Housing Information: Stimulus Bill and Low-Income Housing Tax Credits

Until Congress recently enacted the Stimulus Bill, the IRS had taken the position that Low-Income Housing Tax Credits were not "federal financial assistance" and therefore the requirements of Section 504 of the Rehabilitation Act of 1973 did not apply. HUD had tacitly deferred to IRS. As a consequence, people with disabilities were frequently discriminated against in one of the largest housing programs in the country.

With the recently enacted Stimulus Bill, people with disabilities now have the same Section 504 rights and protections as they have in other "federal financial assistance" programs.

The recently enacted Stimulus act has two important provisions with regards to the Low-Income Housing Tax Credit program that disability advocates should be aware of.

First, Congress enacted a "housing credit exchange program." Your State Housing Finance Agency (HFA) is authorized to "exchange" 100% of unused 2007 and 2008 LIHTC and 40% of their 2009 allocation to developers. In return, your State Housing Finance Agency will receive 85 cents on the dollar.

This is very important because if a housing developer had applied and received a LIHTC allocation but then could not, given the economy, find an investor that would "buy" the credit, with the Stimulus Bill the developer could turn in the credits and receive cash (85 cents on the dollar) from your HFA.

With these funds, your State will be able to continue funding programs for qualified low-income housing residents. Disability advocates must make sure that your HFA requires developers (for housing developments from 2007-2009) comply with Section 504 (see below).

Second, Congress allocated HOME funds to HFAs to fill gaps in tax credit deals. Developers will have to apply for these funds and these HOME funds will fill "gap financing" for tax credit developments. Housing developers must show that the use of such funds will increase the total funds available for the construction or rehabilitation of the affordable housing.

Third, funds provided from both of these programs must be used before January 1, 2011 or the funds will be returned to the Treasury.

What does this mean for advocates?

Funds from these two programs must be used and allocated in accordance with the HFA's allocation plans. However, in many states, these plans in the past did not require compliance with Section 504. You must address this and make sure that before your HFA uses any of these funds, there is
an amendment to the allocation plan so that developers know they must comply with Section 504.

There is no doubt that these funds are "federal financial assistance" and therefore Section 504 of the Rehabilitation Act is applicable. While there had been some dispute whether "tax credits" were "federal
financial assistance," there is no issue with the two funds. This gives advocates a new opportunity to make sure there is compliance with 504.

Therefore, 24. C.F.R. section 8.22 requires that at least five percent of the units be fully accessible to people with physical disabilities and another two percent for people with visual and hearing impairments. Not only must these units be accessible, but they must be targeted to people who require these accessible features.

Any HFA accepting these funds MUST reopen their allocation plans to make sure they require AT LEAST FIVE PERCENT of the new construction must be fully accessible.

At least for the funds in the two Stimulus Bill, we should also be demanding that the HFA target or change allocation plans to target a large portion of these funds to the lowest-income people - people at the SSI income level/18% of the average median income, something most HFAs throughout the country have not done with the LIHTC in the past.

Nationally, we should be looking at how the new Secretary of HUD implements the Stimulus Bill. This is an important opportunity for HUD to take the lead and address the shameful housing crisis people with
disabilities face.

Steve Gold, The Disability Odyssey continues

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