Capital Briefs

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CDFI Fund Invites Applications for Capital Magnet Fund Dollars

The Community Development Financial Institutions (CDFI) Fund has published a notice to solicit applications for funding under the initial round of the new Capital Magnet Fund (CMF) program by April 15. At the same time, the CDFI Fund published proposed regulations for the program and requested comments by May 14.

The Fund expects to award approximately $80 million under the FY 2010 funding round. The Capital Magnet Program was authorized by the Housing and Economic Recovery Act of 2008 to offer competitive grants to eligible community development financial institutions and nonprofits to help attract capital for the development, preservation, rehabilitation, and purchase of affordable housing. Certain other activities are also eligible.

(http://www.access.gpo.gov/su_docs/fedreg/a100315c.html)

Historic Tax Credit Activity Falls in FY 2009

The number of proposed federal historic rehabilitation tax credit projects approved by the National Park Service fell significantly in Fiscal Year 2009, along with the dollar amount of proposed private investment, according to NPS’ recent report on program activity during the year ending 9/30/09.

During FY 2009, NPS approved 1,044 proposed historic preservation projects proposing an aggregate $4.69 billion in rehabilitation work. The number of approved projects was 15% less than FY 2008, with 17% less leveraged private investment. But the average proposed investment amount per project fell just slightly, to $4.49 million. The approved projects created 70,992 new jobs, the highest annual number since 1986.

The 1,044 approved new projects were expected to create 13,743 total housing units, of which nearly 49% are for low- and moderate-income households.

(http://www.nps.gov/history/hps/tps/tax/download/annual_report_09.pdf)

Geithner Discusses New Markets Tax Credit Proposals, Plans

In a visit to North Carolina in February, U.S. Treasury Secretary Timothy Geithner discussed proposals for extending and enhancing the federal new markets tax credit. He noted that the Obama Administration’s FY 2011 budget request proposes a two-year extension of the NMTC program, through 2011; $5 billion in annual allocation authority for 2010 and 2011; and allowing the NMTC to offset federal alternative minimum tax liability. It was also reported that Treasury and the IRS are developing guidance to better enable NMTC investors to determine whether they can qualify for and utilize the tax credit. This guidance will include clarification of how the passive activity rules apply to investors; clarification on the treatment of nonrecourse loans; rules to foster greater investment in institutions such as community development financial institutions; and greater flexibility for community development entities to provide working capital and other short-term loans.

HUD Publishes Details on LIHTC Tenant Data Collection

On March 3, HUD published specifics of final new information collection requirements regarding tenants of low-income housing tax credit projects. A 2008 statute requires state housing credit agencies to submit certain demographic and economic information on LIHTC resident households to HUD at least annually.

(http://edocket.access.gpo.gov/2010/pdf/2010-4386.pdf)

Rural Development Reverses Early Position on Exchange Funds

USDA’s Rural Development recently reversed a December policy directive regarding the treatment of Section 1602 LIHTC exchange funds. RD in a previous unnumbered letter had said that exchange funds should be treated as grant funds and not equity. RD has reversed that position.