PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of sections 2188.1, 2188.2, 2188.4, 2188.5 and 2188.7 of Title 21 NYCRR.
Amended action:
This action amends the rule that was filed with the Secretary of State on January 29, 2008, to be effective February 13, 2008, File No. 53. The notice of adoption, I.D. No. HFA-48-07-00003-A, was published in the November 28, 2007 issue of the State Register.
Statutory authority:
26 U.S.C. section 42; Governor Cuomo's Executive Order No. 135 (issued Feb. 27, 1990), continued by Governor Spitzer's Executive Order No. 5 (issued Jan. 1, 2007)
Subject:
Agency's qualified allocation plan.
Purpose:
To authorize the agency to allow Federal low income housing tax credits to projects financed by other bond issuers.
Substance of amended rule:
Section 42 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations, Revenue Rulings and Procedures, and other publications of the Internal Revenue Service with binding authority applicable thereunder (collectively, the “Code”) require each agency that allows Low Income Housing Tax Credits (“LIHTCs”) to adopt a Qualified Allocation Plan (“QAP”). The New York State Housing Finance Agency's (the “Agency”) QAP currently applies to: (i) the Agency's allocation of LIHTC, as a sub-allocating agency under Executive Order No. 135, issued by the Governor Cuomo on February 27, 1990 and continued by Governor Spitzer's Executive Order No. 5, issued January 1, 2007 and by Part 2040 of Title 9 of the New York Official Compilation of Codes, Rules and Regulations; and (ii) the allowance by the Agency of LIHTC to projects financed by obligations subject to the Private Activity Bond Cap, the interest on which is exempt from federal income tax, as provided in IRC § 42(h)(4) (“Private Activity Bond Credits”).
The Agency has typically allocated LIHTCs to projects that receive financing from the Agency, whether in the form of Private Activity Bond Credits or LIHTCs subject to the State Credit Ceiling. Under the Agency's current QAP, allocations and allowances of LIHTCs are made as part of the Agency's overall financing process for residential rental projects located in New York State. No provision is made for an application procedure for projects which may seek no other form of financing other than LIHTCs from the Agency.
The Agency now anticipates that it will receive applications for Private Activity Bond Credits from projects financed by tax exempt bonds from issuers other than the Agency. Namely, DHCR, which has to date allowed Private Activity Bond Credits to New York State Industrial Development Agencies (“IDAs”), is proposing a change in regulations that, in conjunction with the Agency's proposal, will effectively transfer responsibility for the allowance and monitoring responsibilities related to these LIHTCs to the Agency. Accordingly, the Agency proposes to amend its current QAP to provide a procedure for the allowance of LIHTCs to projects financed by other issuers Private Activity Bonds, but applying to the Agency for LIHTCs.
The proposed procedure is set forth in a proposed Section 2188.4(j):
(j) Projects Financed By an Other Issuer's Private Activity Bonds.
(1) Projects financed by tax-exempt bonds from an issuer other than the Agency subject to the Private Activity Bond Volume Cap in accordance with Section 42(h)(4)(A) of the Code may be allowed LIHTC which is not taken into account regarding the State Credit Ceiling. The Agency's President and Chief Executive Officer, or his or her designee, is hereby authorized to take any actions necessary and appropriate to allow LIHTC to qualified residential rental projects located in New York State that are financed by the proceeds of tax-exempt bonds of an Other Issuer subject to the Private Activity Bond Volume Cap, where such allowance is consistent with this QAP.
(2) Complete applications for the allowance of such LIHTCs must be submitted at least 60 days prior to the later of the proposed construction start date or the planned bond sale date in a form approved by the Agency, and will be accepted and processed throughout the calendar year. The Agency may request any and all information it deems necessary or appropriate for project evaluation. If, in the Agency's sole discretion, any submission is incomplete or if documentation is insufficient to complete any evaluation of the proposed project, processing will be suspended. In such instances, the Agency will notify the respective applicant of how the submission is incomplete and provide at least ten business days for the applicant to submit the requested documentation. Complete applications will be reviewed relative to criteria contained herein at § 2188.5 for eligibility and public purpose. Within 60 days after receipt of a complete application the Agency will issue to the applicant a finding as to whether the application is consistent with this QAP and the amount of LIHTC for which the project qualifies pursuant to Financial Feasibility Review. If the application is consistent with this QAP, the applicant will receive processing instructions for a final allocation of credit. If the project is found to be inconsistent with this Plan, the owner will be notified of the reasons for such finding.
(3) The Agency shall charge a reasonable application fee, due at the time of application. A credit allocation fee, in a reasonable amount determined by the Agency, also is due upon request for issuance of IRS Form 8609. A not-for-profit applicant (or its wholly-owned subsidiary) which will be the sole general partner of the partnership/project owner or sole managing member of the limited liability company/project owner may request and be approved for deferral of payment of the application fee until the date of issuance of IRS Form 8609.
(4) In accordance with Code Section 42(m)(2)(D), the issuer of the tax exempt bonds financing a project is responsible for determining the dollar amount of LIHTCs which is necessary for the financial feasibility of such project and its viability as a qualified low-income housing project pursuant to Section 42(g)(1) of the Code throughout the applicable credit period. Such determination must be included in the applicant's request to the Agency for a final allocation of credit. The Agency will process requests for a final allocation of credit within 60 days after the date of receipt of all required documentation including an executed credit regulatory agreement in a form satisfactory to the Agency with proof of recording. The Agency will apply the criteria for Feasibility Review and LIHTC Underwriting, as described herein at § 2188.5(i), in determining the amount for the final credit allocation with respect to such project.
(5) Regulatory Term. The regulatory requirements of projects receiving an allocation or allowance of LIHTC under the terms of this Plan are described in § 2188.5 of this Plan and shall be subject to compliance monitoring as described in § 2188.7 of this Plan.
Additional Sections of the QAP have been amended to apply its provisions to projects financed by an Other Issuer's Private Activity Bonds. To view the amendments to the QAP in their entirety, a PDF document is available at the Agencies website.
Amended rule as compared with adopted rule:
Nonsubstantive revisions were made in section 2188.7(h).
Text of amended rule and any required statements and analyses may be obtained from:
Jay M. Ticker, Housing Finance Agency, 641 Lexington Ave., New York, NY 10022, (212) 688-4000, e-mail: jayt@nyhomes.org
Revised Regulatory Impact Statement
The Agency is submitting a non-substantive amendment to its proposed rule. SAPA Section 202-bb.8.(iii) requires that, Each agency shall issue a revised rural area flexibility analysis when there are no substantial revisions in the proposed rule but there are changes in the text of the rule as adopted when compared with the text of the latest published version of the proposed rule and such changes would necessitate that such analysis be modified. The changes now being submitted in no way necessitate that the previously submitted analysis be modified.
Revised Regulatory Flexibility Analysis
The Agency is submitting a non-substantive amendment to its proposed rule. SAPA Section 202-b.7.(iii) requires that, Each agency shall issue a revised regulatory flexibility analysis when there are no substantial revisions in the proposed rule but there are changes in the text of the rule as adopted when compared with the text of the latest published version of the proposed rule and such changes would necessitate that such analysis be modified. The changes now being submitted in no way necessitate that the previously submitted analysis be modified.
Revised Rural Area Flexibility Analysis
The Agency is submitting a non-substantive amendment to its proposed rule. SAPA Section 202-bb.8.(iii) requires that, Each agency shall issue a revised rural area flexibility analysis when there are no substantial revisions in the proposed rule but there are changes in the text of the rule as adopted when compared with the text of the latest published version of the proposed rule and such changes would necessitate that such analysis be modified. The changes now being submitted in no way necessitate that the previously submitted analysis be modified.
Revised Job Impact Statement
The Agency is submitting a non-substantive amendment to its proposed rule. SAPA Section 201-a.2.(d)(ii) requires that, An agency shall issue a revised job impact statement when the proposed rule contains any substantial revisions which necessitate such statement be modified. The changes now being submitted are non-substantial and in no way necessitate that the previously submitted statement be modified.
