GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2021
H 1
HOUSE BILL 1124
Short Title: Restore Funding for Low-Income Housing. |
(Public) |
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Sponsors: |
Representatives Autry, Hurtado, Hawkins, and Dahle (Primary Sponsors). For a complete list of sponsors, refer to the North Carolina General Assembly web site. |
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Referred to: |
Appropriations, if favorable, Rules, Calendar, and Operations of the House |
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May 31, 2022
A BILL TO BE ENTITLED
AN ACT To Restore funding for low‑income housing.
The General Assembly of North Carolina enacts:
SECTION 1. Article 3E of Chapter 105 of the General Statutes, with the exception of G.S. 105‑129.41, is reenacted as it existed immediately before its expiration and reads as rewritten:
"Article 3E.
"Low‑Income Housing Tax Credits.
"§ 105‑129.40. Scope and definitions.Definitions.
(a) Scope. – G.S. 105‑129.41 applies to
buildings that are awarded a federal credit allocation before January 1, 2003.
G.S. 105‑129.42 applies to buildings that are awarded a federal
credit allocation on or after January 1, 2003.
(b) Definitions. – The definitions in section 42 of the
Code and the following definitions apply in this Article:
(1) Housing Finance Agency. – The North Carolina Housing Finance Agency established in G.S. 122A‑4.
(2) Pass‑through entity. – Defined in G.S. 105‑228.90.
…
"§ 105‑129.42. Credit Funding mechanism for
low‑income housing awarded a federal credit allocation on or after January
1, 2003.
(a) Definitions. – The following definitions apply in this section:
(1) Qualified Allocation Plan. – The plan governing the allocation of federal low‑income housing tax credits for a particular year, as approved by the Governor after a public hearing and publication in the North Carolina Register.
(2) Qualified North Carolina low‑income housing development. – A qualified low‑income project or building that is allocated a federal tax credit under section 42(h)(1) of the Code and is described in subsection (c) of this section.
(3) Qualified residential unit. – A housing unit that meets the requirements of section 42 of the Code.
(b) Credit. – A taxpayer who is allocated a federal low‑income housing tax credit under section 42 of the Code to construct or substantially rehabilitate a qualified North Carolina low‑income housing development is allowed a credit equal to a percentage of the development's qualified basis, as determined pursuant to section 42 of the Code. For the purpose of this section, qualified basis is calculated based on the information contained in the carryover allocation and is not recalculated to reflect subsequent increases or decreases. No credit is allowed for a development that uses tax‑exempt bond financing.
(c) Developments and
Amounts. – The following table sets out the housing developments that are
qualified North Carolina low‑income housing developments and are allowed
a credit under this section. The table also sets out the percentage of the
development's qualified basis for which a credit is allowed. The designation of
a county or city as Low Income, Moderate Income, or High Income and
determinations of affordability are made by the Housing Finance Agency in
accordance with the Qualified Allocation Plan in effect as of the time the
federal credit is allocated. A change in the income designation of a county or
city after a federal credit is allocated does not affect the percentage of the
developer's qualified basis for which a credit is allowed. The affordability
requirements set out in the chart apply for the duration of the federal tax
credit compliance period. If in any year a taxpayer fails to meet these
affordability requirements, the credit is forfeited under subsection (h) of
this section.
Percentage of
Basis for
Type of Development Which Credit
is Allowed
Forty percent (40%) of the qualified residential units
are affordable to households whose income is fifty Thirty percent
percent (50%) or less of area median income and the (30%)
units are in a Low‑Income county or city.
Fifty percent (50%) of the qualified residential units
are affordable to households whose income is fifty Twenty percent
percent (50%) or less of the area median income and (20%)
the units are in a Moderate‑Income county or city.
Fifty percent (50%) of the qualified residential units
are affordable to households whose income is forty Ten percent
percent (40%) or less of the area median income and (10%)
the units are in a High‑Income county or city.
Twenty‑five percent (25%) of the qualified residential
units are affordable to households whose income is Ten percent
thirty percent (30%) or less of the area median income (10%)
and the units are in a High‑Income county or city.
(d) Election. – Loan
Generated. – When a taxpayer to whom a federal low‑income housing
credit is allocated submits to the Housing Finance Agency a request to receive
a carryover allocation for that credit, the taxpayer must elect a method for
receiving the tax credit allowed by this section. A taxpayer may elect to receive
the credit in the form of either a direct tax refund or a loan generated
by transferring the credit to the Housing Finance Agency. Neither a direct
tax refund nor a A loan received as the result of the transfer of
the credit is not considered taxable income under this Chapter.
Under the direct tax refund
method, a taxpayer elects to apply the credit allowed by this section to the
taxpayer's liability under Article 4 of this Chapter. If the credit allowed by
this section exceeds the amount of tax imposed by Article 4 for the taxable
year, reduced by the sum of all other credits allowable, the Secretary must
refund the excess. In computing the amount of tax against which multiple
credits are allowed, nonrefundable credits are subtracted before this credit.
The provisions that apply to an overpayment of tax apply to the refundable
excess of a credit allowed under this section.
Under the loan method, a
taxpayer elects to transfer the credit allowed by this section to the Housing
Finance Agency and receive a loan from that Agency for the amount of the
credit. The terms of the loan are
specified by the Housing Finance Agency in accordance with the Qualified
Allocation Plan.
(e) Exception When No
Carryover. – If a taxpayer does not submit to the Housing Finance Agency a
request to receive a carryover allocation, the taxpayer must elect the
method for receiving the credit allowed by this section when the taxpayer
submits to the Agency federal Form 8609. A taxpayer to whom this subsection
applies claims the credit for the taxable year in which the taxpayer submits
federal Form 8609.
(f) Pass‑Through Entity. – Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this Article does not distribute the credit among any of its owners. The pass‑through entity is considered the taxpayer for purposes of claiming the credit allowed by this Article. If a return filed by a pass‑through entity indicates that the entity is paying tax on behalf of the owners of the entity, the credit allowed under this Article does not affect the entity's payment of tax on behalf of its owners.
(g) Return and Payment. – A taxpayer may claim the credit allowed by this section on a return filed for the taxable year in which the taxpayer receives a carryover allocation of a federal low‑income housing credit. The return must state the name and location of the qualified low‑income housing development for which the credit is claimed.
If a taxpayer chooses the loan
method for receiving the credit allowed under this section, the The Secretary must
transfer to the Housing Finance Agency the amount of credit allowed the
taxpayer. The Agency must loan the taxpayer the amount of the credit on terms
consistent with the Qualified Allocation Plan. The Housing Finance Agency is
not required to make a loan to a qualified North Carolina low‑income
housing development until the Secretary transfers the credit amount to the
Agency.
If the taxpayer chooses the
direct tax refund method for receiving the credit allowed under this section,
the Secretary must transfer to the Housing Finance Agency the refundable excess
of the credit allowed the taxpayer. The Agency holds the refund due the
taxpayer in escrow, with no interest accruing to the taxpayer during the escrow
period. The Agency must release the refund to the taxpayer upon the occurrence
of the earlier of the following:
(1) The Agency determines that the taxpayer has
complied with the Qualified Allocation Plan and has completed at least fifty
percent (50%) of the activities included in the development's qualified basis.
(2) Within 30 days after the date the development is
placed in service.
(h) Forfeiture. – A taxpayer that receives a credit
under this section must immediately report any recapture event under section 42
of the Code to the Housing Finance Agency. If the taxpayer or any of its owners
are required under section 42(j) of the Code to recapture all or part of a
federal credit with respect to a qualified North Carolina low‑income
development, the taxpayer forfeits the corresponding part of the credit allowed
under this section. This requirement does not apply in the following
circumstances:
(1) When the recapture of part or all of the federal
credit is the result of an event that occurs in the sixth or a subsequent
calendar year after the calendar year in which the development was awarded a
federal credit allocation.
(2) The taxpayer elected to transfer the credit
allowed by this section to the Housing Finance Agency.
(i) Liability From Forfeiture. – A taxpayer that
forfeits all or part of the credit allowed under this section is liable for all
past taxes avoided and any refund claimed as a result of the credit plus
interest at the rate established under G.S. 105‑241.21. The interest
is computed from the date the Secretary transferred the credit amount to the
Housing Finance Agency. The past taxes, refund, and interest are due 30 days
after the date the credit is forfeited. A taxpayer that fails to pay the taxes,
refund, and interest by the due date is subject to the penalties provided in
G.S. 105‑236.
"§ 105‑129.43. Substantiation.
A taxpayer allowed a credit under this Article must maintain and make available for inspection any information or records required by the Secretary of Revenue or the Housing Finance Agency. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer.
"§ 105‑129.44. Report.
The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:
(1) The number of taxpayers that took the credit allowed in this Article.
(2) The location of each qualified North Carolina low‑income building or housing development for which a credit was taken.
(3) The total cost to the General Fund of the credits taken.
"§ 105‑129.46. Reserved for future codification purposes.
"§ 105‑129.47. Reserved for future codification purposes.
"§ 105‑129.48. Reserved for future codification purposes.
"§ 105‑129.49. Reserved for future codification purposes."
SECTION 2. This act is effective for taxable years beginning on or after January 1, 2022.