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Mia Chikamori
mchikamori@wncinc.com
(714) 662-5565, x122

For Immediate Release

President Signs Housing and Economic Recovery Act of 2008

President Bush on July 30th signed into law H.R. 3221, The Housing and Economic Recovery Act of 2008, which includes several significant and sweeping changes to the low-income housing tax credit, the rehabilitation tax credit and tax-exempt bond programs. The law provisions are intended to improve the housing and financial markets. Many of the provisions for low-income housing apply to projects which are placed in service after enactment (immediately after Presidential signing). This means that projects which have received allocations but have not yet been placed in service may be able to benefit from the Act. Tax credit highlights of the Act include:

A temporary, $.20 increase in the tax credit per capita cap.
State agencies can provide a 30% basis boost to properties which they decide need the additional credit to be “economically feasible” The boost will be available to properties which are placed in service after the date of enactment. Developers must obtain state approval.
For 9% properties placed in service after date of enactment, credits can be locked in at greater of AFR formula or 9%. This sunsets in 2013 and is not applicable to 4% deals.
Properties placed in service after enactment will have one year after allocation to fulfill the 10% requirement.
For HOME assisted properties placed in service after enactment, the prohibition of a 30% basis boost if properties are in a Qualified Census Tract (QCT) or DDA (Difficult to Develop Area) is eliminated.
The 10-year rule for acquisition credits on federally subsidized (RD/HUD) properties is repealed for properties placed in service after enactment.
Investors are allowed to use credits against AMT for properties placed in service after December 31, 2007.
Relaxes the related party rule regarding acquisition of credits from 10% to 50%.
Repeals the recapture bond rule for properties that meet certain criteria.

“This is a major victory for the entire industry,” remarked WNC Founder and Chairman Wilfred N. Cooper, Sr., who was active in promoting the tax credit legislation from its beginnings. “It not only takes positive steps towards stabilizing the current low-income housing tax credit market, but also provides for its future strength and longevity.”

A comprehensive summary of the entire legislation is available from the NCSHA at http://www.ncsha.org/uploads/NCSHA%20HR%203221%20Summary%20FINAL.pdf. Nixon Peabody has also prepared a summary which focuses on the low-income housing tax credit provisions, available at http://www.nixonpeabody.com/publications_detail3.asp?ID=2368.