Clinton administration endorses increase in tax credit cap The Clinton administration has thrown its support behind a proposal to raise the per capita limit on low-income housing tax credit allocations by 40%.

Under current law, state agencies administering the tax credit program can hand out $1.25 in credits annually for each person in the state. That is, a state with a population of 4 million would have $5 million in credits. (This is the one-year credit amount; investors in tax-credit projects can claim that amount each year for 10 years.)

The $1.25 limit hasn't changed since the credit was enacted in 1986. The 40% increase endorsed by the administration would raise that limit to $1.75. Tax credit advocates also want the credit cap indexed for inflation, but the administration didn't go that far. Legislation pending in the House and Senate includes the 40% increase and indexation, and credit supporters will still push for both.

The tax credit is responsible for the production of about 75,000 to 90,000 rental housing units each year, meaning that a 40% increase in the amount of credits would add 30,000 to 36,000 units. In 1998, states will have $334.5 million in credits available for allocation under the $1.25 cap, so a $1.75 cap would give them $468.4 million.

In announcing the administration's support for raising the credit cap, Vice President Al Gore said the tax credit program "has not only produced needed housing, but has harnessed the energies of the private sector in the service of community revitalization in a manner never seen before."

Rural housing service revises Section 515 rules, allocates funds The Rural Housing Service (RHS) has revised its regulations for the Section 515 rural rental housing program to implement program reforms enacted by Congress in 1996. The RHS has also allocated the $150 million in Section 515 funds available for fiscal 1998, sending about $111 million to the states and holding the remainder in various reserves.

The changes in the rules affect the way in which applications for Section 515 applications will be solicited. Each RHS state office will designate the eligible places for applications, which may equal up to 10% of the state's rural places, with a minimum of 10 places. States may designate a higher number of places to include areas with a high need for multifamily housing, including areas identified in state plans, empowerment zones and enterprise communities, Indian reservations and colonias (areas along the Mexican border). Also, if sufficient funds are available, RHS headquarters may authorize states to designate up to 20% of their rural places.

Rural places will be ranked according to the incidence of poverty, measured by households with incomes below 30% of the county rural median income; the incidence of substandard housing, as determined by the number of occupied units lacking complete plumbing or having more than one occupant per year; and the lack of affordable housing, measured by the number of households with incomes below 30% of rural median income who are paying more than 30% of income for rent.

At least 80% of the state's designated places must be selected in rank order, while up to 20% may be chosen for geographic diversity, with headquarters' approval.

The regulations also reduce the maximum term for a 515 loan from 50 to 30 years.

The fiscal 1998 funding for the Section 515 program includes $105 million for new construction and $45 million for rehabilitation and repairs. About $71 million of the new construction funds and $40 million of the rehab and repair money went to the states.

Rental surcharge for children violated law, HUD ALJ says A landlord who charged a $15 rental surcharge to tenants with children violated the Fair Housing Act, which bars discrimination against families with children, ruled an administrative law judge (ALJ) in the U.S. Department of Housing and Urban Development (HUD).

In Kelley v. Colclasure, the ALJ ordered the landlord to reimburse the family $285 for the higher rent payments, to pay $600 in damages for emotional distress and to pay a $2,000 civil penalty.

Barry G. Jacobs is NREI's Washington Correspondent and editor of Housing and Development Reporter.