11-003 Code Vt. R. 11-030-003-X
The Federal Tax Reform Act of 1986 created a new federal tax credit to stimulate the production and rehabilitation of housing for low income persons. The legislation ( 26 U.S.C. Section 42) limited the allocation of tax credit authority to each state from 1986-89 to an annual sum equal to $ 1.25 per capita. Under this legislation, the state, acting through the Issuing Authority, the Vermont Housing Finance Agency, has allocated credits totalling approximately $ 1.48 million from 1987 through 1989.
The tax credit is determined as a percentage of certain qualifying project costs, relating to both the entire project and the units within a project that are dedicated for occupancy by low-income households. In the event that the owner fails to maintain the housing as a qualified project, there are provisions for recapture of sums taken as tax credits.
In 1989 Congress adopted an amendment to the legislation that limits the authority for 1990 to $ .9375 per capita. This amendment also requires the state to establish an Allocation Plan for allocating tax credits to qualifying rental properties, which must also meet specific eligibility criteria established by federal law.
On March 8, 1987, Governor Madeleine M. Kunin issued Executive Order # 42, which designates the State Agency of Development and Community Affairs as the State Housing Credit Agency. On July 16, 1987 the Governor signed Executive Order # 42A, which authorizes the Vermont Housing Finance Agency and the Agency of Development and Community Affairs to make low income housing credit allocations. These Rules implement Executive Orders # 42 and 42A.
Executive Order # 42, dated March 8, 1987, and Executive Order # 42A, dated July 16, 1987, establish a system for allocation of federal tax credit authority for qualified low income housing projects. Pursuant to Executive Orders # 42 and 42A:
--The Vermont Agency of Development and Community Affairs is designated the State Housing Credit Agency for the purpose of carrying out and administering the low Income Housing Tax Credit Program.
--A Joint Committee on Tax Credits is established to develop recommended policies for allocation of state credit authority, and to review performance of the Issuing Authority in implementing Program objectives.
--The State Housing Credit Agency is authorized to contract with Vermont Housing Finance Agency as the Issuing Authority for the purpose of administering the program.
The State Housing Credit Agency is authorized to adopt policies for allocation of the state's tax credit authority, to assure that low income housing tax credits are allocated consistently with the Code, any regulations adopted pursuant to Section 42 of the Code, and state housing policy. The State Housing Credit Agency is responsible for submission of annual reports to the Secretary of Treasury concerning the state's credit allocation system, as required by federal law.
The Issuing Authority has sole responsibility for review and approval of tax credit authority relating to specific qualifying low income housing projects, and for execution of the Allocation Plan. In addition to authority to issue tax credits for specific projects, the Issuing Authority shall have the following authority and responsibility:
The Issuing Authority will draft an Allocation Plan for the State Housing Credit Agency that conforms to the requirements of Section 42(m)(1)(B) of the Code. The State Housing Credit Agency will solicit comments from the Joint Committee before distributing the Allocation Plan for public comment. From time to time, the Issuing Authority or the Joint Committee may propose
such modifications in the Plan as are required by the Code or are indicated by conditions in the housing situation of the State.
The State Housing Credit Agency shall hold at least the minimum number of public hearings required by the Code on the Plan. The draft Allocation Plan and the required Housing Needs Analysis will be distributed upon request prior to the public hearings. The State Housing Credit Agency may revise the Allocation Plan in response to public comment and may request advice from the Joint Committee about such revisions. After finalization of the Allocation Plan, the State Housing Credit Agency shall submit it to the Governor for approval. Any amendments to the Allocation Plan shall follow this process.
The Allocation Plan will provide that the highest priority in allocating credits is given to properties with the lowest percentage of costs attributable to intermediaries and that priority is also given to projects serving the lowest income tenants and projects obligated to serve qualified tenants for the longest period and any other priorities established by the Code.
Additional criteria that will be considered in the state's Allocation Plan include:
Not less than 10% of the state housing credit ceiling for any calendar year shall be reserved exclusively for allocation, whether or not actually allocated, the projects involving Qualified Nonprofit Organizations. For purposes of this paragraph, a project "involves" a Qualified Nonprofit Organization if the Qualified Nonprofit Organization materially participates in the development and operation of the project throughout the compliance period, all within the meaning of Section 42(h)(5)(B) of the Code.
In the event that the lawful supply of state credit authority for a given credit year is inadequate to meet the demand, the Issuing Authority may allocate the available supply first in accordance with the priorities established by the Allocation Plan and then, as between projects of equal general priority, in its discretion taking into account, without limitation, such factors as:
--The number of units to be set aside for occupancy by low-income families in the respective competing projects;
--The length of time, beyond the qualifying minimum, for which the competing applicants propose to commit their respective projects to rental housing in general and low-income housing in particular;
--The experience, fiscal responsibility, and past management record of the competing applicants.
With respect to projects not placed in service by the proposed Recipient at the time of application for credit authority, the Issuing Authority is authorized to make tentative assignments of credit authority to particular projects for a current credit year or for any credit year prior to the Sunset Date. Such tentative assignments may be made in the form of commitments, conditioned by their terms on compliance, as of the date the project is placed in service by the Recipient, with Federal law, these regulations, and such other terms and conditions as the Issuing Authority in its discretion shall deem necessary or desireable in furtherance of these regulations and State Housing Policy.
As between the Recipient and the Issuing Authority, the Recipient shall be fully responsible for the accuracy of all project information bearing upon the legality and amount of the credit authority allocated to the Recipient's project including, without limitation, information pertaining to the determination of Eligible Basis and Qualified Basis. At the time of application, or such later time prior to allocation of the credit as the Issuing Authority in this discretion may permit, the proposed Recipient shall deliver to the Issuing Authority, in such form as the Issuing Authority may provide, its certificate as to the amount of Eligible Basis and the amount of Qualified Basis for which the project is eligible under the Code and the regulations adopted pursuant thereto. The Issuing Authority and the State Housing Credit Agency shall be entitled to rely upon such certificate, and the Recipient shall indemnify and hold harmless the Issuing Authority and the State Housing Credit Agency for any loss, cost, or expense resulting from any false statement contained in such certificate, whether or not such statement is negligent or willful. This Section VIII shall constitute an implied term of each and every commitment for, and allocation of, tax credit authority.
11-003 Code Vt. R. 11-030-003-X