An internal Department of Housing and Urban Development (HUD) memorandum has industry groups fearing for exception rents, which allow some units to exceed prescribed fair market rents (FMRs) in the housing choice voucher program. The Sept. 13 memorandum said "approval or renewal of exception payment standard amounts and success rate payment standard amounts by Headquarters and field office staff is rescinded" except in cases involving disability accommodations. But according to Jonathan Zimmerman, housing policy analyst with the National Association of Housing and Redevelopment Officials, HUD officials later told housing authority representatives that HUD would still consider exception rent requests, though only at headquarters. Formerly field and regional offices handled such decisions unless the requested rent was above 120% of FMR. Zimmerman noted that no formal public announcement had been made to override the relevant existing Public and Indian Housing Notices. Several housing organizations, including the National Low Income Housing Coalition, are objecting to the memo and seeking clarification.

Qualified NMTC loans, changed deadline

Under the New Markets Tax Credit (NMTC) rules, the IRS will count the purchase of a loan as a "qualified low-income community investment" if the seller of the loan became a "community development entity" (CDE) after it made the loan but before it sold the loan. The announcement is in IRS Notice 2003-68, which also states that when a CDE's loan is sold and then resold, and all three parties involved are themselves CDEs, the transaction "is treated as a purchase of the loan by the ultimate CDE from the originating CDE." The earlier Notice 2003-64 covered the similar but separate issue of investments in other CDEs. Both are at

A Sept. 12 notice in the Federal Register moves the deadline from Feb. 17 to March 5, 2004, for NMTC recipients to show they have issued, and received investors' cash for, at least half the planned qualified equity investments under their existing tax credit allocations.

"Faith-based" mandates

HUD issued a final rule requiring "equal treatment" for "faith-based organizations" in government grant-making. It appears in the Sept. 30 Federal Register, and reassures some commenters on civil-rights fears, but confirms that religious organizations can consider job applicants' religion when hiring. The rule also said HUD funds could be used to renovate rooms in sanctuary buildings that are not used for worship.

Bond redemption does not block Sec. 42(h)(4)(B) application

An IRS Private Letter Ruling (PLR) has endorsed redemption of tax-exempt bonds early in a multifamily project that also was to use low-income housing tax credits. Proceeds from the bonds were to fund at least half the aggregate basis of the project in its first year.

The IRS found that redeeming the tax-exempt bonds on or after the day the project was placed in service for tax credit purposes "will not preclude a determination that [the] Project was financed with tax-exempt bonds under §42(h)(4)(B)." The ruling, No. 200340005, was issued in September 2002 but was not publicly released until October 2003.

Public housing homeownership rule unchanged

The interim rule allowing tenants to buy housing units "owned or substantially controlled by a public housing agency" through the federal housing voucher program's "homeownership option" was adopted without change in the Sept. 17 Federal Register.

Other announcements in brief

In early September, HUD announced just under $24.6 million in rural housing and economic development grants. The 87 grants, each $400,000 or less, went to organizations and public agencies in 32 states and Puerto Rico. Another $147 million in grants for lead removal and $29.4 million in grants for brownfields redevelopment was announced in early October. HUD also announced $117 million in Sec. 108 loan guarantees for the areas covered by the brownfields grants.

HUD adopted without change its interim rule designating Round III Empowerment Zones and Renewal Communities. The announcement is in the Oct. 3 Federal Register.