(a)

1. (1) Two (2) important revenue rulings were later issued that were not retroactive.
2. (2) September 9, 1992. Internal Revenue Service Rev. Rul. 92-61, 1992-2 C.B. 7, deals with treatment of staff units as part of the eligible basis.

3. (3) September 26, 1997.

   1. (A) Treas. Reg. § 1.42-15, available unit rule, was adopted as an amendment to the regulations.
   2. (B) This rule allows over-income persons in LIHTC units to relocate to another unit in the same building.

(b) The Internal Revenue Service subsequently issued other important rulings, especially notable are the:

1. (1) Guide for Completing Form 8823, revised October 2009; and
2. (2) Housing and Economic Recovery Act of 2008.

(c) Implementation of the Tax Credit Assistance Program (TCAP).

1. (1)

   1. (A) On February 17, 2009, the President of the United States signed the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5.
   2. (B) The purpose of the American Recovery and Reinvestment Act of 2009 was to jumpstart the nation's ailing economy, with a primary focus on:

(i) Creating and saving jobs in the near term; and

1. (ii) Investing in infrastructure that will provide long-term economic benefits.

   1. (C) Title XII of the American Recovery and Reinvestment Act of 2009 appropriated funds for capital investments in low-income housing tax credit (LIHTC) projects.

2. (2)

   1. (A) All TCAP projects must have LIHTCs.

   2. (B)

      1. (i) The project must maintain eligible basis and comply with all other requirements of I.R.C. § 42 throughout the compliance period.
      2. (ii) A violation under I.R.C. § 42 also constitutes a violation under TCAP.

3. (3)

   1. (A) Arkansas Development Finance Authority staff will monitor TCAP projects in the same manner as LIHTC projects.
   2. (B) Specific attention will be paid to the individual TCAP agreements for compliance with all the terms thereof.

   3. (C)

      1. (i) Owner's breach of any provision of the TCAP agreement may constitute an event that the authority may, in its discretion, deem a recapture event.
      2. (ii) If so, the authority will give owner notice and an opportunity to return to compliance.
      3. (iii) The authority shall have full recourse against applicable parties for the full amount of recapture.
      4. (d) Implementation of Section 1602 of the American Recovery and Reinvestment Act of 2009 — Grants to states for low-income housing projects in lieu of low-income housing tax credits.

4. (1)

   1. (A) The Section 1602 program is sometimes called the Exchange Program.
   2. (B) However, this does not mean that a building that has been allocated LIHTCs must exchange these LIHTCs in order to receive Section 1602 funds.
5. (2) The Exchange Program refers to the exchange that takes place at the state level, where the authority exchanges all or part of the state housing credit ceiling (to the extent permitted under Section 1602) for Section 1602 funds.
6. (3) The purpose of the Section 1602 program is to provide funds to develop low-income housing where there is a funding gap.

7. (4)

   1. (A) Just as with LIHTC projects, buildings receiving Section 1602 funds are subject to a fifteen-year compliance period.
   2. (B) The authority will monitor the projects for compliance with the terms and conditions set forth in the extended use agreement.

8. (5)

   1. (A)

      1. (i) A Section 1602 recapture event occurs any time within the fifteen-year compliance period (as defined in I.R.C. § 42(i)(1)) when the applicable fraction of a building under I.R.C. § 42(c)(1)(B) falls below the percentage of Section 1602 funds that comprise the eligible basis of the building (the Section 1602 percentage), or below the minimum set-aside elected for the building under I.R.C. § 42(g)(1), whichever is greater.
      2. (ii) Individual extended use agreements will specify the Section 1602 percentage.
   2. (B) When a recapture event occurs, the full amount of the Section 1602 subaward is owed minus six and sixty-seven hundredths percent (6.67%) (one-fifteenth) for each full year of the building's fifteen-year compliance where a Section 1602 recapture event has not occurred.