2023 Vermont Statutes › Title 32 - Taxation and Finance › Chapter 151 - Income Taxes › § 5930u. Tax credit for affordable housing

§ 5930u. Tax credit for affordable housing
(a) Definitions. As used in this section:
(1) “Affordable housing project” or “project” means:
(A) a rental housing project identified in 26 U.S.C. § 42(g); or
(B) owner-occupied housing identified in 26 U.S.C. § 143 (c)(1) or that qualifies under Vermont Housing Finance Agency criteria governing owner-occupied housing.
(2) “Affordable housing tax credits” means the tax credit provided by this subchapter.
(3) “Allocating agency” or “Agency” means the Vermont Housing Finance Agency.
(4) “Committee” means the Joint Committee on Tax Credits consisting of five members: a representative from the Department of Housing and Community Development, the Vermont Housing and Conservation Board, the Vermont Housing Finance Agency, the Vermont State Housing Authority, and the Office of the Governor.
(5) “Credit certificate” means a certificate issued by the allocating agency to a taxpayer that specifies the amount of affordable housing tax credits that can be applied against the taxpayer’s individual or corporate income tax liability or franchise, captive insurance premium, or insurance premium tax liability as provided in this subchapter.
(6) “Eligible applicant” means any municipality, State agency as defined in 10 V.S.A. § 6301a, the Vermont Housing Finance Agency, a for-profit organization, or a nonprofit organization qualifying under 26 U.S.C. § 501(c)(3) or cooperative housing organization, the purpose of which is to create and retain affordable housing for Vermonters with lower income and that has in its bylaws a requirement that the housing the organization creates be maintained as affordable housing for Vermonters with lower income on a perpetual basis or that meets the application requirements of the allocation plan.
(7) “Eligible cash contribution” means an amount of cash:
(A) contributed to the owner, developer, or sponsor of an affordable housing project and determined by the allocating agency as eligible for affordable housing tax credits; or
(B) paid to the Agency in connection with the purchase of affordable housing tax credits.
(8) “Section 42 credits” means tax credits provided by 26 U.S.C. §§ 38 and 42.
(9) “Allocation plan” means the plan recommended by the Committee and approved by the Vermont Housing Finance Agency, which sets forth the eligibility requirements and process for selection of eligible rental housing projects to receive affordable housing tax credits and eligible owner-occupied housing projects to receive loans or grants under this section. The allocation plan shall include:
(A) requirements for creation and retention of affordable housing for persons with low income; and
(B) requirements to ensure that eligible rental housing is maintained as affordable by subsidy covenant, as defined in 27 V.S.A. § 610, on a perpetual basis and that eligible owner-occupied housing or program funds for owner-occupied housing remain as an affordable housing source for future owners or buyers, and meets all other requirements of the Vermont Housing Finance Agency related to affordable housing.
(10) “Taxpayer” means a taxpayer who makes an eligible cash contribution or the assignee or transferee of or successor to such taxpayer as determined by the Department of Taxes.
(b) Eligible tax credit allocations.
(1)
(A) An eligible applicant may apply to the allocating agency for an allocation of affordable rental housing tax credits under this section related to an affordable housing project authorized by the allocating agency under the allocation plan. In the case of a specific affordable rental housing project, the eligible applicant shall also be the owner or a person having the right to acquire ownership of the building and shall apply prior to placement of the affordable housing project in service. The allocating agency shall issue a letter of approval if it finds that the applicant meets the priorities, criteria, and other provisions of subdivision (B) of this subdivision (b)(1). The burden of proof shall be on the applicant.
(B) Upon receipt of a completed application, the allocating agency shall award an allocation of affordable housing tax credits with respect to a project to an applicant, provided the applicant demonstrates to the satisfaction of the allocating agency all of the following:
(i) the owner of the project has received from the allocating agency a binding commitment for, a reservation or allocation of, or an out-of-cap determination letter for Section 42 credits, or meets the requirements of the allocation plan; and
(ii) the project has received community support.
(2)
(A) The Vermont Housing Finance Agency shall have the authority to allocate affordable housing tax credits to provide funds to make loans or grants to eligible applicants for affordable owner-occupied housing. An eligible applicant may apply to the allocating agency for a loan or grant under this section related to an affordable owner-occupied housing project authorized by the allocating agency under the allocation plan. In the case of a specific affordable owner-occupied housing project, the eligible applicants shall also be the owner or a person having the right to acquire ownership of the unit and shall apply prior to sale of the unit to the homeowner.
(B) The Agency shall require that the loan or grant recipient use such funds to maintain the unit as an affordable owner-occupied unit or as an affordable housing source for future owners or buyers.
(C) The Agency shall use the proceeds of loans or grants made under subdivision (b)(2)(A) of this section for future loans or grants to eligible applicants for affordable owner-occupied housing projects.
(D) The Agency may assign its rights under any loan or grant made under subdivision (b)(2)(A) of this section to the Vermont Housing and Conservation Board or any State agency or nonprofit organization qualifying under 26 U.S.C. § 501(c)(3), provided such assignee acknowledges and agrees to comply with the provisions of subdivision (b)(2) of this section.
(3)
(A) The Vermont Housing Finance Agency shall have the authority to allocate affordable housing tax credits to finance down payment assistance loans that meet the following requirements:
(i) the loan is made in connection with a mortgage through an Agency program;
(ii) the borrower is a first-time home buyer of an owner-occupied primary residence; and
(iii) the borrower uses the loan for the borrower’s down payment or closing costs, or both.
(B) The Agency shall require the borrower to repay the loan upon the transfer or refinance of the residence.
(C) The Agency shall use the proceeds of loans made under the Program for future down payment assistance.
(D) The Agency may reserve funding and adopt guidelines to provide grants to first-time homebuyers who are also first-generation homebuyers.
(c) Amount of credit. A taxpayer shall be entitled to claim against the taxpayer’s individual income, corporate, franchise, captive insurance premium, or insurance premium tax liability a credit in an amount specified on the taxpayer’s credit certificate. The first-year allocation of a credit amount to a taxpayer shall also be deemed an allocation of the same amount in each of the following four years.
(d) Availability of credit. The amount of affordable housing tax credit set forth on the taxpayer’s credit certificate shall be available to the taxpayer every year for five consecutive tax years, beginning with the tax year in which the eligible cash contribution is made. Total tax credits available to the taxpayer shall be the amount of the first-year allocation plus the succeeding four years’ deemed allocations.
(e) Claim for credit. A taxpayer claiming affordable housing tax credits shall submit with each return on which such credit is claimed the taxpayer’s credit certificate and, with respect to credits issued under subdivision (b)(1) of this section, a copy of the allocating agency’s credit allocation to the affordable housing project. Any unused affordable housing tax credit may be carried forward to reduce the taxpayer’s tax liability for no more than 14 succeeding tax years, following the first year the affordable housing tax credit is allowed.
(f) [Repealed.]
(g) Credit allocation.
(1) In any fiscal year, the allocating agency may award up to:
(A) $400,000.00 in total first-year credit allocations to all applicants for rental housing projects, for an aggregate limit of $2,000,000.00 over any given five-year period that credits are available under this subdivision (A).
(B) $675,000.00 in total first-year credit allocations for loans or grants for owner-occupied unit financing or down payment loans as provided in subdivision (b)(2) of this section consistent with the allocation plan, including for new construction and manufactured housing, for an aggregate limit of $3,375,000.00 over any given five-year period that credits are available under this subdivision (B). Of the total first-year credit allocations made under this subdivision (B), $250,000.00 shall be used each fiscal year for manufactured home purchase and replacement.
(2) If the full amount of first-year credits authorized by an award are not allocated to a taxpayer, the Agency may reclaim the amount not allocated and re-award such allocations to other applicants, and such re-awards shall not be subject to the limits set forth in subdivision (1) of this subsection.
(h) Credit allocation; Down Payment Assistance Program.
(1) In fiscal year 2016 through fiscal year 2019, the allocating agency may award up to $125,000.00 in total first-year credit allocations for loans through the Down Payment Assistance Program created in subdivision (b)(2) of this section.
(2) In fiscal year 2020 through fiscal year 2026, the allocating agency may award up to $250,000.00 in total first-year credit allocations for loans through the Down Payment Assistance Program created in subdivision (b)(3) of this section. (Added 1999, No. 159 (Adj. Sess.), § 40; amended 2001, No. 62, § 7; 2003, No. 74 (Adj. Sess.), § 1; 2005, No. 75, § 7; 2005, No. 207 (Adj. Sess.), § 21, eff. May 31, 2006; 2007, No. 176 (Adj. Sess.), § 13, eff. July 1, 2008; 2011, No. 143 (Adj. Sess.), § 21; 2015, No. 51, § G.7; 2015, No. 97 (Adj. Sess.), § 67; 2015, No. 157 (Adj. Sess.), § T.4; 2017, No. 69, § H.10, eff. June 28, 2017; 2019, No. 71, § 3, eff. June 18, 2019; 2021, No. 105 (Adj. Sess.), § 547, eff. July 1, 2022; 2021, No. 138 (Adj. Sess.), § 9, eff. July 1, 2022; 2021, No. 182 (Adj. Sess.), § 1, eff. July 1, 2022; 2023, No. 6, § 382, eff. July 1, 2023.)