SENATE MEMORIAL 93

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Timothy M. Keller

A MEMORIAL

REQUESTING THE NEW MEXICO MORTGAGE FINANCE AUTHORITY TO STUDY THE FEASIBILITY OF ADOPTING A POLICY FOR LOW-INCOME HOUSING TAX CREDIT SCORING PURPOSES TO GRANDFATHER FOR TWO YEARS ANY QUALIFIED CENSUS TRACT THAT HAS BEEN REDESIGNATED BY THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.

     WHEREAS, the New Mexico mortgage finance authority runs a competitive award process for allocating low-income housing tax credits that awards five points to a project located within a qualified census tract; and

     WHEREAS, the state housing tax credit program's qualified allocation plan, effective January 1, 2014, defines a qualified census tract as any census tract that is designated by the United States secretary of the department of housing and urban development as having fifty percent or more of the households at an income level that is less than sixty percent of the area gross median income in accordance with Section 42(d)(5) of the Internal Revenue Code; and

     WHEREAS, the United States department of housing and urban development designates qualified census tracts for purposes of the low-income housing tax credit program; and

     WHEREAS, the low-income housing tax credit program also requires that the poverty rate in the tract be at twenty-five percent or more for qualified census tract eligibility; and

     WHEREAS, the low-income housing tax credit requires that no more than twenty percent of the metropolitan area population reside within designated qualified census tracts; and

     WHEREAS, the twenty percent limit also applies collectively to nonmetropolitan counties in each state; and

     WHEREAS, it is possible for a tract to meet one or both of the above criteria, but still not be designated as a qualified census tract; and

     WHEREAS, the low-income housing tax credit status does not provide for an appeal process to change the qualified census tracts designation of an individual census tract when an error has occurred that causes redesignation; and

     WHEREAS, redesignation occurs when a census tract loses its designation as a qualified census tract; and

     WHEREAS, qualified census tract designations are updated every five years by the United States department of housing and urban development based on its data; and

     WHEREAS, most low-income housing tax credit projects take a long time to reach the application stage, which is only once a year at the end of January, and require substantial resources in terms of time and money to make such an application; and

     WHEREAS, the small business administration also uses qualified census tract designations for its historically underutilized business zones program, called HUBZone, and has run into the same designation problem but has resolved the issue by grandfathering projects for three years; and

     WHEREAS, the competition for low-income housing tax credits is very competitive, and the loss of the five points awarded to projects within the qualified census tracts can make or break an application; and

     WHEREAS, there is a fairness issue for those in the process of putting together a project for application to then lose the qualified census tract designation;

     NOW, THEREFORE, BE IT RESOLVED BY THE SENATE OF THE STATE OF NEW MEXICO that the New Mexico mortgage finance authority be requested to study the feasibility of adopting a policy for low-income housing tax credit scoring purposes that grandfathers for two years any qualified census tract that has been redesignated by the United States department of housing and urban development; and

     BE IT FURTHER RESOLVED that a copy of this memorial be transmitted to the director of the New Mexico mortgage finance authority.

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