n-13-39.pdf

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Temporary Shelter for Individuals Displaced by Severe Storms and Tornadoes in
Oklahoma

Notice 2013-39
The Internal Revenue Service is suspending certain requirements under
§ 142(d) of the Internal Revenue Code for qualified residential rental projects financed
with exempt facility bonds under § 142 to provide emergency housing relief needed as
a result of the devastation caused by severe storms and tornadoes in Oklahoma that
occurred between May 18, 2013, and May 27, 2013 (hereafter, the Tornadoes).
This Notice provides relief for all qualified residential rental projects described
herein. For those projects that are also low-income housing tax credit (LIHTC)
projects, this Notice should be read with Notice 2013-40, I.R.B. 2013-25 (June 17,
2013), which suspends certain low-income and non-transient requirements under § 42
to allow low-income housing credit projects to provide emergency housing needed
because of the Tornadoes.
BACKGROUND
On May 20, 2013, the President issued a major disaster declaration for the
State of Oklahoma because of the devastation caused by the Tornadoes. The
President issued the declaration under the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, 42 U.S.C. 5121 et seq. Subsequently, the Federal
Emergency Management Agency (FEMA) designated jurisdictions in Oklahoma as
eligible for Individual Assistance (as FEMA uses that term). Because of the
widespread damage to housing caused by the Tornadoes, the Service has
determined that issuers may approve the use of qualified residential rental projects
described in § 142(d) to temporarily house displaced individuals, as defined below,
regardless of their income, in accordance with this Notice. The Service has
determined that the projects to which this approval may be given can be located in
any State, regardless of whether a major disaster declaration with Individual
Assistance has been issued for that State.
Consistent with Notice 2013-40, the term “displaced individual” means, for
purposes of this Notice, an individual who resided in a jurisdiction designated for
Individual Assistance and who has been displaced because his or her residence was
destroyed or damaged as a result of the devastation caused by the Tornadoes.
SECTION 1. SUSPENSION OF INCOME LIMITATIONS
The Service has determined that it is appropriate to temporarily suspend certain
income limitation requirements under § 142(d) that apply to qualified residential rental
projects financed with tax-exempt bonds issued by a qualified issuer under § 103
(Issuer). The suspension, described in Section 3 below, is available to both qualified
residential rental projects under § 142(d) that are not subject to any LIHTC-related
requirements (Bond Projects) and to qualified residential rental projects under § 142(d)
that are also subject to LIHTC-related requirements (Bond/LIHTC Projects). For
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purposes of this Notice, the term “Project” refers to either a Bond Project or a
Bond/LIHTC Project.
SECTION 2. GENERAL REQUIREMENTS
.01 Issuer Approval for Relief
. If an Issuer that issued exempt facility bonds for a
Project desires to allow the use of the Project to temporarily house displaced
individuals, the Issuer must approve that use and must determine an appropriate period
for the temporary housing, not to extend beyond May 31, 2014 (Temporary Housing
Period). If a Bond/LIHTC Project subject to both Notice 2013-40 and this Notice
receives approval, for purposes of § 42, for a temporary housing period and for the
suspension of income limitations from a State housing agency (as contemplated in
Section IV(2) of Notice 2013-40) and that agency is not the Issuer, then the income
limitations under § 142(d) for that Bond/LIHTC Project are suspended only if the project
also receives the Issuer’s consent for a suspension. An Issuer that chooses to provide
that consent must adopt for purposes of § 142(d) the same temporary housing period
that the agency adopted for purposes of § 42.
.02 Protection of Tenants
. Existing tenants in a Project whose income is at or
below an applicable income limitation under § 142(d) cannot be evicted or have their
tenancy terminated as a result of efforts to provide temporary housing for displaced
individuals.
.03 Certification and Recordkeeping Requirements
. The Project operator must
comply with the certification and recordkeeping requirements in Section 4 of this Notice.
For certification and recordkeeping requirements under § 42, see Notice 2013-40.
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.04 Rent Restrictions. To the extent such rent restrictions are applicable, rents
for the low-income units that house displaced individuals must not exceed the lesser of--
(1) the maximum gross rent for that unit under § 142(d)(4)(B); or
(2) the maximum gross rent for that unit under § 42(g)(2).
.05 Project Must Meet All Remaining Requirements
. Except as expressly
provided in this Notice, a Project continues to be subject to all other rules and
requirements of § 142(d) and § 103.
SECTION 3. RELIEF FROM SECTION 142 REQUIREMENTS
.01 Qualified Project Period
. Only a unit in a Project occupied by a non-
displaced individual counts for purposes of determining the beginning of the qualified
project period under § 142(d)(2)(A). Thus, only non-displaced individuals are counted
for determining the 1
st
day on which 10 percent of the residential units in a Project are
occupied under § 142(d)(2)(A). However, occupancy of a unit by any tenant (whether a
displaced individual or a non-displaced individual) in a Project counts for purposes of
determining the end of the qualified project period under § 142(d)(2)(A)(i). If occupancy
by a displaced individual in a Project causes any termination of assistance with respect
to the Project under section 8 of the United States Housing Act of 1937, then that
termination is disregarded for determining when the qualified project period ends under
§ 142(d)(2)(A)(iii).
.02 Satisfaction of the Non-Transient Use Requirement
. The occupancy of a unit
in a Project by a displaced individual during the Temporary Housing Period is treated as
satisfying the non-transient use requirement applicable to qualified residential rental
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projects described in § 142(d). See § 1.103-8(b)(4); see also Notice 2013-40 for
suspension of the non-transient use requirement under § 42(i)(3)(B)(i).
.03 Income Qualification of Units in Bond Projects during Temporary Housing
Period. A unit in a Bond Project occupied by a displaced individual during the
Temporary Housing Period retains the income status it had immediately before that
occupancy, regardless of whether the unit was a market-rate unit, a unit occupied by a
tenant who met an applicable income limit, a designated low-income unit, or a never
previously occupied unit. See Rev. Proc. 2004-39, 2004-2 C.B. 49 (treating never
previously occupied units as unavailable). This means, for example, that if a unit in a
Bond Project had been designated as a low-income unit or rented to an individual
whose income was at or below an applicable income limit or was a market-rate unit or
an unavailable unit, then the unit remains as such while occupied by a displaced
individual during the Temporary Housing Period regardless of the occupancy by, or
income of, the displaced individual. Thus, the fact that a unit becomes occupied by a
displaced individual does not affect compliance with the 20-50 test or 40-60 test of
§ 142(d)(1)(A) and (B) (or the 25-60 test under the special rule in § 142(d)(6)).
Under § 142(d)(3)(B), if the income of a low-income resident of a Project rises
above a specified percentage of the applicable income limit, then, for that resident’s
income to continue to be treated as not exceeding the applicable income limit, the next
residential unit meeting certain criteria to become available in the same Project must be
occupied by a new resident whose income does not exceed the applicable income limit
(the next available unit rule). For purposes of determining compliance with the next
available unit rule, an operator of a Bond Project may disregard the new occupancy of
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units during the Temporary Housing Period by displaced individuals, and apply the rule
solely based on new occupancy by persons who are not displaced individuals. The
operator may, however, take into account a displaced individual’s occupancy for
purposes of § 142(d)(3)(B) if the operator obtains sufficient evidence that the displaced
individual’s income does not exceed the applicable income limit.
.04 Income Qualifications of Units in Bond/LIHTC Projects During the Temporary
Housing Period. The income status of a unit and the income qualification of the
occupant of a unit for purposes of § 142(d) in a Bond/LIHTC Project occupied by a
displaced individual during the Temporary Housing Period shall be treated the same as
they are for purposes of § 42 under Notice 2013-40. For purposes of determining
compliance with the next available unit rule, an operator of a Bond/LIHTC Project may
disregard the new occupancy of units during the Temporary Housing Period by
displaced individuals, and apply the rule solely based on new occupancy by persons
who are not displaced individuals. The operator may, however, take into account a
displaced individual’s occupancy for purposes of § 142(d)(3)(B) if the operator obtains
sufficient evidence that the displaced individual’s income does not exceed the
applicable income limit.
.05 Income Qualifications when Temporary Housing Period Ends
. After the end
of the Temporary Housing Period, the status as a displaced individual of an occupant
remaining in a unit in a Project will be disregarded and the status of the unit occupied by
such individual and the income of such individual will be re-evaluated as though the
formerly displaced individual commenced occupancy of the unit on the day immediately
following the end of the Temporary Housing Period. Thus, if the displaced individual
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remains in the unit, the unit will be treated as occupied for all purposes of § 142(d) and
the income of the displaced individual will be used for determining compliance with the
requirements of § 142(d). If non-compliance relates to continued occupancy of the unit
after the Temporary Housing Period by an occupant who was a displaced individual
during the Temporary Housing Period, a 60-day period is allowed for correction.
SECTION 4. CERTIFICATIONS AND RECORDKEEPING
In addition to any information and certifications required by § 142(d)(7), Project
operators must maintain and certify certain information concerning each displaced
individual temporarily housed in the Project. The records must contain the following
information: the name of the displaced individual, the address of the damaged residence
of the displaced individual, the displaced individual’s social security number, and a
statement signed under penalties of perjury by the displaced individual that, because of
damage to the individual’s residence in a jurisdiction designated for Individual
Assistance by FEMA as a result of the devastation caused by the Tornadoes, the
individual requires temporary housing. In addition, the Project operator must keep
accurate records of the Issuer’s approval of the Project’s use for displaced individuals
and the approved Temporary Housing Period and the dates during which displaced
individuals occupied units in the Projects.
The recordkeeping described under this paragraph must be included as part of
the books and records of the Project operator and also must be maintained in a manner
that is consistent with any compliance monitoring process imposed by § 142(d).
SECTION 5. EFFECTIVE DATE
This Notice is effective May 20, 2013.
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SECTION 6. PAPERWORK REDUCTION ACT
The collection of information contained in this Notice has been reviewed and
approved by the Office of Management and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-2244.
A Federal agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of information displays
a valid OMB control number.
The collection of information in this Notice is in the section entitled “Section 4:
CERTIFICATIONS AND RECORDKEEPING.” This information is required to enable
the Service to verify whether individuals are displaced as a result of the devastation
caused by the Tornadoes and thus warrant temporary housing in vacant units in
certain Projects. The collection of information is required to obtain a benefit. The
likely respondents are individuals and businesses.
The estimated total annual recordkeeping burden is 25 hours.
The estimated annual burden per recordkeeper is approximately 30 minutes.
The estimated number of recordkeepers is 50.
Books or records relating to a collection of information must be retained as long
as their contents may become material to the administration of the internal revenue law.
Generally, tax returns and tax return information are confidential, as required by
section 6103.
SECTION 7. DRAFTING INFORMATION
The principal authors of this notice are Timothy L. Jones and Spence
Hanemann of the Office of Associate Chief Counsel (Financial Institutions &
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Products). For further information regarding this notice, contact Mr. Hanemann at
(202) 622-3980 (not a toll-free call).