Table of Contents
State Housing Credit Ceiling
Pursuant to United States Internal Revenue Code Section 42
For the Period Beginning January 1, 1987
(Superseding Executive Orders Nos. 270 and 271)
WHEREAS, The Tax Reform Act of 1986, Pub. L. No. 99-514, 100 Stat. 2085, signed by the President of the United States on October 22, 1986, established a new tax credit that may be claimed by owners of residential rental property providing low-income housing, see Pub. L. No. 99-514, Section 252, 100 Stat. 2190, adding Internal Revenue Code Section 42;
WHEREAS, in the Omnibus Budget Reconciliation Act of 1989, which was enacted into law on December 19, 1989, Congress extended the low-income housing tax credit under Section 42 of the Internal Revenue Code of 1986 through December 31, 1990;
WHEREAS, the tax credit for the acquisition, construction and rehabilitation of low-income housing constitutes a subsidy program to assist the construction of low income housing provided by the federal government;
WHEREAS, under the Omnibus Budget Reconciliation Act of 1989, the Massachusetts 1990 state ceiling for the tax credit is $5,543,438, which is $0.9375 per capita multiplied by 5,913,000, the population of the Commonwealth based on the most recent estimate of its resident population released by the Bureau of Census before the beginning of the calendar year;
WHEREAS, Internal Revenue Code Section 42 establishes a state ceiling on the tax credit used with those projects financed with the proceeds of taxable or non-tax-exempt means of financing, provided that projects financed with the proceeds of tax-exempt bonds are eligible for the credit without reducing the state's ceiling on the tax credit;
WHEREAS, Internal Revenue Code Section 42 specifies an assignment of the state ceiling for the tax credit to the state's housing credit agency, but provides that the Governor of any state may proclaim a different assignment, see I.R.C. Section 42 (h) (3) (F);
NOW, THEREFORE, I, Michael S. Dukakis, Governor of the Commonwealth, by virtue of the authority vested in me as Supreme Executive Magistrate, do make the following assignment of the state ceiling for the tax credit for the period from January 1, 1987 through December 31, 1990 and each year thereafter that Congress extends the low-income housing tax credit:
1.1 Terms used herein shall have the meanings set forth in Internal Revenue Code Section 42. All references to "Internal Revenue Code Section 42" shall mean Internal Revenue Code Section 42, as amended, and all regulations applicable thereto.
1.2 "Equity in the Project" means the difference between the amount of all loans and certain grants provided to the project and the total cost of the project, which may include any in-kind contribution as determined pursuant to guidelines issued from time to time by the Executive Office of Communities and Development (EOCD).
1.3 "Limited Dividend Organization" means a corporation, partnership or other organization, other than a public agency, which by its governing articles of organization or partnership agreement prohibits distribution with respect to any one year of operation of more than a certain percentage of owner's equity in the project, such annual percentage distribution shall be defined pursuant to guidelines issued from time to time by EOCD.
1.4 "Low Income Housing" means housing created through the use of the tax credit, provided that such housing is created in tax credit eligible projects, as defined by Internal Revenue Code Section 42.
1.5 "Project Sponsor" means any partnership, profit or non-profit corporation, limited dividend organization, trust, public agency, individual, or any other person or entity which is the owner of a project for federal income tax purposes.
1.6 "State Housing Credit Ceiling" means the state ceiling for the tax credit used with those projects financed with the proceeds of taxable or non-tax-exempt means of financing, which, as currently provided by Federal Tax Law, is provided to the Commonwealth of Massachusetts on an annual basis from January 1,1987 through December 31, 1990 and subject to allocation by the housing credit agency of the Commonwealth of Massachusetts.
1.7 Any reference to a date herein used without a reference to a year shall mean that date in 1987 and in each succeeding calendar year through 1990 and each year thereafter that Congress extends the low-income housing tax credit.
2. Assignment to the Executive Office of Communities and Development
2.1 The State Housing Credit Ceiling, as defined in Internal Revenue Code section 42, is hereby assigned to the Executive Office of Communities and Development of the Commonwealth of Massachusetts ("EOCD"). EOCD is hereby designated the state Housing Credit Agency for the Commonwealth of Massachusetts authorized to carry out all of the provisions of Internal Revenue Code section 42 on behalf of the Commonwealth. EOCD shall at its discretion allocate any of the State Housing Credit Ceiling to residential rental projects that are tax credit eligible projects as defined by Internal Revenue Code section 42.
At present, such projects are those in which at least twenty (20) percent of the housing units in the project are both rent-restricted and occupied by households with incomes of fifty (50) percent or less of the area median income, or at least forty (40) percent of the housing units in the project are both rent-restricted and occupied by individuals with incomes of sixty (60) percent or less of the area median income. (A unit is considered rent-restricted if the gross rent for the unit does not exceed thirty (30) percent of the income limitation applicable to the unit.)
2.2 Allocation of tax credits for such projects shall be consistent with and pursuant to Internal Revenue Code Section 42 and this Executive Order. EOCD shall allocate the State Housing Credit ceiling only to those projects from which EOCD has received a formal written request that includes information requested by EOCD as described in the Guidelines issued pursuant to this Executive Order.
2.3 At least ten (10) percent of the State Housing Credit Ceiling must be reserved for projects developed by non-profit organizations, as described in Internal Revenue Code Section 42, one of whose purposes is the development of low-income housing.
2.4 EOCD may reassign any of the State Housing Credit Ceiling assigned to it pursuant to this section or authority to carry out the provisions of Internal Revenue Code Section 42 to the Massachusetts Housing Finance Agency ("MHFA")or the Massachusetts Government Land Bank ("Land Bank")in accordance with such conditions as EOCD shall specify. At the time it reassigns any of the State Housing Credit Ceiling for further allocation or authority to carry out the provisions of Internal Revenue Code Section 42 to MHFA or the Land Bank, EOCD shall specify when and if such reassignment shall expire.
3. Allocation Procedures
3.1 Each allocation of the State Housing Credit Ceiling made by EOCD shall be in writing, shall be made for a specific project and shall specify the date on or before which the project must be placed into service in order for the allocation to be effective. If the project is placed into service at a date later than this date, the project will lose its allocation of the tax credit. Allocations may be made subject to those conditions EOCD deems appropriate and consistent with this Executive Order.
3.2 EOCD may require that a Project Sponsor provide a guarantee that the project be placed into service by a certain date as originally stated to the Agency, as a condition of the allocation of the State Housing Credit Ceiling.
4.1 The Secretary of Communities and Development or the Secretary's designee is authorized to make all representations, file all documents and take all other actions in the name and behalf of EOCD as may be required for compliance with Internal Revenue Code Section 42 and to implement this order. In the event that responsibilities under this Executive Order are assigned to MHFA or the Land Bank, appropriate provisions for designations shall be made by the Secretary of Communities and Development. All designations made pursuant to this section shall be evidenced in writing.
5.1 EOCD shall make reasonably available to the public information as to the amount of the State Housing Credit Ceiling not yet allocated and the expiration dates for all allocations by it, and shall confirm, upon request, an allocation of the State Housing Credit Ceiling to a particular project and the duration thereof.
6. Guidelines and Allocation Plan
6.1 Prior to making any allocations, EOCD shall adopt guidelines governing allocation of the State Housing Credit Ceiling.
6.2 Prior to making any allocations, EOCD shall adopt a qualified allocation plan in accordance with Internal Revenue Code Section 42(m). The 1990 Allocation Plan was approved on June 11, 1990.
7. Effective Date
7.1 This order shall be effective as of the date hereof and shall remain effective until the earlier of its termination as a matter of Federal Tax Law or the effective date of any legislation enacted by the General Court with respect to the allocation of the State Housing Credit Ceiling pursuant to Federal Tax Law.
Given at the Executive Chamber in Boston this 7th day of December in the year of our Lord one thousand nine-hundred and ninety, and of the Independence of the United States of America two hundred and fourteen.
Michael S. Dukakis, Governor
The Commonwealth of Massachusetts
Michael Joseph Connolly
Secretary of the Commonwealth