[Congressional Record (Bound Edition), Volume 154 (2008), Part 12]
[Senate]
[Pages 16694-16695]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       HOUSING ASSISTANCE TAX ACT


                      Section 42 Housing Projects

  Mr. Bingaman. Mr. President, I wish to thank the chairman of the 
Finance Committee, Senator Baucus, for including language in H.R. 3221, 
which this body passed on July 26, to clarify the ``general public 
use'' requirement relating to the Low-Income Housing Tax Credit 
Program. That clarification responds to recent Internal Revenue Service 
guidance to State and local housing credit agencies that has cast a 
cloud on existing properties and future development targeted to special 
populations.
  Since enactment of the Housing Credit Program in 1986, and prior to 
the recent IRS activity, the general public use requirement was 
understood to prohibit projects from being (1) rented in a manner 
inconsistent with HUD housing policies regarding nondiscrimination, (2) 
rented to members of a social organization or to employees of specific 
employers, or (3) part of a hospital, nursing home, sanitarium, 
lifecare facility, trailer park, or intermediate care facility for the 
mentally or physically disabled. This understanding has resulted in 
numerous section 42 housing projects being developed nationwide that 
target certain populations, including, for example, veterans, farm 
workers, first responders, teachers, artists, low-income parents 
attending college, pregnant or parenting teens, and domestic abuse 
victims.
  In my home State of New Mexico, the Housing Credit Program has been 
essential to the construction of housing for many low-income 
individuals, including housing that is specifically targeted toward 
farm workers. Among our great success stories is the Franklin Vista 
development in Anthony, NM. Units already in service at Franklin Vista 
are targeted specifically for farm worker housing. The current phase 7, 
now underway, would create an additional 24 units of farm worker 
housing.
  Ms. CANTWELL. I also would like to thank the chairman. In my home 
State of Washington, the IRS action has threatened a number of 
innovative housing developments, involving housing for pregnant women, 
housing for disabled military veterans, and housing for artists that 
are being used as part of a larger redevelopment strategy to rebuild 
neighborhoods. The IRS action has been particularly problematic for 
State efforts to deal with the critical need increase the supply of 
safe, decent, and affordable housing for migrant and seasonal farm 
workers. About 10 years ago, Washington established a Farm Worker 
Housing Program that has led to the creation and preservation of over 
1,065 units of permanent housing for farm workers. The IRS's recent 
position has not only threatened future development of such housing but 
could potentially result in the recapture of low-income housing tax 
credits for such units currently in existence, potentially bringing 
financial ruin to the nonprofit housing providers which have developed 
and operate this housing.

[[Page 16695]]

  The language in the bill that this body passed on July 26 on general 
public use reflects Congress's comfort with the historical application 
of the general public use requirement prior to the IRS's recent 
activities, and Congress's intent to remove the uncertainty and risk 
that the IRS's recent activities have created for the section 42 
program.
  Mr. BINGAMAN. My understanding, Mr. Chairman, is that the general 
public use provision in that bill, as passed, clarifies that housing 
does not fail to meet the general public use requirement solely because 
occupancy restrictions or preferences that favor tenants with (1) 
special needs; (2) who are members of a specified group under a Federal 
program or a State program or policy that supports housing for such a 
specified group, or (3) who are involved in artistic or literary 
activities. Is that understanding correct?
  Mr. BAUCUS. Yes, the Senator is correct. And for this purpose a 
special need may relate to the physical facilities of the property, 
such as a building that offers day care, the services that are to be 
provided, or the circumstances of the tenants, such as low-income 
parents attending college.. The basic structure of the low-income 
housing tax credit is based on the premise that the States have the 
prime responsibility to administer this program, and they have done an 
excellent job so far. They currently have the responsibility to 
determine the housing priorities of the State and to give priority to 
tenant populations with special housing needs. The newly codified 
general public use rule reinforces the latitude of the States to decide 
how housing credit dollars are allocated.
  Ms. CANTWELL. I thank the chairman for that response and for his 
work, along with that of the ranking member, on this important issue 
that would permit housing credit properties to continue to serve 
special populations provided that the properties satisfy the 
nondiscriminatory tenant selection criteria and other requirements of 
the Low-Income Housing Tax Credit Program. I also thank the Senator 
from New Mexico, Mr. Bingaman, for his tireless leadership on this 
issue.

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