Public Law 106-554 Aims to Change the Face of Economically Distressed Areas

WASHINGTON, DC-A bill positively affecting commercial real estate and is now law. HR 4577, now public law 106-554, is designed to encourage investments in economically distressed areas. It passed Congress on Dec. 15 and was signed into law last week. Providing $31.5 billion tax relief to the apartment industry, housing related issues in this law include a low-income housing credit, a private activity bond cap, brownfields clean-up relief, and community renewal provisions.

The low-income housing tax credit increases from the current level of $1.25 per capita to $1.50 in 2001, and to $1.75 in 2002. It also indexes it for inflation starting in 2003. The bill provides, for the first time, a minimum LIHTC allocation for small states, assuring $2 million in 2001 and 2002 and indexing that amount for inflation beginning in 2003, according to information released by the National Multi-Housing Council.

The Private Activity Bond Cap accelerates and already-scheduled increase in the state volume limits on tax-exempt private activity bonds to the greater of $62.50 per resident or $187 million in 2001, $75 per resident or $225 million in 2002. It also indexes the program for inflation starting in 2003.