NCSHA Statement on IRS Clarification That Housing for Special Populations Does Not Violate Multifamily Bond Public Use Rules

The National Council of State Housing Agencies applauds the Internal Revenue Service and U.S. Department of the Treasury for issuing guidance today stating affordable rental housing that provides preferences for specific populations, such as military veterans and other households with special needs, and that is financed with multifamily Housing Bonds and the 4 percent Low Income Housing Tax Credit is not in violation of the multifamily bond program’s general public use requirements as long as it is consistent with the Housing Credit program’s general public use requirements.

State Housing Finance Agencies around the country had used multifamily Housing Bonds and the 4 percent Housing Credit to finance housing for people with special needs until last Fall when bond counsel began hearing from IRS officials that the Service considered such housing to be a violation of the general public use requirements in IRS bond regulations. IRS’s position, as communicated, halted bond/4 percent Housing Credit development for these populations.

NCSHA has been pressing IRS and Treasury to reverse this position and to formally release guidance clarifying that housing for special needs populations and other group preferences does not violate IRS bond regulations if it is consistent with the Housing Credit requirements under the tax code. In December 2018, NCSHA’s Board of Directors made clarification of the general public use requirements for properties serving veterans a priority for the association. We strongly support IRS and Treasury’s decision to release today Revenue Procedure 2019-17 making this clarification so that our member state Housing Finance Agencies may again pair these critical federal programs to serve at-risk populations.