Comment on FR Doc # E7-11731

September 17, 2007 (REG-128274-03) Via Federal eRulemaking Portal RE: REG-128274-03 RIN 1545-BC22 Section 42 Utility Allowance Regulations Update Dear Deputy Commissioner Brown: The National Low Income Housing Coalition (NLIHC) is a membership organization whose members include residents of public and assisted housing and their organizations, state and local housing coalitions, nonprofit housing providers, homeless service providers, fair housing organizations, housing researchers, public housing agencies, private developers and property owners, local and state government agencies, faith-based organizations, and concerned citizens. While our members include the wide spectrum of housing interests, we do not represent any segment of the housing industry. Rather, we focus exclusively on what is in the best interests of people who receive and those who are in need of federal housing assistance. NLIHC has a number of concerns about the proposed changes in the Low Income Housing Tax Credit (LIHTC) regulations at 26 CFR 1.42-10 pertaining to utility allowances for non-HUD and non-RD units. In general, the concerns center on the lack of tenant protections that is highly likely to lead to undue housing cost burdens for low income residents. The LIHTC statute at 26 USC 42(g)(2)(B)(ii) caps gross tenant rents, which include a utility allowance, at 30% of an imputed income limitation. The statute?s inclusion of a utility allowance reflects the importance Congress assigned to protecting residents from extraordinary housing costs beyond rent to owners. The IRS proposal to allow two new options for estimating utility costs threatens the statutory protection. The proposed rule would unfairly benefit owners of LIHTC units at the expense of low income residents by allowing owners to choose, without any other considerations, the lowest of three possible utility allowance estimates. The lower the utility allowance estimate, the greater the amount of rent collected by the owner ? and the greater the housing cost burden on the low income household. ? In order to minimize housing cost burden on low income residents, the regulations should require owners to accept the utility allowance estimate that yields the greatest utility allowance for low income households. ? When owners obtain multiple estimates based on any of the three options, the regulations should require 30-day advance resident notification of the outcomes, access to documentation pertaining to each estimate, and an opportunity for residents to submit comments to the agency administering the LIHTC program. ? The regulations should require the agency administering the LIHTC program to consider resident comments, and provide a means for tenants to seek a technical review to verify the accuracy of any utility allowance estimate. ? The regulations should afford residents an opportunity to request a utility company estimate, and this estimate must be considered by the agency administering the LIHTC program. Rather than relying on estimating techniques that cannot fully take into account building-specific situations (such as quality of construction, actual building materials, quality of heating and cooling equipment in place, predominant unit orientation with respect to sunlight, prevailing winds, etc.), utility allowances should be based on actual consumption for the LIHTC building. Higher utility allowances for elderly and/or disabled people who need special energy-consuming equipment should be granted upon request. The regulations should require more frequent utility allowance adjustments: ? Local utility rates should be reviewed and adjusted if necessary on a quarterly basis. If rates are only reviewed annually, a dramatic rate increase introduced shortly after an annual review will burden low income residents with inadequate utility allowances for almost another year. ? Any time there is a utility rate increase greater than 10%, the agency administering the LIHTC program should be required to notify the owner, and the owner should be required to adjust the utility allowance. The timing of utility allowance adjustments should be implemented in a manner which provides maximum benefit to or minimized burden on low income residents. ? When utility allowances are to be increased, the increase should be realized by residents within 30 days, not 90 days. ? When utility allowances are to be decreased, the owner should provide low income residents with a 90-day notice. ? Gross rent increases greater than 5% that are due in part to utility allowance decreases should be phased in over 90 days. The proposed regulation at 26 CFR 1.42-10(c)(2) addressing annual reviews should require utility rate allowance adjustments to be based on calculations incorporating actual rate changes, rather than merely ?take into account.? Thank you for the opportunity to comment on this proposal. Sincerely, Sheila Crowley, MSW, Ph.D. President and CEO