Low-Income Housing Credit Disaster Relief for the State of California

Low-Income Housing Credit Disaster Relief for the State of California

Notice 2019-52

I.

PURPOSE

In response to the devastation caused by the California Wildfires to Butte, Los

Angeles, and Ventura Counties in the State of California (hereinafter, California), this

notice expands the emergency housing and compliance monitoring relief that is

provided in Rev. Proc. 2014-49, 2014-37 I.R.B. 535, and Rev. Proc. 2014-50, 2014-37

I.R.B. 540. The expanded relief in this notice is limited to the CA Wildfires Major

Disaster, as defined below. Except as expressly provided in this notice, all provisions of

Rev. Procs. 2014-49 and 2014-50 apply to the CA Wildfires Major Disaster without

modification. For example, this notice does not modify the carryover allocation relief

provisions of Rev. Proc. 2014-49, because the only low-income housing project

damaged or destroyed by the wildfire had been placed in service before the disaster.

This notice also solicits public comments regarding any desirable modifications to

Rev. Procs. 2014-49 and 2014-50.

II.

BACKGROUND

Rev. Procs. 2014-49 and 2014-50 provide temporary relief from certain requirements

of §§ 42 and 142(d) of the Internal Revenue Code in the context of a major disaster.

Rev. Proc. 2014-49 provides guidance and relief to the owners of qualified low-income

housing projects (each such project, a § 42 Project) and to Agencies (as defined in

section 5.01 of Rev. Proc. 2014-49) that are responsible for those § 42 Projects.

Rev. Proc. 2014-50 provides guidance to issuers of exempt facility bonds financing

qualified residential rental projects under § 142(d) (each such issuer, an Issuer; each

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such project, a § 142(d) Project) and to operators of those § 142(d) Projects. Various

aspects of these revenue procedures apply with respect to § 42 Projects and § 142(d)

Projects both inside and outside of the area in which the major disaster occurs.

Sections 12 through 14 of Rev. Proc. 2014-49 and sections 5 through 7 of Rev.

Proc

under § 142(d) (each such issuer, an Issuer; each

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such project, a § 142(d) Project) and to operators of those § 142(d) Projects. Various

aspects of these revenue procedures apply with respect to § 42 Projects and § 142(d)

Projects both inside and outside of the area in which the major disaster occurs.

Sections 12 through 14 of Rev. Proc. 2014-49 and sections 5 through 7 of Rev.

Proc. 2014-50 facilitate emergency housing relief for Displaced Individuals (as defined

in section 5.02 of Rev. Proc. 2014-49 and in section 4.04 of Rev. Proc. 2014-50). To

achieve this end, these sections give owners of § 42 Projects and operators of § 142(d)

Projects the option to apply certain modifications to the rules of §§ 42 and 142(d),

provided that the relevant Agency or Issuer authorizes the owner or operator to do so.

Among these modifications is the ability to disregard the actual income of a Displaced

Individual housed in a § 42 Project or a § 142(d) Project, even if the Displaced

Individual’s income exceeds the limitations on income provided in §§ 42 or 142(d). The

option to apply these modified rules is limited to a period defined in the revenue

procedures as the Temporary Housing Period. See section 5.08 of Rev. Proc. 2014-49

and section 4.13 of Rev. Proc. 2014-50. The Temporary Housing Period begins on the

first day of the incident period, as determined by the Federal Emergency Management

Agency (FEMA), and ends on a date determined by the Agency or Issuer. Both

revenue procedures provide a date beyond which the Temporary Housing Period may

not extend. See section 12.02(1) of Rev. Proc. 2014-49 and section 5.02(1) of Rev.

Proc. 2014-50.

On November 12, 2018, under the authority of the Robert T. Stafford Disaster Relief

and Emergency Assistance Act, 42 U.S.C

ency Management

Agency (FEMA), and ends on a date determined by the Agency or Issuer. Both

revenue procedures provide a date beyond which the Temporary Housing Period may

not extend. See section 12.02(1) of Rev. Proc. 2014-49 and section 5.02(1) of Rev.

Proc. 2014-50.

On November 12, 2018, under the authority of the Robert T. Stafford Disaster Relief

and Emergency Assistance Act, 42 U.S.C. §§ 5121-5206 (the Stafford Act), the

President of the United States issued a major disaster declaration with respect to the

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damage in California caused by wildfires beginning on November 8, 2018, and FEMA

designated three counties (Butte, Los Angeles, and Ventura Counties) within California

to be eligible for Individual Assistance and Public Assistance under the Stafford Act (CA

Wildfires Major Disaster). See 83 Fed. Reg. 64352 (2018). The incident period for the

CA Wildfires Major Disaster began on November 8, 2018, and closed on November 25,

2018. See 83 Fed. Reg. 63553 (2018).

Agencies must periodically review § 42 Projects for compliance with the affordability

and habitability requirements of § 42. See § 42(m)(1)(B)(iii); see also § 1.42-5 of the

Income Tax Regulations. Under section 9 of Rev. Proc. 2014-49, an Agency may

extend the due date for its scheduled compliance reviews for up to one calendar year

from the date of a low-income building’s restoration and placement again into service.

That revenue procedure does not delay the compliance review due dates of buildings

that do not require restoration and replacement into service.

III.

EMERGENCY HOUSING RELIEF

Solely in connection with the CA Wildfires Major Disaster, the second sentence of

section 12.02(1) in Rev. Proc. 2014-49 and the second sentence of section 5.02(1) in

Rev. Proc. 2014-50 are revised to read: “The Temporary Housing Period cannot extend

beyond the end of July 2020.”

IV

tes of buildings

that do not require restoration and replacement into service.

III.

EMERGENCY HOUSING RELIEF

Solely in connection with the CA Wildfires Major Disaster, the second sentence of

section 12.02(1) in Rev. Proc. 2014-49 and the second sentence of section 5.02(1) in

Rev. Proc. 2014-50 are revised to read: “The Temporary Housing Period cannot extend

beyond the end of July 2020.”

IV.

COMPLIANCE MONITORING RELIEF

Under this notice, the California Tax Credit Allocation Committee (CTCAC) may

extend the date for its compliance review of low-income housing projects

notwithstanding section 9 of Rev. Proc. 2014-49. For any such building, this extension

may not last beyond one calendar year from the later of—

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• November 25, 2018; or

• In the case of a building that has suffered a casualty loss due to the CA

Wildfires Major Disaster or has been completely taken out of service due to

the CA Wildfires Major Disaster, the date of the building’s restoration and

placement again in service.

This extension of dates for compliance review by the CTCAC does not, however,

extend the compliance monitoring deadlines for owners or operators. If the CTCAC

learns that an owner or operator has failed to comply with the rules of § 42, as

applicable, the noncompliance must be reported timely to the Internal Revenue Service

(Service), along with a description of whether and how the wildfires contributed to the

noncompliance.

V.

REQUEST FOR COMMENTS REGARDING POSSIBLE MODIFICATIONS TO

REVENUE PROCEDURES 2014-49 AND 2014-50

The Department of the Treasury and the Service are considering whether to make

any changes to Rev. Procs. 2014-49 and 2014-50, and, in that regard, request

comments from the public regarding possible changes to the two revenue procedures.

Comments should be submitted by October 31, 2019. Comments may be mailed to:

Internal Revenue Service

Attn: CC:PA:LPD:PR (Notice 2019-52)

Room 5203

P.O. Box 7604

Ben Franklin Station

Washington, D.C

re considering whether to make

any changes to Rev. Procs. 2014-49 and 2014-50, and, in that regard, request

comments from the public regarding possible changes to the two revenue procedures.

Comments should be submitted by October 31, 2019. Comments may be mailed to:

Internal Revenue Service

Attn: CC:PA:LPD:PR (Notice 2019-52)

Room 5203

P.O. Box 7604

Ben Franklin Station

Washington, D.C. 20044

or hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to:

Courier’s Desk

Internal Revenue Service

Attn: CC:PA:LPD:PR (Notice 2019-52)

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1111 Constitution Avenue, N.W.

Washington, D.C. 20224

Alternatively, persons may submit comments electronically via e-mail to the following

address:

Notice.Comments@irscounsel.treas.gov.

Persons should include “Notice 2019-52” in the subject line. All comments submitted

will be available for public inspection and copying in their entirety.

VI.

DRAFTING INFORMATION

The principal author of this notice is Michael J. Torruella Costa of the Office of

Associate Chief Counsel (Passthroughs & Special Industries). For further information

regarding this notice contact Michael J. Torruella Costa on (202) 317-4137 (not a toll-

free call).