was achieved through a Conciliation Agreement approved by HUD on May 25, 2010. The Agreement (and the State's submission of a new disaster recovery plan) paves the way for the release of $1.7 billion in Community Development Block Grant funds specifically appropriated for hurricane recovery efforts. HUD had withheld the funds after the Texas Low Income Housing Information Service and Texas Appleseed expressed concerns about the State's compliance with its planning and civil rights obligations.

“In furtherance of its AFFH obligations, the State will:

* Shift an additional $152 million toward housing needs of low- and moderate-income households

* Provide funding for the replacement of all public housing units in the City of Galveston and in other municipalities where units were destroyed, and set aside $100 million to rebuild subsidized housing in the Counties of Harris, Galveston and Orange

* Fund an $18 million "Impacted Area Buyout" program to permit low- and moderate-income victims of the hurricanes to move out of areas of high minority and high poverty concentration, and a "Title Clearance and Legal Assistance" program to resolve problems with "heir property" and to make those properties eligible for disaster assistance

* Provide up to $5 million to fund a "Moving to Opportunity" program under which tenants with portable rental subsidies can relocate to higher opportunity areas

“The Agreement also mandates AFFH and civil rights training for municipal recipients of disaster recovery funds, and requires State agencies and recipients to collect and publicly report data relevant to compliance with the AFFH and other civil rights obligations.

“The resolution of the Texas AFFH complaint builds on the success of last year's Westchester County settlement. It signals that HUD has raised the bar on AFFH compliance, and that recipients of federal funds have to take their civil rights obligations very seriously. Michael Allen served as lead counsel for the Firm. Michael, who was also lead counsel in the Westchester case, noted that "the innovative approach taken in Texas provides a new template for advocates and municipalities around the country to ensure that federal funds are, in fact, spent in a way that affirmatively furthers fair housing choice."

“A copy of the Conciliation Agreement is available at http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_.”

Announcement of NACCED Meetings in Connection with the NACo Annual Conference

This is an announcement of the NACCED Committee and Board meetings to be held in connection with the 2010 NACo Annual Conference. The meetings will be held on Friday, July 16th and Saturday, July 17th at the Reno-Sparks Convention Center in Reno/Washoe County, NV. The schedule is as follows:

Friday, July 16

 9:00 a.m.- 10:30 p.m. Housing Committee Meeting – Cassa Collinge, Allegheny County, PA, Chair

10:45 a.m. – 12:15 p.m. Community Development Committee Meeting – Chair, Nick Autorina, Cobb County, GA, Chair

1:30 p.m. – 2:30 p.m. Economic Development Committee Meeting – Karen Wiley, Salt Lake County, UT, Chair

2:30 p.m. – 3:30 p.m. Program Support and Education Committee Meeting – Christy Moffett, Travis County, TX, Chair

3:30 p.m. – 4:00 p.m. Membership Committee Meeting – Lance Crawford, Clayton County, GA, Chair

4:00 p.m. – 6:00 p.m. NACCED Board of Directors Meeting – Susan Walsh, President

Saturday, July 17

 9:00 a.m. – 10:30 a.m. Joint NACo/NACCED Economic Development Committee Meeting

10:30 a.m. – Noon Joint NACo/NACCED Housing Committee Meeting

1:00 p.m. – 4:00 p.m. NACo Community and Economic Development steering Committee Meeting

A block of rooms is being held at the Peppermill Hotel, located at 2707 South Virginia Street, Reno, NV. Use the code and password of NACCED10 to book your reservation in the online reservation system on the Peppermill website at www.peppermillreno.com , or by calling the main line at 1-800-282-2444 and tell the agent you are with a group code NACCED10.

The rate is $139 per night + 13% applicable Washoe County Room tax (subject to change) + $10 Resort Fee per night which includes internet access in all public areas and sleeping rooms, the Internet Café, Complimentary business center access, incoming and out going faxes up to 5 pages, in-room coffee makers, use of the health club, pool, valet, access to the parking garage and surface parking, concierge, local and #800 phone calls, and shuttle service to and from the airport.  

This rate is available until Friday, June 18, 2010.  Guests must cancel their reservation 24 hours in advance of arrival date to avoid a penalty of 1 st night room and tax.