Low-Income Housing Credit Requirements Are Suspended To Help Missouri Storm Victims

Notice 2011-47, 2011-27 IRB

In a Notice, IRS has suspended certain requirements under Code Sec. 42 for low-income housing credit projects as a result of the devastation caused by severe storms, tornadoes, and flooding in Missouri beginning on Apr. 19, 2011.

Request for low-income housing relief. Missouri has asked, and IRS has agreed, to allow owners of low-income housing credit projects to provide temporary housing in vacant units to individuals who lived in areas of that state designated for individual assistance in Missouri by FEMA (Federal Emergency Management Agency) and who have been displaced because their residences were destroyed or damaged as a result of severe storms, tornadoes, and flooding (displaced individuals).

Relief for owners of low-income housing. Notice 2011-47 provides for:

... The suspension of income limits for low-income housing projects approved by the Missouri Housing Development Commission (Commission), in which vacant units are rented to displaced individuals. The Commission will determine the appropriate period of temporary housing for each project, not to extend beyond July 30, 2012 (temporary housing period). (Notice 2011-47)

... A displaced individual temporarily occupying a unit during the first year of the credit period will be deemed a qualified low-income tenant in determining the project's qualified basis under Code Sec. 42(c)(1) and in meeting the project's 20-50 test or 40-60 test under Code Sec. 42(g)(1). During the temporary housing period established by the Commission, the status of a vacant unit (i.e., market-rate, low-income, or never previously occupied) after the first year of the credit period that becomes temporarily occupied by a displaced individual remains the same as the unit's status before the displaced individual moved in. (Notice 2011-47, Sec. II)

... The suspension of the non-transient use requirement of Code Sec. 42(i)(3)(B)(i) for any unit providing temporary housing to a displaced individual during the temporary housing period determined by the Commission. (Notice 2011-47, Sec. III)

To qualify for relief, the following requirements must be met: (1) the displaced individual must have resided in a jurisdiction designated for Individual Assistance by FEMA as a result of the severe storms, tornadoes, and flooding in Missouri beginning on Apr. 19, 2011; (2) the project owner must obtain approval for the relief from the Commission; (3) the project owner must maintain and certify certain information on each displaced individual temporarily housed in the project; (4) rents for the low-income units housing displaced individuals can't exceed the existing rent-restricted rates established under Code Sec. 42(g)(2); and (5) existing tenants in occupied low-income units cannot be evicted or have their tenancy terminated to provide temporary housing for displaced individuals. (Notice 2011-47, Sec. IV)

All other Code Sec. 42 rules and requirements continue to apply during the temporary housing period established by the Commission. After the end of that period, the applicable income limitations in Code Sec. 42(g)(1), the available unit rule under Code Sec. 42(g)(2)(D)(ii), the non-transient requirement of Code Sec. 42(i)(3)(B)(i), and the requirement to make reasonable attempts to rent vacant units to low-income individuals will resume. (Notice 2011-47, Sec. IV)

Effective date. Notice 2011-47 is effective May 9, 2011 (the date of the President's major disaster declarations as a result of the severe storms, tornadoes, and flooding in Missouri beginning on Apr. 19, 2011).

References: For the low-income housing credit, see FTC 2d/FIN ¶L-15701; United States Tax Reporter ¶424; TaxDesk ¶383,001; TG ¶15200.