Code of Vermont Rules
Agency 11 - AGENCY OF COMMERCE AND COMMUNITY DEVELOPMENT
Sub-Agency 020 - DEPARTMENT OF ECONOMIC, HOUSING AND COMMUNITY DEVELOPMENT
Chapter 004 - HOUSING DIVISION RULES PART IV: ADMINISTRATION OF THE HOUSING INVESTMENT TAX CREDIT PROGRAM
Section 11 020 004 - HOUSING DIVISION RULES PART IV: ADMINISTRATION OF THE HOUSING INVESTMENT TAX CREDIT PROGRAM
Universal Citation: VT Code of Rules 11 020 004
Current through February, 2024
Rule No.1 Authority
These rules are issued pursuant to authority vested in the Department of Housing and Community Development by 32 V.S.A. § 5830c(d).
Rule No.2 Definitions
The definitions set forth in this Section 2 shall apply to the Rules of the Housing Division, Part IV, Administration of the Housing Investment Tax Credit.
2.1 "Affordable
housing" means housing in which:
(a) At least
50 percent of the units shall be occupied by households whose income does not
exceed 100 percent of the greater of the state or area median income except
when eligible housing charities use charitable investments to finance loans to
individual borrowers. In that case, consistent with
32 V.S.A.
§
5830c(d) (4) (C)
loans made from charitable investments shall not be made to any borrowers with
incomes above 100 percent of the greater of the state or area median income.
Area median income shall be the county or Metropolitan Statistical Area median
income published by the federal Department of Housing and Urban
Development.
(b) The goal shall be
to provide housing at a cost of no more that 30 percent of a household's gross
income. Housing costs for renters shall include rent and utility payments.
Housing costs for homeowners shall include mortgage payments, property
insurance and property taxes.
(c)
The affordability of the unit(s) shall be protected for the duration of the
term of any loan made pursuant to
32 V.S.A.
§
5830c(d) (4) or at
least 15 years, whichever is greater, through a housing subsidy covenant or
other legally binding instrument, which shall terminate upon the issuance of a
judgment of foreclosure or a transfer of the property in lieu of
foreclosure.
2.2 "Bank
Prime Loan Rate" means the March average prime loan rate, as of March 31 each
year, used by insured United States chartered commercial banks to price
short-term business loans, as published in the Federal Reserve Board's
statistical release.
2.3
"Charitable Investment" means a loan or deposit made to an eligible housing
charity, on which the actual annual rate of return is at or below the
charitable threshold rate.
2.4
"Charitable threshold rate" means, for each year beginning July 1, a rate which
is the greater of two percentage points below the most recent bank prime loan
rate, or one percent.
2.5
"Commissioner" means the Commissioner of the Department of Housing and
Community Development.
2.6
"Commissioner of Taxes" means the Commissioner of the Department of Taxes for
the State of Vermont.
2.7
"Department" means the Department of Housing and Community Development of the
Agency of Commerce and Community Development for the State of
Vermont.
2.8 "Eligible housing
charity" means either a governmental agency or instrumentality, or a private
not-for-profit organization that has applied for and has not been denied
tax-exempt status by the United States Internal Revenue Service (IRS) and that
is determined eligible by the Commissioner of the Department of Housing and
Community Development in accordance with Rule 3. Charities qualifying under
this definition must have applied to the IRS for tax-exempt status and must
have received conditional approval before the Commissioner will approve its
eligibility to participate in this program.
2.9 "Fiscal year" means July 1 through June
30.
2.10 "Tax Year" means January
1 through December 31.
2.11 "Tax
credit certificates" or "certificates of eligibility for tax credits" or
"certificate of eligibility to receive tax credit investments" are certificates
issued by the Commissioner to eligible housing charities authorizing the
charity to accept charitable investments pursuant to this chapter in an amount
Up to the dollar amount specified on the certificates. These certificates shall
not be considered a security under
9 V.S.A. §
4202a(10).
Rule No.3 Application for Status as an Eligible Housing Charity
3.1 Any
not-for-profit organization, governmental agency, or instrumentality of the
state must qualify as an eligible housing charity to accept charitable
investments eligible for tax credits under this statute. Such organizations
shall make application to the Commissioner on a form provided by the Department
of Housing and Community Development. The Commissioner shall make a
determination of eligibility and shall provide written verification of the same
if the organization meets the statutory requirements under
32 V.S.A.
§
5830c, Subdivision (d) (1) through (d)
(5).
3.2 Eligibility to receive
certificates will remain valid until such time as the Commissioner revokes it
upon a finding that it fails to substantially meet the eligibility
criteria.
Rule No.4 Distribution of Tax Credit Certificates among Eligible Housing Charities
4.1 Subject to the availability of tax credit
certificates, as defined in Rule 4.3 and the distribution formula as defined in
Rule 4. 4, the Commissioner shall issue tax credit certificates to the
following organizations:
(a) those which have
applied for eligibility as an eligible housing charity;
(b) those which have received written
verification of that status;
(c)
those which have subsequently applied for tax credit certificates;
and
(d) those which evidence that
they have made a good faith effort to ensure each affordable housing project
receiving funds under this program meets the planning goals under
24 V.S.A. §
4302(b)
and (c) and have attempted to mitigate any
potential adverse impacts caused by failure to meet the goals.
4.2 Deleted.
4.3 Availability of Tax Credit Certificates
(a) In no event shall the Commissioner issue
or permit to be outstanding more than $ 5,000,000 in tax credit certificates in
the aggregate in any fiscal year. Each $ 1.00 in tax credit certificates shall
be equal to $ 1.00 in charitable investment funds received by an eligible
charity from an investor pursuant to
32 V.S.A.
§
5830c.
(b) The certificate amount does not represent
the dollar amount of actual tax credits to be received by the investor, nor
does it constitute approval by the Commissioner of Taxes of the investor's
eligibility to receive tax credits, nor does it constitute approval by the
Commissioner of specific affordable housing investments.
(c) An eligible housing charity which is
allocated tax credit certificates may designate which of its investors shall
claim tax credits pursuant to this statute. A tax credit may be claimed by the
investor for the life of the charitable investment, until the eligibility of
the housing charity is revoked, or the statutory authority is repealed,
whichever comes first.
(d) Tax
credit certificates shall be available for re-issuance in an amount equivalent
to the amount by which the principal on a charitable investment is partly or
fully repaid to an investor or it is determined that the principal will not be
repaid. The housing charity shall notify the Commissioner within 30 days of the
date such tax credit certificates become available for re-issuance in the case
of a loan that is fully repaid or will not be paid, and shall provide
documentation of the same. For all others, calculations of the amount by which
the loan has been repaid during the tax year shall be made available to the
Commissioner on January 31. Said charity may then re-apply for available
certificates. Until the Commissioner is notified of the availability of tax
credit certificates pursuant to this subsection, the full amount of the tax
credit certificates issued to a recipient housing charity shall be considered
to be outstanding and not available for reissuance. In no event may the housing
charity designate new investors to receive tax credits without receiving a
re-issuance of tax credit certificates from the Commissioner.
(e) Any balance between the amount of tax
credit certificates issued to a housing charity and the amount of charitable
investments actually received by the charity as of December 31 [st ] each year
must be reported to the Department by January 31. That portion of the amount of
each tax credit certificate issued and unused may be recalled and redistributed
to other eligible housing charities, by February 21, in accordance with Rule
4.1 and 4.4.
4.4
Distribution of Available Tax Credit Certificates Among Eligible Charities
(a) On or after the first working day in July
of each year, in accordance with Sub sections 4.1 and 4.2 above, the
Commissioner shall issue 60% of the available tax credit certificates equally
among eligible housing charities, subject to the following limits:
(1) Charities which have loaned or invested $
50,000 to $ 500,000 in projects which meet the definition of affordable housing
as defined in Subsection 2.1 above for the three fiscal years preceding the
date of its application for tax credit certificates shall receive no more than
$ 200,000 in tax credit certificates, in any given issuance;
(2) Charities which have loaned or invested
over $ 500,000 in projects which meet the definition of affordable housing as
defined in Subsection 2.1 above for the three fiscal years preceding the date
of its application for tax credit certificates shall receive no more than $
1,000,000 in tax credit certificates, in any given issuance.
(b) The Commissioner may issue the
remaining 40% of the available tax credit certificates to eligible housing
charities at any time.
(c) In
allocating the tax credit certificates, and subject to the above limitations,
the Commissioner may consider whether an eligible charity requires a lesser or
greater amount of certificates based on past performance and anticipated
charitable investments or whether another distribution method is in the best
interests of fostering affordable housing. The Commissioner shall make the
reason for his or her distribution available to the public in
writing.
4.5 Charities
may not accept investments eligible for the HITC program in amounts less than $
1,000.
4.6 Eligible housing
charities may return unexpended tax credit certificates to the Commissioner at
any time for redistribution in accordance with Subsection 4.4 above.
4.7 The Commissioner shall furnish the
Commissioner of Taxes with a list of eligible housing charities with the amount
of their respective tax credit certificates by July 15 and March 15 of each
year.
Rule No.5 Revocation of Eligibility
5.1 The Commissioner
may revoke an organization's status as an eligible housing charity upon
finding, after notice and a hearing, that the organization fails to meet
substantially all the criteria under
32 V.S.A.
§
5830c(d) (1) through (d)
(5).
5.2 If eligibility is revoked the effective
date shall be no earlier than the date the charity received notice of the
revocation. The tax credit certificate shall be invalid as of the date of
revocation, but investors shall be eligible for tax credits until the end of
the tax year in which revocation occurs.
5.3 If eligibility is revoked, the
organization shall reimburse the State for the full amount of any tax credits
allowed its investors after the effective date of revocation of eligibility.
The reimbursement shall be prorated on a monthly basis with the charity's
liability beginning on the first day of the month following
revocation.
5.4 The organization
shall pay to investors the full amount of any tax credits claimed by the
investor, but disallowed by the Commissioner of Taxes due solely to the
revocation of eligibility.
5.5
Charities which have had their eligibility revoked by the Commissioner shall
not be liable for the value of tax credits to investors in the tax years
following revocation.
5.6 Any
person aggrieved by the denial or revocation of the eligibility of a housing
charity may appeal to superior court.
Rule No.6 Commissioner's Responsibilities
6.1 Under
32 V.S.A.
§
5830c(a), the
Commissioner shall approve charitable investments in an eligible housing
charity. Such approval shall be deemed to have been granted by the Commissioner
if:
(a) the sum total of the charitable
investment, or the total of all charitable investments accepted by the eligible
housing charity does not exceed the amount of tax credit certificates issued by
the Commissioner:
(b) the recipient
organization has been determined to be an eligible housing charity and the
Commissioner has not revoked the eligibility;
(c) the actual annual rate of return on the
charitable investment is at or below the charitable threshold rate;
(d) the investment is equal to, or more than
$ 1,000;
(e) the charitable
investment has a fixed term at which time the principal will have been
amortized or come due in full.
6.2 Approval of a charitable investment by
the Commissioner in accordance with Subsection 6.1 shall not imply approval of
a tax credit by the Commissioner or by the Commissioner of Taxes.
6.3 Approval of a charitable investment in
accordance with Subsection 6.1 shall not imply that the Commissioner has made
an investment offering or has approved the sale of a security. No written
information prepared by the Department on the HITC Program shall in any way be
considered an investment offering.
6.4 Once the eligible housing charity's
status has been determined by the Commissioner under Subsection 3 and
charitable investments have been approved in accordance with Subsection 6.1,
the Commissioner shall not become involved in the approval of individual
investments made by the charity into specific affordable housing developments
except in accordance with Subsection 4.1(d).
6.5 The Commissioner shall monitor compliance
with the HITC program by requiring:
(a)
Eligible housing charities to submit the information required under
32 V.S.A.
§
5830c(f) (3) to the
Department when it is submitted to the Commissioner of Taxes; and
(b) on or before January 31 and July 31 of
each year the eligible housing charity shall submit the following information
in a format approved by the Commissioner:
(1)
a list of the charitable investments accepted by the eligible housing charity
with the interest rate and term of each loan from each investor and the date
each charitable investment was made to the charity;
(2) a list of the affordable housing projects
in which investors' funds were invested and the degree to which the project
meets
32 V.S.A.
§
5830c(c) (1) (A) through
(C); the interest rate and term of each loan
made by the charity in accordance with
32 V.S.A.
§
5830c(d) (4); the
date funds were disbursed to each project;
(3) evidence of compliance with subsection
4.1(d) and
(4) any other
information reasonably required by the Department to administer this
program.
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