oversight

Community Reinvestment Act: Challenges in Quantifying Its Effect on Low-Income Housing Tax Credit Investment

Published by the Government Accountability Office on 2012-08-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548




              August 28, 2012

              The Honorable Judy Biggert
              Chairwoman
              Subcommittee on Insurance, Housing and Community Opportunity
              Committee on Financial Services
              House of Representatives

              The Honorable Shelley Moore Capito
              Chairwoman
              Subcommittee on Financial Institutions and Consumer Credit
              Committee on Financial Services
              House of Representatives

              Subject: Community Reinvestment Act: Challenges in Quantifying Its Effect on Low-Income
              Housing Tax Credit Investment

              The Low-Income Housing Tax Credit (LIHTC), which is estimated to cost $6.5 billion in forgone
              revenue in fiscal year 2012, is the largest federal program for financing affordable rental
              housing. 1 This program is jointly administered by the Internal Revenue Service (IRS), within the
              Department of the Treasury, and state housing finance agencies (HFA). HFAs competitively
              award LIHTCs to owners of qualified rental housing projects that reserve all or a portion of their
              units for low-income tenants. Developers typically attempt to obtain funding for their projects by
              attracting third-party investors that are willing to contribute equity to the projects, and the project
              investors can then claim the LIHTCs. This process of providing LIHTCs in exchange for equity is
              generally referred to as “selling” the tax credits. 2

              Banks invest in LIHTC projects in part to meet regulatory tests under the Community
              Reinvestment Act (CRA), which encourages depository institutions to meet the credit needs of
              communities where they operate, consistent with safe and sound banking operations. Housing
              and banking industry experts cite concerns about the impact of CRA on bank investors’ demand



              1
               The federal government provides assistance for financing rental housing through approximately 25 programs, tax
              expenditures, and other tools administered by four federal agencies; see GAO, Housing Assistance: Opportunities
              Exist to Increase Collaboration and Consider Consolidation, GAO-12-554 (Washington, D.C.: Aug. 16, 2012), and
              2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and
              Enhance Revenue, GAO-12-342SP, (Washington, D.C.: Feb. 28, 2012).
              2
               The owners of the LIHTC project are permitted to claim the LIHTCs on their income tax return. Technically, what is
              sold to the investor is not the credit but an ownership interest in the project (through a partnership or other entity). For
              purpose of this report, we refer to direct investors and syndicators generally as “investors.”




              Page 1                                                                                                        GAO-12-869R
for LIHTCs in urban areas compared to rural areas. Based on your request, our objective was to
determine, to the extent data allow, how CRA and other factors influence the market for LIHTCs,
including investors’ equity contributions.

Scope and Methodology
For this report, we conducted a review of academic articles and industry reports on the
determinants of LIHTC pricing and analyzed data from a survey of state HFAs responses on
recent LIHTC investor equity contributions and factors that influence pricing. We identified
factors that influence investor demand for LIHTCs and the supply of LIHTCs projects and
developed a conceptual example of the benefits that investors receive in exchange for their
equity contribution. We identified one common method for measuring investor equity
contributions—price per tax credit; how that measure is used within the LIHTC community; and
what that measure does and does not account for. As part of our review, we determined major
data and methodological challenges in quantifying the effect of CRA on LIHTC pricing and
identified any empirical analyses of the effect of CRA on LIHTC prices. Finally, we gathered
documentation and interviewed officials from the IRS, Department of Housing and Urban
Development, Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency, as well as state HFAs, private sector
market participants and academic researchers knowledgeable about the LIHTC and CRA.
Enclosure II contains more details on our scope and methodology, and enclosure III provides
results from our survey of state HFAs. 3

Background
Community Reinvestment Act
Enacted in 1977, the purpose of CRA is to encourage insured depository institutions (banks) to
help meet the credit needs of communities in which they operate, including low- and moderate-
income neighborhoods, consistent with safe and sound banking operations. 4 Federal financial
regulators—the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and the Office of the Comptroller of the Currency—are required to
assess periodically each bank’s record of helping to meet the credit needs of its entire
community. A bank is evaluated primarily on its performance in its local communities or
assessment areas. 5 Its performance in the broader statewide or regional area that includes its
assessment area is considered when evaluating community development activities.

While small banks are evaluated based on lending in their local communities, small-intermediate
banks—with assets totaling at least $290 million and less than $1.16 billion—are subject to a
two-part test and large banks—with assets totaling at least $1.16 billion—are subject to a three-



3
 Enclosure III presents survey questions about LIHTC pricing and the effect of CRA and other factors on the low-
income housing tax credit market. These questions were part of a larger survey; see, GAO, Recovery Act: Housing
Programs Met Spending Milestones, but Asset Management Information Needs Evaluation, GAO-12-634
(Washington, D.C.: June 18, 2012).
4
12 U.S.C. §§ 2901-2908.
5
 Under CRA regulations, assessment areas are delineated by banks and (1) must consist of whole geographies (i.e.,
census tracts), (2) may not reflect illegal discriminations, (3) may not arbitrarily exclude low- or moderate-income
geographies, and (4) may not extend substantially beyond a metropolitan statistical area or state boundary unless the
assessment area is located in a multistate metropolitan statistical area.




Page 2                                                                                                  GAO-12-869R
part test that also evaluates investments. 6 The standards relate to both the quantity of a bank’s
activities, as well as the quality of those activities. Under the large bank investment test and
intermediate-small bank community development investment test, banks can choose to invest in
various qualified community development investments, including LIHTC projects. 7 Examiners
evaluating a bank under the investment test consider not only how much money the bank has
invested but also the quality in terms of how innovative or complex the investments are; how
well the investments respond to credit and community development needs; and whether the
investments differ from those provided by most private investors.

Low-Income Housing Tax Credit
Enacted in 1986, the LIHTC provides an incentive for developers and investors to provide
affordable rental housing for households whose income is at or below specified income levels. 8
The program is jointly administered by IRS and HFAs, state-chartered authorities established to
help meet the affordable housing needs of the residents of their states. The LIHTC is an indirect
financing source and resembles a grant program in that HFAs are responsible for allocating the
credit on a competitive basis to owners of qualified low-income rental projects. Figure 1 depicts
the multistep federal/state process.




6
 The asset threshold amounts as of January 2012. Thresholds for small, intermediate-small, and large banks are
updated annually.
7
 Limited purpose banks, which provide services such as credit cards, and wholesale banks, which are not in the
business of offering mortgages or loans to retail customers, are also assessed under a community development test.
8
26 U.S.C. § 42.




Page 3                                                                                                GAO-12-869R
Figure 1: Transferring Tax Credits from the Federal Government to the Private Sector




                                      Note: For a fuller description and additional graphic on the LIHTC oversight and
                                      compliance system, see GAO, Opportunities to Improve Oversight of the Low-Income
                                      Housing Program, GAO/GGD/RCED-97-55 (Washington, D.C.: Mar. 27, 1997).


1. The Department of the Treasury and IRS administer the LIHTC program and state HFAs
   receive tax credit allocations. LIHTCs are allocated by statutory formula to states annually
   according to population, with a minimum amount awarded to states with small populations. 9
   For 2012, the formula was $2.20 per capita or a minimum of $2,525,000. 10 When the credits
   have been awarded, they are usually available to the owners/investors annually for a 10-
   year credit period as long as the project meets LIHTC requirements.




9
 26 U.S.C. § 42(h)(3).
10
  The annual state credit volume ceiling applies to the 9 percent LIHTC and does not cover 4 percent tax credits
issued for low-income housing projects financed with tax-exempt rental housing bonds. These bonds are subject to
annual state-by-state caps on the volume of private activity bonds.




Page 4                                                                                                    GAO-12-869R
2. Developers apply to HFAs for tax credits. A project’s developer submits a detailed proposal
   to an HFA. To qualify for consideration, a project must:

•     be a residential rental property,

•     meet occupancy thresholds by reserving either 20 percent or more of the available units for
      households earning 50 percent or less of the area’s median gross income adjusted for
      family size or 40 percent or more of the units for households earning 60 percent or less of
      the area’s median gross income adjusted for family size,

•     restrict the rents (including the utility charges) for tenants in low-income units to 30 percent
      of an imputed income limitation based on the number of bedrooms in the unit,

•     meet habitability standards, and

•     operate under the program’s rent and income restrictions for at least 30 years for projects
      placed in service since 1990. 11

3. HFAs award tax credits to selected housing projects. Tax credits are competitively awarded
   to housing projects in accordance with states’ qualified allocation plans. Qualified allocation
   plans outline a state’s affordable housing priorities and set out its procedure for ranking the
   projects on the basis of how well they meet state priorities and selection criteria that are
   appropriate to local conditions. For example, some states establish geographic preferences
   setting aside a specific portion of tax credits by region or for rural areas. By law, each state
   must set aside at least 10 percent of its credit allocation for projects developed by qualified
   nonprofits, but states may set aside a larger share. In addition, the qualified allocation plan
   must give preference to projects that serve the lowest income tenants, serve qualifying
   tenants for the longest period of time, and are located in a qualified census tract and
   contribute to a local community revitalization plan. 12 HFAs are responsible for providing no
   more tax credits to projects than necessary for their financial viability for the 10-year credit
   period. 13 LIHTC projects receiving other federal subsidies are to receive less in tax credits
   than projects not otherwise subsidized by the federal government. 14




11
  A LIHTC project is subject to a 15-year compliance period during which a taxpayer is subject to IRS oversight and
an extended use period of at least 30 years during which the project is subject to HFA oversight. The 15-year
compliance period and the extended use period begin at the same time.
12
  Under 26 U.S.C. § 42(d)(5)(B)(ii)(I), qualified census tracts are designated by the Secretary of Housing and Urban
Development and include census tracts where either 50 percent or more of the households have income below 60
percent of the area median gross income or the poverty rate is at least 25 percent.
13
    26 U.S.C. 42(m)(2)(A).
14
  To guard against oversubsidization, almost all federal housing programs have statutory requirements requiring the
administering agencies to confirm that, at the time of making a grant or subsidized loan, the total amount of subsidy
being provided by public sources does not exceed eligible costs.




Page 5                                                                                                   GAO-12-869R
4. Tax benefits provide a return on equity investments. Investment partnerships are a primary
   source of equity financing for LIHTC projects. Syndicators recruit investors who are willing to
   become partners (generally, limited partners with 99.99 percent ownership share) in LIHTC
   projects. The money investors pay for the partnership interest is paid into the LIHTC project
   as equity financing. Although investors are buying an interest in a rental housing
   partnership, this process is commonly referred to as buying tax credits. Once the LIHTC
   project is placed into service—ready for occupancy—investors can claim their share of the
   credits to offset taxes otherwise owed on their tax returns annually for a 10-year credit
   period. Investors also receive a share of other tax benefits, such as deductions for interest
   on debt and depreciation and amortization deductions, and the possibility of cash proceeds
   from the sale of the project.

After LIHTC projects are placed into service, HFAs monitor the projects for compliance with
federal requirements for LIHTC eligibility, such as household income, rents, and project
habitability. The private sector, both investors and lenders, has an interest in overseeing the
LIHTC project, in part to ensure that they receive their full complement of LIHTCs over the
designated credit period. In general, IRS only collects information necessary for tax
administration and other purposes required by law. IRS collects data on LIHTCs awarded and
other information necessary to check the amount claimed on tax returns. Noncompliance with
federal LIHTC requirements within the 15-year compliance period may result in IRS’s denying
claims for the credit in the current year or recapturing credits claimed in prior years. HFAs are
also responsible for overseeing compliance over the entire LIHTC extended use period, which is
at least 30 years. Noncompliance after the 15-year LIHTC compliance period is not reported to
IRS, but may result in action under state or local law. Although not an administering agency, the
Department of Housing and Urban Development collects data from HFAs and maintains a
database of LIHTC project-level data, such as geographic location, total number of units and
LIHTC units, allocation year of the LIHTC, and the year the property was placed into service.
The Department of Housing and Urban Development commissioned a recent study examining
what happened to projects placed in service between 1987 and 1994 after the end of the 15-
year compliance period.

Summary of Findings
While CRA should increase investor demand for LIHTCs, quantifying the extent of any effect of
CRA on LIHTC equity contributions is difficult given data and methodological challenges. In part
because of the qualitative nature of the CRA investment test, regulatory ratings cannot be
systematically linked to banks’ LIHTC investments. Although a bank’s overall rating and the
associated narrative of its CRA examination are publicly available, the performance evaluation
report does not individually list qualified investments and how they were considered for that
examination. Furthermore, quantifying potential bank demand for LIHTCs in specific geographic
areas is complicated because not every bank assessment area is considered to the same
degree in a CRA examination. Although one way to assess demand for LIHTCs is by examining
how much equity investors are willing to contribute, the common LIHTC price measure—the
ratio of investors’ equity contribution to the total amount of LIHTCs in nominal dollars—is subject
to misinterpretation. Specifically, an investor’s equity contribution reflects the value of not just
the LIHTCs, but also any other tax and regulatory benefits—such as higher CRA ratings—plus
project risks. Such other tax benefits include deductions for depreciation and interest expenses.
Furthermore, complete and reliable data on LIHTC investor equity contributions are not readily
available, creating a challenge to analyzing the determinants of pricing. Although no empirical
analyses of the effect of CRA on LIHTCs are available, CRA is widely cited by academic
researchers, federal officials, and LIHTC market participants, and HFAs surveyed as one factor
that increases bank demand for LIHTC investments particularly in urban areas. LIHTC market


Page 6                                                                                   GAO-12-869R
participants interviewed and HFAs surveyed indicated other factors that influence investors’
decisions to invest in LIHTCs, such as the strength of housing markets in urban areas and
developer experience with LIHTC projects.

Enclosure I provides more details about the challenges in linking bank regulatory ratings to
LIHTC investments, as well as, information about how the LIHTC is calculated and how an
investor evaluates a LIHTC investment in deciding how much equity to contribute. Enclosure I
also summarizes our findings about evidence available about the effect of CRA and other
factors on LIHTC investor demand and equity contributions.

Agency Comments and Our Evaluation
We provided a draft of this report to the Department of the Treasury, IRS, Department of
Housing and Urban Development, Board of Governors of the Federal Reserve System, Federal
Deposit Insurance Corporation, and Office of the Comptroller of the Currency for review and
comment. The Department of Housing and Urban Development stated that it had no comments,
and the other agencies provided technical comments, which we incorporated as appropriate.



As agreed with your offices, unless you publicly announce the contents of this report earlier, we
plan no further distribution until 30 days after the date of this report. At that time, we will send
copies of this report to other congressional committees, the Secretary of the Treasury, the
Commissioner of Internal Revenue, the Secretary of the Department of Housing and Urban
Development, the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Office of the Comptroller of the Currency, and other interested
parties. Copies are also available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions or wish to discuss the material in this report further,
please contact me at (202) 512-9110 or whitej@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page of this report. GAO
staff members who made major contributions to this report include MaryLynn Sergent, Assistant
Director; Kevin Daly; Lois Hanshaw; Edward Nannenhorn; Melanie Papasian; Erinn L. Sauer;
and Elwood D. White.




James R. White
Director
Tax Issues
Strategic Issues

Enclosures–3




Page 7                                                                                   GAO-12-869R
                                                                                                            Enclosure I
                                        The Community Reinvestment Act and Low-
                                        Income Housing Tax Credit Investment
                                        Bank Regulatory Ratings Cannot Be Linked Specifically to
                                        Housing Tax Credit Investments
Background                              How CRA Works
Enacted in 1977, the purpose of         The CRA framework sets out regulatory tests and performance standards for
the Community Reinvestment Act          banks based on the dollar value of an institution’s assets for the previous 2
(CRA) is to encourage insured           years, as shown in the figure on the following page. While small banks are
depository institutions (banks) to      evaluated based on lending in their local communities, small-intermediate
help meet the credit needs of           banks—with assets totaling at least $290 million and less than $1.16 billion—
communities in which they               are subject to a two-part test and large banks—with assets totaling at least
operate—including low- and              $1.16 billion—are subject to a three-part test that also evaluates community
moderate-income neighborhoods—          development investments. The standards relate to both the quantity of a
consistent with safe and sound          bank’s activities, as well as the quality of those activities.
banking operations. CRA is
                                        CRA-Qualified Investments May Include Low-Income Housing
implemented by federal financial
regulators, including the Board of      Tax Credit Projects
Governors of the Federal Reserve        The large bank investment test and intermediate-small bank community
System, the Federal Deposit             development test consider a bank’s record of helping to meet the credit needs
Insurance Corporation, and the          of its assessment area through qualified investments that benefit its
Office of the Comptroller of the        assessment area or a broader statewide or regional area that includes its
Currency.                               assessment area. A qualified investment is a lawful investment, deposit,
                                        membership share, or grant that has community development as its primary
CRA regulators are required to          purpose. Under CRA, community development includes affordable housing for
examine periodically each bank’s        low- and moderate-income individuals; community services targeted to the
record in helping meet the credit       low- and moderate income; activities that promote economic development by
needs of its entire community. That     financing small businesses and farms; activities to revitalize or stabilize low-
record is taken into account in         and moderate-income neighborhoods; and loans, investments, and services
considering a bank’s application for    that among other things benefit low-, moderate-, and middle-income
deposit facilities, including mergers   individuals and geographies in the bank’s assessment area. Banks can invest
and acquisitions. Banks are             in various qualified community development investments, including Low-
evaluated primarily on their            Income Housing Tax Credit (LIHTC) projects, as well as other tax-preferred
performance in their local              investments such as New Markets Tax Credits and state and local tax-exempt
communities, which the regulations      bonds.
define as the banks’ assessment
area. Assessment areas are              As shown in the figure below, examiners evaluating a large bank under the
delineated by banks and (1) must        investment test consider not only how much money the bank has invested,
consist of whole geographies (i.e.,     but also the quality in terms of how innovative or complex the investments
census tracts), (2) may not reflect     are, how well the investments respond to credit and community development
illegal discrimination, (3) may not     needs, and whether the investments differ from those provided by most
arbitrarily exclude low- or             private investors.
moderate-income areas, and (4)          Regulators consider a bank’s investments within the context of the bank, its
may not extend substantially            community, and its competitors. A qualified investment of a lower dollar
beyond a metropolitan statistical       amount may receive more weight under the investment test than one with a
area or state boundary unless the       higher dollar amount that has fewer qualitative aspects. For example, an
assessment area is located in a         LIHTC investment that is particularly responsive to the needs of low- and
multistate metropolitan statistical     moderate-income neighborhoods in the bank’s community may receive
area. A bank’s performance              greater consideration than those not as responsive. Examiners assign a
outside its assessment area or          bank’s rating based on its demonstrated response to the performance criteria.
broader statewide or regional area      Although a bank’s overall rating and the associated narrative of its CRA
that includes its assessment area       examination are publicly available, the performance evaluation report does
is considered only when evaluating      not individually identify qualified investments and how they were considered
community development activities.       for that examination. Thus, it is difficult to determine in a systematic way the
                                        extent to which certain qualified investments, such as LIHTC investments,
                                        were considered as part of a bank’s CRA performance evaluations.

Page 8                                                                                                      GAO-12-869R
CRA Tests and Performance Standards




Notes: Asset thresholds as of January 2012; thresholds for small, intermediate-small, and large banks are updated annually. A bank may choose to
develop its own strategic plan, subject to public comment and prior regulatory approval, or may be evaluated using the standards. Limited purpose
banks, which provide services such as credit cards, and wholesale banks, which are not in the business of offering mortgages or loans to retail
customers, are assessed under a community development test that differs from the intermediate-small bank test shown.


Role of Geography in CRA Examinations
Under the interagency CRA examination procedures, all                        The criteria used in that determination are similar to
of a bank’s assessment areas are reviewed as part of                         those used to determine which assessment areas
the CRA evaluation process. For a large bank with                            receive a full-scope review. Quantifying bank demand
multiple assessment areas, each area will receive either                     for certain qualified investments, such as LIHTCs, in
a full- or limited-scope review. The determination of the                    specific geographic areas is complicated because not
review scope is based on a variety of factors, including                     every bank assessment area is considered to the same
the number of branches, volume of deposits, and/or                           degree in a CRA examination.
reportable loans. During the CRA exam, the relative
importance of the selected assessment areas to the
bank’s operations and activities is also determined to
derive an overall rating.



Page 9                                                                                                                                  GAO-12-869R
                                                                                                                                    Enclosure I

                                          The Community Reinvestment Act and Low-
                                          Income Housing Tax Credit Investment
                                          Investors Benefit from Claiming Low-Income Housing Tax
                                          Credits to Reduce Their Tax Liability
Background                               Calculation of LIHTC Project Costs and Eligible Credit
The Department of the Treasury           A portion of the total project development costs for a qualified rental housing
(Treasury) estimates that the Low-       project are eligible for the LIHTC. Eligible costs include depreciable rental real
Income Housing Tax Credit                estate, common areas, facilities reasonably required for the operation of the
(LIHTC) will cost $6.5 billion in        project, and community service facilities. Costs associated with the land, most
forgone revenue in fiscal year           land improvements, partnership start-up costs, and certain financing costs are
2012. Taxpayers claiming the             not eligible. Further, only the applicable fraction of qualifying costs associated
LIHTC may be individual investors,       with providing low-income housing is included in the basis for claiming the
although in recent years the             credit. This fraction is the lesser of the fraction of affordable units to total units
majority of investors are                or the fraction of square feet in the affordable units to the total square feet for
corporations—either investing            all the residential rental units in the building. The annual credit amount is
directly or through partnerships—        equal to the qualified basis multiplied by the applicable percentage. The
such as banks, real estate,              applicable percentage is determined either on the month the LIHTC project is
insurance, utility, or manufacturing     placed into service—that is ready for occupancy—or at the taxpayer’s
firms.                                   irrevocable election at the time the credit is allocated. Once the LIHTC project
                                         is placed in service, project owners and investors can claim the LIHTCs to
The 9 percent LIHTC was designed         offset taxes otherwise owed on their tax returns over a 10-year credit period.
to provide a 70 percent subsidy for      The following table shows how project costs and total credit are calculated for
new rental construction not              an illustrative LIHTC project with all units set aside for low-income renters.
receiving other federal subsidies or
for certain rehabilitation expenses.
To achieve the 70 percent subsidy,       Example of LIHTC Project Costs and Total Credit
a credit rate is calculated such that
                                         Project cost and LIHTC calculation
the present value of the stream of
LIHTCs over the 10-year credit           Total project development cost                                                             $11,500,000
period is equal to 70 percent of the     Less ineligible costs                                                                     ($1,500,000)
qualified basis of the LIHTC             Eligible basisa                                                                            $10,000,000
project. Tax credit percentage rates                                          b
are prescribed monthly by                Multiplied by applicable fraction                                                                 100%
Treasury. From 1986 to 2008, the         Qualified basis                                                                            $10,000,000
rate fluctuated from between 7.89
percent to 9.27 percent to maintain      Multiplied by applicable percentage (or credit rate)                                                 9%
the subsidy of 70 percent. The           Annual credit amount                                                                          $900,000
Housing and Economic Recovery
Act of 2008 (HERA) established a         Total amount taken over 10 year credit period                                               $9,000,000
temporary minimum rate of 9              Source: GAO analysis.
percent for projects placed in           Notes:
service after the date of enactment      a
                                           Projects located in a qualified census tract or difficult to develop area can have their eligible basis
and before December 31, 2013.            increased by up to 130 percent, referred to as a “basis boost.” HERA allows a housing finance agency
Under HERA, the credit rate may          to designate certain buildings which need the “basis boost” to be financially feasible as located in a
                                         difficult to develop area, and hence, eligible for the enhanced credit. Allowing a property to use the
fluctuate, but will not be less than 9   basis boost and claim a higher credit does not change the state's total credit allocation.
percent. As a result, the present        b
                                           This example shows a project with 100 percent of the units eligible for the credit.
value of the credits cannot fall
below 70 percent and can exceed          In exchange for the LIHTCs, the rental project owner must agree to set aside
70 percent if interest rates are low.    a minimum number of units for qualified low-income households and charge
While this report focuses on the 9       no more than the maximum allowable rents. An extended use agreement with
percent LIHTC, a 4 percent LIHTC         these affordability restrictions for the LIHTC project for at least 30 years, or
providing a 30 percent subsidy is        longer if agreed to by the state and project owner, must be in place to begin
also available.                          claiming the credits.



Page 10                                                                                                                            GAO-12-869R
                                                                                                                                    Enclosure I
                                         The Community Reinvestment Act and Low-
                                         Income Housing Tax Credit Investment
                                         Equity Contribution Is the Investor’s Valuation of a Low-
                                         Income Housing Tax Credit Investment
Background                               Investor Equity Contribution Reflects Additional Benefits and
In deciding to invest in a Low-          Risks Associated with LIHTC Investment
Income Housing Tax Credit                In evaluating the attractiveness of an LIHTC investment relative to alternative
(LIHTC) project, investors consider      investments and determining how much equity to contribute, an investor
the total benefits and risks             would consider the stream of tax benefits and operating income as well as the
associated with the investment. In       risks associated with achieving those flows. Because of rent restrictions,
addition to the dollar for dollar        LIHTC investors would generally not expect to receive rental profits. For our
reduction in tax liability provided by   illustrative project, the following table shows certain tax benefits—$9 million in
the LIHTC, additional benefits may       LIHTCs over the 10-year tax credit period and $1.9 million in reduced taxes
include:                                 from depreciation deducted over the 15-year compliance period. An investor
                                         would receive a share of tax benefits proportionate to its partnership share,
• Tax deductions for interest on         typically 99.99 percent.
  debt and depreciation, which
  can be claimed from the time an
  LIHTC project is placed in             Example of LIHTC Project Tax Benefits
  service until the investor               LIHTC Project Cycle    Year Tax credits Other tax   Project      Total annual
  disposes of its interest. For tax                                                benefitsa   cash flowb   tax benefits
                                           Construction period    1             $0           -            -              -
  purposes, rental real estate
  structures are depreciated using                                2        900,000    $127,273          $0    $1,027,273
  the straight line method over a                                 3        900,000     127,273            0   $1,027,273
  27.5 year recovery period.                                      4        900,000     127,273            0   $1,027,273
                                                                  5        900,000     127,273            0   $1,027,273
• Regulatory benefits for banks            10-year                6        900,000     127,273            0   $1,027,273
  investing in communities they            tax credit
                                                                  7        900,000     127,273            0   $1,027,273
  serve, such as through higher            period
                                                      15-year     8        900,000     127,273            0   $1,027,273
  Community Reinvestment Act                          compliance 9         900,000     127,273            0   $1,027,273
  (CRA) ratings.                                      period      10       900,000     127,273            0   $1,027,273
Investment risks include:                                         11       900,000     127,273            0   $1,027,273
                                                                  12             0     127,273            0     $127,273
• Potential lack of tax liability and                             13             0     127,273            0     $127,273
  therefore being unable to make                                  14             0     127,273            0     $127,273
  full use of the LIHTCs.                                         15             0     127,273            0     $127,273
• Unanticipated inflation (LIHTC                                  16             0     127,273            0     $127,273
  amounts are not adjusted for             Totals through the 15-year   $9,000,000 $1,909,091           $0 $10,909,091
                                           compliance periodc
  inflation after the projects are
                                         Source: GAO analysis.
  completed).
                                         a
                                           Other tax benefits reflect $363,636 annually in depreciation on a $10 million LIHTC project basis for a
• Variation in the actual value of       corporate taxpayer with a 35 percent tax rate. This simplified example does not include interest
  the LIHTCs from year to year           expense or other deductions associated with an LIHTC project.
                                         b
  depending on the number of               Profits are shared according to the partnership agreement. Typically, investors do not expect an
                                         LIHTC project to produce income, and the principal flows are the tax benefits.
  habitable, rent-restricted units       c
                                           Nominal totals for the project not adjusted for time value of money. Investors typically have a 99.99
  occupied by qualifying low-            percent partnership share in an LIHTC project and would receive a proportionate share of the tax
                                         benefits and possibly cash proceeds from the sale of their ownership interest.
  income households.
• Operational losses from the
  LIHTC project (typically limited
  to the amount of investment in
  the property).
• Potential LIHTC recapture if the
  project is not compliant with
  federal requirements.

Page 11                                                                                                                            GAO-12-869R
 In calculating the upfront equity contribution, the             In addition to the amount of benefits expected and
 investor would discount the returns from the investment         timing of the equity payment, an investor’s equity
 to take into account that equity is contributed early in the    contribution would take into account project
 life cycle of the project while the tax benefits will be        characteristics and risks that may affect the flow of tax
 received over time. In general, investors choose an             benefits and potential operating gains and losses.
 equity contribution that will give them a high enough rate      LIHTC market participants interviewed and state
 of return to justify investing in an LIHTC project rather       housing finance agencies surveyed identified a number
 than an alternative asset. The discount rate is the rate of     of conditions that could influence investor equity
 return that could be earned on alternative investments in       contributions. For example, delays in the developer
 the financial markets with similar risks. In our illustrative   completing the project on time or renting the units to
 example, the investor contributes equity of $6,750,000          income qualified tenants would, in turn, delay the flow of
 upfront during the construction period. The investor’s          tax benefits. Potential LIHTC investors would consider
 expected return would depend on its ability to claim any        both a developer’s experience both with a specific
 tax benefits, such as those illustrated in the table above.     LIHTC project type, such as senior housing or family
 If the LIHTC investment was riskier, for example,               housing, as well as reputation in the local market and be
 because the investor is less certain to have sufficient tax     willing to contribute more equity for a project with an
 liability to fully use the tax benefits, the discount rate      experienced developer and less to a project with an
 would be higher and the investor would be willing only to       unproven developer. Similarly, investors would be
 make a smaller equity contribution.                             willing to contribute more equity for an LIHTC project
                                                                 with a reasonable cash flow to cover expenses and
 In addition to the tax benefits accruing to any LIHTC
                                                                 mortgage debt service and well-capitalized reserves to
 investor, a bank may receive positive consideration
                                                                 cover any unforeseen costs. Our example assumed that
 towards its regulatory rating for LIHTC projects that
                                                                 investors expect no cash flow from operations. An
 qualify under the CRA investment test. In determining
                                                                 investor would also take into account investment fees,
 the amount of equity to contribute, a bank investor
                                                                 costs to monitor compliance with LIHTC rules, and the
 would likely account for this additional regulatory benefit
                                                                 financial viability of the LIHTC project. Syndicators and
 for LIHTC investments in its assessment area or the
                                                                 bank regulators reported that investor demand for
 broader statewide or regional areas that includes its
                                                                 LIHTCs is weaker in rural areas in part because rural
 assessment area. According to one researcher, large
                                                                 LIHTC projects tend to be smaller in scale. As a result,
 banks focus their qualified investments in larger urban
                                                                 fixed transaction costs are spread over fewer units, and
 areas, which represent a larger share of their deposits
                                                                 a few vacancies can have a relatively greater impact on
 or total branches and are more likely to be selected for
                                                                 the viability of a small project. Also, rural areas tend to
 full-scope review in a CRA examination. Qualified
                                                                 have smaller margins between allowable LIHTC rents
 investments in other assessment areas, while inside a
                                                                 and market rents, so the risk that tenants could move to
 bank’s overall footprint, receive less consideration, and,
                                                                 alternative housing and create LIHTC vacancies would
 as a result, banks may not receive the same regulatory
                                                                 be greater than in urban areas.
 benefit from investing in those areas.




Page 12                                                                                                         GAO-12-869R
                                                                                                             Enclosure I
                                        The Community Reinvestment Act and Low-
                                        Income Housing Tax Credit Investment
                                        CRA is One of Many Factors that Influence Investor
                                        Demand and LIHTC Equity Contributions
Background                              Industry Price Ratio May be Misleading If Interpreted as
Low-Income Housing Tax Credit           Measuring What Investors Pay for LIHTCs Only
(LIHTC) market participants—
                                        The common LIHTC price measure is a ratio of the equity contribution to the
project developers, syndicators and
                                        sum of nominal LIHTCs only, whereas equity contributed reflects an investor’s
state housing financial agencies
                                        valuation of an LIHTC project’s total returns and risks discounted to account
(HFA)—commonly calculate the
                                        for the time value of money. For our illustrative project receiving $9,000,000 in
LIHTC “price” by dividing the
                                        LIHTCs, an investor equity contribution of $6,750,000 would be expressed as
investor equity contribution by the
                                        a price ratio of $0.75; the price ratio would be lower if measured as equity
total LIHTCs to be claimed over the
                                        contributed per dollar of total nominal tax benefits. However, the equity
10-year tax credit period. The sum
                                        contributed reflects both the LIHTCs and additional benefits discounted for the
of LIHTCs received over time is
                                        timing of those benefits and taking into account the rate of return available on
nominal and is not discounted to
                                        other investments with similar risks. The common LIHTC price ratio can be
reflect the time value of money.
                                        misleading if it is interpreted as the price that investors pay for the LIHTCs
The ratio of equity to the sum of
                                        only. An equity contribution buys a partnership interest in an LIHTC project
nominal LIHTCs is expressed as
                                        including all tax benefits flowing over time and subject to the risks inherent in
cents per LIHTC dollar. Complete
                                        investing in these types of rental housing.
and reliable data on investor equity
contributions or price ratios are not   Despite its limitations, the price ratio used by market participants is the
readily available. HFAs obtain data     measure commonly used to gauge LIHTC pricing, thus facilitating broad
on equity investments to ensure         comparisons across equity invested in LIHTC projects and gauging
that projects receive no more           investment trends. The following figure summarizes the range of average
LIHTCs than necessary for their         price ratios reported by the 50 states and the District of Columbia for 2005
financial viability, but there is no    through 2010. As reported by HFAs, average LIHTC price ratios peaked in
centralized national database.          2006, then declined from 2007 to 2009, and generally increased in 2010.

In February 2009, the American
                                        Average price ratio of equity to LIHTCs, 2005 to 2010
Recovery and Reinvestment Act
(Recovery Act) created two grant
programs to provide stopgap
funding for LIHTC projects. As part
of our Recovery Act work,
managers of all HFAs were asked
to participate in a survey in 2009
and 2011 to collect HFA responses
on LIHTC prices and market
condition. We did not verify HFA-
reported price averages, and states
may have used varying methods to
calculate average prices. All HFAs
responded to both surveys. The
2011 survey included questions on
how the Community Reinvestment
Act (CRA) and other factors affect
LIHTC pricing. See enclosure III for
survey questions and responses.
We also interviewed market
participants about factors that
influence investor demand for
LIHTC projects.



Page 13                                                                                                      GAO-12-869R
Notes: The price typically refers to the ratio of investor equity per dollar of LIHTC and does not take into account other tax and investment benefits
received. The median is the value—in this case, the average price—which falls in the middle of a set of values arranged from smallest to largest; there
are an equal number of values above and below the median value.


Many Factors, Including CRA, Likely Contribute To Investor Demand and LIHTC Equity
Contributions
HFA officials, regulatory officials, academics, and other                      There was widespread agreement about the direction
experts we talked to all cited a number of factors                             and the effect of other factors that affect the level of
affecting investor demand for and equity contributions to                      LIHTC equity investments in urban versus rural areas.
LIHTC projects in recent years. The onset of financial                         According to some LIHTC market participants, investors
struggles for large banks and the exit of two large                            tend to invest in a limited number of geographic areas
LIHTC investors—Fannie Mae and Freddie Mac—                                    that they understand and those tend to be areas with
contributed greatly to decreased investor demand.
                                                                               stronger housing markets. The majority (40) of HFA
Changes in the mix of the limited supply of LIHTC
projects can also lower the average price ratio if state                       survey respondents indicated that the LIHTC market is
HFAs award LIHTCs to rental housing projects viewed                            stronger in urban areas than rural areas within their
by investors as riskier. However, it is unclear how much                       state. Some market participants interviewed said that,
of the broad decline in the average price ratio shown in                       for example, New York City, Boston, and San Francisco
the previous figure reflects investors’ valuation of                           generally have strong housing markets and also have
increased risks associated with available LIHTC                                strong LIHTC markets. One reason cited for the
projects.                                                                      correlation is that increased demand for housing results
While we identified multiple articles and papers                               in higher housing prices, thus increasing the need for
describing LIHTC price ratio trends, we found few                              more affordable housing, including LIHTC projects. Most
studies that empirically modeled various determinants of                       HFA survey respondents indicated that a strong housing
LIHTC equity contributions and found none that                                 market (49) and low rental vacancy rates (47) would
quantified the effect of CRA on LIHTC investment. One                          increase the price of LIHTCs.
researcher who used state-level data said that the lack
of readily available data on investor equity contributions
was a challenge in conducting LIHTC analysis.
Across the range of market participants interviewed and
HFAs surveyed, CRA was widely cited as one factor
that increases bank demand for LIHTC investments.
HFA survey responses supported this general view with
40 of 56 HFAs responding that CRA increased pricing to
some extent. LIHTC market participants stated that CRA
increases banks’ demand for LIHTC investment
opportunities in urban areas. In August 2010, a group of
LIHTC market participants attributed pricing differences
at that time of 20 to 30 percent between large urban
markets and the rest of the country to CRA-motivated
investor demand. Of the 40 HFA respondents that
provided written comments on CRA as a factor, 14
HFAs commented that CRA was more influential in
urban or suburban areas, and 21 cited specific cities or
regions within their states—in almost every case a
metropolitan area. Three states—Maine, Nebraska, and
Vermont—indicated that CRA motivates banks to invest
in LIHTC projects in rural as well as urban areas.




Page 14                                                                                                                                   GAO-12-869R
Enclosure II: Objective, Scope, and Methodology

Our objective was to determine, to the extent data allow, how the Community Reinvestment Act
(CRA) and other factors influence the market for Low-Income Housing Tax Credits (LIHTC),
including investors’ equity contributions.

We gathered documentation and interviewed officials from the Internal Revenue Service (IRS),
Department of Housing and Urban Development, Board of Governors of the Federal Reserve
Board System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the
Currency.

We conducted a review of academic articles and industry reports on the determinants of pricing
for the LIHTC, including studies that empirically modeled various determinants of LIHTC equity
contributions. 15 We identified factors that influence investor demand for LIHTCs and the supply
of LIHTC projects. We also developed a conceptual example of the benefits that investors
receive in exchange for their equity contribution. We identified one common method for
measuring investor equity contributions—price per tax credit; how that measure is used within
the LIHTC community; and what that measure does and does not account for. As part of our
review we determined major data and methodological challenges in quantifying the effect of
CRA on LIHTC pricing and identified any empirical analyses of the effect of CRA on LIHTC
prices. We interviewed Reznick Group about its ongoing study examining the relationship
between CRA assessment areas and LIHTC pricing, but the final study was not available at the
time we did our work.

We selected a group of LIHTC market participants to interview on the extent and nature of the
interaction between the CRA and LIHTC prices. LIHTC market participants were selected from a
variety of organizations, including government agencies, universities and academic research
centers, and industry groups. Methods used to select LIHTC market participants for interviews
included our review of literature, referrals from our internal housing-industry experts, or referrals
from external experts consulted for this or related engagements. We interviewed officials from
six state housing finance agencies (HFA) that administer the LIHTC in their states. HFAs were
selected in coordination with audit work conducted for our June 2012 report on American
Recovery and Reinvestment Act (Recovery Act) housing programs. 16 HFAs selected include
California, Colorado, Illinois, Massachusetts, Mississippi, and Pennsylvania. The selection of
states provided geographic diversity and included states with varying amounts of urban and
rural areas.

To assess state LIHTC markets, we asked mangers of state HFAs in all 50 states, the District of
Columbia, and the insular areas to complete a web survey as part of our Recovery Act work.
We added questions regarding LITHC pricing to our 2011 survey of HFAs’ use of two LIHTC




15
  Michael D, Eriksen, “The market price of Low-Income Housing Tax Credits,” Journal of Urban Economics 66 (2009):
141-149; and Leslie A. Robinson, “Do Firms Incur Costs to Avoid Reducing Pre-Tax Earnings? Evidence from the
Accounting for Low-Income Housing Tax Credits,” The Accounting Review vol. 85, no. 2 (2010): 637-669.
16
 GAO, Recovery Act: Housing Programs Met Spending Milestones, but Asset Management Information Needs
Evaluation, GAO-12-634 (Washington, D.C.: June,18, 2012).




Page 15                                                                                             GAO-12-869R
temporary financing programs. 17 Our questions asked how CRA and other factors affected
LIHTC pricing. Data collection took place from December 2011 through February 2012. We
received usable responses from all 56 agencies. In addition, when reporting on approximate
average tax credit price for 2007, 2008, and 2009, we used information gathered from HFAs in
response to our 2009 questionnaire. 18 The “price” as reported by HFAs typically reflects the
ratio of equity contributed per dollar of LIHTC. We did not verify HFA-reported price averages,
and states may have used varying methods to calculate average prices. While this common
industry measure does not account for additional tax benefits received by an LIHTC investor,
the equity to LIHTC ratio is commonly used in describing overall trends in LIHTC pricing.

See enclosure III for the wording of our 2011 survey questions and a summary of the results.
While all state agencies returned questionnaires, and thus our results are not subject to
sampling or overall questionnaire nonresponse error, the practical difficulties of conducting any
survey may introduce other errors in our findings. We took steps to minimize errors of
measurement, question-specific nonresponse, and data processing. We obtained comments on
a draft of our self-administered questionnaire from the National Council of State Housing
Agencies, the Department of the Treasury that administers the Recovery Act Section 1602 grant
program, and pretested draft questionnaires with two housing finance agencies. During the
survey, we made follow-up contacts with nonrespondents to encourage participation, and to
clarify answers respondents made, as necessary. In addition, our analysts resolved respondent
difficulties in answering one question during the survey. Finally, analysis programs and other
data analyses were independently verified.

We conducted our work from July 2011 to August 2012 in accordance with all sections of GAO’s
Quality Assurance Framework that are relevant to our objectives. The framework requires that
we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our
stated objectives and to discuss any limitations in our work. We believe that the information and
data obtained, and the analysis conducted, provide a reasonable basis for any findings and
conclusions in this product.




17
   The Recovery Act established two temporary funding programs that provided capital investments to LIHTC projects:
(1) the Tax Credit Assistance Program (TCAP) administered by the Department of Housing and Urban Development
and (2) the Grants to States for Low-Income Housing Projects in Lieu of Low-Income Housing Credits Program under
Section 1602 of the Recovery Act (Section 1602 Program) administered by the Department of the Treasury. TCAP
provided gap financing to be used by state HFAs in the form of grants or loans for capital investment in LIHTC
projects that were awarded tax credits in fiscal year 2007, 2008, or 2009; project owners were to spend all TCAP
funds by February 2012. Designed to be used in lieu of tax credits, the Section 1602 Program allowed state HFAs to
exchange a portion of their 2009 ceiling (up to 100 percent of unused 2008 LIHTC and 40 percent of their 2009
allocation) for grant funds from Treasury at the rate of 85 cents for every tax credit dollar, and then award proceeds to
finance the construction or acquisition and rehabilitation of qualified low-income buildings.
18
 GAO, Recovery Act: Results of GAO’s Survey of State Housing Finance Agencies’ Use of The Low-Income
Housing Tax Credit Assistance Program (TCAP) and Section 1602 Program, GAO-10-1023SP (Washington, D.C.:
Sept. 20, 2010).




Page 16                                                                                                    GAO-12-869R
Enclosure III: Results from Survey of State Housing Finance Agencies for
Selected Questions about the Low-Income Housing Tax Credit Market
Questions about the Low-Income Housing Tax Credit (LIHTC) market were part of a larger
Survey of State Housing Finance Agencies on Recovery Act Funding. Only results from these
questions (1 through 10) are shown in this enclosure. For the results for questions 11 through
46, please see appendix II in GAO-12-634. 19

Background on Your State’s LIHTC Market
1. Compared to 2009, considering both urban and rural areas, is your state’s market for low
income housing tax credits: Click one button.

                                 About
Much             Somewhat        the         Somewhat       Much         Don’t       Number of
stronger         stronger        Same        weaker         weaker       know        respondents
           33            18              3              0            1           1             56



2. Compared to 2009, how would you characterize the current housing tax credit market in
urban versus rural areas (however you may define them) in your state? Is it:

                                                                                 Don’t have
Much              Somewhat           About the     Somewhat         Much               both
stronger            stronger              same      stronger     stronger        urban and
in urban            in urban      in urban and       in rural     in rural             rural                  Number of
areas                  areas        rural areas        areas        areas             areas    Don’t know   respondents
12                       28                  14              0             0              1             1           56



Tax Credit Pricing
3. In our previous survey we asked for the approximate average tax credit price set at closing
with investors in your state for 2007, 2008 and 2009. What were the approximate prices for the
following years? Enter cents using numeric digits and decimal points, if needed, in the boxes
below

2005 – cents paid per dollar tax credit

                                                                                         Number
Mean                  Median             Minimum              Maximum             of respondents
89.2                        90                    75                 100                       48


2006 – cents paid per dollar tax credit

                                                                                         Number
Mean                  Median             Minimum              Maximum             of respondents
          92.4              93                    80                 103                       48




19
 See GAO, Recovery Act: Housing Programs Met Spending Milestones, but Asset Management Information Needs
Evaluation, GAO-12-634 (Washington, D.C.: June 18, 2012).




Page 17                                                                                                       GAO-12-869R
2007 – your previous report was: _____ cents paid per dollar tax credit

2008 – your previous report was: _____ cents paid per dollar tax credit

2009 – your previous report was: _____ cents paid per dollar tax credit

2010 – cents paid per dollar tax credit

                                                                                  Number
Mean               Median             Minimum            Maximum           of respondents
74.4                     73                  47                     96                 53


4. If you have any additional comments or would like to explain any of your answers on tax
credit pricing, please provide them below. Box will scroll to accommodate text as necessary.

(Open-ended answers not displayed.)

Impact of CRA on Tax Credit Pricing
5. In your opinion, does the Community Reinvestment Act (CRA) tend to increase, decrease, or
have no effect on the pricing of low-income housing tax credits in your state?

Greatly    Moderately      Slightly         No       Slightly   Moderately        Greatly   Don’t  Number of
increase     increase     increase       effect     decrease     decrease       decrease    know respondents
14                  20           6              5          2                0          1           7           55


6. Are there specific geographic location(s) within your state where CRA is more influential than
others?

Yes                                        No                       Number of respondents
38                                         16                                          54


7. IF YES: In what geographic locations is CRA more influential?

(Open-ended answers not displayed.)

8. In your opinion, do each of the following project or market characteristics generally tend to
increase, decrease, or have no effect on the pricing of low-income housing tax credits in your
state? Click one button in each row.

Project Features

A relatively large number of housing units in the project

Greatly             Slightly                           Slightly            Greatly                       Number of
increase           increase           No effect       decrease           decrease     Don’t know       respondents
8                         32                 9                  1               0              6               56




Page 18                                                                                                  GAO-12-869R
Multi-family structures, such as apartment buildings

Greatly            Slightly                      Slightly     Greatly                       Number of
increase          increase     No effect        decrease    decrease     Don’t know       respondents
4                       10            31               0            0           10                 55


Single-family structures, such as detached homes

Greatly            Slightly                      Slightly     Greatly                       Number of
increase          increase     No effect        decrease    decrease     Don’t know       respondents
0                        5            23              10            2           16                 56


Inclusion of other federal sources of funding

Greatly            Slightly                      Slightly     Greatly                       Number of
increase          increase     No effect        decrease    decrease     Don’t know       respondents
3                       24            17               3            0                8             55


Project Feasibility

Experienced developer team

Greatly            Slightly                      Slightly     Greatly                       Number of
increase          increase     No effect        decrease    decrease     Don’t know       respondents
29                      25             0               0            0                2             56


Well-capitalized reserves

Greatly            Slightly                      Slightly     Greatly                       Number of
increase          increase     No effect        decrease    decrease     Don’t know       respondents
15                      34             1               0            0                6             56


Expectation of reasonable cash flow

Greatly           Slightly                   Slightly         Greatly                      Number of
increase         increase     No effect     decrease        decrease    Don’t know       respondents
11                      33            6                0           0             6               56


Market Characteristics

Low rental vacancy rates

Greatly           Slightly                   Slightly         Greatly                      Number of
increase         increase     No effect     decrease        decrease    Don’t know       respondents
13                      34            4                0           0             4               55




Page 19                                                                                     GAO-12-869R
A strong housing market

Greatly           Slightly                   Slightly       Greatly                  Number of
increase         increase       No effect   decrease      decrease    Don’t know   respondents
19                      30             3           0             0             3            55


Presence of large banks within the state

Greatly           Slightly                   Slightly       Greatly                  Number of
increase         increase       No effect   decrease      decrease    Don’t know   respondents
13                      20            10           0             0            13            56


9. Are there any other factors that generally tend to increase or decrease pricing of low-income
housing tax credits in your state? If so, describe them in the box below.

(Open-ended answers not displayed.)

10. If you have any additional comments or would like to explain any of your answers on the
impact of CRA on tax credit pricing, please provide them below.

(Open-ended answers not displayed.)

Questions 11 through 46 intentionally not reported. 20




(450960)




20
 See GAO-12-634, appendix II.




Page 20                                                                               GAO-12-869R
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