Illinois Housing Looks for Help in Tax Credit Administration

May 12, 2021

Ms. Emily M. Lesniak
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2021-28) Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Re: IRS-2021-0004 Treasury and IRS Priority Guidance Plan

Dear Ms. Lesniak,

On behalf of the Illinois Housing Development Authority (hereinafter referred to as IHDA), we are submitting comments in response to the Internal Revenue Service (IRS) Notice of public recommendations on items to be included in the 2021-2022 Priority Guidance Plan. As an active member of the National Council of State Housing Agencies (hereinafter referred to as NCSHA) our organization agrees with their position and recommendation and would like to further specifically highlight areas we feel are essential towards ensuring the guidance plan has a favorable impact for IHDA and our constituents as the state housing finance agency in Illinois.

The Proposed Income Average Rule REG-104591-18, and ongoing issues previously raised as recommendations for prior year Priority Guidance Plans, remains at the forefront and is extremely important to support the continued effective state administration of the Housing Credit and Housing Bond programs. IHDA has previously expressed concerns on this matter referring to the current proposal, whereupon the AIT rule seeks to implement an average of no more than 60 percent of the AMI as a condition of meeting the AIT, a much more restrictive approach than the current statute, which at Section 42(g)(1)(C)(i), requires only that 40 percent of the units in a project be rent-restricted and occupied by individuals whose income does not exceed the imputed limitation designated by the taxpayer for the specific unit to achieve the minimum set-aside requirements. The finalization of the proposed IRS Average Income Test rule remains paramount towards ensuring that the expansion of affordable housing isn't hindered by the inflexibility of such a proposal. Furthermore, it remains the recommendation of IHDA that the AIT minimum set-aside should be considered met so long as 40 percent of the units in the property have an average of 60 percent or less AMI. Also, the property should have an overall average of no more than 60 percent of AMI across all low-income units, but if a unit goes out of compliance causing the property-wide average to go above 60 percent AMI, this should be considered a non-compliance for that unit, and not a violation of the minimum set-aside, so long as 40 percent of the units still meet the 60 percent average. Furthermore, the final rule should allow owners to modify unit designations, so long as the state Agency allows for that in its policies and the state Agency consents to the change.

Thank you for the opportunity to make recommendations to the 2021-2022 Priority Guidance Plan.

Sincerely,

Myriam Weaver
Director, Asset Management
The Illinois Housing Development Authority
Chicago, IL