n-04-76.pdf

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Part III-Administrative, Procedural and Miscellaneous

Relief from Certain Low-Income Housing Credit Requirements in the State of Florida
Due to Hurricanes Charley, Frances, Ivan, and Jeanne

Notice 2004-76

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 Hurricanes Charley,
Frances, Ivan, and Jeanne. This relief is being granted pursuant to the Service’s
authority under ' 42(n) and ' 1.42-13(a) of the Income Tax Regulations. This notice
amplifies and supersedes Notice 2004-66, 2004-42 I.R.B. 677.

BACKGROUND

On August 13, 2004, September 4, 2004, September 16, 2004, and September
26, 2004, respectively, the President declared major disasters for the State of Florida as
a result of Hurricanes Charley, Frances, Ivan, and Jeanne. 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.

On September 16, 2004, the Service issued Notice 2004-66, which, because of
the widespread damage to housing caused by Hurricanes Charley and Frances,
temporarily suspended certain income limitation requirements under § 42 for qualified
low-income housing projects in the State of Florida.

The State of Florida has requested that the Service extend the relief granted in
Notice 2004-66 (applying to Hurricanes Charley and Frances) to allow owners of low-
income housing credit projects in the State of Florida to provide temporary housing in
vacant units to individuals displaced because their homes were destroyed or damaged
as a result of the devastation caused by Hurricane Ivan or Jeanne.

SUSPENSION OF INCOME LIMITATIONS

Because of the widespread damage to housing caused by Hurricanes Charley,
Frances, Ivan, and Jeanne, 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, Frances, Ivan, or Jeanne
(displaced individuals). The Florida Housing Finance Corporation will determine the

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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 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 required 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, Frances, Ivan, or
Jeanne.

(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

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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 temporarily
housed in the project, specifically: name, address of damaged home, 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, Frances, Ivan, or
Jeanne, 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.

EFFECTIVE DATE

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

EFFECT ON OTHER DOCUMENTS

Notice 2004-66 is amplified and superseded.

PAPERWORK REDUCTION ACT

The collection of information contained in this notice has been reviewed and
approved by the Office of Management and Budget (OMB) in accordance with the
Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1907.

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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 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, Frances, Ivan, or Jeanne.

This information will be used in the Florida Housing Finance Corporation’s
compliance monitoring processes. 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 1,700 hours.

The estimated annual burden per recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is 6,800.

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).