OLR Bill Analysis
AN ACT CONCERNING THE ALLOCATION OF LOW INCOME HOUSING TAX CREDITS.
This bill requires the Connecticut Housing Finance Authority (CHFA) to allocate federal Low-Income Housing Tax Credits (LIHTC) using priority tiers it creates in its Qualified Allocation Plan (QAP). Under these tiers, CHFA must give priority consideration to (1) “feasible proposals” in high- or very-high opportunity areas for 75% of the credits and (2) “catalytic proposals” in very low-, low-, or moderate-opportunity areas for 25% of the credits. If there are an insufficient number of proposals qualifying in an allocation round under the priority tiers, then CHFA must allocate the remaining credits to the general pool of applicants according to the other priorities in its QAP.
The bill defines “feasible proposal” as a proposal demonstrating a strong likelihood of starting construction within nine months of the credit being awarded. A “catalytic proposal” is a proposal that (1) is part of a neighborhood plan predicted to enhance the neighborhood's economic development, as demonstrated through market analysis and (2) does not increase neighborhood poverty levels.
Under the bill, “opportunity areas” are areas identified as such by the Kirwan Institute for the Study of Race and Ethnicity's opportunity mapping analysis, which assesses census tracts by educational, economic, and neighborhood characteristics, including school performance and poverty and crime rates.
Federal law requires states to annually adopt a QAP that states the criteria it will use to select credit recipients. Among other things, QAPs must (1) give preference to certain projects, such as those serving the lowest income tenants and (2) include certain selection criteria, such as project location and energy efficiency. It is unclear whether the priority tiers required under the bill conflict with federally required preferences and selection criteria (26 USC 42(m)).
EFFECTIVE DATE: October 1, 2015
The federal LIHTC program, administered by CHFA in Connecticut, provides incentives for developers to acquire, rehabilitate, or build low- or mixed-income housing through the allocation of federal tax credits that may be sold to corporations or investors to raise equity for a project. The number of credits is limited; CHFA allocates them based upon how well proposals meet the priorities and selection criteria in the QAP.
Kirwan Institute for the Study of Race and Ethnicity
The Institute conducts policy oriented interdisciplinary research on racial and ethnic disparities at Ohio State University. According to the Institute, opportunity mapping is a tool used to (1) identify where opportunity rich communities exist and assess who has access to these communities and (2) understand what needs to be remedied in opportunity poor communities.