Written by Michael J. Novogradac and Glenn A. Graff, Published by the Journal of Affordable Housing, Volume 18, Number 1, Fall 2008
This article addresses the impact of the Housing and Economic Recovery Act of 2008 (HERA) (H.R. 3221) on current and future Low-Income Housing Tax Credit (LIHTC) properties. HERA was passed by the U.S. House of Representatives on July 23, 2008, and by the U.S. Senate on July 26, 2008. President Bush signed the bill into law July 30, 2008. With a number of important exceptions discussed below, HERA is generally effective after its date of enactment, i.e., starting on July 31, 2008.
This article summarizes and provides commentary on the major portions of HERA that expand and modernize the LIHTC under § 42 of the Internal Revenue Code of 1986. This article segregates the changes into four major areas: those changes that will enhance investor incentives, those that may make existing and future LIHTC developments more financially feasible, those that lessen the administrative burden of complying with the LIHTC program, and, lastly, miscellaneous other changes.
HERA reflects more than a year and a half of effort by members of Congress and numerous industry participants. From the moment that the Democrats took control of Congress in November 2006, efforts to modernize the LIHTC began. This effort culminated in the inclusion of LIHTC modernization provisions in HERA.
Two West Coast senators, Gordon Smith (R-OR) and Maria Cantwell (D-WA), led the way in the Senate. In the House of Representatives, Congressman Charlie Rangel, chair of the Ways and Means Committee, took a very personal and active interest in developing the legislation. Among industry participants, the National Council of State Housing Agencies, the Affordable Housing Tax Credit Coalition, the Housing Advisory Group, and the National Association of Home Builders Housing Tax Credit Advisory Group were critical supporters.