E9-7041. Low-Income Housing Tax Credit (LIHTC) Tenant Data Collection; Advance Solicitation of Comment on Data Collection Methodology

AGENCY:

Office of the Assistant Secretary for Policy Development and Research, HUD.

ACTION:

Notice.

SUMMARY:

The Housing and Economic Recovery Act of 2008 requires state agencies administering properties receiving low-income housing tax credits to submit to HUD, not less than annually, certain demographic and economic information on households residing in such properties. This statute also requires HUD to establish standards and definitions for the information that state housing agencies must submit, and to provide them with technical assistance in establishing systems to compile and submit such information. This notice seeks early input from applicable state agencies, and other interested stakeholders on a methodology or approach to meet this statutory requirement in advance of HUD's submission of a formal proposal for public comment.

Comment Due Date: May 29, 2009.

ADDRESSES:

Interested persons are invited to submit comments regarding this notice to the Regulations Division, Office of General Counsel, 451 7th Street, SW., Room 10276, Department of Housing and Urban Development, Washington, DC 20410-0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title.

1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street, SW, Room 10276, Washington, DC 20410-0500.

2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the http://www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically.

Note:

To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.

No Facsimile Comments. Facsimile (FAX) comments are not acceptable.

Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number through TTY by calling the Federal Information Relay Service at 800-877-8339. Copies of all comments submitted are available for inspection and downloading at http://www.regulations.gov

FOR FURTHER INFORMATION CONTACT:

For questions on LIHTC tenant data collection, contact Michael K. Hollar, Senior Economist, Economic Development and Public Finance Division, Office of Policy Development and Research, Department of Housing and Urban Development, 451 7th Street, SW., Room 8216, Washington, DC 20410-6000, telephone number [phone], or send an e-mail to [e-mail]. For specific legal questions pertaining to Section 42 of the Internal Revenue Code, contact Branch 5, Office of the Associate Chief Counsel, Passthroughs and Special Industries, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224, telephone number [phone], fax number [phone]. Additional copies of this notice are available through HUD User at [phone] for a small fee to cover duplication and mailing costs.

Copies Available Electronically: This notice and additional information about the LIHTC program are available electronically on the Internet at http://www.huduser.org/​datasets/​lihtc.html.

SUPPLEMENTARY INFORMATION:

I. Background

Housing and Economic Recovery Act of 2008 (HERA)

Section 2835(d) of HERA (Pub. L. 110-289, approved July 30, 2008) amends Title I of the U.S. Housing Act of 1937 (42 U.S.C. 1437 et seq. ) (1937 Act) to add a new section 36 (to be codified as 42 U.S.C. 1437z-8) that requires each state agency administering tax credits under section 42 of the Internal Revenue Code of 1986 (low-income housing tax credits or LIHTC) to furnish HUD, not less than annually, information concerning the race, ethnicity, family composition, age, income, use of rental assistance under section 8(o) of the U.S. Housing of 1937 or other similar assistance, disability status, and monthly rental payments of households residing in each property receiving such credits through such agency. New section 36(a) of the 1937 Act further provides that, to the extent feasible, each agency administering tax credits should collect such information through existing reporting processes and in a manner that minimizes the burden on property owners.

New section 36(b) requires HUD to establish standards and definitions for the information to be collected by state agencies and to provide states with technical assistance in establishing systems to compile and submit such information and, in coordination with other federal agencies administering housing programs, establish procedures to minimize duplicative reporting requirements for properties assisted under multiple housing programs.

New section 36(c) provides that HUD “shall, not less than annually, compile and make publicly available the information submitted to the Secretary pursuant to subsection (a).”

Low-Income Housing Tax Credit

LIHTC is a tax incentive intended to increase the availability of low-income housing. Section 42 of the Internal Revenue Code of 1986 provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental housing projects. The credits allocated are based on the cost of units placed in service as low-income units under particular minimum occupancy and maximum rent criteria. In general, a building must meet one of two thresholds to be eligible for LIHTC: (1) At least 20 percent of the units must be rent-restricted and occupied by tenants with incomes no higher than 50 percent of the area median gross income (AMGI); or (2) At least 40 percent of the units must be rent-restricted and occupied by tenants with incomes no higher than 60 percent of AMGI. The term “rent-restricted” means that gross rent, including an allowance for tenant-paid utilities, cannot exceed 30 percent of the tenant's imputed income limitation (i.e. , 50 percent or 60 percent of AMGI). The rent and occupancy thresholds remain in effect for at least 15 years, and building owners are required to enter into agreements to maintain the low-income character of the building for at least an additional 15 years.

Currently, there is no comprehensive administrative database containing data on LIHTC tenant households. HUD's Office of Policy Development and Research, under its broad authority to conduct research on housing and urban development issues, has collected and published data on LIHTC projects periodically throughout the life of the LIHTC program, and annually since 1999. The HERA requirement reflects Congressional intent to have data on households residing in LIHTC properties collected annually and submitted under uniform standards.

This Document

Through this notice, HUD seeks to inform all the public of its responsibilities with respect to LIHTC data collection, and to reach a broader audience (than is possible through informal meetings) to solicit early input from state agencies and other interested members of the public on standards and definitions that would be helpful to state agencies in their collection of the information required by section 36 of the 1937 Act, as well as input on procedures that would minimize duplicative reporting requirements.

In an effort to initiate discussion of these statutory requirements and commence the solicitation of informal feedback on these requirements, the data collection requirements were first discussed in a public forum at the Tenant Rental Assistance Certification System (TRACS) quarterly industry meeting on October 22, 2008. At that time, HUD also announced its intention to create an informal working group, open, at any time, to any interested parties, for the members of the working group to share their individual views of this data collection effort, and any past experiences with similar data collection efforts. HUD will use the information provided by the various members of the working group and consider the members' individual recommendations and suggestions in its development of the standards and definitions that HUD is charged with issuing under section 36 of the 1937 Act.

HUD is seeking feedback from the public on the standards, definitions, and procedures for collecting the required data. One possible approach for which it solicits early comment, is to use two forms, one requesting data on LIHTC properties, indicating among other things project-based subsidies (so that universally applicable project data need not be separately reported for each tenant), and the other requesting data on LIHTC tenants and unit-specific characteristics. HUD requests that the public provide comments on whether this approach will minimize reporting burden on property managers, and on any other approaches that HUD should consider.

To collect LIHTC property characteristics, HUD seeks comments on whether the agency should use the form currently used to collect data in HUD's LIHTC projects placed in service database. Annually, HUD requests, through a contractor, data on a volunteer basis from the state housing finance agencies on LIHTC projects placed in service. This form has two advantages over creating a new form. First, it is OMB-approved through 2011 and therefore would not require a new review under the Paperwork Reduction Act unless modifications are made. Second, the state housing agencies currently use this form and are familiar with it. Continuing with a familiar form would assist the goal of minimizing the reporting burden. More information on HUD's current LIHTC projects placed in service database can be found here: http://lihtc.huduser.org/​.

The proposed tenant data collection form is based on the National Council of State Housing Agencies' (NCSHA's) best practices Tenant Income Certification (TIC) Form. The IRS does not require a standard form across states to certify tenants residing in LIHTC-financed units. NCSHA's best practices TIC form is used by many state housing finance agencies, either as is or in a slightly modified version. Since the data requested on this form is already collected by many state housing finance agencies, HUD believes this form, modified to account for additional information that HUD is required by statute to report, would minimize the reporting burden on the state agencies. The form contemplated by HUD amends NCSHA's TIC to include race, ethnicity, and disability status.

HUD anticipates publishing its formal proposal for implementing the data collection during the summer of 2009. Once data transmission methods are in place, data collection could begin as early as the first or second quarter of 2010.

Dated: March 19, 2009.

Jean Lin Pao,

General Deputy Assistant Secretary for Policy Development and Research.