n-11-87.pdf

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Part III - Administrative, Procedural, and Miscellaneous

State of New York Low-Income Housing Credit Disaster Relief

Notice 2011-87

The Internal Revenue Service is suspending certain requirements under § 42 of
the Internal Revenue Code for low-income housing credit projects to provide emergency
housing relief needed as a result of the devastation in the State of New York caused by
either Hurricane Irene during the period of August 26, 2011 to September 5, 2011, or
the remnants of Tropical Storm Lee during the period of September 7, 2011 to
September 11, 2011. 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 31, 2011, and September 13, 2011, the President declared major
disasters for the State of New York. The declarations were made 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 for Individual Assistance. The State of New York has requested that the
Service allow owners of low-income housing credit projects to provide temporary
housing in vacant units to individuals who resided in jurisdictions designated for
Individual Assistance in the State of New York and who have been displaced because

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their residences were destroyed or damaged as a result of the devastation caused by
Hurricane Irene or the remnants of Tropical Storm Lee. Based upon this request and
because of the widespread damage to housing caused by Hurricane Irene and the
remnants of Tropical Storm Lee, the Service has determined that the New York State
Homes and Community Renewal Agency (Agency) may provide approval to project
owners to provide temporary emergency housing for displaced individuals in
accordance with this notice.
I. SUSPENSION OF INCOME LIMITATIONS
The Service has determined that it is appropriate to temporarily suspend certain
income limitation requirements under § 42 for certain qualified low-income housing
projects. The suspension will apply to low-income housing projects approved by the
Agency, in which vacant units are rented to displaced individuals. The Agency will
determine the appropriate period of temporary housing for each project, not to extend
beyond October 31, 2012 (temporary housing period).
II. STATUS OF UNITS
A. Units in the first year of the credit period
A displaced individual temporarily occupying a unit during the first year of the
credit period under § 42(f)(1) will be deemed a qualified low-income tenant for purposes
of determining the project’s qualified basis under § 42(c)(1), and for meeting the
project’s 20-50 test or 40-60 test as elected by the project owner under § 42(g)(1). After
the end of the temporary housing period established by the Agency (not to extend

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beyond October 31, 2012), a displaced individual will no longer be deemed a qualified
low-income tenant.
B. Vacant units after the first year of the credit period
During the temporary housing period established by the Agency, the status of a
vacant unit (that is, market-rate or low-income for purposes of § 42 or never previously
occupied) after the first year of the credit period 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). However, even if it houses a
displaced individual, a low-income or market rate unit that was vacant before the
effective date of this notice will continue to be treated as a vacant low-income or market
rate unit. Similarly, a unit that was never previously occupied before the effective date
of this notice will continue to be treated as a unit that has never been previously
occupied 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 that house displaced individuals.

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III. SUSPENSION OF NON-TRANSIENT REQUIREMENTS
The non-transient use requirement of § 42(i)(3)(B)(i) shall not apply to any unit
providing temporary housing to a displaced individual during the temporary housing
period determined by the Agency in accordance with section I of this notice.
IV. OTHER REQUIREMENTS
All other rules and requirements of § 42 will continue to apply during the
temporary housing period established by the Agency. After the end of the temporary
housing period, the applicable income limitations contained in § 42(g)(1), the available
unit rule under § 42(g)(2)(D)(ii), the nontransient requirement of § 42(i)(3)(B)(i), and the
requirement to make reasonable attempts to rent vacant units to low-income individuals
shall resume. If a project owner offers to rent a unit to a displaced individual after the
end of the temporary housing period, the displaced individual must be certified under
the requirements of § 42(i)(3)(A)(ii) and § 1.42-5(b) and (c) to be a qualified low-income
tenant. To qualify for the relief in this notice, the project owner must additionally meet
all of the following requirements:
(1) Major Disaster Area
In the case of an individual displaced by the devastation caused by Hurricane
Irene, the displaced individual must have resided in a New York jurisdiction designated
for Individual Assistance by FEMA as a result of the devastation in the State of New
York caused by Hurricane Irene during the period of August 26, 2011 to September 5,
2011.

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In the case of an individual displaced by the devastation caused by the remnants
of Tropical Storm Lee, the displaced individual must have resided in a New York
jurisdiction designated for Individual Assistance by FEMA as a result of the devastation
in the State of New York caused by the remnants of Tropical Storm Lee during the
period of September 7, 2011 to September 11, 2011.
(2) Approval of the Agency
The project owner must obtain approval from the Agency for the relief described
in this notice. The Agency will determine the appropriate period of temporary housing
for each project, not to extend beyond October 31, 2012.
(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 the following: name, address of damaged residence,
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 New
York jurisdiction designated for Individual Assistance by FEMA as a result of the
devastation caused in the State of New York by either Hurricane Irene during the period
of August 26, 2011 to September 5, 2011, or the remnants of Tropical Storm Lee during
the period of September 7, 2011 to September 11, 2011, as applicable, the individual
requires temporary housing. The owner must notify the Agency that vacant units are
available for rent to displaced individuals.

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The owner must also certify the date the displaced individual began temporary
occupancy and the date the project will discontinue providing temporary housing as
established by the Agency. The certifications and recordkeeping for displaced
individuals must be maintained as part of the annual compliance monitoring process
with the Agency.
(4) Rent Restrictions
Rents for the low-income units that house 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 DATES
This notice is effective August 31, 2011 (the date of the President’s major
disaster declaration) for devastation caused by Hurricane Irene in the State of New York
during the period of August 26, 2011 to September 5, 2011. This notice is effective
September 13, 2011 (the date of the President’s major disaster declaration) for
devastation caused by the remnants of Tropical Storm Lee in the State of New York
during the period of September 7, 2011 to September 11, 2011.
PAPERWORK REDUCTION ACT

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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 1545-2220.
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 “OTHER
REQUIREMENTS” under “(3) Certifications and Recordkeeping.” This information is
required to enable the Service to verify whether individuals are displaced as a result of
the devastation caused in the State of New York by either Hurricane Irene during the
period of August 26, 2011 to September 5, 2011, or the remnants of Tropical Storm Lee
during the period of September 7, 2011 to September 11, 2011, and thus warrant
temporary housing in vacant low-income housing units. The collection of information is
required to obtain a benefit. The likely respondents are individuals and businesses.
The estimated total annual recordkeeping burden is 300 hours.
The estimated annual burden per recordkeeper is approximately 15 minutes. The
estimated number of recordkeepers is 1200.
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

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The principal author of this notice is David Selig of the Office of Associate Chief
Counsel (Passthroughs & Special Industries). For further information regarding this
notice, contact Mr. Selig at (202) 622-3040 (not a toll-free call).