Agenda - Council Work Session - 01/10/2012

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CERTAIN STUDENTS NOT TO DISQUALIFY UNIT - A UNIT SHALL NOT FAIL TO BE TREATED AS A LOW-INCOME UNIT MERELY BECAUSE IT IS OCCUPIED 1. by an individual who is i A student and receiving assistance under title IV of the Social Security Act, ii A student who was previously under the care and placement responsibility of the State agency responsible for administering a plan under part B or part E of title IV of the Social Security Act, or iii Enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State or local lows, or 2. entirely by full time students if such students are i single parents and their children and such parents are not dependents (as defined in IRC § 152 determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of another individual and such children are not dependents of another individual other than a parent of such children, or ii. married and file a joint tax return See Chapter 17 of the Guide for Completing Form 8823, Low -Income Housing Credit Agency's Report of Noncompliance or Building Disposition, for additional guidance. L. Eligible Basis In general, the eligible basis of a building is equal to the building's adjusted basis for acquisition, rehabilitation or construction costs for the entire building, subject to certain conditions and modifications set forth in Section 42(d). As a general rule, the adjusted basis rules of Code Section 1016 apply, with the exception that no adjustments are made for depreciation. Some of the special provisions for determining eligible basis under Section 42(d) are: The eligible basis may be increased for new buildings and rehabilitation to existing buildings that are located in designated qualified census tracts (QCT), difficult development areas (DDA) or in developments utilizing the state designated basis boost. The cost of the non -low income residential units in a building is included in eligible basis only if the quality of these units does not exceed the average quality of the low-income units. If the cost of a non -low income unit exceeds the cost of a low-income unit (using the average cost per square foot and assuming the same size) by more than 15 percent, the entire cost of the non -low income unit must be excluded from the building's eligible basis. If the excess cost is not more than 15 percent, the owner may make an election to exclude only the excess cost of the non -low income unit(s) from eligible basis. The cost of depreciable property used in common areas or provided as comparable amenities to all residential units (e.g., carpeting and appliances) is included in determining eligible basis. The cost of tenant facilities (e.g., parking, garages, and swimming pools) may be included in eligible basis if there is no separate charge for use of the facilities and they are available to all tenants in the project. The cost of a community service facility is included in basis only if the building is located in a qualified census tract. The eligible basis of that facility must not exceed 25 percent of first $15 Million of eligible basis plus 10 percent of additional basis in the project. All community service facilities that are part of the same qualified low- income housing project shall be treated as one facility. A community service facility is defined as a facility that is part of the qualified low-income housing project designed to serve primarily individuals including tenants and non -tenants whose income is 60 percent or less of area median income. Only limited guidance has been issued by the IRS regarding these changes. No assurances can be given that additional IRS guidance will not require further adjustments to the QAP and additional reviews of selected developments. Eligible basis is reduced by federal grants, residential rental units that are above the average quality standard of the low-income units, historic rehabilitation credits, and nonresidential rental property. Buildings located in 2012 Housing Tax Credit Procedural Manual I 20