n-04-66.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

Part III-Administrative, Procedural and Miscellaneous

Relief from Certain Low-Income Housing Credit Requirements Due to Hurricane Charley and
Hurricane Frances

Notice 2004-66

The Internal Revenue Service is suspending certain income limitation requirements
under ' 42 of the Internal Revenue Code for certain low-income housing credit properties in
Florida as a result of the devastation caused by Hurricane Charley and Hurricane Frances. This
relief is being granted pursuant to the Service’s authority under ' 42(n) and ' 1.42-13(a) of the
Income Tax Regulations.

BACKGROUND

On August 13, 2004, and September 4, 2004, respectively, the President declared major
disasters for the State of Florida as a result of Hurricane Charley and Hurricane Frances.
These declarations were made under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, Title 42 U.S.C. 5121-5206 (2000 & Supp. I 2001). Subsequently, the Federal
Emergency Management Agency (FEMA) designated counties for Individual Assistance.

The State of Florida has requested that the Service allow owners of low-income housing
credit projects to provide temporary housing in vacant units to individuals displaced (displaced
individuals) because their homes were destroyed or damaged as a result of the devastation
caused by Hurricane Charley and Hurricane Frances. The State of Florida has further
requested that the temporary housing of the displaced individuals in low-income units without
regard to income not cause the owners to lose low-income housing credits.

SUSPENSION OF INCOME LIMITATION

Because of the widespread damage to housing caused by the hurricanes, the Service
has determined that it is appropriate to temporarily suspend certain income limitation
requirements under § 42 for qualified low-income housing projects in the State of Florida that
are beyond the first year of the credit period under § 42(f)(1). The suspension will apply to low-
income housing projects, approved by the Florida Housing Finance Corporation, in which vacant
units are rented to individuals displaced by Hurricane Charley or Hurricane Frances. The
Florida Housing Finance Corporation will determine the appropriate period of temporary housing
for each project, not to extend beyond September 30, 2005.

During the temporary housing period established by the Florida Housing Finance
Corporation, the status of a vacant unit (that is, market rate or low-income for purposes of § 42)
that becomes temporarily occupied by a displaced individual remains the same as the unit's
status before the displaced individual moves in. Displaced individuals temporarily occupying
vacant units will not be treated as low-income tenants under § 42(i)(3)(A)(ii) (a low-income unit
that was vacant before the effective date of this notice will continue to be treated as a vacant
low-income unit even if it houses a displaced individual and a market rate unit that was vacant
before the effective date of this notice will continue to be treated as a vacant market rate unit
even if it houses a displaced individual). Thus, the fact that a vacant unit becomes occupied by
a displaced individual will not affect the building's applicable fraction under § 42(c)(1)(B) for

2
purposes of determining the building's qualified basis, nor will it affect the 20-50 test or 40-60
test of § 42(g)(1). If the income of occupants in low-income units exceeds 140 percent of the
applicable income limitation, the temporary occupancy of a unit by a displaced individual will not
cause application of the available unit rule under § 42(g)(2)(D)(ii). In addition, the project owner
is not responsible during the temporary housing period to make attempts to rent to low-income
individuals the low-income units housing displaced individuals. All other rules and requirements
of § 42 will continue to apply.

At the end of the temporary housing period established by the Florida Housing Finance
Corporation, the applicable income limitations contained in ' 42(g)(1), the available unit rule
under ' 42(g)(2)(D)(ii), and the requirement to make reasonable attempts to rent vacant units to
low-income individuals resume. The suspension of income limitations is subject to the
requirements listed below.

REQUIREMENTS FOR SUSPENSION OF INCOME LIMITATIONS

To qualify for the suspension of income limitations, the project owner must meet all of
the following requirements:

(1) Major Disaster Area
The displaced individual must have resided in a Florida county designated for Individual
Assistance by FEMA as a result of Hurricane Charley or Hurricane Frances.

(2) Approval of Florida Housing Finance Corporation
The project owner must obtain approval from the Florida Housing Finance Corporation to
obtain the relief described in this notice. The Florida Housing Finance Corporation will
determine the appropriate period of temporary housing for each project, not to extend beyond
September 30, 2005.

(3) Certifications and Recordkeeping
To comply with the requirements of ' 1.42-5, project owners are required to maintain
and certify certain information concerning each displaced individual, specifically: name, address,
social security number, and a statement signed under penalties of perjury by the displaced
individual that, because of damage to the individual’s home in a Florida county designated for
Individual Assistance by FEMA as a result of Hurricane Charley or Hurricane Frances, the
individual requires temporary housing. The owner must also certify the date the individual
began temporary occupancy and the date the project will discontinue providing temporary
housing as established by the Florida Housing Finance Corporation. The certifications and
recordkeeping for displaced individuals must be maintained as part of the annual compliance
monitoring process with the Florida Housing Finance Corporation.

(4) Rent Restrictions
Rent for the low-income units housing displaced individuals must not exceed the existing
rent-restricted rates for the low-income units established under ' 42(g)(2).

(5) Protection of Existing Tenants
Existing tenants in occupied low-income units cannot be evicted or have their tenancy
terminated as a result of efforts to provide temporary housing for displaced individuals.

3
EFFECTIVE DATE

This notice is effective August 13, 2004 (the date of the President’s major disaster
declaration as a result of Hurricane Charley).

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 1545-1907.

An 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 titled “REQUIREMENTS FOR
SUSPENSION OF INCOME LIMITATIONS,” under “
(3) Certifications and Recordkeeping.” This
information is required to enable the Service and the Florida Housing Finance Corporation to
verify that the individuals obtaining temporary housing in approved low-income housing projects
are displaced from their homes in a Florida county designated for Individual Assistance by
FEMA as a result of Hurricane Charley and Hurricane Frances. This information will be used in
the Florida Housing Finance Corporation’s compliance monitoring process. The collection of
information is required to obtain a benefit. The likely respondents are individuals, businesses,
and nonprofit institutions.

The estimated total annual recordkeeping burden is 750 hours.

The estimated annual burden per recordkeeper is approximately 15 minutes. The
estimated number of recordkeepers is 3,000.

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 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this notice is Jack Malgeri of the Office of the Associate Chief
Counsel (Passthroughs and Special Industries). For further information regarding this notice
contact Mr. Malgeri on (202) 622-3040 (not a toll-free call).