HTC Exchange Program Overview
ARRA also created another remedy for HTC developments through its Exchange Program. Treasury offers to exchange certain tax credits for $0.85 on the dollar.
- Only certain credits will be eligible for exchange. These include:
- 2008 HTC carryover
- Any HTC allocation returned in 2009 (excludes GO Zone HTCs)
- 40% of MHC's 2009 Annual Credit Allocation
- 40% of any National Pool credits MHC receives
- New construction and acquisition rehabs with or without an allocation of HTCs will be eligible to receive funds from the exchange program:
- Developments without an HTC allocation must be determined by MHC to be qualified low-income buildings and will be subject to the same income and rent restrictions as those receiving HTC allocations.
- Effects of exchange program subawards:
- Subawards will not reduce HTC eligible basis.
- Owners will not be required to report subawards as taxable income.
- MHC would be required to perform asset management functions to ensure subaward recipients remain incompliance with Section 42.
- MHC will recapture subawards for noncompliance and return the funds to the Treasury.
The Treasury department has advised against taking applications or designing program guidelines until they can provide additional guidance. They are currently reviewing several proposals, including one to allow the exchange of GO Zone and other disaster credits. MHC expects to receive guidance in May.
For specific questions related to MHC's administration of the two ARRA provisions, contact: