Tax Credit Exchange Program

The Tax Credit Exchange Program, also referred to as the Exchange Program, allows the Montana Board of Housing the choice to receive cash grants from the U.S. Treasury Department in lieu of a portion of its Low Income Housing Tax Credits. With these grants, MBOH can then award this cash as sub-awards to qualified projects, specifically for the construction of, the acquisition of and for the rehabilitation of qualified low income buildings.

This funding of $17,825,673, which originated in the American Recovery & Reinvestment Act (ARRA), represents a life-saver for the projects currently using Low Income Housing Tax Credits. Due to the current conditions within the world-wide credit market, investors of housing tax credits have become scarce, especially for rural states like Montana. The Tax Credit Exchange Program allocations were announced recently and funding will be dispursed as part of the Montana Reinvestment Act, HB 645.

The need for affordable housing is felt across the entire state of Montana. The Tax Credit Exchange Program will help projects to keep their shovels in the dirt until the markets return normal.

ARRA provides a specific formula for determining the amount of Tax Credit Exchange Program funds available to each state. The formula reflects the same formula that is used each year for the division of the available tax credits to each of the 50 Housing Finance Agencies (HFA). The funds are paid directly from the U.S. Treasury to MBOH, which is the HFA for Montana. Individual projects and owners do not have any entitlement under the law to receive exchange funds. Rather, sub-awards will be made to eligible projects based on a process established by the MBOH staff.

Montana's communities have an ongoing and growing need for affordable housing. This includes a high demand for workforce housing, as well as senior housing.

Eligible recipients include qualified low income projects as defined in Section 42 with or without a tax credit allocation from the MBOH. For projects with an allocation, project owners must demonstrate good faith efforts to obtain investment commitments for the credits.

Sub-awards will be subject to the same income, rent and use restrictions as required by MBOH with respect to an award of LIHTCs.

A much needed and welcomed LIHTC property in Dillon, MT.

Sub-awards are not subject to the cross-cutting federal requirements. Therefore, Sub-awardees do not have to comply with Davis-Bacon Prevailing Wages or the National Environmental Policy Act and Related Laws, as well as many other federal rules and requirements.

Tax Credit Exchange Program funds may be used in conjunction with Tax Credit Assistance Program funds, at the discretion of MBOH.

Exchange funds not used by MBOH by January 1, 2011 must be returned to the Treasury.

MBOH will be able to submit applications to the Treasury to exchange credits at any time through 2010, in any amount.

Tax Credit Exchange Program funds cannot be used for administration.

MBOH is required to perform certain asset management functions, and may collect reasonable fees from the sub-awardees for expenses associated with the performance of this duty. The fees may not exceed amounts customarily charged for the same or similar services, and may in no way exceed the actual costs.

The Tax Credit Exchange Program will have an incredibly positive effect on Montana and its communities. The employment opportunities and the housing that will result are both things that people need.

Montana and Governor Schweitzer's overriding objective in support of these goals is the creation and preservation of jobs. The Montana Reinvestment Act funds support three themes that align with the broader goals of ARRA:

promoting energy efficiency and creating green jobs
unlocking the credit markets and supporting shovel-ready projects
mitigating the effects of the economic crisis and preventing community decline.

Once the funds are dispersed, MBOH will make regular reports of the following data to the state's recovery website at http://recovery.mt.gov/commerce/default.mcpx:
- Name of recipient entity
- Name of project
- Brief description of project
- Location of project: city/county, state, zip code
- Number of construction jobs created
- Number of construction jobs retained
- Number of non-construction jobs created
- Number of non-construction jobs retained
- Number of total housing units newly constructed
- Number of total housing units rehabilitated
- Number of low-income housing units newly constructed
- Number of low-income housing units rehabilitated

The Low Income Housing Tax Credit Program provides safe, sanitary and affordable housing to families that otherwise would not be able to afford housing in many Montana communities. The Montana Board of Housing has allocated this federal tax credit funding for the State of Montana since 1987. Since then, over 5,000 units have been created. This has had the additional benefit to Montana’s economy of adding $399,000,000 in housing equity. In addition to money spent on building materials, there are many jobs created in construction, property management and property maintenance. Property taxes or payment in lieu of taxes are another direct benefit to local governments.

Information about Montana's Housing Division and its other Housing Programs

Housing is a great need in and around the Crow Tribal Lands and all of eastern Montana.

Tax Credit Exchange Program information:

Amended 2009 QAP

ARRA Implementation Plan

2009 Tax Credit Projects

2009 Tax Credit Funding

Frequently Asked Questions

Program summary from NLHIC

Summary from NCSHA

July 10, 2009 Press Release from U.S. Treasury

GOVERNOR BRIAN SCHWEITZER

Tax Credit Exchange Program

Contact Information