Relates to temporary deferral of certain tax credits

2 Co-sponsors

• Carl Kruger
• Velmanette Montgomery

BILL NUMBER:S8460A

Title of bill

An act to amend the tax law, in relation to temporary deferral of the low income housing credit

Purpose or general idea of bill

SUMMARY OF SPECIFIC PROVISIONS: This bill would enact legislation exempting certain tax credit defer- ments enacted in a chapter of 2010 as proposed in legislative bill numbers S.6610-C and A.9710-D.

Effects of present law which this bill would alter

(Needs Verification from Danielle) Subdivision 3 (a) of section 33 of the tax law, as amended by section 1 of part y of a chapter of 2010.

Justification

This bill would eliminate the tax deferment for the State Low Income Housing Credit, the Historic Homeownership Rehabilitation Credit and the Brownfield Redevelopment Tax Credit. Credits are monetized and sold to third party investors to provide capital for development. These three tax credit programs are vital to the construction and rehabilitation of affordable housing in New York State, and as such are a critical econom- ic development and job generation tool.

The State Low Income Housing Credit, since its creation 10 years ago, has provided a vital source of gap funding for affordable housing projects throughout New York State, which otherwise would not have been financially viable. Deferring the state Low Income Housing Credit will not only stall new affordable housing development, but will also put in jeopardy existing affordable housing projects underwritten with state tax credits.

The Brownfields Tax Credit is also a critical source of support for affordable housing development. This tax credit program was just revised in 2008 to ensure efficient use of this resource in financing the reme- diation of abandoned or under-used properties where expansion or rede- velopment is prevented by environmental contamination. Brownfields often pose not only environmental, but legal and financial burdens on communities. Left vacant, contaminated sites can diminish property value of surrounding sites and potentially threaten the economic viability of adjoining properties. As with deferral of the State Low Income Housing Credit, deferring the Brownfields Tax Credit will not only inhibit future Brownfields remediation and redevelopment, but will jeopardize existing projects that were underwritten with this tax credit.

The Historic Homeownership Rehabilitation Credit, created in 2009, is an essential financing tool for affordable housing, particularly in upstate New York. The credit is limited to distressed census tracks in New York

State; with a deferral, many shovel-ready affordable housing projects critical to economic revitalization in distressed New York State commu- nities will be stalled, unable to move forward without this important gap financing.

Moreover, at a low-cost and high-return to the state, these three state tax credits are essential to affordable housing development and rehabil- itation throughout New York State. Affordable housing construction is a proven job and revenue creator - the deferral would not only inhibit affordable housing and economic development, but also job growth and income revenue to the state. Furthermore, large national investors seek- ing to provide equity for New York State projects will be forced to shift investment to projects in other states. The deferral will cause a long-term diversion of investment capital from New York, as investors cannot be expected to rely on the good faith and credit of New York State once it has demonstrated a willingness to disregard existing financial commitments.

Legislative history

New.

Fiscal implications for state and local governments

To be determined.

Effective date

Immediately.