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

Published on April 5, 2019

WASHINGTON, DC — The National Council of State Housing Agencies (NCSHA) applauds the Internal Revenue Service and U.S. Department of the Treasury for issuing guidance this week 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.

This victory is a strong example of Federal and State government representatives working together to support our country’s veterans.

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, including projects with preference for veterans, 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, put at serious risk developments that paired bond and 4 percent Housing Credits to serve these populations and had not yet closed construction loans or were in planning. In particular, this policy undermined the purpose and goals of California’s Veterans Housing and Homelessness Prevention Program, a $600 million state-financed program that specifically funds units to house veterans.

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. Just last month, a delegation led by NCSHA’s Board Chair and California Housing Finance Agency Executive Director, Tia Boatman Patterson, met with U.S. Senators and Treasury officials to urge a quick resolution.

We strongly support IRS and Treasury’s decision to release this week 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.

About the National Council of State Housing Agencies
For more than 50 years, state Housing Finance Agencies (HFAs) have played a central role in the nation’s affordable housing system, delivering financing to make possible the purchase, development, and rehabilitation of affordable homes and rental apartments for low- and middle-income households.

The National Council of State Housing Agencies (NCSHA) is a nonprofit, nonpartisan organization created to advance, through advocacy and education, the efforts of the nation’s state HFAs and their partners to provide affordable housing to those who need it. NCSHA’s vision: An affordably housed nation. Learn more at