Senators Ask IRS to Clarify Eligibility of Veterans’ Housing for Private Activity Bonds
On March 15, Senators Dianne Feinstein (D-CA), John Cornyn (R-TX), Catherine Cortez Masto (D-NV), Jacky Rosen (D-NV), Kamala Harris (D-CA), and Mazie Hirono (D-HI) sent a letter to Internal Revenue Service (IRS) Commissioner Charles Retting pressing IRS to issue guidance clarifying that multifamily bond-financed affordable rental housing developments do not violate the general public use requirements of the bond program so long as they are consistent with the general public use requirements of the Housing Credit program. In recent months, IRS officials have told various bond counsel that it is the Service’s position that housing with preferences for specific populations, including veterans, violates the public use requirement in IRS multifamily bond regulations. This interpretation of the regulations has had serious repercussions for properties in the pipeline that would serve special needs groups, in particular for developments that use other financing sources that require preferences for those special needs groups. NCSHA, in meetings with senior Treasury officials, has similarly urged Treasury and IRS to issue guidance rectifying the problem. NCSHA is also working with Hill leaders on a legislative solution should Treasury and IRS fail to act.